Yahoo Finance Oil & Gas Stock Roundup: Exxon & Chevron's AGMs, SLB's Outlook & More
It was a week when both oil and natural gas prices suffered losses.
On the news front, the headlines came from biggies ExxonMobil XOM and Chevron’s CVX annual general meetings and oilfield service major SLB’s SLB bullish revenue guidance. Developments associated with TC Energy TRP and Petrobras PBR also made it to the headlines.
Overall, it was a bearish seven-day period for the sector. West Texas Intermediate (WTI) crude futures decreased 1.3% to close at $71.74 per barrel, while natural gas prices plunged 10.1% to end at $2.17 per million British thermal units (MMBtu).
In particular, the crude price action flipped to the negative after two weeks, with government data revealing an unexpected build and concerns about a slowing global economy.
Meanwhile, natural gas performed far worse following a higher-than-expected increase in stockpiles held in underground storage in the lower 48 states and expectations for comfortable temperatures and, therefore, lighter heating or cooling demand.
Recap of the Week’s Most Important Stories
1. Chevron and ExxonMobil, two major U.S. oil companies, experienced shareholder pushback at their annual meetings as climate change proposals were rejected. While the call for emissions reduction received little backing, the incident shed light on the contrasting perspectives of shareholders in Europe and the United States.
With only 11% of Exxon and less than 10% of Chevron shareholders in favor, the climate change proposals failed to gain substantial traction. This is in contrast to the recent outcomes at European oil companies such as Shell and BP, where similar proposals garnered significant support from shareholders.
The resistance to emissions reduction proposals stems from concerns about reducing oil and natural gas production, a move that the U.S. oil majors have been reluctant to make. (Chevron & Exxon's Shareholders Reject Climate Proposals)
2. SLB, the largest oilfield contractor, has projected revenue growth of more than 45% by 2025 from the 2022 levels. The energy major expects its EBITDA to grow more than 60% over the same time frame, suggesting that its earnings related to operations will improve more than the top line through the mentioned period. Olivier Le Peuch, SLB's chief executive officer, offered the updates at the Bernstein Strategic Decisions Conference.
This reflects that SLB is confident its overall operations will continue to grow, banking on its technology differentiation and integration capability. In its core business related to oil and gas operations, the Zacks Rank #3 (Hold) company anticipates the continuation of remarkable growth from upcycle dynamics.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Amid tight supply in service capacity, the oilfield service major is being able to create favorable pricing through value creation. Based on all these positive developments, SLB expects upcycle associated with its core business to continue through 2025 and beyond. On the back of its innovations, it is also assured of driving decarbonization in the long term. (SLB Expects Revenues to Increase Handsomely Through 2025)
3. TC Energy, a prominent Canadian energy company, made a significant move by seeking permission from the Federal Energy Regulatory Commission (“FERC”) to put parts of the North Baja natural gas pipeline expansion into service. This development aims to supply more natural gas from the United States to Mexico, with potential implications for both nations' energy sectors.
The North Baja pipeline expansion project, with an estimated cost of $127 million, is designed to allow for a greater supply of natural gas from the United States to Mexico. With this development, TC Energy aims to strengthen cross-border energy cooperation and support the growing energy demands of both countries.
The expansion also marks a crucial step toward bolstering energy cooperation between the United States and Mexico. Following approval from the FERC, TC Energy aims to put parts of the pipeline into service, enabling the supply of U.S. natural gas to Mexico. This undertaking holds great potential for both nations, diversifying energy sources, encouraging cross-border energy trade and supporting Mexico's LNG aspirations. (FERC Approves TC Energy's US-Mexico Pipeline Project)
4. Petrobras, in an attempt to align with the global shift toward sustainable energy sources, announced a revision of its 2023-2028 strategic plan. The Brazilian state-run oil company aims to increase its investments in low-carbon initiatives, demonstrating a commitment to energy transition and portfolio diversification.
With the growing demand for environmentally friendly alternatives, Petrobras has decided to make a significant shift in its approach. The company's board of directors approved a revision of its strategic plan, which now sets a target of allocating 6-15% of its total capital expenditure (“CAPEX”) toward low-carbon initiatives. This is a notable increase from the 6% previously allocated in the 2023-2027 plan.
The revised plan underlines PBR's determination to adapt to the changing energy landscape and proactively invest in sustainable solutions. By committing a substantial portion of its CAPEX toward low-carbon projects, the company aims to contribute to global efforts in mitigating climate change and reducing carbon emissions. (Petrobras Shifts Focus, Boosts Low-Carbon Initiatives)
Price Performance
The following table shows the price movement of some major oil and gas players over the past week and during the last six months.
Company Last Week Last 6 Months
XOM +0.8% +2.2%
CVX +1.4% -9.4%
COP +0.5% -11.8%
OXY +1.3% -7.3%
SLB +5.1% -7.7%
RIG +6.1% +63.5%
VLO -4% -8.1%
MPC +0.1% -0.2%
With oil and gas moving in opposite directions for the week, stocks saw a mixed bag. The Energy Select Sector SPDR — a popular way to track energy companies — rose 1.4% last week. But over the past six months, the sector tracker has decreased 6.2%.
What’s Next in the Energy World?
As usual, market participants will closely track the regular releases to look for guidance on the direction of the commodities. In this context, the U.S. Government’s statistics on oil and natural gas — one of the few solid indicators that come out regularly — will be on energy traders' radar. Data on rig count from the oilfield service firm Baker Hughes, which is a pointer to the trends in U.S. crude/natural gas production, is closely followed too.
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Chevron Corporation (CVX) : Free Stock Analysis Report
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Schlumberger Limited (SLB) : Free Stock Analysis Report
Petroleo Brasileiro S.A.- Petrobras (PBR) : Free Stock Analysis Report
TC Energy Corporation (TRP) : Free Stock Analysis Report
