Did Russian Energy Companies Outperform in 2Q15?



Falls in sales

The sales of ExxonMobil (XOM) and Chevron (CVX) contracted by 19% and 34%, respectively, between 2Q14 and 2Q15. Gazprom Pao (OGZPY), Gazprom Neft (GZPFY), and Lukoil (LUKOY) posted sales falls of 20%, 10%, and 25%, respectively, in the same period.

Gazprom Neft is a subsidiary of Gazprom Pao but operates with a different production mix. Gazprom Pao, Gazprom Neft, and Lukoil represent the large-cap (large capitalization) Russian ADRs (American depositary receipts) in the oil and gas sector.

ExxonMobil and Chevron represent the large-cap US energy companies.

The average falls in sales of the US-based energy companies were higher than those of their Russian peers. The 3Q15 financial results for the Russian companies are set to be announced around the middle of November.

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YTD performance

ExxonMobil and Chevron fell 14% and 19%, respectively, in 2Q15, whereas Gazprom Pao, Gazprom Neft, and Lukoil fell by 11%, 6%, and 5%, respectively, on a YTD (year-to-date) basis. The US-based energy benchmark, the SPDR Energy Select Sector ETF (XLE), fell about 16% on a YTD basis.

EPS (earnings per share) rose about 26% and 53%, respectively, for Gazprom Pao and Gazprom Neft in 2Q15 over 2Q14 compared to falls of 48% and 67%, respectively, for ExxonMobil and Chevron.

Lukoil’s earnings fell 56% in 2Q15 compared to 2Q14. The chart above shows the YTD performances of these companies.

Production mix

  • ExxonMobil operates with a production mix of 46% in both natural gas and crude oil.
  • Chevron has a production mix of 33% in natural gas and 66% in crude oil.
  • Gazprom Pao has a production mix of 85% in natural gas and 10% in crude oil.
  • Gazprom Neft has a production mix of 22% in natural gas and 79% in crude oil.
  • Lukoil has a production mix of 13% in natural gas and 85% in crude oil.

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