Robert Smithson is fund manager at Taube Hodson Stonex Partners
Case study: Total versus Chevron
Total and Chevron are two of the top-five independent oil companies in the world. Total shares may be quoted in Paris and the chief executive may speak French, but it has no capital invested in French production, preferring to invest in the Middle East and Africa.
Chevron has a similar portfolio of assets. Little wonder that, for much of the past 15 years, their share prices and valuations have moved in lockstep. From early 2010 this relationship broke down, with Chevron outperforming Total by roughly 50 per cent.
However, both companies achieve very similar returns. In the past five years, Chevron’s return on equity has been 20.5 per cent, against 18 per cent for Total. During this same period Chevron managed annual reserves growth of 1 per cent against 1.7 per cent for Total.
Making the choice between Chevron and Total, the latter is a much cheaper way to gain exposure to almost identical assets.
