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U.S. Oil and Gas Industry Analysis

UpdatedSep 25, 2022
DataAggregated Company Financials
Companies405
  • 7D-9.3%
  • 3M0.5%
  • 1Y36.4%
  • YTD23.1%

Over the last 7 days, the Oil and Gas industry has dropped 9.3%, driven by Exxon Mobil declining 8.0%. Meanwhile, PBF Energy actually outperformed within the industry, gaining 5.5% in the last week. In the past year, the industry has gained 36%. Looking forward, earnings are forecast to decline by 11% per year.

Industry Valuation and Performance

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

DateMarket CapRevenueEarningsPEAbsolute PEPS
Sun, 25 Sep 2022US$1.8tUS$1.9tUS$190.1b8.2x9.3x0.9x
Tue, 23 Aug 2022US$2.0tUS$1.9tUS$189.9b10.1x10.4x1x
Thu, 21 Jul 2022US$1.8tUS$1.7tUS$116.0b12.3x15.6x1.1x
Sat, 18 Jun 2022US$1.9tUS$1.7tUS$116.0b11.8x16.1x1.1x
Mon, 16 May 2022US$1.9tUS$1.7tUS$115.2b13.4x16.7x1.2x
Wed, 13 Apr 2022US$1.9tUS$1.5tUS$97.5b15x19.6x1.3x
Fri, 11 Mar 2022US$1.8tUS$1.5tUS$96.4b16.1x18.8x1.2x
Sun, 06 Feb 2022US$1.7tUS$1.4tUS$75.3b17.3x22.1x1.2x
Tue, 04 Jan 2022US$1.4tUS$1.2tUS$31.0b16.4x46x1.1x
Thu, 02 Dec 2021US$1.3tUS$1.3tUS$32.2b15.2x41.9x1.1x
Sat, 30 Oct 2021US$1.5tUS$1.1t-US$3,685,322,231.0020.7x-394.9x1.3x
Mon, 27 Sep 2021US$1.3tUS$1.1t-US$4,698,528,885.0019x-273x1.2x
Wed, 25 Aug 2021US$1.2tUS$1.1t-US$5,398,683,915.8213.9x-221.7x1.1x
Thu, 01 Jul 2021US$1.3tUS$1.1t-US$5,425,245,648.8215.3x-244.8x1.2x
Sun, 04 Apr 2021US$1.2tUS$908.9b-US$46,678,347,385.7113.7x-25.2x1.3x
Wed, 06 Jan 2021US$876.4bUS$875.3b-US$110,077,824,233.609.2x-8x1x
Sat, 10 Oct 2020US$687.0bUS$987.5b-US$84,437,415,097.136.1x-8.1x0.7x
Fri, 03 Jul 2020US$858.3bUS$1.1t-US$56,862,100,814.018.3x-15.1x0.8x
Mon, 06 Apr 2020US$658.3bUS$1.3t-US$11,814,907,432.275.7x-55.7x0.5x
Thu, 09 Jan 2020US$1.4tUS$1.3tUS$42.7b12.5x32x1x
Wed, 02 Oct 2019US$1.3tUS$1.3tUS$78.6b9.9x17.1x1x
Price to Earnings Ratio

17.1x


Total Market Cap: US$1.3tTotal Earnings: US$78.6bTotal Revenue: US$1.3tTotal Market Cap vs Earnings and Revenue0%0%0%
U.S. Oil and Gas Industry Price to Earnings3Y Average -27.7x202020212022
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 9.3x which is higher than its 3-year average PE of -27.7x.
  • The 3-year average PS ratio of 1.0x is higher than the industry's current PS ratio of 0.90x.
Past Earnings Growth
  • The earnings for companies in the Oil and Gas industry have grown 34% per year over the last three years.
  • Revenues for these companies have grown 13% 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 Market-5.22%
Energy-9.44%
Oil and Gas-9.28%
Oil and Gas Refining and Marketing-4.49%
Coal and Fuels-7.35%
Integrated Oil and Gas-7.85%
Oil and Gas Storage and Transportation-9.31%
Oil and Gas Exploration and Production-12.24%
Industry PE
  • Investors are most optimistic about the Oil and Gas Storage and Transportation industry even though it's trading below its 3-year average PE ratio of 65.1x.
    • Analysts are expecting annual earnings growth of 9.4%, which is lower than the prior year's growth of 14.2% per year.
  • Investors are most pessimistic about the Oil and Gas Refining and Marketing industry, although it looks like investor sentiment has improved given that it's trading above its 3-year average.
Forecasted Growth
  • Analysts are most optimistic on the Oil and Gas Storage and Transportation industry, expecting annual earnings growth of 9.4% 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 26% 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
PBF PBF EnergyUS$29.885.5%
+US$189.0m
143.9%PE2.6x
NEXT NextDecadeUS$6.44-1.4%
US$87.9m
130.0%PB50.8x
BROG Brooge EnergyUS$8.459.5%
+US$80.0m
-11.1%PE76.7x
SLNG Stabilis SolutionsUS$7.4739.1%
+US$38.4m
7.1%PS1.5x
TNK Teekay TankersUS$28.252.5%
+US$23.0m
120.9%PS1.4x
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Latest News

