Buy This, Not That: Why This $8.8B Energy Company Embarrasses ExxonMobil

Shah Gilani|June 25, 2025

There’s a reason Warren Buffett didn’t buy ExxonMobil…

While everyone assumes bigger is better in energy, the numbers tell a different story. ExxonMobil’s massive $466 billion market cap can’t hide its paltry 9.73% profit margins.

Compare that to this $8.8 billion energy company delivering 35% margins – the kind of profitability that separates great investments from mediocre ones.

The dividend story is even more compelling: 4.9% yield versus ExxonMobil’s 3.66%.

But here’s the kicker – this isn’t just about higher yields. It’s about sustainable business models. While oil prices swing wildly based on Saudi production decisions and Middle East tensions, natural gas infrastructure generates steady cash flows from long-term contracts.

Click on the thumbnail below to discover why this smaller energy company is delivering the profitability and income that Big Oil simply can’t match.

TRANSCRIPT

Hey, everybody. Shah Gilani here with your weekly BTNT, as in Buy This, Not That. This week, I want to talk about an oil company, the largest being ExxonMobil, versus a natural gas play, and that would be, in this case, Antero Midstream. It’s a midstream company, but it really is in the natural gas business for the most part.

So I’m really going to compare natural gas to oil. Now the reason I’m doing that is I’ve been getting a lot of questions about should I be in oil company stocks right now? Should I buy oil? Should I buy USO?

Should I buy natural gas? If oil is going up, shouldn’t natural gas be going up? And well, guess what? Oil is going to go up and down.

For the most part, it’s coming back down. So the spike that we had is over. Are we going to see another spike in oil? I don’t know.

I don’t think so because one of the reasons that we’re not likely to see another spike unless we have another Middle East dustup, and, of course, that’s always a possibility, is that the Saudis have been producing more oil. They’re trying to bring the price of oil down, and they are the player that makes a difference – they’re the marginal player in terms of price. And so if they’re increasing production, partly to make the rest of the OPEC members fall in line because they have been overproducing.

And so Saudi Arabia basically said, “Oh, if you’re going to play that game, then we will knock the price down” since everyone’s got a quota of what they’re supposed to produce. And if some OPEC members are overproducing, others are maybe not going to sell as much. Anyway, the Saudis have basically said, “OK. Enough of this.”

As they often do, they’re going to make everyone toe the line a little bit closer and increase production – not try. They’re going to increase production and continue. They’ve increased it three times already this year to bring the price down. So the dustup in the oil price that we saw was a result of Israel bombing Iran.

And everyone thought, “Well, what if the Strait of Hormuz gets closed? What if this happens? What if that happens? Oil could go to $140.”

I heard all kinds of numbers. And so oil moved considerably higher, but it’s come down considerably. So oil to me is always going to be that. It’s going to be volatile.

But generally speaking, the price is under control. So I don’t think that oil presents that kind of opportunity. As far as energy stocks in general, they have been laggards in the market’s move year to date. They’ve been laggards for some time.

And generally, over time, they lag behind other sectors. So energy is not a favorite sector. But within energy, I want to compare ExxonMobil to, again, Antero Midstream symbol AM. And let’s take a look at the chart because I know a lot of folks are thinking, “Well, oil’s a better buy.”

Oil companies are a better buy. Maybe their dividends are better. Maybe you have the likes of a Warren Buffett accumulating one of the big oil companies, not ExxonMobil. And so a lot of folks think there’s a reason he’s such a smart investor.

Maybe I should buy ExxonMobil. My answer to that is: well, take a look at the charts first and foremost.

As far as ExxonMobil goes, it’s not a compelling chart.

So here’s ExxonMobil, people, trading at $108 and some change, and I’m unimpressed with that kind of movement in the stock. To me, it’s not a healthy-looking chart. Here’s the spike in oil. You know, we see a couple spikes and then boom.

Guess what? Right down and right down again.

This is in line with the price of oil. I wouldn’t – I don’t want to own a company that’s subject to a commodity so directly. I’d rather directly invest in the commodity. So the company, yes, it pays a decent yield.

ExxonMobil yields 3.66% on a forward basis. And this is a gigantic company. We have a $466 billion market cap. Huge revenues.

Profit margin is under 10%. It’s 9.73%.

So, yeah, I think ExxonMobil is fine. If you own it, you’re happy with the dividend.

But to me, I’m not going to buy ExxonMobil given the fact that maybe I want to play a spike in oil or maybe long term, I want an energy company. I’m not inclined for a 3.66% forward dividend yield to buy ExxonMobil. Rather, I would go – if I prefer, generally speaking, natural gas over oil. And, yes, Exxon explores and produces natural gas, etc.

But Antero Midstream is much more about gas. Yes. They produce gas. They go for gas.

They also have some other businesses associated with extraction of natural gas.

Midstream, they’ve got pipelines. So they’ve got a lot going on, and it’s principally in the natural gas space. So I like Antero much better than I like ExxonMobil. And one of the reasons is that it’s not nearly as big a company, about – excuse me – $8.87 billion market cap, so tiny relative to the $466 billion market cap of an ExxonMobil.

But profit margin at Antero is a whopping 35%. And looking at ExxonMobil’s at 9.73%, that’s a huge difference. So you see in the chart, this has had a really nice move up. It’s not that natural gas has just been moving up. Like I said, people want to buy Antero for its handsome dividend, and it’s going to probably continue to pump out that dividend. The payout ratio is a little bit over 100%. But listen, they make enough money, and they continue to pay out a very healthy dividend. So Antero AM versus ExxonMobil, I’m going to say Antero all day long.

Why? Because No. 1, I prefer natural gas over oil. And No. 2, you got a much better dividend yield at 4.9% on Antero versus 3.66% on ExxonMobil. So there you have it. It’s AM over XOM, Antero over ExxonMobil.

Cheers, everybody. Catch you guys next week.