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The Oil and Gas Industry Hit Multiyear Lows in 2015

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Dec. 31 2015, Updated 10:14 a.m. ET

Lower oil prices are hitting oil and gas industry hard

The E&P (exploration and production) companies are being affected by lower crude oil prices. Almost every subindustry in the oil and gas sphere is being affected by lower crude oil prices. Downstream is the only exception where lower crude oil prices have boosted profits. Investors must understand that downstream makes a profit due to improved refining margin because of the fall in the price of crude oil.

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This series will compare different energy segments like large-capped upstream, as well as downstream and midstream companies. The series will analyze their respective moving averages, Wall Street consensus estimates, weighted average cost of debt, and cash flow. We’ll also focus on their sales performance until 3Q15 and other metrics related to their operation. We will also have a look at renewable energy sources.

[marketrealist-chart id=931901]

What is impacting crude?

Crude oil is not only impacted by the price wars between OPEC and the US (SPY) shale oil producer, but other macroeconomic factors are emerging out of different geopolitical developments. The growth of solar energy and another alternative source of energy could also impact the future outlook of oil. Experts feel that OPEC members are sensing this future development to make as much money as possible before oil demand dries up.

The United States Oil (USO) has fallen by 44.7% on a year-to-date basis. Other upstream companies such as Energy XXI (EXXI), Diamondback Energy (FANG), and Continental Resources (CLR) have fallen by 68.71% and 40.3%, respectively, on a year-to-date basis. Diamondback Energy rose by 11.5% on a YTD basis on December 29. The graph above shows the United States Oil YTD performance.

In the next part, we will analyze the moving averages of large-capped upstream companies.

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