ConocoPhillips Shows Bigger Isn't Better, as Big Oil, Exxon Lag

NEW YORK (TheStreet) -- The best Big Oil stock may be the one planning to become smaller.

Investors looking to find stock profits in the gargantuan but slow-growing earnings of Big Oil companies have been disappointed in 2012, but as May approaches, there's reason to focus on the upcoming split of ConocoPhillips (COP) over the earnings results of ExxonMobil(XOM) , which again disappointed investors.

As industry giants like ExxonMobil, Chevron (CVX) , BP (BP) and Royal Dutch Shell(RDS.A) lag rising markets, an ambitious breakup strategy by ConocoPhillip may be a strong target for those in search of a needle-moving investment within a Big Oil group of stocks that don't seem to budge.

After ExxonMobil reported that its first quarter profit dropped 11% to $9.45 billion, or $2 a share on Thursday -- missing Wall Street consensus of $2.09 -- it's hard for investors to be encouraged. Slowing energy production that is cutting into earnings and a share price not keeping pace with rising markets can make a profit that rivals the GDP of nations seem inconsequential. Even a 21% dividend raise by dividend laggard Exxon Mobil -- announced a day before the weak earnings -- wasn't enough to keep shares from selling off. ConocoPhillip's split into two separate oil exploration and refining companies, on the other hand, may be a worthwhile investment for Big Oil-inclined investors.

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According to Oppenheimer energy analyst Fadel Gheit, the move "will create two strong companies, including the largest E&P company in terms of production, proved reserves and market value, and the second-largest refiner in the US." Gheit estimates that after the split and previously announces asset divestiture programs, both companies will have stronger balance sheets and higher dividend yields than their new non-integrated oil industry peers.