ExxonMobil Vs. Chevron: Which Energy Stock Is A Better Buy Ahead Of Q4 Earnings?

Exxon Mobil Corp XOM and Chevron Corp CVX stand as two behemoths in the energy sector, both holding significant influence over the global oil and gas industry. Both energy giants are about to report their fourth-quarter earnings on Feb. 2, before market hours.

Wall Street is expecting ExxonMobil to report $2.04 in EPS and $79.28 billion in revenues. Chevron is expected to report $2.96 in EPS and $47.61 billion in revenues.

While both companies operate in the same industry and have evolved through acquisitions and mergers – ExxonMobil in 1999 through the merger of Exxon and Mobil and Chevron with the merger of Chevron and Texaco in 2001 – there are notable differences in their operational strategies, financials, and initiatives.

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Operational Focus

One of the key distinctions lies in their operational focus. ExxonMobil places a strong emphasis on upstream operations, including exploration and production, with a global reach that spans multiple continents. In 2024, ExxonMobil plans to keep its oil output steady, while leaning on the added output from Pioneer for production growth.

Chevron, while also engaged in upstream activities, balances its portfolio with a significant presence in downstream operations, such as refining and marketing. For 2024, Chevron is targeting an increase in oil production.

2024 Production & Spending Targets

ExxonMobil and Chevron have set differing capital spending and production targets for 2024. Chevron is aiming for a solid increase in oil output, buoyed by its mega deals in 2023, including a $53 billion purchase of Hess and a $6.3 billion acquisition of PDC Energy.

On the other hand, ExxonMobil is maintaining steady production levels in its plan but anticipates growth through added output from its $60 billion acquisition of Pioneer Natural Resources in the Permian Basin.

In terms of spending, ExxonMobil is allocating a substantial budget of over $20 billion for lower-emissions opportunities until 2027, signifying a noteworthy escalation from the initial $3 billion planned in 2021.

On the other hand, Chevron aims to boost capital spending in 2024, projecting a range between $18.5 billion and $19.5 billion, reflecting an 11% increase from the previous year. Furthermore, Chevron foresees annual spending between $19 billion and $22 billion through 2027.

Sustainability Efforts

Looking at sustainability efforts, ExxonMobil is making substantial investments in lower-emissions opportunities, with a particular emphasis on carbon capture. Moreover, Exxon strategically acquired Denbury for $5 billion, securing a carbon dioxide transportation pipeline.

In addition to its carbon-related endeavors, Exxon is entering the electric vehicle sector, planning to produce lithium by 2027 and aiming to be a leading lithium supplier for electric vehicles by 2030.

Valuation

ExxonMobil and Chevron pair very closely in terms of valuation.

Data compiled from Yahoo Finance

Trailing and forward price multiples compare head on when it comes to these two energy giants.

Let’s look at what analysts consensus says:

Data compiled from Yahoo Finance

Analysts do appear to side with ExxonMobil at the moment, with the stock offering 21.7% upside as compared to Chevron offering 19.49% upside.

Clearly, both stocks compare head-on before Q4 earnings. However, their Q4 earnings reports on Friday may cause analysts to re-evaluate their investment stance on these stocks. Investors may want to wait for any major announcements that may cause analysts to reconsider their ratings, before deciding between these stocks.

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