Breaking News!!
Petrobras - the Brazilian-run oil company - appears to have discovered a giant oil field off the Brazilian coast! (See Petrobras, below) Repsol (below) was also involved. Offshore Brazil is a seabed of opportunity right now.
Also, the Bakken Formation of North Dakota is red hot with exploration now with the high oil prices. The oil formation there is two miles down and horizontal drilling and fracturing is necessary when you reach the formation. But the rewards are great if you have the technology. There may be as much as 500 billion barrels of oil there! EOG Resources, below, presently appears to be ahead in the technology of recovering the oil. Marathon Oil, below, is another large oil company that is also active there.
Investments in large oil company stocks ( "major oil companies" as they are often referred to) is essential in obtaining a well- balanced oil & gas investment portfolio. Since many of the large oil and gas company stocks appear to be priced at or below fair value, when their enormous oil & gas reserves are considered, now appears to be a good time to buy selected major oil & gas stocks. The large oil companies discussed include Saudi Armco, Shell, Exxon, British Petroleum, Total, Chevron, ConocoPhillips, XTO, and others.
The 2007 meltdown of the overall stock market took a toll on the stock of a few of the large oil companies, also. However, most held up well, certainly better than the more volatile, small oil company stocks.
A review of the major oil & gas company stocks follows:
Saudi Armco. (Saudi Armco has no public stock so no stock investment is possible). Saudi Arabian Oil Company. The world's largest oil company (largest oil producer). Owned by the Saudi Arabian government. Saudi Armco has control of enormous reserves of crude oil and very large reserves of natural gas. But, some experts say the Saudi oil reserves are exaggerated and that the super-giant Saudi field, Ghawar, is peaking and that further increases in oil production are unlikely.
The Saudis deny that their oil reserves are exaggerated. They say that when they nationalized the Saudi oil industry, they had to increase the stated oil reserves to realistic levels. They claim the oil companies - when the oil companies had control - had severely underestimated the oil reserves so that the companies could control oil prices. According to the Saudis, the oil reserves of the country are enormous, possibly as high as 900 billion barrels. Others question the reserve figures.
The Saudis also deny that their oil production has peaked and say they can increase oil production when necessary.
Saudi Arabia is a large country and additional oil fields (no doubt smaller than Ghawar) will likely be found.
(Note: In the past year or so, rumors have circulated that the Saudis are deliberately over producing oil to put economic pressure on Iran, their competitor in the Persian Gulf region. Iran is very dependent on oil revenues and over-production reduces the price that Iran obtains for each barrel of oil.)
Royal Dutch (RDS-B). Royal Dutch owns 60% interest in Royal Dutch/Shell Group. (The Shell Transport and Trading Company, p.l.c. owns the remaining 40%). The Royal Dutch/Shell Group companies are engaged in all the principle aspects of the oil and natural gas industry as well as in power generation, renewable energy, chemicals, and other.
Shell stock has a market cap of $211 billion, annual revenue of over $356 billion and profits of $31 billion per year.
Several years ago, Royal Dutch was charged with significantly over-stating oil reserves and paid a large fine. The admission by Shell regarding reserves cast doubt on other oil companies' reserve estimates and helped feed the Peak Oil frenzy.
Shell stock is largely unchanged over the past year but was volatile during the year.. The P/E is 7.
Shell's work in alternative energy - LNG, wind energy, solar energy - is of interest. For more information on alternative energy sources, see alternative energy sources.
Truly a massive oil company, second only to Exxon/Mobil and, possibly, British Petroleum!
Exxon/Mobil (XOM). This oil company is the world's most profitable company. Engaged in the exploration and production of oil and natural gas and the manufacture of petroleum products. The Exxon stock is up about 20% from one year ago.
Market cap of Exxon is $459 billion, revenue is $362 billion and profits of $41 billion (yes, that is right...$41 billion!).
I have a particular interest in LNG and see where Exxon will acquire 28 LNG tankers. Talk about commitment to LNG! One country that Exxon is apparently interested in exporting LNG from is Qatar. Qatar has enormous reserves of natural gas (see Natural Gas).
