Major Oil Companies Hold Ground in Volatile Markets

Strategic Insights -

Despite widespread market volatility, major oil companies weathered the storm last month, with most trading indexes showing a slight decline or staying relatively stable. The IPF Oil & Gas Index of the 15 largest oil and gas companies traded in New York fell 2% in April, compared to a 3% dip for the S&P 500 Index and a 4% decline in the broader FT-World Actuaries Index. Meanwhile, the technology-laden Nasdaq Composite plummeted 16% in April, a significant correction after a hot 1999.

Key Takeaways:

  • Major oil companies, including Exxon Mobil, Chevron, Texaco, Conoco, and Phillips, reported better-than-expected first-quarter earnings, attributed to lower-than-expected exploration expenses and increased global refining margins.
  • Analysts attributed the positive earnings surprises to cost savings and strong refining margins, despite a decline in crude oil prices.
  • Chevron and Texaco suffered the largest share price declines, with both down around 8%, while USX-Marathon fell 11% after reporting earnings below expectations.
  • Fahnestock & Co. analyst Fadel Gheit describes the performance of major oil companies as "unusually weak," reflecting a skeptical long-term market view.
  • Energy investors are opting for shares in independent producers, which are valued lower than major oil companies under current valuations.

Statistics:

  • The IPF Oil & Gas Index declined 2% in April, compared to a 3% dip for the S&P 500 Index and a 4% decline in the broader FT-World Actuaries Index.
  • The Nasdaq Composite plummeted 16% in April, while the S&P 500 Index fell 3%.
  • Major oil companies, including Exxon Mobil, Chevron, and Texaco, reported better-than-expected first-quarter earnings.
  • Crude oil price declined to $25.66/barrel at the end of April.
  • USX-Marathon suffered the sharpest fall in the IPF Index, with a share price drop of around 11%.
  • Fahnestock & Co. analyst Fadel Gheit said energy investors are opting for shares in independent producers, valued lower than major oil companies under current valuations.

Sources:

  • International Petroleum Finance's (IPF) Oil & Gas Index
  • Fahnestock & Co. analyst Fadel Gheit
  • Exxon Mobil
  • Chevron
  • Texaco
  • Conoco
  • Phillips
  • USX-Marathon
  • Total Fina Elf
  • Unocal