Wells Fargo's Roger Read and Lauren Hendrix said in a client note that the firm prefers companies "with some combination of a favourable cost structure and ability to deliver at least modest production growth, yet able to generate free cash flows that can either be directed towards strengthening the balance sheet or for direct shareholder returns".
That doesn't appear to include ExxonMobil, on which Wells Fargo cut its rating.
"We are downgrading ExxonMobil to market perform from outperform based on our updated production estimates, margin expectations and commodity price deck," the analysts said.
"We had expected ExxonMobil to be able to pursue an acquisition during the oil price downturn as a way to deliver growth and returns.
"However, with that window likely closed for now, plus its premium valuation, we are stepping back to neutral."
Mulacek has been a fly in ExxonMobil's ointment since the US oiler trumped Oil Search's $US2.2 billion offer for Papua New Guinea collaborator InterOil with its own all-stock $2.5 billion proposal.
InterOil's shareholders approved the takeover after hedge funds gave their tick of approval, but Mulacek, who stepped down as managing director in 2013, made allegations of insider trading by those now running the company.
He also filed an objection after the Yukon Supreme Court approved the transaction in October, saying it did not properly remunerate shareholders of InterOil, which is incorporated in Yukon.
Some had criticised ExxonMobil for the deal, with Raymond James recommending InterOil shareholders ditch its shares in the supermajor once the deal went through.
ExxonMobil, however, is playing a long game on LNG, with a senior executive leaving RBC Capital Markets analysts with the impression after a briefing last August that the takeover was based on the supermajor's belief that LNG demand will triple by 2040.
ExxonMobil also believes that a brownfield expansion of its PNG LNG facility is likely to be one of the most economic LNG projects in the world.
The call from Raymond James was before Mulacek scored a surprise win in the Supreme Court of Yukon, which upheld his appeal in December.
ExxonMobil followed up by increasing its offer with an improved contingent payment based on the Antelope-7 well, which Mulacek has still rejected.
He says the deal still doesn't offer InterOil shareholders full value for the company's hydrocarbon reserves in PNG.
Although Wells Fargo is unimpressed with ExxonMobil, the firm said it maintained its outperform ratings on Australia Pacific LNG downstream operator ConocoPhillips, Occidental Petroleum and Canadian Natural Resources.
Wells Fargo cited low-cost production in the case of ConocoPhillips overall, Occidental's favourable position in the Permian Basin and CNR's strong production growth.