British Petroleum (BP). British Petroleum has four main businesses: (1) Exploration and production; (2) Gas, power and renewables; (3) Refining and marketing; and (4) Petrochemicals. BP is almost as large as Exxon/Mobil with a market cap of $223 billion, annual revenues of over $284 billion and profits of about $21 billion.
British Petroleum stock has changed little over the past year (but was very volatile). The P/E is 10.
BP is the operator of the Alaskan Prudhoe Bay field, a portion of which had to be shut down a little over a year ago for extensive pipeline repairs.
BP's activities in renewable energy are of interest. One item of particular interest to me is BP's work with the Jatropha plant from which biodiesel is being produced. See alternative energy sources for more.
Total (TOT). An oil company with interests in oil and gas (including LNG), electricity generation, petrochemicals, oilfield services and engineering industries. Its oil and gas activities are scattered over Africa, Europe, the North Sea, the Caspian Sea, Australia, the Gulf of Mexico, and Latin America. Market cap $165 billion, revenues $214 billion, and net income = $21 billion.
Total stock is up about 15% for the past year. P/E is a little over 8.
Total has interests in 27 refineries and 16,000 retail stations.
Total has become adept at getting foreign countries to allow Total access to oil and gas reserves. Total officials say that is the new challenge to international oil companies. Oil and gas-rich countries no longer allow you to come in and pillage the country of its resources. The countries now want something in return.
Chevron (CVX). This oil company is headquartered in San Ramon, California. The oil company explores for crude oil and natural gas, refines crude oil, produces petrochemicals, and markets the products. Operates in 180 countries. Market cap $176 billion, revenues are $210 billion and earnings are $19 billion.
In 2004 - 2006, Chevron led a group in making a very large (possibly giant) discovery (Jack prospect) in the deep Gulf of Mexico. However, it will take about 10 years to get the field in full production....an indication of the difficulty in bringing even a giant oil field into production when the field is located in the deep Gulf.
Chevron stock has moved up about 20% in the past year.
About three years ago, Chevron bought out Unocal after a tussle with CNOOC, the Chinese offshore company, which also wanted Unocal. (See CNOOC, below, for more information.)
ConocoPhillips (COP). The company is located in Houston. Primary business is exploring for and producing crude oil, natural gas and natural gas liquids, worldwide. World's largest oil refiner. Also, manufactures and markets petrochemicals. Has an emerging businesses segment that pushes the development of new businesses beyond the company's traditional operations.
Conoco's market cap is $121 billion, annual revenues are $172 billion, and net income is about $12 billion.
ConocoPhillips became North America's largest natural gas producer when it purchased Burlington Industry for $38 billion. The purchase price is equivalent to a value of $3 per thousand cubic feet for Burlington's natural gas reserves. That looks like a decent price to me although not the bargain it appeared in the aftermath of Katrina when gas prices were very high.
XTO Energy (XTO). The company develops and produces both oil and natural gas and has substantial reserves of both oil and gas. Its natural gas reserves are estimated at 7 trillion cubic ft and oil/natural gas liquids are estimated at almost 300 million barrels. XTO has interest in over 10,000 oil & gas wells.
XTO's stock price has continued its long-term steady rise. The stock is up another 50 % over the past year (it has been moving up for a long time!).
The company's market cap is $31 billion, revenues are about $6 billion per year and the net profit is about $1.7 billion. The price to earnings ratio is 17, pretty low for a fast growing company like XTO.
XTO is headquartered in Texas and much of its operations are in the Texas - Louisiana area. The company is strong into the Barnett shale formation developments of North Texas.
XTO has also branched out heavily into the hot Rocky Mountain region by buying about 1 trillion cubic feet of gas, much of it in the Rockies, from Dominion.
XTO has the reputation of being a superbly managed firm. It is well-known for its ability to replace reserves as the oil & gas production is sold. The risk with XTO is also low because they operate largely in old U.S. oil and gas fields. XTO tends to avoid many of the energy-rich countries of the world where risk is great (as the giant major oil companies sometimes learn to their sorrow.)
