We recommend investors avoid the more oily names with no near-term supporting catalysts or valuation support, such as Murphy Oil.

We do not think Murphy is out of the woods yet operationally and still recommend avoiding the stock.

Although Exxon Mobil had a strong quarter operationally, results were severely impacted by a higher tax rate -- an issue we suspect will not reverse going forward.

Since the beginning of the month, Exxon has outperformed its peers by over 6%, leaving the company trading at a significant premium to the group. As such, we are downgrading Exxon to neutral, as the stock's valuation is not as compelling.

The Unocal deal gives Chevron the near- to medium-term production growth it was lacking, as well as the potential for future growth from its Asian assets.

AHC trades at an 18% discount to its peers ... which we believe is wide enough to compensate investors for the risks inherent in the stock -- namely, a price exploration strategy, significant downside risk should oil prices retreat, weaker free cash flow generation and returns.