Exxon Mobil Corp. is set to be removed from the S&P 500 Index’s 10 biggest companies for the first time ever portending the end of an era for oil firms as investors look beyond hydrocarbon to technology, Bloomberg reports.
The S&P 500, a closely followed gauge, is a stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States.
Exxon yielded its place to Visa Inc. by weighting on August 1 and then to Procter & Gamble Co. two weeks later, according to data compiled by Bloomberg which now expects an official announcement from S&P Dow Jones Indices to that effect.
Once confirmed, it would be the first time in nearly a century of the S&P index that Exxon would be weighted out of the top 10.
“The oil sector has gone from being the leader of the world economy to a laggard,” said Tom Sanzillo, director of the Institute for Energy Economics and Financial Analysis, told Bloomberg.
In the last 10 years, the oil sector has weakened from 11.7 percent to 4.4 percent of the S&P 500 Index following the rise of tech firms like Facebook, Amazon, Microsoft and the likes, and a shale-induced glut in the oil market.
Exxon Mobil in the second quarter earnings published in August noted that earnings grew 13 percent over 2,876 million USD in the preceding quarter and 7.27 percent from the year before.
In the downstream business, however, while Exxon Mobil turned the corner to post 451 million USD profit after it had made 256 million USD loss in Q1, year-on-year bottom-line slid 37.71 percent.
In the chemical segment, earnings more-than-halved to 188 million USD from 518 million USD in the first quarter. Compared to the corresponding quarter in 2018, the second quarter number was down by 78.9 percent.
Lower margins due to lengthening supply, higher scheduled maintenance, higher expense related to growth projects and unfavourable tax, forex impacts, among others were cited as headwinds.
Exxon Mobil is the largest direct descendant of John D. Rockefeller’s Standard Oil, and was formed on November 30, 1999 by the merger of Exxon (formerly the Standard Oil Company of New Jersey) and Mobil (formerly the Standard Oil Company of New York).
The Company operations include exploration and production of oil and gas, electric power generation, and coal and minerals operations. Exxon Mobil also manufactures and markets fuels, lubricants, and chemicals.
Exxon Mobil Corporation operates petroleum and petrochemicals businesses on a worldwide basis including in Nigeria.
SEGUN ADAMS