NEXT

US$6.44

NextDecade

7D

-1.4%

1Y

130.0%

HES

US$104.60

Hess

7D

-14.0%

1Y

38.8%
Sep 17

Hess Corporation: This Blue Light Special Will Not Last

Summary Hess's quarterly cash flow from operating activities topped $1 billion. Participation in the Guyana project assures fast growth of cash flow for the foreseeable future even if oil prices decline long-term as expected. The third FPSO will be delivered late next year. Management guides to a long-term cash flow growth of 25% which is a fantastic growth rate. More discoveries and progress in this project will lift future expectations. (Note: This article appeared in the newsletter on July 27, 2022, and has been updated as needed.) Hess Corporation (HES) announced quarterly cash flow from operating activities in excess of $1 billion. That is roughly half the current market value of the stock. While the stock market appears concentrated on an eventual oil price decline, Hess represents that rare company that is growing production in both the United States and through the partnership in Guyana. Moreover, that growth should top 20% in the current fiscal year. Further reading indicates that the growth rate is not going to be slowing anytime soon (though it may be a little lumpy in the beginning). The Guyana partnership is working to add an FPSO a year probably beginning in 2025. Guyana appears profitable enough that the partnership could easily move to two FPSOs per year sometime in the future. For the time being, Hess management, at a recent conference stated that as long as the Brent price remained at or above $55, the company can grow cash flow at a 25% rate through 2026. A 25% growth rate compounded means that cash flow triples roughly every 5 years. That is a fantastic return for this industry. The best part is that all the discoveries announced have been only on one leased block. Hess, through different partnerships, has interests in more blocks that could provide further growth. Guyana is probably the most prolific block of oil production found in recent memory. That is a game changer for a company the size of Hess. Unlike many competitors who often have a decline in cash flow, the projected rapid production growth in Guyana would likely soften any cyclical decline while sending production and profits higher in the next cycle. Such projected steady growth is exceptionally rare in the oil and gas industry. But it makes a possible buy and hold strategy a very good way for small shareholders to go. The Asset Story A traditional measurement of oil in the ground for as long as I can remember is $5 per barrel. By that measure Hess is exceptionally cheap. Hess Corporation Presentation Of Lease Holdings, Discoveries, And Estimated Reserves (Hess Presentation At September 2022, Conference) Hess has a roughly 3 BBOE share of the gross discoveries made so far of oil in the ground. Production just began. So continuing discoveries probably more than offset any production. But that means the market value is less than $3 per barrel of oil "in the ground". That is a huge discount from what many would quickly figure this asset is worth. That is before you consider the superior profitability of this asset. John Hess himself asked at the June conference why this is and then explained that the market changed. When I was growing up, the company that discovered the North Slope (in Alaska) saw its stock "go through the roof" on news of the discovery. From what I can tell, those days are gone. Now the market wants to see cash flow because these discoveries are often years away from production. Cash Flow On The Way In the case of Hess, the cash flow has begun. Management noted that six one-millions barrels of oil loads were sold in the quarterly release. That was up considerably from the first quarter when only one FPSO was operating. The Hess share of production rose to 67 KBOD in the second quarter. Hess Presentation Of Guyana Cash Flow Growth In The Near Future (Hess Corporation September 2022, Conference Presentation) Obviously, since the delivery of FPSOs is what powers the majority of long-term profit growth at Hess, the increase in cash flow is not going to be a straight line as shown above. It would actually be closer to a modified step function instead as there is the ramp-up growth followed by a period of lesser (if any) growth until the next FPSO arrives. The latest quarterly comparison was influenced by some weather issues as well as a Gulf asset sale. That will influence the future cash flow increases as well. But these kinds of issues are not considered repeating. The more cash flow from Guyana, the sooner it is likely to be considered self-funding by the partners. The currently strong commodity price issue probably means it is self-funding far earlier than predicted. Should selling prices decline, then there is a third FPSO arriving next year that should offset lower prices in a material fashion. This project is profitable enough that cash flow is likely to increase in the future just from production growth overriding the effect of lower selling prices. Now, as this project grows, there will likely be enough partnership cash flow to begin to have two FPSOs start up in a year. That does not include potential discoveries on the other leases that Hess has an interest in. The Future Since the second FPSO was ramping up production in the second quarter, the average production from the Guyana partnership that accrues to Hess will be higher in the third quarter. This production is now approaching about one-third of the total corporate production reported. It can be easily seen that the company's future will largely be determined by the Guyana progress or lack thereof. Already there are more discoveries this fiscal year than have ever been reported and the fiscal year is not close to the end. The higher commodity selling prices have allowed for a considerable increase in partnership activity while lessening the partnership need for cash.