Overview
The chart below shows the stock performance of Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), ConocoPhillips (NYSE:COP), and BP plc (ADR) (NYSE:BP) over the last four years.
In April 2009, all four companies traded at roughly the same price. Right as BP’s stock began taking off and distancing itself from the others, the Deep Water Horizons oil spill occurred The huge dip in the chart at the beginning of 2010 is the result of that disaster.
BP collapsed after the oil spill and has just barely been able to climb ahead of where it was in April 2009. Today, there is an almost $80 difference in share price between BP plc (ADR) (NYSE:BP) and Chevron Corporation (NYSE:CVX).
The spill’s impact
BP has already spent $24 billion due to the oil spill. The company is currently facing federal prosecutors who are seeking to show that the government, individuals, and business are owed billions of dollars more in civil damages under the Clean Water Act. The amount may reach as high as $18 billion, bringing BP’s total loss from this spill to $42 billion.
The fact that BP might soon owe $18 billion makes it a poor investment. BP has plenty of available cash so this won’t hurt in the short term, but it will hurt the company over the long term and will hamper growth and exploration. It will be much more difficult for BP to purchase and develop new wells like the one it successfully tested off the coast of Brazil a month ago.
BP saw a decline in its profit over last year. It earned $500 million less in the first quarter of 2013 compared to 2012.
Earnings
Chevron had a first-quarter earnings loss of 4.5%. Some of that was caused by Chevron’s refinery operations, which saw profits decline 13% as two of its refineries were undergoing maintenance for much of the year. This decline will likely be reversed in 2013 as the refineries become operational again.
ConocoPhillips’ first-quarter earnings fell 27%, and the company reported a profit of only $2.1 billion, far less than Exxon Mobil Corporation (NYSE:XOM)’s $9.5 billion. That being said, ConocoPhillips (NYSE:COP) sold $950 million in assets last year. If we take that into account, the company does have profit growth year-over-year. I believe ConocoPhillips has the potential to see its stock rise over the next year or so as investors witness a continuation of its rising profits.
While Exxon Mobil Corporation (NYSE:XOM) may have only returned 33% over the last four years, it has vast growth potential. ExxonMobil distinguishes itself from the other three companies as the only one to grow its profit year-over-year. ExxonMobil’s earnings improved slightly. One of the reasons for the disparity between its earnings and say, Chevron’s, was ExxonMobil’s refinery business, which increased its profit margins. Such growth is a reflection of the underlying strength of the company.
