Chevron vs. Shell in Gulf of America: Who's Got the Edge?

Chevron Corporation CVX and Shell plc SHEL are two of the world's biggest energy companies, and both have been drilling for oil and gas in the deep waters of the Gulf of America (GoA) — what we used to call the Gulf of Mexico — for decades. This region is super important because it provides about 14% of all the crude oil produced in the United States, and is known for producing oil that's very profitable and has a lower carbon footprint. For both Chevron and Shell, their operations in the GoA are a vital part of their long-term plans, helping them use their money efficiently and meet their sustainability goals.Developing oil and gas in deep water is entering a new era, with companies using advanced technology and focusing more on reducing emissions. Because these projects cost a lot of money and U.S. energy independence is increasingly important globally, investors are paying closer attention to Chevron and Shell's GoA activities than ever before. Let's take a closer look at both companies to see which might be a better investment right now.The Case for Chevron StockChevron is really stepping up its game in the Gulf of America. The company recently started pumping oil from two huge new projects: Ballymore in April 2025, and Whale just a few months before that. Once it's fully running, Ballymore is expected to produce 75,000 barrels of oil per day, while Whale is designed for 100,000 barrels of oil equivalent per day. These two massive projects are key to Chevron's plan to boost its GoA production to 300,000 net barrels of oil equivalent per day by 2026, which is a whopping 50% increase from the 2020 levels!Chevron is combining its many years of offshore experience with new, energy-efficient designs. The company’s Anchor platform, which started operating in August 2024, is built to tap into high-pressure oil reserves. Even older facilities, like Tahiti, which has been producing since 2009, are still thriving thanks to updated models and smarter cost management. All these upgrades mean that Chevron's oil from the Gulf is among the most profitable and environmentally friendly in its entire portfolio. Chevron isn't just focused on producing more oil; they are also investing smartly. The integrated major is using simpler designs and building things in pre-made sections to cut down on development time and costs. For example, the Whale facility uses energy-efficient systems to minimize its pollution. This strategy helps Chevron produce highly profitable oil with less carbon, showing they're being financially smart and environmentally responsible.The Case for Shell StockShell is a true pioneer in deepwater drilling and remains the biggest producer in the Gulf of America. They were the first company to successfully extract oil from water depths beyond 1,000 feet, way back in 1978. Shell's current list of assets includes major projects like Perdido, Stones, Vito, and Whale, all of which highlight Shell's unmatched ability to operate in extremely deep waters. Sparta, another new project set to begin producing in 2028, will be the next standardized facility in its deepwater portfolio. These projects really show off Shell's engineering skill and its ability to control costs even in one of the toughest drilling environments in the world.Shell's strategic advantage comes from its focus on replicating designs and using robotics. The Vito and Whale projects, for instance, used almost identical designs, which meant engineering work was 50% faster and manufacturing errors were reduced by 75%. Also, in 2024, the Stones project led the industry by using robotic systems to inspect offshore tanks, cutting costs and making operations safer. When it comes to emissions, Shell has already reduced methane output in the GoA by 40% since 2016 and even beat its 2023 emissions target by 5%, further strengthening its reputation for environmental responsibility.Shell’s GoA portfolio is anchored by advanced deepwater hubs like Perdido and Stones, among the world’s deepest and most complex offshore facilities. These assets support a hub-and-spoke model, enabling efficient tiebacks and extended field life. Upcoming projects like Sparta follow Shell’s phased, capital-efficient approach. With high uptime, strong recovery rates, and low emissions, Shell’s GoA operations offer reliable cash flow while aligning with its broader strategy of disciplined growth and decarbonization.Price PerformanceOver the last year, Shell's stock has remained relatively stable, dropping just 0.1%, while Chevron's stock has dipped 3.3%. Chevron's recent underperformance might mean its stock is undervalued, especially if its ambitious Gulf production goals are met on time. Image Source: Zacks Investment ResearchValuation ComparisonWhen we look at how much investors are willing to pay for future earnings, Chevron trades at 18.26 times its forward earnings, while Shell trades at 11.29 times. Chevron's higher value likely reflects expectations of better profit margins from its growing GoA projects and the positive impact of recently acquired high-value assets from Hess. Image Source: Zacks Investment ResearchEarnings OutlookThe Zacks Consensus Estimate sees Chevron’s EPS to drop by 27% in 2025, but then bounce back strongly with a 23% increase in 2026. Image Source: Zacks Investment ResearchShell's EPS is projected to fall by 20% in 2025, with a slower recovery of 10% in 2026. Image Source: Zacks Investment ResearchConclusionChevron and Shell are both powerful players in the Gulf of America, bringing decades of experience together with modern efficiencies and a good environmental track record. Shell stands out for its sheer size, innovative spirit, and ability to replicate successful projects. Chevron, on the other hand, offers a more focused strategy in the Gulf, with a clearer outlook for higher profit margins and stronger production growth.With both companies currently carrying a Zacks Rank #3 (Hold), investors might find it tough to pick a clear winner. However, Chevron seems to be in a slightly better position right now. This is due to its very clear production targets, smart spending, and a projected stronger rebound in earnings. That said, both stocks remain compelling options for investors looking for high-quality exposure to one of the world's most resilient and environmentally conscious offshore oil basins. You can see the complete list of today’s Zacks #1 Rank stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Chevron Corporation (CVX): Free Stock Analysis Report Shell PLC Unsponsored ADR (SHEL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks