April 26 - Jeffrey Goldfarb talks to Breakingviews columnist Chris Swann about the various drags on Exxon Mobil, Chevron and Occidental.
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Big drag and energy earnings this quarter for all sorts of different reasons ExxonMobil Chevron. Occidental all have seem to be pulled back by being out -- an energy prices Chris let's start with Exxon. You know you -- -- running to stand still what exactly are we talking about there we'll all that. Via oil companies that having that the big problem of that capital spending which is about having to work much harder in order to get the oil and out. Lots of the low hanging for -- to be the easiest hello to reach is in countries that just don't want to give you access to it anymore. And as a result they're having to pay two more remote more expensive place so I was Exxon's been trying to choose their stock price how best strategy to sort of pay pray that the cracks -- aquarius is just constant chant by accident. We'll make that endings and the race by 1% to -- the year. Net earnings per share rose by 6%. And that's what the magic of financial engineer -- the magic -- -- us right. So that's a that's a -- terrorist event they've been doing buybacks now offer. Years and it seems to be the pattern here and this is despite they've invested pretty heavily as you've pointed out an -- go on in the gas and but the only way they seem to. To move stopper was there -- -- PS this is what about -- Have turned into something of that conventional cash -- and that. You know they've been. Very very generous in that -- and dividends and and that buybacks and that there actually -- about a small elite group called the dividend aristocrat success and they've actually been increasing dividends every year since 1962. At least that's as far back as -- guys. So I took it to healthy track record worked -- move quickly to occidental. You made the point that may be what they need to do to get things going is to start -- things -- Well if you look at the the experience of comic Kate Phillips which has sent the largest steel companies and -- count the refining element. They've actually from. I was -- surprisingly. -- hits to my prediction and actually benefit from this so that stock outperformed by about 18% since they actually. Being a cop out right line. And occidental has pipeline business that they can't extract -- chemical business both of which are probably undervalued. As part of a decent results but still some drag on with the stock just hasn't been keeping up with the market again this is part of what you're -- saying there's some value to be at their ethnicity and and they also have a cost inflation problem which is which is common to a lot of oil companies that -- get the -- -- -- -- much. Having to pay an awful lot supply is blackness it's -- time to be an oil lack of a trip up with such Chevron reported today. You think you've got a problem down under. Yeah I like cash up front and general. That he had that heavily expects to Australia of that and the chief investing in the two biggest liquefied natural gas projects found ankle can. Which recently had they recently announced -- was running 40% of the budget that can be 52 billion dollars so what do we do about what's the answer not much. Spitzer salvia but they are basically just be a drag on what you drive -- whatever that story yet Derek. Thanks a lot Chris will leave -- there and we'll be back with more breaking news next week.