Why Chevron Corporation (CVX) Is Preferable to Exxon Mobil Corporation (XOM)

Chevron has been selling onshore properties in dicey Nigeria, a nation with light, sweet crude but also a history of terroristic attacks. The company isn’t alone. Royal Dutch Shell plc (ADR) (NYSE:RDS.A) has also been jettisoning Nigerian assets, following a long string of spills and attacks that, as Reuters said last week, “have damaged the region’s environment and the reputation of the company.”

And TOTAL S.A. (ADR) (NYSE:TOT) also has been selling onshore in Nigeria. But the French company is nevertheless developing a new offshore oil field there that it maintains will produce 200,000 barrels a day.

The metrics

Finally, let’s take a quick look at a few key metrics for Exxon Mobil Corporation (NYSE:XOM) and Chevron. As you know — and as is indicated by the table below — on a market-cap basis, Exxon is easily the larger of the pair. Further, it also sports a higher forward P/E than Chevron’s. But there’s where ExxonMobil’s advantages end. Chevron has achieved a higher operating margin, its balance sheet includes a cash position three times that of its peer, and its indicated forward yield is also higher.

Sources: Yahoo! Finance and TMF calculations.

The Foolish bottom line

This has been a quick look at the two remaining U.S.-based international oil and gas companies. While their similarities are as significant as their differences in many respects, my inclination in a head-to-head competition is to find for Chevron.

I’m admittedly swayed by what I believe to be a stronger set of operating locations, including a dominance in Australia and a Lone Ranger position upstream in Saudi Arabia. But beyond that, its cash position provides management with intriguing flexibility, and its stronger yield is yet another distinct positive. Perhaps these are some of the reasons why the analysts who follow the two companies also rate Chevron more highly.

The article Why Chevron Is Preferable to ExxonMobil originally appeared on Fool.com and is written by David Smith.

Fool contributor David Smith has no position in any stocks mentioned. The Motley Fool recommends Chevron and Total SA. (ADR).

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