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U.S. Oil and Gas Industry Analysis

UpdatedAug 10, 2022
DataAggregated Company Financials
Companies398
  • 7D-1.9%
  • 3M-0.3%
  • 1Y49.4%
  • YTD30.4%

Over the last 7 days, the Oil and Gas industry has dropped 1.9%, driven by Exxon Mobil declining 3.7%. This takes the industry's 12 month performance to a gain of 49%. As for the next few years, earnings are forecast to decline by 9.9% per annum.

Industry Valuation and Performance

Has the U.S. Oil and Gas Industry valuation changed over the past few years?

DateMarket CapRevenueEarningsPEAbsolute PEPS
Thu, 11 Aug 2022US$1.9tUS$1.9tUS$188.4b9.6x9.9x1x
Sat, 09 Jul 2022US$1.7tUS$1.7tUS$116.3b11.8x14.9x1.1x
Mon, 06 Jun 2022US$2.1tUS$1.7tUS$115.7b14.4x18.6x1.3x
Wed, 04 May 2022US$1.9tUS$1.6tUS$108.4b14.8x17.5x1.2x
Fri, 01 Apr 2022US$1.9tUS$1.5tUS$97.9b14.8x19.2x1.3x
Sun, 27 Feb 2022US$1.7tUS$1.5tUS$94.2b15.1x17.5x1.1x
Tue, 25 Jan 2022US$1.5tUS$1.3tUS$31.0b17.2x49.1x1.2x
Thu, 23 Dec 2021US$1.4tUS$1.3tUS$31.5b15.8x43.5x1.1x
Sat, 20 Nov 2021US$1.4tUS$1.3tUS$32.0b16.1x44.4x1.1x
Mon, 18 Oct 2021US$1.4tUS$1.1t-US$4,725,833,319.0019.8x-305.9x1.3x
Wed, 15 Sep 2021US$1.2tUS$1.1t-US$7,011,117,044.2714.1x-176.9x1.1x
Fri, 13 Aug 2021US$1.2tUS$1.1t-US$5,398,683,915.8214.8x-224.8x1.1x
Tue, 08 Jun 2021US$1.3tUS$909.1b-US$46,622,797,837.6115.1x-27.1x1.4x
Mon, 01 Mar 2021US$1.1tUS$875.1b-US$110,022,990,928.5311.4x-10.2x1.3x
Thu, 03 Dec 2020US$830.5bUS$987.0b-US$83,143,441,730.077.1x-10x0.8x
Sun, 06 Sep 2020US$800.9bUS$1.1t-US$56,958,195,556.627.4x-14.1x0.7x
Wed, 10 Jun 2020US$875.6bUS$1.3t-US$11,841,825,259.076.8x-73.9x0.7x
Tue, 03 Mar 2020US$1.0tUS$1.3tUS$41.9b9.4x24.8x0.8x
Fri, 06 Dec 2019US$1.3tUS$1.3tUS$79.4b8.1x16.2x1x
Mon, 09 Sep 2019US$1.3tUS$1.4tUS$89.9b8.5x14.5x1x
Price to Earnings Ratio

14.5x


Total Market Cap: US$1.3tTotal Earnings: US$89.9bTotal Revenue: US$1.4tTotal Market Cap vs Earnings and Revenue0%0%0%
U.S. Oil and Gas Industry Price to Earnings3Y Average -28.1x202020212022
Current Industry PE
  • Investors are pessimistic on the American Oil and Gas industry, indicating that they anticipate long term growth rates will be lower than they have historically.
  • The industry is trading at a PE ratio of 9.9x which is higher than its 3-year average PE of -28.1x.
  • The industry is trading close to its 3-year average PS ratio of 1.0x.
Past Earnings Growth
  • The earnings for companies in the Oil and Gas industry have grown 28% per year over the last three years.
  • Revenues for these companies have grown 12% per year.
  • This means that more sales are being generated by these companies overall, and subsequently their profits are increasing too.

Industry Trends

Which industries have driven the changes within the U.S. Energy industry?

US Market0.30%
Energy-2.11%
Oil and Gas-1.94%
Coal and Fuels3.63%
Oil and Gas Storage and Transportation-0.15%
Oil and Gas Refining and Marketing-1.59%
Oil and Gas Exploration and Production-1.71%
Integrated Oil and Gas-3.17%
Industry PE
  • Investors are most optimistic about the Oil and Gas Storage and Transportation industry, which is trading close to its 3-year average PE ratio of 12.4x.
  • Analysts are expecting annual earnings growth of 10%, which is lower than the prior year's growth of 14% per year. So the market might believe that analysts are underestimating future growth.
  • Investors are most pessimistic about the Coal and Fuels industry, which is trading below its 3-year average of 8.0x.
Forecasted Growth
  • Analysts are most optimistic on the Oil and Gas Storage and Transportation industry, expecting annual earnings growth of 10% over the next 5 years.
  • However this is lower than its past earnings growth rate of 14% per year.
  • In contrast, the Oil and Gas Refining and Marketing industry is expected to see its earnings decline by 29% per year over the next few years.

