Exxon Better Value Than Chevron

NEW YORK (TheStreet) - Oil prices keep whipping around and readers want to know how fast-moving crude prices will affect their stocks. It's been a very long time since I looked at the big integrated stocks, and I'm going to tackle the two biggest - ExxonMobil(XOM) and Chevron(CVX) - and see if we can make some connections between the predictions I have for the price of oil and the predictions I can make for the share prices of these two behemoth U.S. oil companies.

Oil Value Stock: Exxon

Investors want to believe that the price of crude oil will be directly translated to the share prices of the big U.S. integrated oil companies. In truth, the big integrated stocks like ExxonMobil and Chevron had a much stronger correlation to the price of the crude barrel before 2008 than they have now. Since the big deleveraging of assets and oil in the fall of 2008 and early 2009, there has been less direct relationship with crude prices and these stocks. It has been the financials and technology stocks that have led the big recovery in stocks while energy has lagged a bit - this in spite of a crude price that has basically tripled since the lows of March 2009.

So, understanding the big integrated oil companies requires us to do more than just try and predict the future price of crude (which, is definitely going up!). Let's take the two biggest and look at them individually and relatively.

ExxonMobil is the big boy on the block and still has some of the most compelling leadership in the industry. I recall seeing Lee Raymond, Exxon CEO until 2005, appearing at a congressional inquiry into oil prices. When asked by California Senator Barbara Boxer about some outrageous Exxon quarterly profit posting, Raymond looked at her with his steely eye and responded, "Senator, I have no interest in what the company made last month - I am working on assuring our profits five years from now!"

That's always been ExxonMobil - always planning ahead. Exxon sports the largest portfolio of exploration ever in their history. It is also the key to understanding their acquisition of XTO(XTO), an admittedly expensive move into natural gas. I would put my money on Exxon's ability to see the energy future clearly. They have a history of doing that better than anyone else. In addition, ExxonMobil's return on equity is always the best in the patch and they have the kind of balance sheet that could lead to a significant stock buyback at any moment.