Exxon Mobil Corporation (XOM), Chevron Corporation (CVX): Big Oil Future Like Present, Leaking All Over the Place

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To keep up with Exxon Mobil Corporation (NYSE:XOM)’s Twitter Feed Saturday was something like listening to your Aunt Hilda after downing 6 mugs of tall blonde roasts:

“Exxon Mobil Corporation (NYSE:XOM) is paying for the cleanup in Arkansas. We’re not using the Oil Liability Trust Fund”

“Reports Exxon Mobil Corporation (NYSE:XOM) restricting media access in Mayflower aren’t true. Local law asking media to follow standard safety precautions.”

The above was damage control concerning Exxon’s oil spill in Mayflower, Arkansas about a week prior.

By comparison, the only thing Royal Dutch Shell plc (ADR) (NYSE:RDS.A) communicated over social media for the weekend, was its excitement about a fuel-efficient car building contest in Texas.

Really? How ’bout that spill? Apparently the company had already forgotten it leaked almost 30,000 gallons of crude onto that same State, plus a waterway connecting to the Gulf of Mexico days earlier. But perhaps, Shell figured the whole thing would eventually blow over. After all, it was just two months ago in February when Chevron Corporation (NYSE:CVX) beat a criminal rap in South America for its Brazilian oil spill.

Big oil highlights

With these incidents, one might get the impression that the only real problem Big Oil has is bad PR. After all…

1) Exxon Mobil Corporation (NYSE:XOM) closed another deal Friday to drill in offshore Liberia, acquiring an 80% interest from Canadian Overseas Petroleum Ltd. The deal received final approval from Liberia’s legislature and its president Ellen Johnson Sirleaf. Exxon has also generated $138 billion of free cash flow since 2008, and has distributed about $145 billion dollars in cash to shareholders (more than Chevron, BP, and Shell combined).

2) Chevron Corporation (NYSE:CVX) still retains its recommendation as a “strong buy” per NASDAQ analysis (an even better rating than Exxon’s). And as mentioned else where:

“Chevron Corporation (NYSE:CVX) currently supports a $228.8 billion market capitalization and trades with a forward price-to-earnings ratio of 9.49. Having consecutively raised its dividend yield since 1988, Chevron Corporation (NYSE:CVX) trades with a 3.0% annual dividend and offers a quarterly rate of $0.90 per share”

Yet there’s more afoot…

3) Royal Dutch Shell plc (ADR) (NYSE:RDS.A)

With a share price that is surprising, to say the least, Shell is definitely the under-performer of the group. It just doesn’t seem to trade like a company of its size

It also carries the following concerns:

1. only an 8% total stock return last year (comparable to BP)

2. a drop in reserve discovery

3. a declining Return on Equity (ROE), and

4. an ROA (Return on Asset) failing to meet the industry average for years

However, with Shell withstanding, there is sufficient reason to believe the market won’t be any kinder to major oil players in the coming years.

More leaks in the structure

While Big Oil may or may not care about its imprint on the planet, what they will remiss is the money and influence they’re projected to lose due to the following:

1) Lower Demand

Regardless of where gas prices, and rare optimistic forecasts, it remains that consumer oil demand is at its lowest point in 15 years (as low as when we were all doing the Macarena) and demand for gasoline has dropped since 2008.

Even by Big Oil’s admissions, transportation and industrial demand, is projected to continue to decline. Gasoline is down, crude is up, however the reserves are greater than they’ve ever been.

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