Integrated Energy Companies’ Downstream Performances in 2Q17
ExxonMobil (XOM) had a throughput of 4.4 MMbpd (million barrels per day) in 2Q17. That’s the highest among our integrated energy companies.
Integrated energy companies’ upstream earnings rose in 2Q17, altering the segmental dynamics within the companies.
In 2Q17, XOM produced the largest quantity of crude oil and natural gas, at 3.9 MMboepd (million barrels of oil equivalent per day). Second in line was Shell.
Shell had the highest capex in the first half of 2017 at $9.9 billion, of which 76.0% was in the upstream segment and 24.0% was in the downstream segment.
Oil prices have now improved, leading to better cash flows for integrated energy companies.
Integrated energy companies have seen steep rises in their debt levels in the past few years due to oil price volatility.
Institutional ownerships in ExxonMobil (XOM), Chevron (CVX), Royal Dutch Shell (RDS.A), and BP (BP) have declined so far in August 2017 over February 2017.
The higher valuations that XOM and CVX command are apparently due to their financial strength in the form of lower leverage compared to Shell and BP.
BP has the highest dividend yield compared to RDS.A, XOM, and CVX. However, BP’s dividend yield has fallen from 7.3% in 3Q15 to the current level of 6.9%.
Implied volatility in integrated energy stocks has declined in 3Q17. ExxonMobil (XOM) has seen the highest fall.
Shell has received the most “buy” ratings among our integrated energy stocks in this series. Its mean target price is $63 per share, which implies a ~14.0% gain.
At the beginning of the year, CVX’s and RDS.A’s 50-day moving averages fell but stayed above their 200-day moving averages.
In this series, we’ll do a cross-sectional analysis of integrated energy stocks. We’ll examine their moving average crossovers, price forecasts, analyst ratings, and much more.
Over the past year, the correlation coefficient of BP with WTI comes in at 0.57, which shows that the stock has changed in line with WTI prices—to some degree.
BP (BP) is now trading at a forward PE (price-to-earnings) ratio of 17.3x—just below its peer average of 17.8x.
BP’s PEG ratio stands at 0.30, which is below the peer average of 0.34.
Institutional holdings in BP currently stand at ~10%, which has fallen ~1% in the past six months.
BP (BP) has recently witnessed a fall in its short interest (as a percentage of outstanding shares)—from 0.6% at the end of May to its current level of 0.4%.
The implied volatility in BP stock has fallen 2.8% since July 3, 2017, to its current level of 13.8%. During the same period, BP stock has risen 5.5%.
In 1Q17, BP stock broke below its 200-day moving average, likely due to BP’s 4Q16 earnings, which missed estimates.