Chevron Corporation (NYSE:CVX) has experienced similar problems to Exxon with softening crude prices, falling production and weaker refining margins impacting second quarter 2013 earnings. For that period Chevron Corporation (NYSE:CVX)’s bottom line plunged by 26% year over year, with net earnings down to $5.4 billion, leaving it with some attractive valuation ratios. Although its low proved reserves in comparison to its enterprise value do leave it looking expensive in comparison to Exxon.
But like Exxon, Chevron Corporation (NYSE:CVX) has focused on building its non-conventional oil reserves, having inked a deal with Argentine government controlled YPF to access the vast shale oil reserves of the Vaca Muerta in Argentina.
BP plc (ADR) (NYSE:BP) also appears cheap, but there are a range of negative catalysts that continue to affect its performance. For the second quarter of 2013 it saw its profitability plunge with its post-tax result dropping by 25% year over year to $2.7 billion.
Key drivers of these disappointing results were declining production volumes and softer crude prices. Other factors included a stronger U.S. dollar, coupled with Russian ruble depreciation and the lagging effect of Russian oil export duties impacting Russian earnings worse than expected.
Finally, BP plc (ADR) (NYSE:BP) is still managing the ongoing fallout from the 2010 Macondo disaster, which has already cost BP plc (ADR) (NYSE:BP) $42 billion. It was also forced to increase its provision for litigation costs arising from this disaster by $200 million in the second quarter 2013.
This ongoing litigation, combined with the increasing political risk created by BP plc (ADR) (NYSE:BP)’s growing dependence on its Russian operations for growth, makes it a relatively unappealing investment.
Exxon continues to reward investors with a steadily appreciating dividend
An appealing aspect of Exxon Mobil Corporation (NYSE:XOM) is the company’s steadily appreciating dividend, which was increased in the second quarter to $0.63 per share, or a 10% increase quarter over quarter. This gives Exxon a healthy trailing twelve month dividend yield of almost 3%, creating a compelling reward for patient investors who continue to hold the stock through troughs.
Foolish bottom line
It is clear that Exxon Mobil Corporation (NYSE:XOM), like its peers Chevron Corporation (NYSE:CVX) and BP plc (ADR) (NYSE:BP), has struggled with softening crude prices and declining margins in its upstream business. This has been a key trigger for the recent weakness in Exxon’s share price, leaving it looking cheap. Over the long term, Exxon should outperform, and the consistently strong growth in the value of its dividend will also continue to reward patient long-term investors.
The article Emerging Tailwinds Set to Push This Oil Major Higher originally appeared on Fool.com and is written by Matt Smith.
Matt Smith has no position in any stocks mentioned. The Motley Fool recommends Chevron.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
