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.