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Exxon and Chevron are both in the red over the past year. Both reported quarterly results last week, with Chevron cutting share buybacks amid a broader pullback in oil prices. Meanwhile, Exxon is sticking with its buyback plan of nearly $5 billion in shares per quarter. We want to break down these two stocks, the challenges facing each, and what you should do with them if you're an investor. Here with us now, we've got Stuart Glickman, CFRA Research Energy Equity Analyst and Deputy Research Director. Great to have you on with us today. Let's perhaps start with Chevron, Stuart. Why is the stock in the red, and what is the bull-bear case here?

Hi, Brad, thanks for having me. So, I think the bull case for Chevron: they have some nice assets in the deepwater Gulf of Mexico; they're growing pretty extensively in the Permian Basin like Exxon is. So, both of those things are pluses. The Gulf of Mexico is a longer-cycle kind of play. Permian is a little more short-cycle, so they have a nice balance between the two. Now, for the challenges with Chevron. Number one: they have a joint venture in Kazakhstan, Tengi Chevron Oil, which, you know, has done an expansion but was very delayed, over budget; that has caused problems. It looks like they're starting to get to the bottom of those problems, but it's been a long time coming. Secondly, their earnings on the upstream have actually trailed those of Exxon, at least in the last quarter. They really didn't do as nearly as good a job as Exxon did in the quarter on their operating income per barrel. And third, and probably the most important thing that's an overhang on the stock, you have this legal rock fight over Hess' 30% stake in Guyana because Chevron has, of course, offered to buy Hess completely. Exxon is saying they have a right of first refusal over that 30% stake in Guyana, and Guyana is absolutely the crown jewel in Hess. So, Chevron, if it can't win that court battle, and probably we're going to get to a resolution towards the end of this year, Hess is much less attractive without Guyana in it.

So, let's talk about Exxon. Why is it in the red over the past year, and what are the cases for the animal spirits surrounding that stock?

Right. So, you know, Exxon and Chevron, and everybody else in the oil space, is beholden to what happens with oil prices. So, oil prices averaged $77 a barrel for WTI. Today, we're trading at around $57. When we entered the year, I thought that WTI probably would average about $65 a barrel. I've been underweight energy since August of last year. But there are reasons to like Exxon. Exxon has a 45% stake in that Guyana project that Hess owns 30% of. It is far and away one of the biggest contributors to incremental volume growth for Exxon. Even for a company of their size, it actually does move the needle. Exxon has done a better job than Chevron at generating return on invested capital over the years. Their balance sheet is a fortress; net debt to cap is around 7% right now. Chevron's is pretty good too, but Chevron's is around 14%. And Exxon has really kind of shied away from a lot of the renewable energy investments that many other super majors pursued, and I think the proof has been in the pudding: their returns have been better than companies like a BP, for example, which has struggled.