Exxon Mobil Corporation (XOM), Petroleo Brasileiro Petrobras SA (ADR) (PBR): If You Want Oil, Head South

Relative to other oil majors, Petrobras does not look too attractive. Its ROI of 2.7%, ROE of 4.2% and profit margin of 7.6% place it a step below Exxon Mobil Corporation (NYSE:XOM). Given the nature of public companies to support the public at the cost of profits, it is expected that Petrobras’ ROI will remain compressed. Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) is helping the world to defeat declining oil production, but that doesn’t guarantee profits.

With an ROI of 6.3%, and ROE of 8.8%, Apache’s financials don’t look very encouraging. Its total debt to equity ratio of 0.41 is higher than ExxonMobil’s, but Apache is pursuing asset sales that could lower its debt load and return more cash to shareholders. Another risk is its Egyptian presence. Given the recent upheaval in the nation, there is a chance its Egyptian production could face some struggles. Overall Apache is a small but growing exploration firm.

Conclusion

New reserves are being found in the southern hemisphere, and Exxon Mobil Corporation (NYSE:XOM) in taking a lead in many parts of Africa. Brazil’s Petrobras sounds like a good investment, but the awkward public-private partnership and recent protests make it likely that Petrobras will be stuck paying for more public subsidies. Apache is a growing international play with a number of international fields, including in Argentina and Western Australia. Exxon Mobil Corporation (NYSE:XOM) and Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) are two interesting investments that are hard at work increasing their reserves.

The article If You Want Oil, Head South originally appeared on Fool.com and is written by Joshua Bondy.

Joshua Bondy has no position in any stocks mentioned. The Motley Fool recommends Petroleo Brasileiro S.A. (ADR). The Motley Fool owns shares of Apache. Joshua is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.