High global oil prices and share buybacks may help lift earnings per share, but Philip Weiss, senior analyst at Argus Research, is still not impressed.
Exxon expanded its natural gas operations by buying XTO Energy in 2009 for $31 billion, and it continues to put more money into liquids-rich plays—natural gas that contains natural gas liquids, which can be removed from the natural gas and are valuable as separate products. Those investments hamper Exxon’s near-term results, according to Weiss.
He says the strategy may make sense in the long term, but not in the current gas price environment. Natural gas prices have moved a bit higher in recent weeks, but Weiss says there’s no real catalyst to push them meaningfully higher.
As an industry leader, Exxon is often the primary place for investors to get exposure to the energy sector, however Weiss argues there are peer companies with stronger balance sheets, higher dividend yields and better production mixes – in particular Chevron (CVX).
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