Once, ExxonMobil Corp. was the biggest US publicly traded company by market value in the country but at the moment, as it tries to sustain its massive dividend, the oil major has been surpassed by rivals.
In the third quarter of the year, Exxon is estimated to post a record-setting third consecutive quarterly loss due to the crushed demand for crude and fuel globally. On Thursday, it announced 14,000 job cuts on the back of weak demand.
This year, Exxon’s shares have lost more than half of their value, to the lowest level in twenty years. After close to a century of membership, the company’s stock was removed from the storied Dow Jones Industrial Average. It is also facing uncertainties on whether it can sustain its dividend.
The company has been cutting project spending and workforce but has been hammered by the plans to pay a dividend that costs almost USD15 billion each year. The capital spending plan for 2020 has been slashed by USD10 billion, to roughly USD23 billion.
Currently, Exxon has a hefty dividend yield of 10%, mainly due to the sharp slump in the share price. Meanwhile, cutting the dividend is not a viable option at the moment.
If the US oil persists lower than USD45/barrel, Exxon’s cash balance could end up in shambles due to its debt. Its debt has climbed by 60% since the takeover by Woods in 2017.
