October 16, 2020 Read More →

Not many bright spots on horizon for oil and gas markets


Oil and gas markets are far from healthy, but with crude prices stable and natural gas prices on the rise, drilling and completion activity could grind higher, according to Morgan Stanley.

– Capex will likely remain flat in 2021, but will increase in 2022 and 2023, the bank believes.

– Key risks to the oilfield services sector include pandemic-related shutdowns, election risks and OPEC behavior. But upside risk includes the possibility of industry consolidation, which would improve supply-side dynamics and oilfield services pricing.

Goldman Sachs upgraded ExxonMobil (NYSE: XOM) from Sell to Neutral on October 12, after having cut the company to Sell back in February.

– ExxonMobil has underperformed Chevron (NYSE: CVX) for several years due to weakening refining fundamentals, concerns about dividend sustainability, higher debt, skepticism about aggressive spending plans, and lack of attractive growth prospects, according to Goldman Sachs.

– Exxon underperformed Chevron by 38 percent since 2016.

– The concerns are “fundamentally justified,” the bank says, but they are more or less priced in at this point. Having been beaten down, the stock price has less room to fall.

– Meanwhile, a separate report from IEEFA documents the many missteps by ExxonMobil and CEO Darren Woods over the past few years, saying the oil major has fallen from “industry leader to laggard.” 

[Staff Report]

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Posted in: IEEFA In the News

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