Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Chevron Corporation (CVX) & Exxon Mobil Corporation (XOM): What’s The Difference?

Page 1 of 2

As energy producers continue their balancing act between oil and natural gas production, price swings have left two of the industry’s biggest producers scratching their heads. For the past few years, low natural gas prices have left these producers looking for more oil. Now, with the price of crude oil falling in the first quarter, it left both Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) staring at weaker revenue results from the year before.

Luckily for Exxon Mobil Corporation (NYSE:XOM), its refining business helped pad margins despite the segments’ profits falling 2.6%. Overall, Exxon was able to grow its earnings by $50 million year over year. While that might not sound like a lot, because it’s an expert share repurchaser, this represented 6% earnings growth on a per-share basis.

Unfortunately, Chevron Corporation (NYSE:CVX) wasn’t so lucky as its integrated business was affected by downtime at two of its refineries. The company’s Richmond, Calif., plant has been down since last August’s fire, while the Pascagoula, Miss., plant experienced preannounced maintenance in the quarter. What that meant for Chevron is that as upstream earnings fell from $6.17 billion to $5.52 billion year over year, the problem was compounded as downstream earnings slipped, too, from $804 million to $701 million. Together, this contributed to an earnings drop of about 3% per share.

What we’re seeing in the quarter is that Exxon Mobil Corporation (NYSE:XOM)’s integrated asset base really helped to bail it out, while Chevron Corporation (NYSE:CVX)’s didn’t. That’s rather interesting, considering that Exxon has been so vocal about exporting LNG, which would affect the chemicals side of its business.

Sure, Exxon wins either way, but considering that its chemical business fetched 62% more profit year over year for a total haul of $1.1 billion, the company would have been in the same boat as Chevron Corporation (NYSE:CVX) if it wasn’t bailed out by these profits. This is especially true when you factor in that these margins were made possible by low natural gas. With that context, you have to wonder why it’s so vocal to export our excess gas.

The Dow Chemical Company (NYSE:DOW) has taken the opposite argument for exactly this reason. Feedstock costs are at rock-bottom levels because of the natural gas production surge, which has slashed prices. The Dow Chemical Company (NYSE:DOW) says it and its chemical manufacturing brethren such as Huntsman Corporation (NYSE:HUN) will create more jobs in the U.S. than if LNG is exported.

Source: Dow Chemical.

Huntsman Corporation (NYSE:HUN) CEO Peter Huntsman has been just as vocal, saying that increased exports will cause “our nation’s natural gas advantage to be stripped and sent overseas to build a new manufacturing base that would otherwise be built here in the U.S.” That statement is certainly debatable, as a government study, which, while agreeing that exports would increase the price of natural gas, also noted that exports would be a net positive benefit to our economy. In fact, it sees $47 billion in new economic activity even with unlimited exports.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...
X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!