Integrated energy stocks fell steeply in 2015
In 2015, stocks for integrated energy companies fell on the back of lower oil prices, affecting upstream earnings. In 2015, Royal Dutch Shell (RDS.A) fell sharply by 28%. Chevron (CVX) saw its stock fall a huge 18%. Exxon Mobil (XOM) and BP (BP) fell 13% and 14%, respectively. This affected the iShares US Energy ETF (IYE), which has ~39% combined exposure to XOM and CVX.
Shell’s stock performance
Royal Dutch Shell’s (RDS.A) stock has been on a downward spiral in 2015. Shell’s 50-day moving average had broken below its 200-day moving average in late 2014. It has stayed there due to lower oil prices.
Shell made a series of strategic moves in early October 2015, including rescheduling and halting projects, selling assets, ceasing exploration activity in high-cost areas, and cutting operating costs. Shell stock rose after that, crossing over its 50-day moving average. But weak 3Q15 results followed. After the results, Shell stock resumed its downward fall, breaking below its 50-day moving average. Shell is currently trading below its 50-day and 200-day moving averages.
3Q15: Tough quarter for Shell
Royal Dutch Shell (RDS.A) posted a loss of $7.4 billion, including identified items, in 3Q15. Identified items included divestment gains and losses, impairments, redundancy, and restructuring costs. For EII (excluding identified items), Shell posted an adjusted profit of $1.8 billion, a fall of 70% over 3Q14. The EII upstream segment saw a loss of $425 million compared to earnings of $4.3 billion in 3Q14.
Shell’s refining segment, EII, saw its earnings rise from $1.8 billion in 3Q14 to $2.6 billion in 3Q15 due to higher refining margins and widening cracks. EII, Royal Dutch Shell (RDS.A) reported diluted adjusted EPS (earnings per share) of $0.28 in 3Q15 compared to $0.92 in 3Q14.