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By Claudia Assis

Chevron and Exxon are ‘deep-pocketed names that are thinking 20 and 30 years out’

Chevron plans to boost oil and gas production by up to 3% a year through 2030. Exxon’s five-year plan calls for an output increase of about 18%.

Chevron Corp. and Exxon Mobil Corp. plan to boost their oil and gas production over the next five years, even as falling oil prices may leave investors scratching their heads at the companies’ moves.

Chevron (CVX) and Exxon (XOM) are energy giants that look at longer cycles – and they have a wealth of experience playing the long game. They both benefit from their size and footprint and are among the few remaining global integrated energy companies, meaning they also refine crude oil and have robust chemicals businesses.

“They have a long-term horizon, and a lot of their projects are long-term in nature too,” said Simon Wong, a portfolio manager with Gabelli Funds. The refining side of their business has fared well this year, and they have also made acquisitions recently that contributed to that higher production, he said.

To understand the increases in production amid weakening prices for crude futures, it helps to think in terms of the companies’ long and short cycles, said Stewart Glickman, an analyst at CFRA Research.

Longer cycles are easier to understand, Glickman said. Those carry a bigger price tag and take years to mature, and their development continues through short-term market weakness. Chevron and Exxon are “deep-pocketed names that are thinking 20 and 30 years out,” he said.

Shorter-cycle projects are usually land-based, where costs are lower, and they are easier to stop and start. Both Chevron and Exxon are expanding in one such area, the Permian Basin in West Texas, and it’s possible that both feel they have advantages over smaller peers that “will result in their taking market share, while the weaker hands get shaken out of the market,” Glickman said.

Exxon’s deal for Pioneer Natural Resources Co., announced in 2023, made the oil giant’s North America holdings even more attractive for a relatively modest price.

Chevron’s acquisition of Hess Corp., completed earlier this year after a tug-of-war with Exxon over assets in Guyana, addressed investors’ concerns about the quality and longevity of Chevron’s international portfolio.

At this week’s investor day, Chevron said it plans to boost oil and gas production by up to 3% a year through 2030. Exxon’s five-year plan, announced last December, calls for an increase in output of about 18%.

Chevron’s investor update seemed to highlight the company’s attractiveness to a broader swath of investors, which hasn’t been easy to accomplish with the energy sector underperforming the broader equity market. The Energy Select Sector SPDR exchange-traded fund XLE is up about 7% this year, while the S&P 500 index SPX is up about twice as much in the same period.

One of the key factors keeping the “elusive generalist investor” from investing in energy stocks has been the risk of a downside in oil prices, J.P. Morgan analyst Arun Jayaram wrote in a note this week. At its investor day, Chevron did an effective job of highlighting the resilience of the portfolio amid those lower prices, Jayaram said.

Crude-oil futures in New York (CL.1) are down around 18% this year, and London-based ICE Brent crude prices (BRN00) are off about 14% over the same period. Wall Street is generally cautious on energy and energy prices, with the view that major oil-producing countries could continue to allow crude prices to drift lower.

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, had been announcing monthly oil-production increases since April. Earlier this month, the group said it would pause the hikes in the first quarter of 2026, following a modest increase in December. The first quarter of the year usually shows weaker demand for oil.

A recent global energy-demand forecast called for growing consumption of oil and gas. The International Energy Agency said consumption will increase through 2050, as adoption of electric vehicles missed earlier estimates.

When comparing the two energy giants, Chevron usually has an edge over Exxon on Wall Street.

“I like both of them equally, but if I had to choose one, at this point I’d say Chevron,” Gabelli Funds’ Wong said. “But both of them are very well-run companies.”

In the last three or four years, Chevron has spent a lot on projects, but it is now holding on to more of its cash to give back to shareholders, he said.

Wall Street rates the shares of both companies highly. Of 29 analysts polled by FactSet covering Chevron, 15 rate the stock a buy and 13 give it a hold rating. Of 30 analysts on Exxon, 14 rate the stock a buy and 15 give it a hold rating. Chevron and Exxon shares each have one sell rating, according to FactSet.

-Claudia Assis

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  11-16-25 1510ET
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