Breaking News!
Petrobras - the Brazilian-run international oil company - has 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, although the giant discoveries there will be difficult to develop.
Also, the Bakken Shale Formation of North Dakota is red hot with exploration now with the high oil prices. The oil-containing formation there is two miles down and horizontal drilling and fracturing is necessary once vertical drilling reaches the formation. But the rewards are great if you have the technology (and if oil prices are high enough to justify development).. 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 high-quality oil. Marathon Oil and XTO (both discussed below) are examples of large oil companies that are becoming active in the Bakken Shale Formation, along with many small oil companies.
Investments in large oil company stocks ( "major oil companies" as they are often referred to) is essential in obtaining a well- balanced oil & gas stock 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 may be a good time to buy selected major oil & gas stocks. The large oil companies discussed include: Shell, Exxon, British Petroleum, Total, Chevron, ConocoPhillips, XTO, Occidental, Repsol, Hess, Imperial, Marathon, Chesapeake, Encana, EOG, Devon, Pestrobras, Saudi Armco, .Gasprom, PetroChina, Statoil, and CNOOC.
The recent meltdown of the overall stock market took a toll on the stock of large oil companies but to a lesser extent than the stock of small oil companies..
Royal Dutch (RDS-B). Royal Dutch owns a majority interest in Royal Dutch/Shell Group. 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 operates over 44,000 service stations.
Shell stock has a market cap of $160 billion, annual revenue of over $306 billion and profits of $14.5 Billion.
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 was up about slightly over the past year.
Shell's work in alternative energy - LNG, wind power, solar energy, shale oil, natural gas to liquid fuels, Alberta oil sands, etc. - is of interest.
For more information on alternative energy sources, see alternative energy sources.
Truly a large oil company, second only to Exxon/Mobil and, possibly, British Petroleum! Also, a very innovative company.
Shell stock must be considered by any investor preparing a list of large oil company stocks.
Exxon/Mobil (XOM). This large 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. Exxon stock is essentially unchanged from one year ago.
Market cap of Exxon is $305 billion, revenue is $301 billion and profit ois $21 billion.
Exxon is apparently interested in exporting LNG from is Qatar. Qatar has enormous reserves of natural gas (see Natural Gas....could the LNG prospects change with the enormous U.S. reserves of natural gas found recently in shale formations).
Exxon has very large reserves of oil and other petroleum liquids and natural gas. Exxon is making a major move in the natural gas area by moving to acquire XTO (acquisition value = $41 billion), one of the most aggressive natural gas companies in the industry. Also, it should have been noted that XOM has interests in 15,000 oil and/or gas wells.
Exxon is loaded! Question: Will Exxon be worth a trillion dollars a few years from now?
British Petroleum (BP). British Petroleum has four main businesses: (1) Exploration and production of oil; (2) Gas, power and renewables; (3) Refining and marketing; and (4) Petrochemicals. BP is almost as large an oil company as Exxon/Mobil with its stock worth $145 billion, annual revenues of over $266 billion and profits of about $20 billion.
British Petroleum stock is down about one-fourth in the past month since the Gulf Of Mexico spill occurred. .
BP's oil & gas reserves are also very large. Oil & petroleum liquids total 5.0 billion barrels and natural gas reserves total about 41 trillion cubic feet.
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). A large 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 $109 billion. (Note: recent financial data on Total was not available at my sources).
Total has interests in 16,000 retail stations.
Total's oil & natural gas reserves are estimated at 10 billion barrels, equivalent.
Total has become adept at getting foreign countries to allow Total access to oil and gas reserves. Total officials say that getting access 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 major 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 $157 billion, revenues are $171 billion and earnings are $13 billion.
Chevron merged with Texaco in 2001.
In 2004 - 2006, Chevron led a group in making a very large (probably 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 oil field is located in the deep Gulf.
Chevron stock was little changed 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.)
Chevron is the largest supplier of geothermal energy in the U.S. but the total energy from geothermal represents only about 2 % of Chevron's total energy output - an indication of how small alternative energy output is in the U.S.
ConocoPhillips (COP). The company is located in Houston. Primary business is exploring for and producing crude oil, natural gas and natural gas liquids, worldwide. Conoco is the 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 $83 billion, annual revenues are $150 billion, and net income is $6 billion The stock was up about 20% over the past year.
ConocoPhillips became one of 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. .
ConocoPhillips is making a strong effort to enter the Russian energy market.
Conoco's reserves are estimated at 9 billion barrels of oil equivalent.
