Why ExxonMobil Has Lagged Behind Chevron and the Dow Jones Industrials in 2013

Energy giant Dow component ExxonMobil (XOM 0.30%) has had a fairly good 2013, with gains of 11% this year. But compared both to the 23% gain for the Dow Jones Industrials (^DJI 0.73%) and the 17% jump in shares of rival Chevron (CVX 0.36%), Exxon's returns don't look all that impressive, and the oil giant still has something to prove to investors that it can deliver leading returns even with its massive size.

Exxon faces the same challenge that many big oil companies have had to deal with lately: finding ways to replace falling production from aging wells with new sources of oil and gas around the world. Even with monumental discoveries in unconventional plays like ultra-deepwater drilling and shale oil and gas formations, Exxon and its peers have to maintain the pace of capital investments in order to keep up with the rate of depletion of its legacy assets. Can Exxon keep up with Chevron and its other industry rivals? Let's take a closer look at what moved shares of ExxonMobil in 2013.

Stats on ExxonMobil

Source: S&P Capital IQ.

Exxon Total Return Price data by YCharts.

Why hasn't ExxonMobil stock done better in 2013?
As you can see above, ExxonMobil has struggled for most of the year. Without a sizable rebound in just the past couple of months, Exxon might have threatened to be one of the Dow's few losers for the year, and it has consistently failed to match up to Chevron's performance.

One big headwind against Exxon has come from its not being ideally positioned to take advantage of some of the most favorable opportunities in energy lately. For instance, even as U.S. oil and gas production has skyrocketed, Exxon still gets most of its production from international sources. That has made it challenging for Exxon to find enough good projects to sustain its output, something that Chevron has managed to do more successfully and on a more consistent basis.

Yet Exxon has delivered some positive surprises more recently. In its most recent quarter, the company managed to boost production by 1.5%, topping investors' expectations and reversing year-ago drops in production levels. Even though overall revenue and income fell, Exxon enjoyed sizable earnings gains from its upstream segment, partially offsetting weakness in the downstream refinery business as some of the pricing factors that had previous helped refining operations be extremely profitable began to fade somewhat.

Still, Exxon, Chevron, and many other oil and gas companies haven't been happy to see oil prices stagnate and even head lower recently. In particular, West Texas Intermediate breaking under $100 per barrel has had a painful impact on revenue and earnings throughout the industry. Yet the increasing spreads between WTI and overseas Brent crude prices could help Exxon's refinery operations turn around in the current quarter. That shows some of the benefits of Exxon having decided to remain an integrated energy company, rather than spinning off its refinery operations as many of its peers have done in the past few years.

ExxonMobil's future is still uncertain. Although it has taken strides recently to bolster its production and try to make the most of a tough price environment, Exxon really needs to see oil climb back above $100 per barrel in order to make the most of its current opportunities. Otherwise, it will have to find new discoveries at a much faster pace than it has accomplished in the past if it wants to have any chance of sustaining its revenue over the long run.

Click here to add ExxonMobil to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.