Bloomberg \/London: September 02 2019 12:38 AM<\/p>\n
Big Oil has a new contender for the No 2 spot. Chevron Corp has almost displaced Royal Dutch Shell Plc as the second-largest oil company by market capitalisation.<\/p>\n
It\u2019s been a particularly grim month for Big Oil, as a US-China trade war dimmed the picture for global economic growth, stymieing crude demand. The Stoxx Europe 600 Oil & Gas Index was headed for a 6.3% decline, among the largest monthly drops in nearly four years, which mirrors the slide in Brent prices.<\/p>\n
But Shell had it worst. Its B shares in London have plunged more than 12% last month, a decline not seen since the 2008 financial crisis, which has knocked almost \u00a326bn ($32bn) off its market value. That\u2019s put chief executive officer Ben van Beurden\u2019s dream of being No 1 in the industry by every measure even further out of reach.<\/p>\n
Shell established itself as the No 2 oil company following its acquisition of BG Group Plc, narrowing its market cap gap with Exxon Mobil Corp. But its US competitor Chevron has now caught up with it again.<\/p>\n
Blame earnings. Shell\u2019s net income slid in the second quarter and was far weaker than expected, falling short of the average analyst estimate by almost 30%. That was its biggest miss in more than two years, and pushed chief financial officer Jessica Uhl to acknowledge the company should probably find a way to better manage expectations.<\/p>\n
\u201cShell\u2019s shares have suffered from an unwelcome relapse of earnings volatility,\u201d said Christyan Malek, head of European oil and gas research at JP Morgan Chase & Co. \u201cWhile we view this as more of a bump in the road, together with the oil price correction \u2013 which Shell is more geared to \u2013 it has under-performed more than others.\u201d<\/p>\n
Chevron, on the other hand, surpassed second-quarter analyst estimates by 21%. Its shares still fell in August, along with the rest of the industry, but its dip was only a third of Shell\u2019s. It\u2019s also traded in dollars, an advantage over sterling-denominated Shell B shares. The British currency has been pummelled by the Brexit process.<\/p>\n
Both companies still trail Exxon by a large margin. The Irving, Texas-based oil giant\u2019s market cap is almost $290bn, compared to Chevron and Shell\u2019s $223bn.<\/p>\n","protected":false},"excerpt":{"rendered":"
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