Oil spent the last week in a fast funk before a resurgence of interest sent prices rising back towards $50 this week. As the 1st quarter reports of many of the U.S. E+P players come in, we have a great opportunity to assess which one of them, if any, we’d like to focus on to take advantage of an oil price that seems momentarily stuck between $45 and $53 dollars a barrel.
In general, the story of earnings from each of them is exactly the same, although the differences, when there are some, are critical for knowing where to invest in the energy space. A notable similarity between all of these companies is that they are hugely ahead of where they were in revenues compared to last year. This makes lots of sense as oil was trading an average of about $25 lower in the first quarter of 2016 compared to this year.
Each of them is also clearly committed to increasing production in 2017 as well. This is also a similar theme for U.S. oil companies and not a good one – the slavish move towards higher production, no matter what the outlook for oil prices and profitability has helped to extend the timeline of global rebalancing of supply and demand and punish stock prices.
So, neither of these commonalities is helpful in gauging which of these producers to own. It has become fact that U.S. oil companies are now reliant upon continuing OPEC cuts to make them even marginally profitable. The crowing you’re hearing from oil CEOs on conference calls, thumbing…