RRR reflects how many barrels of oil equivalent the company adds to its reserves in replacement of ones that are produced.
Crude oil price is affected by numerous factors like the demand-supply gap, geopolitical issues, and the economic scenario, to name a few.
During reigns of low oil prices, segment dynamics come into play. The downstream segment supports total earnings when the upstream segment takes a backseat.
Crude oil prices are affected by OPEC (Organization of Petroleum Exporting Countries), which contributes 39% to the global crude oil supply.
In 2014, global proved reserves stood at 1,700 billion barrels, of which 48% were held in the Middle East.
The fact is that with integrated energy companies’ vast reserves, refining capacity, and assets, these giants are well placed to cope with the challenges of the future.
Energy companies are bearing the brunt of the energy sector decline and trying to keep their shareholders immune from the decline in profits.
Royal Dutch Shell (RDS.A) is the biggest company in terms of revenues followed by Exxon Mobil (XOM).
Gasoline demand has grown by 2.1% to 19.8 MMbpd (million barrels per days) from August 2014 to August 2015.
Tracking the refiners’ acquisition cost of crude oil and prices of refined products in key areas can give a good sense of the future refining margins and cracks in general.
The total operating refining capacity in the United States stood at ~18 MMbpd (million barrels per day) in September 2015.
Integrated energy companies are involved in all stages of the energy value chain from oil exploration to the marketing of petroleum products.
ConocoPhillips’s stock has fallen by almost 21% so far this year. But since late 3Q15, the company’s stock seems to be rising.
ConocoPhillips’s forward EV-to-EBITDA multiple of ~10.2x is lower than the multiples of its close competitors.
ConocoPhillips’s 3Q15 EV-to-EBITDA ratio was 13.8x. This is significantly higher than its five-year average multiple of 5.3x.
In 3Q15, ConocoPhillips reported an OCF (operating cash flow) of $1.9 billion. This was ~50% lower than its OCF in 3Q14.
ConocoPhillips’s net debt-to-EBITDA was in the range of 0.6x–1.1x between 3Q13 and 4Q14. But in 2015, its net debt-to-EBITDA multiple started increasing.
ConocoPhillips has made big reductions in its cost structure. Its initial operating cost guidance for 2015 was $9.2 billion, but this was revised twice.
For 3Q15, ConocoPhillips reported global production (excluding Libya) of ~1.6 MMBoe per day, which represents 81 MBoe per day higher than the prior year.
ConocoPhillips has taken major steps in the face of lower commodity prices. These include capital and cost reductions.