Top Stock Gainers and Losers

Which companies have driven the market over the last 7 days?

CompanyLast Price7D1YValuation
COP ConocoPhillipsUS$95.985.1%
+US$6.3b
67.8%PE7.7x
EOG EOG ResourcesUS$108.995.2%
+US$3.2b
56.9%PE11.2x
DVN Devon EnergyUS$60.055.9%
+US$2.2b
114.5%PE7.6x
XOM Exxon MobilUS$91.450.5%
+US$1.8b
56.7%PE9.8x
OXY Occidental PetroleumUS$62.863.1%
+US$1.7b
134.2%PE5.8x
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Latest News

APA

US$33.22

APA

7D

-3.5%

1Y

72.8%
Aug 10

APA Corporation's Blowout Earnings And Low Price Spell Opportunity

APA Corporation had incredibly strong 2Q 2022 earnings, although the company has redirected its focus to debt paydown over share buybacks. The company has a modest but sustainable dividend and is focused on buybacks and dividends, something we agree with. The company had a weaker quarter from a production perspective; however, that's expected to improve going into the end of the year. APA Corporation (APA) has had a tougher time than most companies in the recent oil environment, with an almost 40% decline from the company's 52-week highs. However, the company has a unique and manageable portfolio of assets and some of the strongest FCF in the industry which supports the ability to continue increasing shareholder rewards. APA Corporation 2Q 2022 Results APA Corporation performed incredibly well through the quarter, supported by the strength of its assets. APA Corporation Investor Presentation APA Corporation Results - APA Corporation Investor Presentation APA Corporation saw just over 300 thousand barrels / day in adjusted production with just over $400 million in quarterly spending. The company saw a massive $814 million in FCF giving the company a FCF yield of more than 30% and highlighting its financial strength with the recent weakness in the market. The company is committed to using this massive cash flow on shareholder returns as much as possible. It has a minimal 1.5% dividend; the company's dividends are roughly $40 million per quarter. In the same quarter, the company repurchased $290 million in shares, or almost 3% of outstanding, with more than $200 million repurchased in July. The company's share count is done ~10% YoY. Lastly, it also paid down $600 million in debt during the quarter, showing the company's overall financial strength. APA Corporation Asset Strength The company's assets are incredibly strong. It found 140 million barrels in Suriname, showing the strength of assets there. APA Corporation Investor Presentation APA Corporation Global Portfolio - APA Corporation Investor Presentation The company's reported (non-attributed) production was almost 385 thousand barrels / day, at 47% oil. The company has 20 rigs, primarily focused on the international although production between the United States and International is roughly fixed. The company also has numerous areas of potential exploration it's looking out. The company's margins remained strong during the quarter, although North Sea margins which are much more tied to direct prices than others, dropped. In Egypt, the company had almost $80 / barrel in realized prices, with $110 / barrel in North Sea, and more than $60 / barrel in the United States. The company's margin across its assets are in the $50-70 / barrel range. One potential risk is that the company's U.S. production has dropped almost 20% YoY. However, going into 2H 2022, the company's wells drilled is expected to expand significantly. APA Corporation Guidance The company's guidance continues to indicate the potential for strong shareholder returns. APA Corporation Investor Presentation APA Corporation Guidance - APA Corporation Investor Presentation APA Corporation's total 3Q 2022 production guidance is in line with the second quarter, however, for the year, the company's production is expected to be 3-4% higher than where it'll be for the two quarters. That is a result of increased production coming online, especially in the North Sea where the company doesn't have the same tax barrels and noncontrolling interest. The company's upstream capital expenditures are expected to be ~$1.7 billion which it can comfortably afford and we expect the company to be able to drive substantial shareholder returns. At current prices we expect FCF to be in line with the most recent quarter if not increase slightly. APA Corporation Shareholder Returns Putting this all together, APA Corporation has the ability for substantial shareholder returns. APA Corporation Investor Presentation APA Corporation Shareholder Returns - APA Corporation Investor Presentation APA Corporation has a strong commitment to shareholder rewards and we expect that to continue. The company repurchased more than 30 million shares in 4Q 2021 and repurchased 7 million shares in each of the last 2 quarters. That's a high-single digit repurchase rate for the company's shares annualized. The company has increased its dividends significantly and has the ability to continue maintaining its modest dividend even through a tough market. In recent quarters, the company has also focused on rapid debt paydowns. In a rising interest rate environment, we'd like to see those debt paydowns continue if not accelerate. The company's net debt is currently $5 billion versus $6.2 billion at YE 2021. Average interest rates have gone to 5.2% from 5.0%. The company has roughly $1.5 billion due until 2030, which it can comfortably afford. Its average maturity has increased by 2 years to almost 16 years. As much as the company can continue repurchasing debt we'd like to see that continue.

