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When Exxon Mobil (NYSE:XOM)) acquired XTO Energy, it spoke volumes about the future of natural gas, both domestically, as well as globally. After all, the fact that XOM, the world's largest oil company, as measured by market cap, would make such a large bet on natural gas led to much wagging of tongues among energy investors. This can be considered especially true, given XOM's justifiable reputation as a master of capital allocation and risk assessment. It appears to me that the market has overlooked a more appealing opportunity in Royal Dutch Shell (RDS.A, RDS.B), however.

Formed by the combination of the Royal Dutch Petroleum Company, a Netherlands-based firm, and the Shell Transport and Trading Company, a UK-based firm, Royal Dutch Shell's headquarters are in The Hague, and the company's registered office is in London. The shares are primarily listed on the London Stock Exchange (LSE), with secondary listings on the Euronext Amsterdam and the NYSE exchanges.

The "B" shares dividends fall under the tax treaty between the US and the UK and are paid in the GBP, while the "A" shares are tied to the Netherlands and are paid in Euros, and lack the advantageous tax treatment afforded the B shares, making the B shares a better holding for investors holding them in an IRA, or other tax-advantaged accounts.

Royal Dutch Shell has made a substantial commitment to the liquid natural gas (LNG) sector, as well to gas to liquids (GTL) technology, as evidenced by the firm's most recent announcement of participation on the construction of a multi-billion dollar LNG plant in western Canada in conjunction with Korea Gas, Mitsubishi, and PetroChina (NYSE:PTR) to supply the hungry Asian markets. Projects range geographically from LNG operations in Qatar to Russia, Nigeria and Australia . LNG sales volume rose by 138%, compared to Q1 of last year, generating an additional $1.3B in earnings from the company's integrated natural gas operations.

An increased focus on cost control and generating economies of scale are leading the company to divest smaller, more marginal operations, both in production as well as downstream. The capital raised by these divestitures will help the company in meeting the capital requirements demanded of its large-scale projects. This focus yielded a 61% increase in earnings for the last quarter, comparing y/o/y numbers.

Of course, as a dividend-oriented income investor, what definitely tips the needle in favor of RDS.A and RDS.B is the yield offered. After the shellacking that the commodity sector's taken, generally speaking, the B shares are yielding 5.4%, with the A shares yielding 4.7%. In comparison, XOM is paying a comparatively niggardly yield of 2.8%. (The yield figures are from Morningstar). For those who will point out that XOM steadily buys back shares, Royal Dutch Shell has also been doing the same thing for a while now.

Source: Why Royal Dutch Shell Belongs In Your Portfolio