This is one I will keep a close watch on!
Occidental Petroleum (OXY). This independent, international oil company explores for, develops, and markets crude oil and natural gas in the US, Latin America, and Middle East. Biggest development in the past few years is the news that Occidental is back in Libya in a big way since sanctions were lifted from that country. Not only does Libya have plenty of oil but it has the good, light, low-sulfur oil that is easy to refine. Light oil is becoming increasingly precious as Peak Oil approaches. Occidental could be sitting in the catbird seat.
Occidental's reserves include 2 billion barrels of oil and 4 trillion cubic feet of natural gas.
Market cap $60 billion, $19 billion revenue and $7 billion net income. OXY stock, with a P/E of 11, is up over 40% in the past year.
Gazprom OAO (OGZPF.PK). The Russian oil and gas company. Gazprom has the monopoly on Russia's natural gas production. The company is the largest company in Russia. An idea of the huge size of the firm can be seen in the fact that 25 % of Russia's federal tax revenues are from Gazprom. Gazprom controls one-fourth of the world's natural gas reserves. It should be noted that Gazprom is gearing up to export LNG overseas.
The Gazprom stock is up about 20% over the year.
No data is presented on Gasprom due the difficulty of interpreting the available data.
PetroChina (PTR). The mainland China (headquartered in Beijing) oil and gas company. Explores for crude oil and natural gas and transports and markets the products. The company purchases oil when necessary. It also refines oil.
Company reserves are 12 billions barrels of oil and 53 trillion cubic feet of natural gas. PetroChina has 21,000 kilometers of gas pipeline, 9,600 kilometers of crude oil pipelines, and 2,400 kilometers of refined product pipelines.
PetroChina has a market cap of $230 billion, revenues of $106 billion, and net income of $20 billion. The stock has risen a net of about 25 % in the past year after more than doubling in midyear.
PetroChina has 400,000 employees!
The company has just inked a deal for clean Australian natural gas (LNG) to be imported into China.
Repsol YPF (REP). Large Spanish oil and gas company based in Madrid. Engages in the exploration, development and production of oil and natural gas (also LNG). The company is strongly positioned in Argentina, Venezuela and other Latin American countries.
Repsol was apparently a junior partner to Petrobras in the giant offshore Brazilian oil strike just announced.
Repsol's market cap is $43 billion, revenues are $88 billion and net income is $5 billion. The stock price is virtually unchanged for the past year.
Hess Corporation (HES) A much smaller oil company than the ones discussed above. Hess explores for and produces crude oil and natural gas. It also operates oil refineries. Market cap is $31 billion, revenues are about $32 billion and profits are about $1.8 billion.
Hess is up about 100% for the past year but analysts still give the stock only an average rating.
Imperial Oil (IMO). Imperial Oil engages in exploring for, production of, and sales of crude oil and natural gas and their products. Operates over 2000 Esso stations in Canada.. Products include crude bitumen from Canada's oil sand deposits. Possibly a good way to play Canada's oil sands!
A majority (70%) of the company's stock is owned by Exxon Mobil.
Market cap is $48 billion, revenue is $24 billion revenue, and net income = $3.2 billion. Imperial Oil stock is up about 40% in the past year. P/E of the stock is 15.
Petrobras
Petrobras (PBR) - Official name is Petroleo Brasileiro SA. Petrobras is the Brazilian state-run oil company. The market cap is $269 billion but changing rapidly due to recent huge oil strikes off the Brazilian coast. Revenue is $101 billion and net income is $12.7 billion. The PE of the stock is about 21.
The company has 70,000 employees.
In April 2008, Petrobras announced the discovery of a giant oil field offshore from Brazil's southeastern coast. This Carioca field discovery closely follows their discovery of the 8 billion barrel Tupi field in the same area. (It should be noted that the reported size (33 billion barrels) of the Carioca field is questioned by some oil experts.)
Offshore Brazil is turning into major oil territory and Petrobras is leading the way. The company now ranks high with the oil giants.
