Stephanie points out to me the weaker exploration and production spending and the lower production coming from the No. 1 U.S. energy producer. She also pointed out to me the lower stock buybacks that Exxon will execute for 2014, a key driver that many shareholders were relying upon for continued stock strength.
I agreed with Stephanie that production margins were slowly shrinking for the energy behemoth and there was a reason: increased exposure into overseas markets and less interest in U.S. production.
This is an issue because the price of U.S. benchmark crude has been catching up to higher global prices and the margins in U.S. production are concurrently getting better. It also means that downstream refining profits are getting worse for U.S. producers of gasoline and heating oil, where Exxon is a sector leader.Add to that the still troubled 2010 acquisition of XTO Energy in light of continuing weak natural gas prices and you have an integrated company that's tough to like, particularly when there are other, and better, integrated choices. I talk more about Exxon with Stephanie in the video above. At the time of publication the author had a position in BP. Action Alerts PLUS has no holdings in the stocks mentioned. Follow @dan_dicker This article was written by an independent contributor, separate from TheStreet's regular news coverage.
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