ExxonMobil gets out, Chevron sticks around
The geopolitical conflict in the Middle East is getting all of the media’s attention right now, which makes sense. However, shortly before that conflict broke out, the big story in the energy sector was the U.S. government going into Venezuela and arresting its leader, Nicolas Maduro. Replacing Maduro was his vice president, Delcy Rodríguez, who has so far been very willing to work with the United States.
That, however, is really the end of the story, not the beginning. After former president Hugo Chavez rose to power, he nationalized the oil industry. At that point, Exxon exited the country. That makes total sense given Exxon’s conservative culture. Chevron, however, remained. To be fair, Exxon could be owed money over that nationalization, but it still isn’t operating in the country. That’s a potential setback today, now that Venezuela appears to be opening up to foreign investment again.
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NYSE: CVX
Chevron
Premium Feature
Moneyball Superscore
68/100
Today’s Change
(0.61%) $1.30
Current Price
$214.06
Key Data Points
Market Cap
$423BMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.
Day’s Range
$212.02 – $215.55
52wk Range
$146.49 – $217.40
Volume
6.6M
Avg Vol
8.4M
Gross Margin
18.48%
Dividend Yield
3.29%
A big nation with huge needs
It is estimated that Venezuela has the world’s largest oil reserves. Operating in a region that is generally politically and economically stable, it could be a very attractive source of oil for Western nations. If the political situation in the country remains stable, it is highly ly that Exxon will want back in. But not right away, with the company explaining that Venezuela isn’t yet stable enough to justify investment.
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NYSE: XOM
ExxonMobil
Premium Feature
Moneyball Superscore
70/100
Today’s Change
(0.46%) $0.76
Current Price
$165.99
Key Data Points
Market Cap
$683BMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.
Day’s Range
$164.08 – $167.09
52wk Range
$110.39 – $176.41
Volume
11.4M
Avg Vol
15.4M
Gross Margin
20.88%
Dividend Yield
2.48%
Chevron has already pledged to invest $7 billion into the country’s energy industry. That makes sense, given that Venezuela’s energy sector is in a state of disrepair after years of neglect. Chevron is really just making sure that it can operate more efficiently in the country. But being there and committing to invest gives it a head start in what could be a very important country on the world’s energy stage in the future. Notably, Chevron won’t be able to invest $7 billion in a month or two; the cash it is putting into Venezuela is a testament to its long-term commitment. And, over the long term, it should allow the company to increase the amount of oil it produces in the country.
That said, there’s no way to predict the future and Venezuela could again descent into political uncertainty. But Chevron’s more aggressive approach appears to be paying dividends right now, even though this exposure had been a thorn in the company’s side for many years.
Chevron is probably the more attractive energy giant
Although the day-to-day events in the geopolitical conflict in the Middle East are pushing oil prices higher and lower, don’t overlook the long-term opportunity Chevron has in Venezuela. More conservative Exxon will ly return to the country someday, but Chevron has the lead right now. And then you can add that Chevron’s 3.4% yield is nearly a percentage point above Exxon’s 2.5%, despite both being among the world’s largest energy companies and having decades of annual dividend increases behind them. When you add it up, given their similarities and differences, most dividend lovers will probably find Chevron a more appealing investment opportunity today.
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About the Author
Reuben Gregg Brewer is a contributing Motley Fool stock market analyst covering energy, utilities, REITs, and consumer staples. He is the former director of research at Value Line Publishing, where he rose from mutual fund analyst to equity analyst before leading all research operations. Reuben holds a bachelor’s degree in psychology from SUNY Purchase, a master’s in social work from Columbia University, and an MBA from Regis University. He has been featured as a financial expert on CNBC and in the Financial Times, Barron’s, and InvestmentNews.
Stocks Mentioned
Chevron
NYSE: CVX
$214.06
(+0.61%)+$1.30
Motley Fool Stock Advisor’s Latest Pick
—% Avg Return
ExxonMobil
NYSE: XOM
$165.99
(+0.46%)+$0.76
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
Sumber Artikel:
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