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Zainab Calcuttawala

Zainab Calcuttawala

Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…

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This Analyst Now Favors Chevron Shares Over Exxon

Oil sands operation

Chevron’s cash at hand, Permian Basin assets and related growth opportunities are leading analysts to think the company is a better bet than Exxon Mobil, according to the investment banking company Jefferies.

In the past, Jefferies analysts have preferred Exxon over Chevron for the purposes of estate planning and portfolio management, but at the close of February, the firm preferred the later instead.

Both American companies are included in the S&P 500 – a benchmark index that has been up around six percent since the beginning of 2017. Still, the effects of the long-term drop in oil prices have prevented the companies from seeing a positive growth rate. The effects of the November 2016 deal between members of the Organization of Petroleum Exporting Countries (OPEC) and other cooperating nations have caused barrel prices to see several consecutive days of growth since the beginning of this year.

Chevron shares’ rate of decline slowed to five percent since the start of 2017, while Exxon was down nine percent.

Neither company has been entirely successful at meeting analyst expectations over the past couple of years.

Last month, Chevron reported earnings of US$0.22 per share for the fourth quarter, compared with a loss of US$0.31 per share for the fourth quarter of 2015, in line with expectations that it would return to profit, but missing the earnings per share estimates by a wide margin. One week before the Q4 results came out, Jefferies Group analyst J. Gammel raised his earnings per share forecast to US$0.65, up from a previous forecast of US$0.58.

Exxon Mobil’s former CEO, Rex Tillerson now serves as Secretary of State in the Trump administration, which signals the increased presence of oil interests in the implementation of American foreign policy, according to the newly-inaugurated president’s critics.

By Zainab Calcuttawala for Oilprice.com

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