Shares of Chevron (CVX) - Get Report climbed 1.4% to $117.44 Monday after a Barclays analyst initiated coverage of the oil and gas company with an overweight rating and a stock price target of $145.

Analyst Jeanine Wai said in a note to investors that the San Ramon, California-based Chevron "is well-positioned to both return significant free cash flow to shareholders and fund its 3-4% five-year growth CAGR guidance."

Wai also initiated coverage of Exxon Mobil (XOM) - Get Report at equal weight with a price target of $73 a share.

"We like management's approach to its $4-5 billion run rate buyback as being a ratable return of cash through the commodity cycle," Wai wrote. "While CVX has outperformed XOM by 11% over the last year, the stock still trades at a discount on an after-tax cash-blow basis in 2020, which should invert over the next year as the market becomes comfortable with the sustainability of CVX's casg return program."

Wai added that "while we think XOM's counter-cyclical investment approach will eventually pay off, it leaves a near-term FCF deficit after dividend at Brent prices less than $70."

Wai said the Permian Basin in the southwestern part of the U.S. is "the largest driver of medium-term production growth for XOM and CVX."

"Energy is currently one big 'Show-me Story' and the Permian is coming up on FCF inflection for both names as XOM targets its Permian as FCF positive in 2021 at $60 flat real Brent, while CVX targets 2020 at $55 West Texas Intermediate.

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