Exxon, Chevron Lack a Certain Je ne Sais Quoi

Exxon, Chevron Lack a Certain Je ne Sais Quoi

Oil companies face a slippery path on their energy transition journey. Pivot too quickly to clean energy and valuations fall in anticipation of poor future returns. Budge too little and your board risks getting a revamp by an activist investor (a la Exxon Mobil).

The U.S. oil majors’ shares trade at a roughly 58% premium to European peers as a multiple of forward-12-month earnings. The latter have historically lagged behind U.S. oil companies on valuation, but the gap has grown. Ten years ago, U.S. oil majors traded at a more moderate 24% premium to their European peers.