Energy Business

The Exxon Mobil of 2020 to 2030 Will Be Quite a Different Company Than in Its Past

Exxon still has substantial natural gas efforts underway. Almost a decade after its approximately $36 billion acquisition of XTO, Exxon remains the top dog in U.S. natural gas, and it has become more active in many of the shale plays around the United States since. The company wisely stayed out of the Occidental acquisition of Anadarko, which originally was to be a target of rival Chevron Corp. (NYSE: CVX).

An ongoing project in Guyana is soon to begin production, and the projections are calling for up to 750,000 barrels per day of production by 2025 from that project alone. This may be one of the reasons that Exxon is willing to part ways with many assets in Africa and Asia as it sees more certainty closer to home.

And in the oil patch, investors just seem to prefer Chevron over Exxon. Chevron’s market cap is still lower than Exxon at $227 billion, but that’s because Chevron shares were last seen up 9% year to date and up 2% from a year ago, compared with a mere 2% year-to-date gain and a 9.5% drop from a year ago for Exxon.

It’s hard to call either oil and gas giant a value stock, but analysts prefer Chevron’s cash flow expectations over Exxon’s. In dividend payouts, Exxon’s yield of 5% is still a full point higher than the 4% yield Chevron pays out. Chevron is valued at about 17 times expected 2020 earnings per share, versus a multiple of about 18 times for Exxon.

It’s also worth noting that Exxon and Chevron have lagged their European supermajor peers in investing serious cash in renewable energy. Both continue to seek ways to mitigate the effects of carbon emissions rather than making big cuts to emissions. If electric vehicles and renewable energy generation become as popular as some projections have indicated over the next decade, these two companies are currently making poor investment decisions. Both, for example, have invested in carbon capture technologies that have little or no value in reducing the effects of carbon emissions.

Lastly, the consensus analyst target prices from Refinitiv look more favorable for Chevron than Exxon. Chevron’s $119.40 current price and its consensus target price of $136.58 imply upside of almost 14.5%, before considering its dividend. Exxon’s share price of $69.65 and consensus target price of $79.02 imply upside of nearly 13.5%, before considering the dividend. Analysts on average are not even expecting Exxon to go back to its 52-week high of $83.49, while they expect Chevron to go above its 52-week high of $127.34.

It’s going to be a long road for Exxon in a period when fossil fuels have become less and less important to many investors and consumers alike. That said, oil and gas aren’t going to be dying any time soon. If you look around at home and work it’s going to be impossible to find products and fixtures that weren’t made with compounds from oil.