Big Oil Battle Royale: Is ExxonMobil or Chevron the Better Buy for 2030 Right Now?
Key Points
Both oil giants' business models enable them to grow steadily over time despite the cyclical nature of oil and gas markets.
Both companies are major players in the Permian Basin.
ExxonMobil is expanding more aggressively, while Chevron is focusing on more disciplined growth.
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Over the last month, the U.S. and Iran have agreed to a ceasefire, and Brent crude oil prices have fallen to around $70 per barrel. For investors looking to add energy stocks, the recent sell-off in oil stocks presents an opportunity.
Two top players in the oil space are ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX), both of which are making investments to drive growth while effectively managing capital expenditures (capex). Here's which one stands out as a better buy for 2030 right now.
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The two integrated oil giants have this in common
ExxonMobil and Chevron are American supermajors, operating as integrated oil and gas companies that span the entire value chain. These companies engage in upstream exploration and production, midstream logistics, and downstream refining and marketing.
They also maintain strict capital discipline, and their business models enable them to grow steadily over time despite the cyclical nature of oil and gas markets. This capital flexibility is a major reason why the companies have consistently grown their annual dividend payouts -- ExxonMobil for 43 consecutive years and Chevron for 39 consecutive years.
Comparing ExxonMobil and Chevron
ExxonMobil operates on a massive scale, especially since its 2024 acquisition of Pioneer Natural Resources for $60 billion. The move gave ExxonMobil a huge footprint in the resource-rich Permian Basin with 1.4 million net acres, where it has leveraged "cube development" to drastically reduce costs.
As a result, ExxonMobil targets a production cost of $35 per barrel in the Permian Basin this year and $30 per barrel by 2030. In addition, Permian shale is a "short-cycle" asset, meaning a well can be drilled and brought online in months, not years, allowing ExxonMobil to quickly ramp up production when oil prices are high.
Chevron is also a major player in the Permian, holding 2.2 million gross acres in the region. While it has more acreage than ExxonMobil, Chevron produces roughly 1 million barrels of oil equivalent per day (BOE/d), compared with Exxon's 1.6 million BOE/d. Chevron has intentionally capped its growth in the region, investing capital in other projects while significantly reducing capital expenditures in the Permian.
Looking ahead to 2030
ExxonMobil and Chevron have outlined longer-term goals for their investors. Exxon production is expected to increase to 5.5 million BOE/d, driven by assets in the Permian, Guyana, and LNG, and it aims to deliver $25 billion in earnings growth and $35 billion in cash flow growth by 2030.
Chevron is focusing on accelerating cash flows and maintaining strict cost discipline. The company projects 10% annual growth in adjusted free cash flow and earnings per share by 2030, assuming an oil price of $70 per barrel. It also lowered its annual capex guidance to $18 billion to $21 billion and plans to repurchase between $10 billion and $20 billion of stock during that period.
If you're considering investing in the recent dip in oil and gas stocks, ExxonMobil and Chevron are two top stocks to buy, especially if you are looking for passive income through dividends. ExxonMobil is expanding more aggressively, while Chevron is focusing on more disciplined growth. If you're bullish on oil prices long term, ExxonMobil's growth strategy and massive footprint make it the top stock to buy right now.
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Courtney Carlsen has positions in Chevron and ExxonMobil. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy.
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