Four integrated behemoths
In this series, we’ll compare four large integrated companies from around the world: ExxonMobil (XOM), BP (BP), Royal Dutch Shell (RDS.A), and YPF (YPF). American Depository Receipts (or ADRs) for BP, RDS.A, and YPF trade on the New York Stock Exchange.
Integrated energy companies typically engage in the businesses of exploration, production, refining, and distribution of oil and gas. Some of these companies also earn revenues from chemical production and energy marketing and trade.
As noted in the chart above, YPF and BP have been two of the best integrated stocks this year. Both stocks beat the Energy Select Sector SPDR ETF (XLE). BP (BP) is a UK-based integrated oil and gas company. Since January 1, its stock has returned 13.5%. Since January 1, YPF stock has returned 11.5%. YPF is an Argentina-based integrated energy company.
Royal Dutch Shell (RDS/A) is a Netherlands-based integrated energy company. Royal Dutch Shell’s stock returns since January this year have been a negative 6%.
ExxonMobil (XOM) is a Texas-based integrated oil and gas company. Since January 1, its stock has returned a negative 4%. ExxonMobil makes up 15.2% of the Energy Select Sector SPDR ETF (XLE).
Why did returns vary?
Integrated energy companies have produced a relatively less favorable return to their investors since the beginning of this year. However, their returns have varied across the sector. While integrated companies’ upstream operations have been negatively affected by lower crude oil prices, some with diversified geographies and more downstream-weighted revenue have managed to do well.
The crude oil market has gone through one of the worst slumps in history since June 2014. After nearing $110 per barrel, West Texas Intermediate (or WTI) oil price crashed to ~$43.50 in March, a decline of 60%. Since then, it has recovered ~37%. Investors can invest in the United States Oil ETF (USO), which reflects WTI’s spot performance.
Next in this series, we’ll look into the 1Q15 changes in these companies’ revenues.
Royal Dutch Shell (RDS.A) recorded a 2.8% 1Q15 EPS decline compared to the year-ago quarter.
Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.
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As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.