RDSA

Our Reports on Stocks in the Oil and Gas Complex Industry

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Dividend Yield: Estimated on a forward-looking annualized basis. VBI: The Valuentum Buying Index, a timeliness indicator that overlays a price-to-fair-value estimate consideration. Fair Value Estimate: Derived by Valuentum’s enterprise valuation process. Dividend Cushion ratio: A ratio assessing the health of the dividend (the higher, the better). Data as of the date of this article. Individual company reports may have been updated subsequent to the publishing of this article, so please download a company’s stock and dividend report for its latest information and data. Note: The data in the tables of each of the below companies’ respective stock pages is updated the weekend after the publishing of this update. Please click on a company name below to view the corresponding equity … Read more

Evaluating the Exposure of Chevron and Exxon Mobil to Russia’s Energy Industry

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Image Shown: Shares of Chevron Corporation (blue line) and Exxon Mobil Corporation (orange line) have skyrocketed over the past six months. By Callum Turcan In the wake of Russia invading Ukraine (again) in February 2022, geopolitical tensions between the West and Russia have reached levels last seen during the height of the Cold War. At the beginning of March 2022, near term WTI and Brent futures were trading north of $100 per barrel while liquified natural gas (‘LNG’) spot prices and European natural gas prices remained incredibly expensive. The supply-demand dynamics for crude oil and natural gas were already tight before this crisis, and in light of the expansive sanctions programs enacted by the West and some of its allies … Read more

Valuentum’s Theses on Best Ideas Chevron and Exxon Mobil Playing Out

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By Callum Turcan Raw energy resources pricing has surged higher during the past year with room to run. The global energy complex is on the rebound as demand for crude oil and refined petroleum products is steadily recovering from the worst of the coronavirus (‘COVID-19’) pandemic. As demand for electricity and heating needs held up well during the pandemic, liquified natural gas prices (‘LNG’) put up a strong year in 2021 and remain elevated. The OPEC+ cartel is committed to slowly phasing out its crude oil supply curtailment agreement first enacted in 2020, effectively limiting growth in global oil supplies at a time when demand is rebounding at a brisk pace. We view the near-term outlook for the global energy … Read more

High Yielding Philips 66 Has a Solid Plan in Place to Reward Its Shareholders

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Image Shown: An overview of Phillip 66’s expansive asset base. Image Source: Phillips 66 – November 2021 IR Presentation By Callum Turcan Demand for diesel and gasoline has largely recovered from the worst of the coronavirus (‘COVID-19’) pandemic, though kerosene demand (jet fuel) has a way to go given depressed levels of international travel. The refining giant Phillips 66 (PSX) took advantage of the rebound seen over the past year to pare down its debt levels on a consolidated basis. At the end of December 2020, Phillips 66 had $13.4 billion in net debt (inclusive of short-term debt) on a consolidated basis, which fell down to $12.0 billion in net debt (inclusive of short-term debt) at the end of September … Read more

ExxonMobil Continues to Optimize Its Asset Base

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Image Source: ExxonMobil Corporation – Second Quarter of 2021 IR Earnings Presentation By Callum Turcan According to Reuters, ExxonMobil Corporation (XOM) is in the process of divesting its Fayetteville shale play position in Arkansas, which ExxonMobil’s spokeswoman Julie King confirmed according to the news outlet. This is an upstream asset focused on the extraction of natural gas from the ground via “fracking” techniques (combing horizontal drilling and hydraulic fracturing to unlock raw energy resources from the ground). Divestment Overview The Fayetteville shale play was once touted as a major part of America’s way to become “energy independent” during the early days of the fracking boom. However, the play soon lost favor with energy firms large and small due to the … Read more

Chevron Posts a Great Earnings Update, Share Repurchases to Resume

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Image Shown: An overview of Chevron Corporation’s performance in the second quarter of 2021. We include shares of Chevron as an idea in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios and continue to be huge fans of the name as the global energy complex continues to recover from the worst of the coronavirus (‘COVID-19 pandemic). Image Source: Chevron Corporation – Second Quarter of 2021 IR Earnings Presentation By Callum Turcan We added shares of Chevron Corporation (CVX) as an idea to both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios back on June 27, 2021 (link here). The outlook for the global energy complex continues to improve significantly from the worst of the coronavirus (‘COVID-19’) pandemic, … Read more

ExxonMobil’s Immense Upside in Guyana

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Image Source: ExxonMobil Corporation – 2021 Investor Day Presentation By Callum Turcan On June 27, we added shares of ExxonMobil Corporation (XOM) as an idea to the Best Ideas Newsletter portfolio and the Dividend Growth Newsletter portfolio (link here). The backdrop for the energy complex has improved considerably in recent months. Raw energy resources pricing has surged in the wake of demand for refined petroleum products beginning to recover in earnest, while demand for various petrochemical products is also on the rise. Near-term Brent and WTI futures are trading north of $70 a barrel as of this writing, keeping in mind Brent averaged ~$60-61 per barrel and WTI averaged ~$57-$58 per barrel during the first three months of 2021. On … Read more

Chevron’s Forward-Looking Dividend Coverage is Becoming Stressed

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Image Shown: Chevron Corporation reduced its capital expenditure expectations a couple of times this year, though that still has not enabled the firm to generate meaningful free cash flows given the various headwinds facing its businesses. Image Source: Chevron Corporation – November 2020 IR Presentation By Callum Turcan On October 30, Chevron Corporation (CVX) reported third quarter earnings for 2020. As expected, it was a brutal report from Chevron. The ongoing coronavirus (‘COVID-19’) pandemic decimated global energy demand and severely weakened raw energy resources pricing at a time when refining margins are quite weak. This double whammy saw Chevron post a $0.2 billion GAAP net loss in the third quarter of 2020 as its revenues tanked. Dividend Coverage Facing Serious … Read more

Exxon Mobil’s Weak Forward-Looking Dividend Coverage is Very Concerning

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Image Source: Exxon Mobil Corporation – Third Quarter of 2020 IR Earnings Presentation By Callum Turcan Exxon Mobil Corporation (XOM) has contended with enormous headwinds so far in 2020 due to the ongoing coronavirus (‘COVID-19’) pandemic, and that has put its dividend at risk. Over the past couple of years, the company has come nowhere close to generating enough free cash flow to cover its dividend obligations. Exxon Mobil’s forward-looking dividend coverage appears quite weak and the company is currently leaning heavily on debt markets to keep making good on those obligations. As of this writing, shares of XOM yield ~9.7% as investors are increasingly pricing in the chance for a meaningful payout cut. Deteriorating Upstream Outlook The long-term slide … Read more

Our Thoughts on the Oil & Gas Industry

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Image Shown: Crude oil prices, measured by the WTI benchmark, plummeted during the initial phases of the COVID-19 pandemic and have yet to fully recover. Declines in global crude oil prices have depressed prices for natural gas, natural gas liquids, and liquified natural gas as well. We expect that it will take some time for the oil and gas industry to truly recover, and hefty net debt loads combined with onerous dividend obligations are making that a very tough task. Juicy dividend yields are a sign of the headwinds facing the oil and gas industry and are not a sign of strong underlying strength in those firms that are paying out generous dividends. By Callum Turcan Raw energy resources prices … Read more