Keep up the good work, Petrobras! We need all the conventional oil you can find! Development of alternative energy sources is moving too slowly!
Who says state-run oil companies can't produce? Petrobras has made a major oil strike even if they are found to have fudged the size of the reserves a bit!
Marathon Oil Corporation (MRO). Marathon is a large oil company engaged in both the production of oil and natural gas and in the operation of refineries (capacity about 1,000,000 barrels of crude oil per day. Marathon recently agreed to purchase Western Oil Sands for $5.5 billion and also announced that it is upgrading one or more of its refineries to handle the heavy crude obtained from the oil sands. The company is also getting involved in the hot Bakken Formation prospect in the North Dakota - Montana-Manitoba area. Up to 500 billion barrels of high quality but difficult-to-extract oil are in the Bakken Formation.
Marathon has a market cap of $33 billion, revenue of about $59 billion per year with profits of $4 billion. The stock price is virtually unchanged for the year but the stock was volatile during the year.
China National Offshore Oil Company, Ltd. (CNOOC) (Stock symbol CEO) CNOOC shook up the establishment a few years ago when they made an unsolicited offer of $18.5 billion to buy Unocal Corp. (UCL). CNOOC become quite the celebrity oil company. Eventually, under pressure from the U.S. Congress, the proposed purchase was blocked.
The offer shows that China desperate to shore up its oil and gas reserves for the long haul ahead. China is now the second leader consumer of oil in the world. They are already a net importer of oil and gas and their demand for energy is growing rapidly.
The offer upset some in the US Congress as China is generally seen as a US rival. But does the US really have any choice in such matters? Through the monstrous trade imbalance between the two countries, China has been allowed to accumulate over 700 billion dollars of greenbacks. We almost gleefully allowed this to happen and now we want to say the Chinese can't spend these greenbacks buying American companies. I don't think so! Eventually, we will have to allow China to buy U.S. energy firms.
You really can't blame the Chinese for trying. They need the oil and gas as badly as the US. ( You are going to see many more such deals around the globe from the Chinese. Many world oil companies are under-priced and the Chinese know bargains when they see them.)
Forbes (on-line) has called CNOOC a "buccaneering offshore exploration company." CNOOC is not afraid to go anywhere and that includes Somalia and Iran.
The company stock almost doubled during the past year.
CNOOC is 66% owned by the Chinese government but the board had independent members who represent foreign interests.
Chesapeake Energy (CHK). An independent natural gas company who is the third largest producer of natural gas. 88% of the company's business is in natural gas. Chesapeake is an aggressive oil & gas company who operates thousands of oil and gas wells and drills hundreds of new wells each year.
Chesapeake's reserves are about 7 trillion cubic feet of natural gas equivalent.
Chesapeake's market cap is $19 billion, revenue is about $ 8 billion per year and profit is about $1.2 billion per year. The P/E is 19. The company stock is up about 50% during the past year.
Sliding natural gas prices over the past few years have required CHK to react aggressively to keep their profits up. The natural gas production rate has been cut, drilling programs have been trimmed, and marginal properties have been sold off.
Encana Corp (ECA). A Canadian-based independent company with some impressive oil & gas reserves: 12 trillion cubic feet of natural gas & 1.1 billion barrels of oil & natural gas liquids. At a market cap of $58 billion, the value of oil & gas reserves, alone, are worth several times the present stock value of the company.
Market cap is $58 billion, annual revenues are $23 billion, and net income is about $4 billion. P/E is 15.
The Canadian companies appear to be particularly popular now because they are in a safe location (removed from Gulf of Mexico with its hurricanes) and they are located near the hottest oil properties at this time - the Canadian oil sands whose recovery operations require enormous amounts of natural gas.
In addition to providing natural gas, Encana is getting involved in mining oil sand deposits and, in at least one instance, they are working a joint venture with another oil company.
Canadian Natural Resources (CNQ). Another Canadian-based company with large reserves (2 billion barrels oil, 5 trillion cubic feet of natural gas). Most of their reserves are in Canada but CNQ also has operations in the North Sea and offshore West Africa.
