Florida-based utility and power producer NextEra Energy Inc., the company with major wind farm operations throughout Oklahoma, surpassed Exxon Mobil Corp. in stock market value last week, reinforcing bets on Wall Street that a cleaner energy system has long-term value.
NextEra’s market capitalization pushed above $138 billion in intraday trading Friday, eclipsing Exxon, which had once been the world’s largest public company according to E and E News.
The milestone came a few days after The Wall Street Journal reported that NextEra had approached energy rival Duke Energy Corp. about a potential $60 billion buyout.
Duke — based in Charlotte, N.C. — reportedly rebuffed the proposed merger. But if the two companies were to become one, the combined assets would create a dominant energy company with regulated electric and gas utilities across the South, pipelines, and a national portfolio of wind and solar power producers.
Exxon’s stock price has fallen by roughly half since the beginning of the year. The oil giant was removed from the Dow Jones Industrial Average in August after more than 90 years.
The coronavirus pandemic has weighed heavily on the oil industry. Oil prices were slashed in the spring as global demand dropped off. But analysts say what is happening in the markets reflects the broader and continual shift away from traditional fuels. Exxon has continued to focus on oil and natural gas and hasn’t kept pace with European producers who have announced plans to dramatically shift their portfolio over time to emphasize lower-carbon energy production.
“Oil prices have fallen, and that matters if you are Exxon,” said Paul Patterson, a utility analyst with Glenrock Associates LLC. “But the big thing is the excitement about renewable energy, the potential that there might be increased activity in that area.”
NextEra is one of the companies better positioned to take advantage of that, Patterson said.
NextEra executives have also said they’ve used the company’s relationships with equipment and technology suppliers to edge out smaller competitors in the power markets. “We think, obviously, we run the best utility in the world,” CEO Jim Robo told Wall Street analysts last year.
NextEra has been hungry to buy other companies for years. It has made a play for South Carolina’s public utility, Santee Cooper. It also made an $11 billion bid for Jacksonville, Fla.’s municipal utility, according to multiple media reports.
Most notably, it pursued Southern Co. subsidiary Gulf Power Co. in 2019. That deal gave NextEra another regulated electricity provider along with Florida Power & Light Co.’s Florida electric utility. Investor-owned utilities plus a plethora of long-term renewable energy contracts add up to two strong, steady income streams.
“The commodity exposure of a company like NextEra is considerably less,” Patterson said. “We’re talking about a regulated company with heavily contracted renewables here.”
Source: E & E News