Compared to its closest rival Chevron, ExxonMobil's market capitalization gap exceeds 160 billion US dollars.
The Zhitong Finance App learned that oil giant ExxonMobil (XOM.US)'s Q1 earnings report fell short of expectations on Friday, mainly because natural gas prices fell more than expected, and refining profit margins declined due to higher than expected maintenance costs. The company closed down nearly 3% on Friday.
However, it is worth noting that ExxonMobil has still risen 17% since this year, far exceeding the increase in Brent crude oil and that of its rivals; the first-quarter results of ExxonMobil and Chevron (CVX.US) showed that profits both declined. Chevron is ExxonMobil's closest competitor, yet the market value difference between the two still exceeds 160 billion US dollars.
Jinjoo Lee of the Wall Street Journal's “Heard On The Street” column said that ExxonMobil's consistent capital expenditure since 2019 seems to be paying off: in the 2019-23 period, ExxonMobil's capital expenditure was $94 billion, two-thirds higher than Chevron's, and ExxonMobil's performance in Guyana and the Permian Basin seemed to be better than Chevron, which experienced delays and cost overruns on joint ventures in Kazakhstan.
Lee said that if ExxonMobil wins the lawsuit for Chevron's acquisition of HES.US (HES.US) shares in the Guyana oil project, its advantage will expand further; ExxonMobil Chief Financial Officer Kathy Mikells (Kathy Mikells) said on Friday that the arbitration process is still “at a very early stage,” and both companies have selected arbitrators, and a third arbitrator has yet to be appointed.
Currently, ExxonMobil has $33.3 billion in cash on its balance sheet, so the company can still choose to increase cash returns or make more acquisitions. Furthermore, its current net debt-to-capital ratio is 3%, the lowest in more than a decade.
ExxonMobil's valuation premium is about 6% higher than Chevron based on the expected 12-month profit before interest, tax, depreciation and amortization (EBITDA). Lee believes “good news in arbitration may put ExxonMobil ahead of its competitors.”