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$50 a barrel! Oil companies get $312B windfall

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Written by: Matt Krantz at USA Today

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Oil prices Thursday closed above $50 a barrel for the first time since June as Hurricane Matthew barreled toward the U.S., contributing to a $316 billion boost for energy stock investors.

The price of West Texas Intermediate crude has rallied 92% from its lows this year to close Thursday at $50.44 a barrel.

Traders are expecting oil prices to swing higher if Matthew disrupts oil supplies in the southeast U.S. Meanwhile, oil prices were already rising since last week following a pact with members of theOrganization of the Petroleum Exporting Countries to pull back on production.

The 36 energy companies in the Standard & Poor’s 500 index have collectively gained $312 billion in market value since crude prices hit rock bottom this year at $26.21 in February, according to a USA TODAY analysis of data from S&P Global Market Intelligence.

Chevron (CVS) is the biggest energy winner in market value, adding $36.2 billion since the low in oil prices. All energy companies in the S&P 500, with the exception of refiner Valero Energy (VLO), have added market value since oil prices bottomed out. The Energy Select Sector SPDR exchange-traded fund (XLE), which tracks the performance of large energy stocks, is up 37% from its lows this year in January as investors start looking for values.

Higher oil prices are a welcome change for investors who have been reeling from an epic bear market when it to petroleum. The price of oil has collapsed 76% from its high to its low over the past three years. Investors are braced for energy companies to report 65% lower adjusted profit in the third quarter, dramatically worse than the 0.8% drop in profit seen from the S&P 500 at large.


But profits are expected to turn as prices firm. Chevron’s adjusted profit is expected to drop 63% this year to $5 billion, but rebound 174% in 2017 to $13.8 billion.

If oil prices keep gaining, the future surge in energy company profits is that much more believable. Exploration and production oil “companies can move from scapegoats to darlings (or vice versa) in short periods,” says Lloyd Byrne, analyst at Nomura in a note to clients.


Largest energy stock gainers in market value since the low in WTI oil prices in February

Company, Symbol, market value gain from low ($ millions), % gain from low

  • Chevron, CVX, $36,202.33, 23.1%
  • Exxon Mobil, XOM, $30,851.08, 9.3%
  • Kinder Morgan, KMI, $18,148.79, 58.2%
  • Schlumberger, SLB, $17,508.83, 18.3%
  • EOG Resources, EOG, $17,389.32, 48.2%
  • Anadarko Petroleum, APC, $15,744.35, 79.0%
  • ConocoPhillips, COP, $15,654.71, 39.6%
  • Halliburton, HAL, $15,129.57, 61.0%
  • Williams, WMB, $12,926.32, 129.6%
  • Pioneer Natural Resources, PXD, $12,796.91, 68.1%

Written by: Matt Krantz at USA Today

Click HERE to Read Article From Publisher