Chevron & Exxon 1/26/94 Stock Price 52 week YTD Pr Div Gross Rating 1/25 --- Range --- Chg Rate Yield Mobil Corp. MO 79.88 85-62 1 3.40 4.3 Exxon Corp. MO 66.25 69-60 5 2.88 4.4 Chevron Corp. MO 92.50 99-69 6 3.50 3.8 ----Interim---- 1994E pr/94 FY/IP EPS93 EPS94 PE94 --Next- -YrAgo- EBITDA EBITDA MOB 12/01Q 5.42 5.70E 14.3 n/a n/a 14.45 5.5 XON 12/01Q 3.67 4.05E 16.0 n/a n/a 9.70 6.8 CHV 12/01Q 6.57 6.60E 13.9 n/a n/a 15.40 6.0 1. Analysts continue to rate Mobil, Exxon and Chevron moderate outperformers. All reported fourth-quarter earnings somewhat higher than expected. Analysts are not materially changing our 1994/1995 estimates for any of these companies. These estimates are: (1) Mobil = $5.70 (up from $5.60) for 1994 and $6.20 for 1995; (2) Exxon = $4.05 for 1994 and $4.75 for 1995 and (3) Chevron = $6.60 for 1994 and $7.10 for 1995. 2. All three companies reported earnings from operations that were somewhat higher than consensus estimates, as did Texaco the previous day. The common thread was that refining/marketing earnings were particularly strong, especially in the Far East and Latin America, and gains in this segment more than offset the impact of sharply lower crude oil prices on the exploration/production sector. Investors had expected this general pattern, but the magnitude of the gains in the refining/marketing sector was more than been forecast. All three companies had one-time items: Exxon's were positive and those of Chevron and Mobil were negative. Thus, on a reported basis, Exxon showed a gain in earnings, but Chevron and Mobil showed substantial declines. Analysts and investors will focus on the operating and not the reported numbers, however. 3. Adjusted fourth-quarter earnings were as follows: (1) Mobil, $1.47 versus $1.42 a year ago, bringing the full year's adjusted net per share to $5.42 versus $3.58 in 1992; (2) Exxon, $1.11 versus $1.10 a year ago, bringing the full year's adjusted net per share to $3.67 versus $3.51 in 1992 and (3) Chevron, $1.68 versus $1.54 a year ago, bringing the full year's adjusted net per share to $6.57 versus $4.33 in 1992. Mobil and Chevron benefited substantially during the year from cost-cutting initiatives and from the strength in U.S. gas prices. U.S. gas is relatively small to Exxon; plus, it had initiated cost-cutting efforts earlier and, thus, did not experience the same rate of year-over-year gain. 4. On the operational side, analysts think it of interest that the U.S.-based international oil companies who have reported so far--Exxon, Mobil and Texaco--and that have meaningful European refining/marketing operations have all shown higher product sales in this year's fourth quarter than last year, and the same observation holds true for the entire year of 1993. Europe is the market most plagued by recession and the most vulnerable, therefore, to lower petroleum consumption. Instead, we are seeing modest gains. This suggests to us that underlying consumption and demand trends are stronger than many observers think. In a better economic environment, this could well contribute to a currently unexpected surge in petroleum product demand. 5. API inventory data released last night showed a large decline in heating oil and crude oil inventories in the United States, clearly showing the effect of the recent cold weather in the Northeast. Heating oil stocks were down 8.2 million barrels, and crude oil fell by 4.8 million barrels. Total inventories of crude oil and principal refined products now stand 7 million barrels below last year. Crude oil stocks are about level with last year, as is gasoline. Distillate stocks are 10 million barrels lower. This can't be all bad.