As the world economy emerges from the epidemic and commodity prices continue to recover, the oil and gas industry is on the rise. Great thing. Results of Wall Street Indicators They have generally shown courage Short-term oil spills, despite severe strains of epidemics. Even the traditional conservative IEA has forecast the remainder of 2020, but has raised oil prices for 2022. However, few experts have come up with long-term oil forecasts. What good will Big Oil be for 5, 10 or 20 years from now on? Amazing innovation? Long, slow decline? Or maybe a more sudden fall?
The UK-based multi-professional professional network Ernest and Young delved deeper into the subject Some interesting insights Regarding long-term oil and gas vision.
Mitch Fan, CEO of EI America Energy and Resources, and EY US Oil and Gas CEO, began his analysis last year, noting that it is unique among the underlying cycles in the oil and gas industry.
Explaining the high prices of 2021, and the declining costs of the past year, he explained the potential ways to increase revenue for 2021 and move E& Ps forward:
- Integrated oil and gas companies appear to be more likely to invest their capital in decarbonation and alternative energy.
- With the advent of oil and gas in the coming decades, many free people are more likely to re-invest in their core businesses.
- Instead of investing in the future, a small group of companies may choose to return the capital to shareholders and opt for a slower flow.
Consider how some of these situations are playing out.
Pure energy transfer
EY says deep-pocketed oil and gas companies are more likely to invest in renewable energy.
However, the shares of oil and gas companies that invest heavily in renovations are no bigger than their brothers with less green certificates.
The point is a good one BP (NYSE: BP) and Ll l (NYSE: RDS.A), European oil supermarkets with some major clean energy obligations, both of which do not meet European oil and gas standards. STOXX Europe 600 Oil and Gas Index (SXEP).
The biggest problem here comes from the way the renewable sector works.
Green energy requires heavier pre-investment investments with longer return times compared to fossil fuels. In fact, green infrastructure is 1.5-3.0x more capital and manpower than hydrocarbons.
Oil and gas companies are currently struggling to find a way to make ends meet. In fact, they consider it important to re-establish, at least in part, as a renewable enterprise by deciding which carbon energy markets offer the most exciting future returns.
Most renewable enterprises, such as renewable and wind projects, tend to reduce cash flows several decades ago after total capital expenditure, compared to higher oil risk risks than their current models. While there is a need to generate rapid shareholder returns, some fossil fuel companies are actually reviving their clean energy investment.
By investing their cash flows on clean energy projects, oil majors can benefit in the future — but at the expense of today’s surplus payments and rebates. In other words, the markets want to eat their bread and still say little.
Independent E and P investments
Interestingly, according to EY, most of the free E&P companies will continue to invest in most of their cash flows despite the ongoing energy shift in their major oil and gas businesses.
Independent E&P companies are primarily focused on making the bull market stronger but more vulnerable to falling oil prices. Not surprisingly, many are superior in the current market.
Last year, Houston, Texas-based Shale manufacturer Konoko Phillips (NYSE: COP) When many Shale companies refused to lower production and give up their market share, they celebrated themselves after announcing some deep product cuts. The company’s reduction of North American production to 500,000 bpd is one of the biggest reductions in U.S. production. This year, Konoko Phillips has reduced drilling activity and maintained a tight cover on capital expenditures.
And those savings are now paying off.
Konoko became the first major U.S. independent oil producer to resume its stock purchase program after ending last year’s oil crisis.
Concoco continues to buy $ 1.5 billion worth of shares annually and plans to sell its shares. Senoves Energy Share in the current quarter and complete sales by the end of the year 2022. Proceeds from the sale – ~ ~ 2 billion – will be used to support stock purchases.
Related: Oil may be added more when OPEC recommends keeping the output cut off
The COP stock is being reassembled after the U.S. Bank Improved shares to purchase With a price target of $ 67 for neutrality, it has the potential to accelerate return by calling the company a “cash machine”.
According to Bofe analyst Dog Legget, it looks like KonokoIt is ready to expedite your refunds more than any “pure-game” E&P or oil major.
Leggate COP shares are back to more attractive levels ”But in a different macro perspective than ever before [Brent] Oil costs about $ 70. “
But most of all, Boffy Analyst believes that oil recovery is very risky in the long run.
But Boff A is not the only one on Wall Street who is floating about COP.
as if Note to customersRaymond James says the company’s stock price is assessing the oil and gas company’s imminent cash flow.
COP shares are impressive because they are 40.9 = 5% compared to the previous year.
With the WTI price tag in the 60’s, ConocoPhillips should have little trouble generating huge cash flows at less than $ 30 / BB.
Then we have stocks as a strong cycle Daven Energy (NYSE: DVN).
A few months ago, Boeing analyst Doug Leggett predicted that if Brent prices could reach $ 55 a barrel or more, more oil and gas reserves would make a big difference by 2021. With Brent constantly flirting at $ 70 a barrel, many Shale drivers are now home and dry.
Bofa is overburdened in the energy sector, and has named Daven Energy, which advises oil companies to focus on strengthening their free flow or other cost-cutting measures. Ion ion natural resources (NYSE: PXD), and EOG Resources (NYSE: EOG).
Thanks to strong revenues and continued spending, including a flexible profit structure, Bofa was right on the money by increasing its DNA stockpile by 88.4% YTD.
Daven adopted a flexible profit structure, something that went well with Wall Street.
Daven paid $ 0.11 (joint stock and $ 0.24) in stock last quarter, representing 5.5% year-on-year. In addition, if the company is up-to-date, it predicts more than 7% profit margin for 2021, indicating its commitment to return more capital to the stock market as long as cash flow allows.
Some Wall Street analysts have suggested that DVN can sport up to 8% profit margins.
And there is no shortage of strong natural LNG players in this category.
Antero Resources (NYSE: AR), Southwest Energy (NYSE: SWN), Chenere Energy (NYSE: LNG), EQT Corporation (NYSE: EQT), and Regional Resources (NYSE: RRC), they are all strong choices.
By Alex Kimani to Oilprice.com
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