OKE

US$62.26

ONEOK

7D

5.6%

1Y

17.8%
Aug 09

Cautiously Optimistic About ONEOK's Growth Potential

Oneok has a respectable portfolio of NGL assets well positioned in some of the highest margin markets in the country. The company's substantial spare capacity represents a low cost potential source of growth. We expect the company to maintain its dividend yield of just over 6%, with additional opportunity to grow beyond that value. ONEOK, Inc. (OKE) ("Oneok") is an American natural gas company focused on NGL, which are overwhelmingly produced from natural gas. The company is one of the largest players in the space, with a distributed asset portfolio, that stands to benefit from rising volumes. However, the company does also have a reliance on continued growth to justify its valuation. Oneok Business Performance Oneok's overall business performed well during the quarter with respectable volume growth. Oneok Investor Presentation Oneok saw strong performance across its business with high single-digit volume growth across the business. The company's Rocky Mountain business has by far the highest margins and saw reasonable growth, and across the company's business it saw growth in every single market. In July, the company announced that numbers are looking dramatically better. There's been a lot of talk about how the Permian Basin's proximately to export markets makes it the next big NGL market, however, the increased competition has also stressed margins in the region. The Gulf Coast/Permian Basin has less than 25% the margins of the Rocky Mountain region. The company is also expanding potential volumes through new fractionators. Oneok Opportunity Oneok has substantial opportunity assuming volumes continue to recover, from built-in spare capacity. Oneok Investor Presentation The company has seen volumes in the Rockies region grow from 299 thousand barrels/day to 329 thousand barrels/day. That represents roughly 10% YoY growth resulting in more than $100 million EBITDA growth for Oneok. However, the true story here is growth. The company has more than 200 thousand barrels/day of spare capacity with minimal capital. That spare capacity could add a massive $800 million in annual EBITDA, or 25% EBITDA growth, but the company has provided no guidance as to whether or not there exists the demand for the volumes. Given that prices have tapered down, we expect some use of available capacity, but not significant growth beyond that. However, this does go to highlight that as volumes continue to grow the company can earn high-volume cash flow. Oneok Financial Guidance Oneok's overall financial guidance is respectable, but shows the company needs to focus on growth to justify its valuation. Oneok Investor Presentation Oneok is forecasting roughly $1.7 billion in net income, or a P/E of <16. From this the company has several different expenses including $700 million in annual interest from its $14 billion in net debt along with taxes and depreciation / amortization expenses. However, many of those numbers don't scale with EBITDA. That means that should the company increase its EBITDA from other sources, it will more directly go to net income. That financial strength will support continued earnings. Oneok Shareholder Returns Oneok has a consistent history of shareholder rewards that we expect can grow from its current levels. Oneok Investor Presentation Oneok has a large history of shareholder returns. The company's return on invested capital has expanded substantially from 2017. The company has managed to grow EBITDA in a variety of WTI crude oil prices, and now that prices have recovered substantially, we expect the rate of the company's growth to continue. That continued EBITDA growth will help improve the valuation.