Conoco and BP are teaming up to build a $30 billion pipeline to bring natural gas from the north slope to the U.S. markets.
Repsol YPF (REP). Largest 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 (Carioca Field) just announced. (See write-up at top of page)
Repsol's market cap is $26 billion. Data on revenues and net income are not recent so are not included here.. The stock price was essentially unchanged for the past year.
XTO Energy (XTO). The company develops and produces both oil and natural gas and has substantial reserves of both oil and natural gas. Its natural gas reserves are estimated at 12 trillion cubic ft and oil reserves are estimated at 93 million barrels. XTO has interest in over 10,000 oil & gas wells.
The stock was up a little less than 10% over the past year.
The company's market cap is $27 billion, revenues are about $8.9 billion per year and the net profit is about $1.9 billion.
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 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.)
XTO has jumped into the Bakken shale formation play in North Dakota by buying properties from Headington Oil for about $2 billion. XTO is already heavily involved in the red-hot Barnett Shale play and has recently moved into the massive natural gas strike in the Haynesville shale formation.
It should be noted that XTO is being acquired by XOM for about $41 Billion.
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 both oil and natural gas (3.2 billion barrels of oil equivalent)
Market cap $65 billion, $17 billion revenue and $3.6 billion net income. The stock was up about 20% over the past year.
Chesapeake Energy (CHK). An independent natural gas company who has just become the largest producer of natural gas in the U.S. About 90% 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. They are heavily and successfully involved in the Haynesville shale formation of Louisiana and East Texas using horizontally-drilled wells.
Chesapeake's reserves are about 14 trillion cubic feet of natural gas equivalent.
Chesapeake's market cap is $14 billion and revenue is about $9 billion and profits for the past year were only $6.25 million. The company stock was virtually unchanged during the past year as the overall stock market crashed.
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.
Chesapeake Energy is an aggressively-managed company but the economic collapse of the past few years has not done them well.
Encana Corp (ECA). A Canadian-based independent oil company with some impressive oil & gas reserves including natural gas liquids. The market cap has dropped to $22 billion because the company was split into two parts in December 2009.
Market cap is $22 billion, annual revenues are $11 billion, and net income is about $2.3 billion.
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.
EOG Resources (EOG). The bad boy is back! 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 $25 billion, revenue of $4.4 billion, and net income of $500 million.
EOG is basically a gas company instead of an oil company...despite their expertise in handling Bakken shale formation oil. Their total reserves are about 10 trillion cubic feet equivalent.
Looks like a solid company. The stock was up over 50% over the past year..
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 $28 billion, revenue is $ 9 billion and net income is over $2 billion .
Stock price was up slightly over the past year,
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.
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. Other oil experts 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.)
Petrobras
Petrobras (PBR) - Official name is Petroleo Brasileiro SA. Petrobras is the Brazilian state-run oil company. The market cap of the company stock is $152 billion but changing rapidly due to recent huge oil strikes off the Brazilian coast. Revenue is $98 billion and net income is $15 billion.
Petrobras stock was up about 150% over the past year.
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 earlier 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.....on the other hand, there are rumors that the two Carioca and Tupi oil fields may be just the first two of a multiple collection of oil fields in the same general area.)
Offshore Brazil is turning into major oil territory and Petrobras is leading the way. The company now ranks high among 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!
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. I am beginning to be impressed by some of the state-run companies, e.g. Statoil & Petrobras.
The market cap is $83 billion, revenue is $28 billion, and net income $2.4 billion. The stock was up about two-thirds over the past year.
I particularly like Statoil's long-range projection for exporting LNG from the Arctic natural gas fields.
An impressive looking oil 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.
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 about one trillion 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.
CNOOC is 66% owned by the Chinese government but the board had independent members who represent foreign interests.
CNOOC stock doubled over the past year.
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 57 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.
Data on revenues & net income was not available from my sources. The stock price almost doubled over the past year.
The company has an amazing 466,000 employees.
The company has inked a deal for clean Australian natural gas (LNG) to be imported into China.
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.
No financial data is presented on Gasprom due the difficulty of interpreting the available data. The Gasprom stock was up slightly over the past year.
You will have to do your own research.
The large oil companies are loaded with oil and gas reserves and oilfield technology. Their stocks also appear to be under-priced due to the overall market crash. With peak oil still approaching (at a reduced rate) and with alternative energy sources not even close to being able to replace oil and natural gas, now appears to be an good time to buy the large oil company stocks.
Last Updated: 08/03/10
e-mail me @ vanc13@cox.net
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