The market cap of CNQ is $38 billion, revenues are $11 billion per year. Net income is $2.6 billion. The P/E is 14. Although the stock price has appreciated over 40% during the past year.
Statoil (STO). Statoil is 70 % owned by Norway and is headquartered in Norway. Statoil is very active on the Norwegian continental shelf. Statoil appears to working with Russia toward opening up huge Arctic Circle natural gas fields for development. with the long-term view of exporting LNG to the U.S. Statoil is also actively involved in oil and natural gas operations in 35 countries including LNG, Canadian oil sands, African oil, etc.
The market cap is $63 Billion, revenue is $81 Billion, and net income $8 Billion. PE is8. The stock is up about 20% over the past year.
The analysts like Statoil a whole lot and so do I. I particularly like the long-range projection for exporting LNG from the Arctic natural gas fields to the U.S.
An impressive looking company if the state ownership doesn't bother you. It doesn't bother me at all. As a matter of fact, when I look at the Brazilian-run company, Petrobras, and their giant new oil discovery offshore Brazil, and the well-run Statoil, the better I like the state-run companies. Some of the state-run firms are running circles around our giant private oil companies.
EOG Resources (EOG). Enron is back! Or, at least, the independent oil company derived from Enron has arrived. Unlike the cursing that accompanied the demise of Enron, EOG is a well- thought-of company growing in leaps and bounds. I have included them here mainly because of their expertise in handling the Bakken Formation oil of North Dakota. Apparently, they are technically ahead of the other companies working on the Bakken Formation.
EOG has a market cap of $32 billion, revenue of $4 billion, and net income of $1 billion. The trailing PE is 30 but the PE is forecast to drop to 17 next year.
EOG is basically a gas company instead of an oil company. Their total reserves are about 6.8 trillion cubic feet equivalent.
Looks like a solid company. My only problem is that its stock looks fully priced.
But EOG is the type of independent oil company (like Devon, below) we need right now. If we are going to survive the arrival of Peak Oil, we need an ample supply of oil and gas as a bridge to alternative energy development. And alternative energy development is nowhere near ready to assume the burden of the fossil fuels.
Keep up the good work, EOG!
Devon (DVN). The largest independent oil and gas company and one about whom there are constant rumors of a take-over by one or other of the major oil companies. Devon has large oil reserves, which are well-verified, and many prospects. Hence, it is a desirable merger partner. Market cap is $45 billion, revenue is $ 11 billion and profits are $ 3.1 billion. The stock has a P/E of 13.
Stock price has increased about 2/3 over the past year and has a nice steady curve up!
Devon recently participated with Chevron in the discovery of a giant new oil field (Jack prospect) in the deep Gulf of Mexico and is also involved in the prolific Barnett Shale Formation work going on around the country.
Question. Would a takeover of independent Devon by a major oil company be desirable to the U.S. public as Peak Oil approaches? We need someone out looking for oil and gas and Devon does a great job. If the aggressive independents like Devon are taken over, who is going to find new oil deposits?
Too many of the larger firms are cautious and are content to buy oil deposits, i.e., buy independents like Devon, rather than spend the money to find oil deposits. You can't blame them since the return for exploration has been poor in recent years. My question is, of course, strictly academic since it is still a free country and, if someone wants to sell their firm, there is nothing legal that can be done to stop them. (For more of the same, see the discussion on China's proposed buyout of Unocal, above)
The public will likely suffer if Devon sells out.
As you can see, I like Devon but I like them as an independent.
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Last Updated: 05/11/08
e-mail me @ vanc13@cox.net
Disclaimer
This web site, titled Large Oil Company Stocks | Major Oil Stocks, and the information included herein, is intended to provide information only and should not be construed as investment advice. The information provided is meant to broaden your knowledge and enable you to make better investment decisions within your portfolio.
Sometimes I give an opinion on the quality of an investment. This information is based solely on my own investment goals and investment needs and might not reflect your goals and needs and might not be an appropriate investment for your portfolio.
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