While oil prices are likely to remain elevated, investors may be contemplating if it's time to take profits in Chevron CVX) or Exxon Mobil (XOM) stock amid reports that Iran is open to ending the war with the U.S.
Crude oil prices retreated 1% on Tuesday but remain over $100 a barrel, a price point that offers superior operating leverage for Chevron and Exxon.
To that point, both operate across the entire energy chain, from exploration and production (upstream) to transportation and storage (midstream) and refining and distribution (downstream).
Such diversification provides multiple profit engines even when oil prices fluctuate. This makes it compelling to keep exposure to Chevron and Exxon stock even as they have spiked more than 30% year to date, and have recently hit their all-time peaks of $214 and $176 a share, respectively.
Image Source: Zacks Investment Research
Chevron & Exxon’s Strategic Expansion is Paying Off
Global tensions and the U.S. push for energy dominance have boosted demand for reliable, large-scale oil producers, providing the perfect opportunity for Chevron and Exxon.
Benefiting from shifting global energy flows amid production disruptions in the Middle East, these oil giants are capitalizing on strategic positions in places like Venezuela, Guyana, and the Mediterranean while increasing their domestic footprint as well.
Chevron has made major strategic investments, including the acquisition of Hess Corporation last year, which gives it access to a 30% stake in the Stabroek Block offshore of Guyana, one of the world's largest oil discoveries in the last decade. Acquiring Hess also brought 463,000 acres of high-quality assets in the Bakken Shale, a major oil-bearing rock formation located mainly in North Dakota and Montana within the coveted Williston Basin.
Additionally, Chevron has expanded its presence in the Leviathan gas field in the Mediterranean, diversifying its revenue beyond oil. The Leviathan gas field is a massive offshore natural-gas reservoir located in the Eastern Mediterranean Sea and is one of the largest gas discoveries in the region, serving as a major energy source for Israel, Egypt, and Jordan.
Meanwhile, Exxon has lucrative-projects in Guyana as well, and the integration of Pioneer Natural Resources, which it acquired in 2024, has boosted long-term production visibility by making it the largest producer in the oil-rich Permian Basin, the most lucrative and productive oil-producing region in the U.S.
Powerful Balance Sheets
Luring long-term investors is that Exxon still has over $10 billion in cash on its balance sheet and strong asset coverage with $448.98 billion in total assets compared to $182.35 billion in total liabilities.
Image Source: Zacks Investment Research
As for Chevron, it has a smaller cash pile of just over $6 billion but still maintains a solid asset-to-liability position. Chevron’s total assets are currently at $324 billion and nicely above its total liabilities of $131.83 billion.
Image Source: Zacks Investment Research
Strong Free Cash Flow & Shareholder Returns
Owning some of the lowest-cost, highest-margin assets in the world has allowed Chevron and Exxon to generate large free cash flows. More importantly, they've used it to return significant capital to shareholders through dividends and buybacks.
Notably, Chevron and Exxon’s breakeven levels are below $50 per barrel, meaning prices of $90-$100 per barrel produces massive cash flow. Keeping this in mind, it’s noteworthy that Exxon returned more than $37.2 billion to shareholders last year, which included $17.2 billion in dividends and $20 billion in share repurchases. Chevron returned $27.1 billion to shareholders in 2025, with $12.8 billion in dividends and $14.3 billion in buybacks, when including Hess share repurchases ($2.2 billion).
Image Source: Zacks Investment Research
Conclusion & Strategic Thoughts
Chevron and Exxon are capitalizing on higher oil prices through increased production, low-cost assets, and strategic positioning in regions that benefit most from today’s tight global supply. Their ability to generate strong cash flow at oil prices well below current levels makes higher crude a direct boost to profits, even if a deal to end the war between the U.S and Iran is hopefully reached.
Israel’s position in the feud will also need to be considered, and the impact of damaged energy infrastructure in the region may still delay global oil production in the near future. Considering this, and the aggressive returns that Chevron and Exxon can provide, it may certainly be worth holding these big oil stocks in the portfolio.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners UpChevron Corporation (CVX) : Free Stock Analysis Report
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
