Oil Titans Face Off: Exxon Mobil or Chevron for 2025 Gains?

There are several reasons to believe that 2025 may be a gusher for long-suffering investors in the oil sector. Despite the United States pumping more oil than ever before, energy stocks, in general, have underperformed the market in 2023 and 2024. That underperformance speaks to the cyclical nature of supply and demand throughout the world.

An easy way to invest in the oil sector is through an exchange-traded fund (ETF) such as the Energy Select SPDR Fund NYSEARCA: XLE. This fund holds approximately two dozen companies in the oil, gas consumable fuels, and energy equipment and services fields. That’s why it’s often viewed as a proxy for the sector.

In the last five years, despite obvious supply and demand variables, XOM has delivered a better total return. But that outperformance flips to CVX over a longer time period.

So what about 2025? Understanding the outlook for each stock may come down to their approach to capital expenditures (CapEx). Exxon Mobil and Chevron are taking two different approaches to capital expenditures in 2025, but what does that mean for the fortunes of each stock?

The oil industry has been preparing for the coming boom, with several of the major players making strategic acquisitions. In 2024, Exxon Mobil completed its $59.5 billion acquisition of Pioneer Natural Resources.

That acquisition is already paying off, as the company has noted that more than 50% of its total upstream products now come from its advantaged assets in the Permian, Guyana, and LNG. That’s three years earlier and is a key reason the company is generating more than $15 billion in earnings and $20 billion in cash flow compared to 2019 levels. Exxon expects those numbers to increase by an additional $20 billion and $30 billion, respectively, over the next six years.

As part of the company’s Plan 2030 released in December, Exxon Mobil announced plans for cash CapEx for 2025 in the range of $27 to $29 billion. The company says this reflects the first full year of having Pioneer’s assets in its portfolio. Between 2026 and 2030, the company plans an annual spend of between $28 billion and $33 billion to advance its long-term opportunities.

There couldn’t be a greater contrast between Exxon Mobil and Chevron in terms of capital expenditure plans. Chevron plans to reduce its CapEx spending by about $2 billion from 2024 levels. That will put it between $14.5 billion and $15.5 billion.

Chevron announced that approximately $13 billion of that spending would focus on upstream projects (i.e., oil and gas exploration). However, the company plans to reduce spending in the Permian basin to between $4.5 and $5.5 billion in favor of increasing its already robust free cash flow.

To be clear, capital expenditures between $14.5 billion and $15.5 billion are not an insignificant amount. But, notably, it’s about half of Exxon Mobil’s spending plan. It’s also only part of Chevron’s move towards cutting capital spending. The company is selling some non-core assets and recording between $700 million and $900 million in restructuring costs.

Normally, that would be a cause for concern. However, a significant reason for Chevron’s decision is likely due to its merger with Hess Corp. NYSE: HES. The company is in arbitration with Exxon Mobil regarding rights to Hess’ Guyana assets. However, the deal is still likely to be approved sometime in 2025. Once approved, it will be bullish for Chevron’s production and free cash flow outlook into the 2030s.

The analyst forecasts on MarketBeat are bullish about both stocks. The consensus price target on XOM shows a 22% increase in the next 12 months. For CVX, the price target shows a 24% gain. Since Exxon released its Plan 2030, analysts have been lowering their price targets.

The key would seem to be earnings. Despite the uncertainty surrounding the Hess merger, analysts still forecast 13% earnings growth for Chevron and just over 1.3% for Exxon Mobil. And then you have to consider the company’s dividend. And once again, the advantage has to go to Chevron with a dividend considered the gold standard with a 4.59% yield. And with the steps the company is taking to increase its free cash flow, its 37-year streak of increasing that dividend is in no jeopardy.