At first glance, the two biggest U.S.-based members of Big Oil appear to be heading in divergent directions.
In his company's annual analyst meeting this week, John Watson, CEO of Chevron (NYSE: CVX ) , left little doubt about a decided -- albeit new -- emphasis on natural gas for 2011. In contrast, a week ago Rex Tillerson, his counterpart at ExxonMobil (NYSE: XOM ) , conducted a similar meeting during which he communicated a decided push toward higher-priced oil.
That's not to say that Chevron is abandoning oil. Rather, it's essentially playing catch-up with its peers. Last year, by paying $41 billion for unconventional gas producer XTO, Exxon instantly became the largest producer of gas in the U.S.
At about the same time, Royal Dutch Shell (NYSE: RDS-B ) bought the assets of East Resources for $4.7 billion, giving it 650,000 acres in the Northeast's emerging Marcellus shale play. And beyond that, Consol Energy (NYSE: CNX ) obtained 500,000 Marcellus acres by forking over $3.5 billion to Dominion Resources (NYSE: D ) .
Amid its peers' deals, Chevron virtually disdained domestic gas plays. Now, however, the company is in the process of spending $4.3 billion to acquire Marcellus player Atlas Energy, clearly signaling a vote of confidence on gas. Indeed, during the analyst session, Vice Chairman George Kirkland called natural gas the driver of "our long-term growth."
Watson said during the meeting that his company has established a $26 billion capital budget for this year, 20% above its 2010 number. He predicted production of 2.79 million barrels of oil equivalent per day during 2011. Keys to reaching that figure will be initial production from the company's Tahiti Phase 2 project in the Gulf of Mexico, along with output enhancements in Nigeria and the Gulf of Thailand.
Furthermore, as you may know, the company is leading in the development of a pair of big liquefied natural gas projects off Western Australia. The Gorgon project, in which Chevron has a 50% interest, is expected to run up a tab of about $37 billion before its spigot is turned on in 2014. Chevron also has a 75.75% interest in the Wheatstone project, in which Apache (NYSE: APA ) has a minor stake. Wheatstone is likely to come on line two years after Gorgon.
This year, Chevron will begin shale gas projects in Poland and Canada and anticipates initiating deepwater programs in China and Liberia. Unfortunately, along with its operating plans, it'll be forced to continue to pursue its now 18-year-old environmental damages lawsuit in Ecuador, where a sitting judge recently hit the company with an $8.6 billion damages order.
From my perspective, Chevron's increasing oil-gas balance, along with its geographic spread, bode well for the company and render it an increasingly logical selection for Foolish watchlists.