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Are The Oil Majors Undervalued?

Exxon

Friday May 4, 2018

In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy sector. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.

Let’s take a look.

1. Earnings for oil majors up sharply, but Wall Street skeptical

(Click to enlarge)

- The oil majors posted an enormous improvement in earnings, some of them posted their largest profits in years.
- But Wall Street is still skeptical. Even as oil prices have rallied sharply, the majors have barely seen improvement in their share prices. ExxonMobil (NYSE: XOM) has actually posted losses since the fourth quarter of 2017, even though oil prices are now at a three-year high.
- Investors are now wary of high spending levels, which is likely why Exxon has been singled out. Exxon has aggressive spending plans over the next decade in order to grow production. The company’s output dipped by 6 percent in the first quarter compared to a year earlier.
- Still, investment banks keep telling their clients that the oil majors present a huge investment opportunity, with share prices beaten down so much.

2. Exxon stepping up shale drilling

(Click to enlarge)

- With Exxon’s conventional production suffering from some declines in recent years, the oil supermajor is betting on U.S. shale to help revive output.
-…

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