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Exxon Is Good but Halliburton Is Better Value

Stocks in this article: XOM HAL

NEW YORK ( TheStreet) -- When it comes to oil and gas, there aren't many rivals that can go toe-to-toe with Exxon Mobil (XOM). I will concede that as enamored as I have become with Halliburton (HAL), even it can't compete with the successful track record of Exxon Mobil, the world's second largest company behind only Apple (AAPL). Yet through no fault of its own, the company often gets overlooked when discussing some of the top run operations on Wall Street and seemingly punished for what appears to be routine success -- something from which the company has become somewhat of a victim.

It goes without saying, that this is a tremendous problem to have. But while Exxon trades in-line with Halliburton from the standpoint of their respective multiples, the stock remains significantly discounted when compared to such names as Schlumberger (SLB). The concerns surrounding natural gas cannot be overstated, as with several of its peers and most notably Chesapeake Energy (CHK), Exxon has had to deal with adverse effects of not only slower production, but considerably weaker North American prices for natural gas -- an event that served to offset what was once perceived to be a benefit of higher oil process.

Leading into the company's first-quarter earnings report, I was eager to see if it was able to navigate through the roughs as well as rival Halliburton and thus, which of the two was the better investment. While Halliburton convinced that it was undervalued by at least 33%, it was Exxon's turn to remind Wall Street of why it deserves a bit more respect.

The quarter that was

The company reported first-quarter earnings of $9.45 billion or $2 per share -- representing a decrease of 11% from the same period of a year ago as upstream earnings declined 10% to $7.8 billion. As noted, this was attributable to declining production of both oil and natural gas, whereas in last year's quarter it reported $10.7 billion in net income or $2.14 per share. Analysts polled by Thompson Reuters had expected the company to bring in profits of $2.09 per share for the first quarter. Oil-equivalent production fell 5% to 4,553 oil equivalent barrels per day but higher oil prices helped boost prices, as did other income and higher refining activities.

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