Take a chart of the S&P 500's performance over the first half of this year and compare it to the performance of oil behemoths Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) and you notice that these two companies have seriously under-performed. As I write, the S&P is up 18% year-to-date, while ExxonMobil and Chevron are only up 3.2% and 12.6% respectively. Even including annualized yields of 2% and 3%, these returns come nowhere near the rest of the index.

Investors are getting bored; it would appear that big oil is no longer exciting, and growth has become elusive. Spending is rising, putting valuable dividends in jeopardy. During the last quarter, ExxonMobil increased capital spending by 10%, only to see its cash flow deteriorate by 25%. Chevron, on the other hand, increased capital spending by 29% and saw its cash flow fall a similar 22%.

Cash flow critical
What has raised more concern among investors is the lack of free cash flow available to pay the dividend and finance buybacks. For example, during the second quarter, Chevron's operating cash flow was $8.5 billion but the company spent $8.6 billion on capital expenditures. A $500 million sale of assets bolstered cash flow, but this left nothing for the $2.9 billion in dividend and stock repurchase commitments.

Elsewhere, ExxonMobil is experiencing the same issues. Operating cash flow was $7.7 billion during the second quarter and capex spending was $8.7 billion, leaving no cash for the $2.8 billion in dividend and $4 billion in stock repurchase commitments. 

However, management is not worried at either company. Exxon only has $15 billion in net debt compared to $341 billion in assets, and Chevron has debt of $20 billion with $22 billion in cash and short term investments.

Outlook is cloudy
Drilling and exploration in many regions are now proving to be more expensive and capital intensive than many first forecast. Costly setbacks in the Arctic, offshore, ultra-deep-water, and oil sands have proved these assets to be worth less than initially expected. That said, big oil does now have exposure to the US oil revolution, which it is making use of, but shale production is also more costly than conventional oil fields.

A better play
EOG Resources (NYSE:EOG) is a much better play on oil production in the U.S. The company has two solid positions in North Dakota's Bakken and South Texas' Eagle Ford plays that have led analysts to predict a 35% rise in oil production this year. Both Chevron and ExxonMobil expect oil output to fall between 1-2% this year.

EOG has noted a rapid rise in operating cash flow as its projects come online. Income before tax is up around 100% year-on-year and free cash flow is positive -- so positive, in fact, that the company has notched a 340% rise in cash and short term investments from the same period last year.

Foolish summary
Traditional safe havens, big oil companies are now not as attractive as they once were with capex rising and operating cash flow stagnating. On the other hand,  disciplined independent producers are still churning out the cash and growing oil production rapidly.