U.S. President Joe Biden has criticized oil majors for not stepping up to help combat record-high gasoline prices at the pump.  In his latest remark, he highlighted that many oil companies have made record levels of profit and according to Refinitiv I/B/E/S estimates, 2022 looks to be a banner year for the energy sector. Exhibit 1 highlights the net profit margin for the S&P 500.  Energy is expected to post a record-high profit margin of 11.7% followed by 10.7% in 2023, both expected to be the highest margin in over a decade in large part to a sustainable sharp rise

The Oil & Gas Equipment & Services sub-industry kicked off 21Q4 earnings season for the S&P 500 Energy sector. We take a closer look at this sub-industry as it can be viewed as a leading indicator as to how the larger Exploration & Production sub-industry performs in the coming weeks.  The Energy sector will be a key focus this quarter as highlighted in a previous post (S&P 500 21Q4 Preview: Another Quarter of Double-Digit Growth on Tap, January 11, 2022), where we highlight that the sector is currently expected to contribute 8.12 percentage points (ppt) to the overall 21Q4 index

U.S. oil majors finished reporting 20Q1 results in the week starting May 4. The industry beat consensus expectations this quarter, led by Exxon Mobil, Chevron, ConocoPhillips, Devon Energy, and Occidental Petroleum. As a result, the S&P 500 Energy sector led all sectors and posted the strongest earnings and revenue surprise this quarter with 124.1% earnings and 5.7% revenue surprise. If we exclude Exxon Mobil, the energy sector still generates an aggregate 58.7% earnings surprise. Exhibit 1 displays the 20Q1 results in more detail. Exhibit 1: 20EQ1 Earnings Results for S&P 500 Energy Sector Source: S&P 500 Earnings Scorecard While energy

Carl Icahn isn’t exactly known for his tact. When he attacked Occidental Petroleum in February, he told its investors that “you don’t have to be Sherlock Holmes” to think that Chief Executive Vicki Hollub bought rival Anadarko Petroleum at high price so her company wouldn’t itself become a target. Icahn was at least proven right about Hollub’s overreaching – her deal has done her and her company in after she slashed its dividend on Tuesday. Having increased his stake to 10%, the activist may get his way. He could use the win. Icahn is no stranger to the oil patch,

Brent oil has entered into a bear market, as prices have fallen almost $30 a barrel since the beginning of the year. Initial worries over COVID-19 caused the largest weekly decline in Brent oil prices since January 2016, having declined 13.6% during the week of February 28. The sell-off intensified when OPEC+ concluded its meeting on March 6 without a deal to further cut oil production. As a result, Brent oil suffered its largest one-day drop since 1991, declining 24.1% ($10.9/barrel). Oil majors including Exxon, Chevon, BP, ENI, and Total have all seen downgrades to Q1 EPS estimates and are

As of Tuesday, Vicki Hollub runs Occidental Petroleum in name only. The $13 billion shale driller cut its dividend by more than 80% after a price war wiped 25% off of the price of Brent crude oil. Hollub had previously pledged to defend the dividend at all costs, even at low oil prices. Now that the generous payout is gone, it’s only a matter of time before she goes too – and Occidental loses its independence. Hollub’s job was already on thin ice, after she staked her reputation on a debt-fueled purchase of rival Anadarko Petroleum last year. Shareholders including

U.S. oil companies finished reporting 19Q3 earnings, posting a significant overall decline in YoY growth.  Notables including Exxon, Chevron, and Occidental experienced a decline of 54.1%, 26.5%, and 93.8% in YoY earnings.  Top-line revenue also declined 15.1%, 17.9%, and 4.9% respectively. Aggregate YoY earnings growth dropped 49.2%, while aggregate revenue declined 14.3%. Exhibit 1 highlights aggregated results for the S&P 500 Integrated Oil & Gas and Oil & Gas Exploration & Production sub-industries. Exhibit 1: 19Q3 Results for S&P 500 Energy E&P Decline in commodity prices It was expected to be a difficult quarter for the energy sector coming into

European oil majors finished 19Q3 reporting.  Not surprisingly, a common theme was a decline in YoY growth rates on both earnings and revenue given the lower prices in oil and gas.  Notables including BP and Total suffered a YoY decline of 40.9% and 20.1% in earnings, while revenues declined 11.0% and 10.1% respectively. Macro environment looks gloomy Brian Gilvary, CFO of BP stated, “looking now at the broader macro environment. Brent crude prices averaged $62 per barrel in the third quarter compared to $69 per barrel in the second quarter. Following the attack on the facilities in Saudi Arabia, prices

A gush of mergers in the Permian Basin is testing shareholders’ blind faith. In a few months West Texas drillers have chalked up nearly $30 billion in deals focused on one of the world’s largest oil patches. Consolidation helps combat rising costs, but high prices leave scant margin for error. Diamondback Energy was the latest to gobble up a neighboring producer, offering $8.3 billion for Energen last week. The all-stock deal, which valued Energen at roughly $29,000 an acre, is about in line with BP’s deal to buy BHP’s shale assets last month. While that represented a steep discount to