(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)
NEW YORK, Oct 27 (Reuters Breakingviews) – Exxon Mobil and Chevron are sending prodigious amounts of cash to investors, but third-quarter results show how quickly priorities can start to compete. The two companies reported somewhat similar results on Friday, with the $420 billion Exxon earning $9.1 billion, and the $279 billion Chevron making $6.5 billion. Both companies’ profit shrunk compared to the same period last year, thanks to lower commodity prices. With more than $110 billion in acquisitions between the two of them, investors might wonder where they will slot in.
Exxon returned over $8 billion to investors and Chevron $6 billion, and right now that’s not at the expense of their balance sheets. Exxon’s cash pile is closing in on its long-term debt. Chevron’s total debt is less than a tenth of its overall value.
But investment is rising. Exxon said that its full year capital and exploration expense will probably be near the top of its guidance of up to $25 billion. Chevron has spent $11.5 billion so far this year, over 40% more than last.
The giants are also flexing their deal muscles, with Chevron announcing a deal to buy Hess for $53 billion in stock, and Exxon acquiring Pioneer Natural Resources for $60 billion. Over the past decade both stocks have sharply underperformed the S&P 500 Index as they’ve grown their positions dramatically. The best time for discipline is when cash is flowing. (By Robert Cyran)
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(Editing by Lauren Silva Laughlin and Sharon Lam)