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Forget ExxonMobil. Chevron is new leader in oil.

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Ben Margot/AP/File

(Read caption) A Chevron flag flying over the Chevron refinery in Richmond, Calif., in 2008. Chevron Corp. has not only outperformed rival ExxonMobil in terms of stock returns and profit margin, its prospects have brightened because it may not have to pay $19 billion for environmental damages in Ecuador.

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A decade ago I would have said that ExxonMobil (NYSE: XOM) was the best-managed oil company among the international oil companies. Today, I believe that distinction goes to Chevron (NYSE: CVX).

While ExxonMobil may be considered the pace-setter in the integrated oil and gas business, Chevron has outperformed its larger rival over the past five years. Chevron pays a slightly higher dividend than XOM (3.3 percent versus 2.8 percent), and its share price has appreciated 22 percent over the past five years, versus 2 percent for ExxonMobil. (Keep in mind that this includes the oil price crash of 2008). Over the last 10 years, Chevron is up an impressive 265 percent, versus 156% for ExxonMobil. During the oil price plunge in the second half of 2008, Chevron's share price only fell 10 percent (vs. 18 percent for XOM).

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Chevron's market cap of $228 billion is substantially behind that of XOM, but that was still good enough for third place on last year's Fortune 500 list, with Walmart (NYSE: WMT) sandwiched between them. Chevron's 2012 profit margin of 10.9 percent was slightly ahead of Exxon's 10.2 percent. The higher profit margin - as well as Exxon's lagging stock performance relative to Chevron - is largely a reflection of the fact that natural gas is a larger component of Exxon's business, so that it was harder hit by last year's price crash.

A big concern for many investors has been a $19 billion judgement against Chevron for environmental damages in Ecuador. It concerns operations that Texaco had in Ecuador from the 1960s until about 1990. Chevron acquired Texaco in 2001, and after years of legal battles Chevron lost a lawsuit in a provincial court in Ecuador.

The suit was brought on by an American, Steven Donziger, a New York lawyer who stands to earn over a billion dollars if the judgment stands. But lately the judgement appears to be on very shaky ground, and Chevron's stock is rallying.

Donziger has tried to seize Chevron's assets in Canada, Brazil, and Argentina -- but a Canadian judge recently rejected the claims. Further, evidence is mounting of fraud associated with the case. A hedge fund who was bankrolling the litigation recently backed out due to "mounting evidence of fraud and misconduct" by the plaintiffs. A firm that provided scientific analysis for the plaintiffs recanted their findings, saying they had been misled by Donziger. Donziger was also caught on tape boasting of using "pressure, intimidation, and humiliation" to get the Ecuadoran judges to comply with his desires. Hey, it may look sleazy, but there's a billion dollars at stake for him. (Last month BusinessWeek had a complete rundown of all the twists and turns in the case).

It looks highly unlikely that Chevron will have to pay this judgement, and as the case has fallen apart Chevron stock has been on a tear. In just the past 6 months, Chevron shares are up 20% while ExxonMobil is up 5%. Chevron is my favorite company among the large integrated oil companies. I would accumulate shares on any signs of weakness, but even at the current price this is a company that you can buy today and hold for the next 10 years.