The month has kicked off with a resounding jolt in the oil market, as May-dated crude futures (CLK24) have surged 4.4% since early March. The driving force behind this rally is the International Energy Agency’s (IEA) latest report, which raised its global crude oil demand growth forecast for 2024. The IEA cited a stronger U.S. economic outlook and escalating fuel requirements for ships opting for longer routes to evade Houthi attacks in the Red Sea as critical factors fuelling this upward revision.

A Closer Look at Chevron Corp

One prominent player basking in the current market spotlight is Chevron (CVX). As an extensive energy conglomerate, Chevron’s portfolio spans the entire oil and gas supply chain—from exploration and production to refining, distribution, and sales. Despite year-to-date gains of 3.8%, Chevron has trailed behind the 10.4% return of the S&P 500 Energy Sector SPDR (XLE).

Chevron exceeded earnings projections in its Q4 report with an EPS of $3.45, surpassing the expected $3.29. Driven by high commodity prices and robust upstream production, Chevron foresees Q1 2024 earnings per share at $3.06—a 13.8% year-over-year decline. Meanwhile, full-year 2024 earnings are anticipated to dip 0.7% to $13.04 per share.

In a strategic move, Chevron is venturing back into action in Venezuela’s Orinoco Belt with plans to drill 30 new wells by 2025. This initiative aims to boost production capacity by 35% to 250,000 barrels per day. Additionally, a collaboration with a Colombian entity is in the works to establish a solar power plant in Panama.

With a current yield of 4.22% and an annualized dividend rate of $6.52 per share, Chevron stands tall as a dividend aristocrat. The company recently paid out a quarterly dividend of $1.63 per share on March 11, underpinned by 36 consecutive years of dividend growth.

Exploring ExxonMobil

Not to be outdone, ExxonMobil (XOM) shines as a global heavyweight in the oil and gas domain. With operations spanning the entire energy sector, ExxonMobil stands at the forefront of the industry from upstream ventures to downstream operations.

ExxonMobil has shown impressive year-to-date gains of 13.5%, surpassing both the XLE and the broader S&P 500. The company has set its sights on scaling production in key areas, aiming to achieve a remarkable target of 2 million barrels per day from the Permian Basin by 2027.

In a recent triumph, ExxonMobil struck oil (black gold, to be precise) in Guyana with a significant discovery named Bluefin. Currently producing 650,000 barrels a day, their aspiration is to nearly double this output to 1.2 million barrels daily by 2027. This milestone would place Guyana’s production on par with major oil players like Angola, an OPEC member. Furthermore, ExxonMobil is contemplating launching their first offshore natural gas project in Guyana, positioning this as a pivotal asset in their oil portfolio.

Recently unveiling their Q4 2023 earnings, ExxonMobil surpassed expectations with earnings per share of $2.48.

The Rise of ExxonMobil: A Beacon in the Energy Sector

ExxonMobil’s stellar performance has left analysts awestruck, effortlessly surpassing the $2.21 per share mark they had forecasted. The anticipation mounts as they prepare to unveil Q1 2024 earnings on April 26, with a predicted $2.17 per share, marking a 23% dip from the previous year. Despite this, financial gurus have faith in the company, predicting a full-year EPS of $9.11 for 2024, a minor 4% downturn from 2023, before witnessing a resurgence in earnings for fiscal 2025.

Dividends and Growth:

When it comes to dividends, ExxonMobil boasts a solid dividend yield of 3.36%. The company’s dividend has enjoyed a consistent increase for 25 consecutive years, demonstrating stability and reliability. With a modest payout ratio of 38.6%, Exxon’s dividend remains well-supported by its earnings, leaving ample room for potential growth.

Analyst Sentiment:

Wall Street analysts remain optimistic about ExxonMobil, with a prevailing “moderate buy” sentiment. Among the 19 analysts weighing in on the matter, 10 back the company with a “strong buy” recommendation, while 8 opt for a conservative “hold” approach. The average price target for ExxonMobil stands at $123.94, reflecting a notable premium exceeding 9% over Thursday’s closing price.

Jefferies recently raised their price target for XOM to $135, lauding the company’s robust cash flow and the potential for increased share buybacks. Similarly, Ryan Todd of Piper Sandler maintains a “Buy” rating on ExxonMobil, setting a price target of $130. Todd highlights the company’s compelling value proposition and emphasizes the potential for further dividend growth.

The Outlook for CVX and XOM

Against a backdrop of rising oil prices and the International Energy Agency’s optimistic demand projections, Chevron and ExxonMobil stand out as luminaries in the energy sector. Far from ordinary oil stocks, these companies are dividend aristocrats, offering investors a steady income stream. If you’re eyeing the energized energy market for investment opportunities, these industry giants merit a closer examination.

On the publication date, Ebube Jones did not hold any positions (directly or indirectly) in the securities discussed in this article. The information provided here is purely for informational purposes. For further details, refer to the Barchart Disclosure Policy.

The opinions and viewpoints expressed are those of the author and do not necessarily represent the stance of Nasdaq, Inc.