Aug 09

Is Exxon Mobil A Good Dividend Stock? Focus On Dividend Growth And Yield

Exxon Mobil has raised its annual dividends for 39 years running, and future dividend cuts are unlikely considering XOM's financial leverage and breakeven. XOM offers a higher dividend yield as compared to the other US oil majors. Exxon Mobil is a good dividend stock, and this provides support for my Buy rating assigned to XOM. Elevator Pitch I maintain my Buy rating on Exxon Mobil Corporation's (XOM) stock. I evaluated XOM's five-year or medium-term outlook in my previous article for the company published on April 1, 2022. This article touches on Exxon Mobil's appeal as a dividend play. In my view, Exxon Mobil is a good dividend stock that justifies a Buy rating. XOM offers forward dividend yields in excess of 4%, and it has increased its dividend payout in every year for close to four decades. XOM Stock Key Metrics Before discussing Exxon Mobil's dividends, I assess XOM's most recent quarterly financial performance in the current section of the article. Exxon Mobil reported the company's financial results for the second quarter of 2022 at the end of July, and both XOM's topline and bottom line beat market expectations. XOM's revenue jumped by +71% YoY from $67.7 billion in Q2 2021 to $115.7 billion in Q2 2022, which turned out to be +4% ahead of the market's consensus topline projection of $111.7 billion. Exxon Mobil's Q2 2022 non-GAAP adjusted EPS of $4.14 was +7% higher than Wall Street's consensus bottom line estimate of $3.89, and this represented a +276% YoY increase as compared to its Q2 2021 EPS of $1.10. Besides delivering on better-than-expected headline financial metrics, XOM's key operating metrics were also impressive. Exxon Mobil's Permian Basin production increased by around 130,000 barrels of oil equivalent per day in 2022 year-to-date. More importantly, the company has guided for full-year FY 2022 Permian Basin production to grow by +25% which is the same pace of growth it achieved in 2021, as indicated in its Q2 2022 earnings presentation. Separately, Exxon Mobil's refining margins for the second quarter of 2022 came in significantly higher than historical levels as per the chart below. While XOM's Q2 2022 chemical margins were at the lower end of its historical range, the company noted at its second-quarter earnings call that it witnessed "a slight improvement in the quarter", suggesting that chemical margins could have already bottomed out. Exxon Mobil's Q2 2022 Margins As Compared To 10-Year Historical Range XOM's Q2 2022 Earnings Presentation Also, XOM's shareholder capital return metrics were encouraging. Exxon Mobil spent approximately $3.9 billion on share repurchases in the second quarter of 2022, which was equivalent to about 1% of its market capitalization. In late-April 2022, XOM disclosed that there will be an "increase in (the company's share repurchase program up to a total of $30 billion through 2023", and this suggests that the company needs to buy back around $4 billion worth of shares every quarter between Q2 2022 and Q4 2023 to meet its share buyback target. Exxon Mobil is on track to achieve its $30 billion share repurchase goal, as seen with the amount of monies allocated to share buyback in the recent quarter. In the subsequent two sections of the article, I highlight another key component of Exxon Mobil's shareholder capital return plans: dividends. What Should Investors Know About Exxon Mobil's Dividend? There are a couple of key things regarding Exxon Mobil's dividend that income-focused investors should be aware of. One key thing is Exxon Mobil's dividend growth track record. At the company's Investor Day in March 2022, XOM emphasized that it had "sustained annual dividend growth for 39 consecutive years in a row." Exxon Mobil last raised its quarterly dividend per share in the final quarter of last year by +$0.01 to $0.88. Furthermore, there are expectations that Exxon Mobil will continue to grow its dividends in the future. According to the sell-side's consensus financial forecasts obtained from S&P Capital IQ, XOM's annual dividend per share is projected to increase by a CAGR of +4.2% for the FY 2022-2025 period. Another key thing is that XOM has the ability to sustain its current dividend payout, and there is a very low risk of dividend cuts going forward. Exxon Mobil highlighted at its Q2 2022 investor briefing that its breakeven declined from $44 per barrel in 2021 to $41 per barrel in early-2022, and the company has targeted a further reduction in its breakeven to $35 per barrel. Moreover, XOM continues to deleverage, and its gross debt-to-capital ratio has decreased to 20% as of the end of the second quarter of 2022. Previously, Exxon Mobil had indicated at its March 2022 Investor Day that its goal is to maintain a gross debt-to-capital ratio in the 20%-25% range, so the company has already achieved this goal in the recent quarter. In other words, a low breakeven and a comfortable financial leverage ratio put XOM in a good position to maintain the company's current dividends at the very least. The final thing is that Exxon Mobil's shareholder mix is a key consideration for the company when it decides on its shareholder capital return initiatives. XOM mentioned at its Investor Day that approximately 45% of its shareholders are individual investors (as opposed to institutional investors), and it stressed that "we do understand how important the dividend is to our shareholders." This makes it more likely that Exxon Mobil will continue to prioritize dividends as a key component of its capital allocation and shareholder capital return. I do a comparison of Exxon Mobil with its key peers on the dividend yield metric in the next section. Is Exxon Mobil's Dividend Better Than Its Competitors? Exxon Mobil's dividend yield is superior to that of its key competitors and peers, namely the other US oil majors, which is another key investment merit for XOM. Peer Comparison For Exxon Mobil Stock Consensus Forward Fiscal 2022 Dividend Yield Consensus Forward Fiscal 2023 Dividend Yield Consensus Forward Fiscal 2024 Dividend Yield Exxon Mobil 4.0% 4.2% 4.3% Chevron Corporation (CVX) 3.7% 3.9% 4.1% ConocoPhillips (COP) 2.0% 2.2% 2.9%