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The Zacks Analyst Blog Highlights: Statoil ASA, ConocoPhillips, Royal Dutch Shell, ExxonMobil and Marathon Oil
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For Immediate Release
Chicago, IL – August 15, 2017 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Statoil ASA (NYSE: – Free Report), ConocoPhillips (NYSE:(COP - Free Report) – Free Report), Royal Dutch Shell plc (NYSE: – Free Report), ExxonMobil Corp. (NYSE:(XOM - Free Report) – Free Report) and Marathon Oil Corp. (NYSE:(MRO - Free Report) – Free Report).
What’s Saving the Oil Companies in a Low-Price Environment?
The global oil sector has come a long way since it witnessed a sudden slump. Related industries, as well as their constituent companies, faced the impact of low oil prices. Some companies even had to file for bankruptcy, as staying in the business became harder with their then-available sources. Thousands of jobs vanished from the industry.
The demand for products in the oil industry is something that takes a long time to change. Therefore, price rise due to increasing demand was something farfetched. The next available option was to cut back supply and generate a little scarcity, which would be enough to bring oil prices to a bearable level for the companies. Oil cartels like the Organization of the Petroleum Exporting Countries (OPEC) had to cut back supply.
Upstream companies were forced to drop their contracts with drilling service providers, forcing them to cold stack their rigs. The process again killed some jobs. To survive the crash, most of the companies went for cost reduction options like improving production technologies, exiting from unprofitable sites and merger and acquisition.
Improved Production Technologies
For the short term, to maintain cash flow, companies have been resorting to cost cuts through several techniques. Apart from the layoffs, instead of drilling one well at a time, oil producers like Statoil ASA (NYSE: – Free Report) have been using rigs that can move on tracks or legs to complete drilling of several wells at a time. Not only does this reduce the time for drilling but also increases efficiency. As a result, operating costs also decline.
Companies have also been using new fiber-optic sensors below the ground to receive data, which allows them to make informed decisions. With the help of the sensors, the oil upstream companies get to know the optimum depth of hard rock penetration as well as the required well spacing in the region. The fibers also help in keeping a track of temperatures, pressure and vibration on equipment underground, which helps companies to pull out before potential damages.
Large companies are shifting from diesel to natural gas coming from the same field to power operations. This reduces cost per well in a field. The whole oil turmoil has brought in these new efficiency measures in the industry to lower expenses.
Exit from Unprofitable Sites
Oil companies have been looking for reserves where extraction and production processes are cheap. They are selling high maintenance assets and shifting toward lower production costs plays. In this context, we can mention the mass exodus from the Canadian oil market to the Permian Basin to avail low extraction and production costs.
Some companies are opting for mergers and acquisitions to reduce expenses, enjoy cost synergies and increase revenue streams through diversification, in the long run. The mergers and acquisitions ensure the survival of the fittest in the industry. A couple of examples (involving huge transaction amounts) include the $70 billion merger of Shell and BG group, the $30 billion merger between General Electric Co. and Baker Hughes Inc. and others.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Statoil ASA, ConocoPhillips, Royal Dutch Shell, ExxonMobil and Marathon Oil
For Immediate Release
Chicago, IL – August 15, 2017 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Statoil ASA (NYSE: – Free Report), ConocoPhillips (NYSE:(COP - Free Report) – Free Report), Royal Dutch Shell plc (NYSE: – Free Report), ExxonMobil Corp. (NYSE:(XOM - Free Report) – Free Report) and Marathon Oil Corp. (NYSE:(MRO - Free Report) – Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Monday’s Analyst Blog:
What’s Saving the Oil Companies in a Low-Price Environment?
The global oil sector has come a long way since it witnessed a sudden slump. Related industries, as well as their constituent companies, faced the impact of low oil prices. Some companies even had to file for bankruptcy, as staying in the business became harder with their then-available sources. Thousands of jobs vanished from the industry.
The demand for products in the oil industry is something that takes a long time to change. Therefore, price rise due to increasing demand was something farfetched. The next available option was to cut back supply and generate a little scarcity, which would be enough to bring oil prices to a bearable level for the companies. Oil cartels like the Organization of the Petroleum Exporting Countries (OPEC) had to cut back supply.
Upstream companies were forced to drop their contracts with drilling service providers, forcing them to cold stack their rigs. The process again killed some jobs. To survive the crash, most of the companies went for cost reduction options like improving production technologies, exiting from unprofitable sites and merger and acquisition.
Improved Production Technologies
For the short term, to maintain cash flow, companies have been resorting to cost cuts through several techniques. Apart from the layoffs, instead of drilling one well at a time, oil producers like Statoil ASA (NYSE: – Free Report) have been using rigs that can move on tracks or legs to complete drilling of several wells at a time. Not only does this reduce the time for drilling but also increases efficiency. As a result, operating costs also decline.
Companies have also been using new fiber-optic sensors below the ground to receive data, which allows them to make informed decisions. With the help of the sensors, the oil upstream companies get to know the optimum depth of hard rock penetration as well as the required well spacing in the region. The fibers also help in keeping a track of temperatures, pressure and vibration on equipment underground, which helps companies to pull out before potential damages.
Large companies are shifting from diesel to natural gas coming from the same field to power operations. This reduces cost per well in a field. The whole oil turmoil has brought in these new efficiency measures in the industry to lower expenses.
Exit from Unprofitable Sites
Oil companies have been looking for reserves where extraction and production processes are cheap. They are selling high maintenance assets and shifting toward lower production costs plays. In this context, we can mention the mass exodus from the Canadian oil market to the Permian Basin to avail low extraction and production costs.
Oil companies like ConocoPhillips (NYSE:(COP - Free Report) – Free Report), Statoil, Royal Dutch Shell plc (NYSE: – Free Report), ExxonMobil Corp. (NYSE:(XOM - Free Report) – Free Report), Marathon Oil Corp. (NYSE:(MRO - Free Report) – Free Report) and others are leading the way. This is pushing the companies quickly toward stable balance sheets. Oil companies are discovering new oil reserves but choosing to operate on those whose production cost is less. Shell presently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Merger and Acquisition
Some companies are opting for mergers and acquisitions to reduce expenses, enjoy cost synergies and increase revenue streams through diversification, in the long run. The mergers and acquisitions ensure the survival of the fittest in the industry. A couple of examples (involving huge transaction amounts) include the $70 billion merger of Shell and BG group, the $30 billion merger between General Electric Co. and Baker Hughes Inc. and others.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.