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US Big Oil Employees Risk Savings As Share Prices Slide

Benj

Employees at U.S. oil supermajors have lost $5 billion in savings since the end of 2018 as more than a third of these savings were in company stocks, which have been battered by oil price swings amid heightened market uncertainty.

Reuters reported the figures, based on research of company disclosures, which showed the five biggest U.S. oil companies by market size—Exxon, Chevron, Conoco, EOG Resources, and Occidental Petroleum—held $44 billion in 401 (k) employee assets at end-2018, for around 66,000 employees. Of the total, 36 percent was in company stock.

However, the average return on these five companies’ stock over the period covered by the research, was a negative 44 percent, Reuters also reported, with the range between -22 percent and -77 percent.

The portion of savings held in energy company stocks across the five biggest oil majors in the U.S. compared with just 6 percent held in company stock across all industries, Reuters noted, a much healthier portion to hold in stocks.

“A lot of people think their company’s stock is safer than an index fund,” says David Blanchett, Morningstar’s head of retirement research. However, he added, “It doesn’t make any sense from a household finance perspective.”

This seems to be especially true for energy companies. These have been underperforming indices for quite a while as investors became more cautious about their bets on oil and gas after the last oil price crisis and amid growing awareness of climate change and its implications for the long-term profitability of oil and gas companies.

Since the start of the year alone, Exxon’s stock has fallen from over $70 to about $42 apiece. Chevron’s stock has slumped from over $120 to $83 since January. ConocoPhillips has slid from over $65 to about $32. EOG Resources has lost more than half of its value, down from $84 to $39 since January. Finally, Oxy’s stock has fallen from over $42 to less than $12.

By Irina Slav for Oilprice.com

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