53.05 +0.04 (0.08%)
After hours: 6:25PM EST
|Bid||53.05 x 1000|
|Ask||53.15 x 1200|
|Day's range||52.96 - 54.82|
|52-week range||52.96 - 83.49|
|Beta (5Y monthly)||1.03|
|PE ratio (TTM)||15.79|
|Forward dividend & yield||3.48 (6.42%)|
|Ex-dividend date||09 Feb 2020|
|1y target est||N/A|
(Bloomberg Opinion) -- How bad is it in the energy sector right now? Its weighting in the S&P 500 is on the verge of falling below the utilities sector for the first time ever. You know, that boring poles-and-wires industry. If in the Houston area, it is recommended you don’t bring this up in polite conversation.The two sectors closed out a Tuesday to forget with weightings barely 4 basis points apart. All else equal, for energy to shrink below the weighting of utilities, oil and gas stocks need only drop another 1.2% (1). The sector’s down almost 9% so far this week. It is tempting to read as little or as much into this as one likes. The spread of coronavirus is a genuine black swan that will tend to hit exposed cyclical sectors (oil and gas) and support traditional havens (utilities). The latter do look stretched, valuation-wise: At almost 21 times, utilities sport the highest forward price/earnings ratio of any major S&P 500 sector, besting even tech by more than a point. At the other end of the scale, green-tinged schadenfreude can be expected, as energy’s demotion is seen as a portent of a carbon-woke, increasingly electrified society. There is some truth to that, too, as expectations of peak oil demand — which are different from and foreshadow the actual event — mess with the terminal values embedded in energy valuations.The biggest factor may lie somewhere between the immediacy of relative sector sentiment and the existential challenges of the future. As observed in everything from Exxon Mobil Corp.’s dividend yield (hitting a new high of 6.4%) and the increasingly junky spreads in energy high-yield bonds, coronavirus has hit an industry weakened by its prior excesses. Not a message likely to find favor in Houston either, but then the market’s never been that polite.(1) This assumes no movement in any other sector of the S&P 500, including utilities. Which isn't realistic, obviously, but still, that is a mighty small gap.To contact the author of this story: Liam Denning at firstname.lastname@example.orgTo contact the editor responsible for this story: Mark Gongloff at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Exxon Mobil Corp. fell to a 15-year low on Monday amid a broad selloff in equity and commodity markets and just over a week before Chief Executive Officer Darren Woods is scheduled to present the oil explorer’s long-term strategic plan to investors and analysts.The shares have been under pressure since Exxon disclosed disappointing fourth-quarter results in late January and prospects for a near-term recovery were dimmed by the spreading coronavirus. Excess supplies of natural gas, chemicals and motor fuels also weighed on the oil supermajor.Exxon fell 4.7% to close at $56.36 on Monday in New York as Brent crude tumbled to about $56 a barrel. The last time the Texas-based driller’s stock traded at this level was the end of 2005, when crude fetched $59.Exxon has been scrutinizing employee-travel budgets since posting its worst quarterly profit in almost four years, people with knowledge of the matter told Bloomberg News earlier this month. Auditing teams have fanned out to some divisions to analyze travel requests involving industry conferences, the people said.Woods is focused on rebuilding Exxon’s portfolio of crude and gas projects through new drilling from Guyana to Mozambique. But investors have so far balked at the huge cost. Woods is scheduled to defend his strategy in a day-long presentation on March 5 in New York.To contact the reporter on this story: Kevin Crowley in Houston at firstname.lastname@example.orgTo contact the editors responsible for this story: Simon Casey at email@example.com, Joe CarrollFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Oil tumbled by the most in almost seven weeks as the worsening coronavirus outbreak fueled concerns that the global economy will falter.Futures fell 3.7% in New York on Monday, the largest drop since early January. The deadly virus has spread to more than 30 countries, raising the threat of a global pandemic. Infections spiked again in South Korea and Iran, while Afghanistan, Bahrain and Kuwait all reported their first cases.“The spread beyond China is igniting fears of much larger global crisis,” said Ellen Wald, president of Transversal Consulting and a nonresident fellow at the Atlantic Council’s Global Energy Center. “This adds another layer of uncertainty to the demand picture.”The prospect of a protracted disruption in the global economy from the virus fueled a broader market sell-off. All three major U.S. stock benchmarks slumped more than 3%, with the Dow Jones Industrial Average erasing all of its gains for the year. The S&P 500 energy index fell to an almost 10-year low, with Exxon Mobil Corp. -- one of the top performers -- sinking to the lowest level in 14 years. The yield on 10-year Treasury bonds approached the 2016 record low.Forced quarantines in the Italian regions of Lombardy and Veneto will impact demand for fuels in one of Europe’s industrial heartlands, according to David Doherty, analyst at BloombergNEF. The regions consume more than 25% of Italian oil products and account for over 30% of the country’s GDP.The OPEC+ alliance led by Saudi Arabia has struggled to agree on a collective response, dropping the idea of an early emergency gathering amid opposition from Russia. The coalition is scheduled to meet on March 5 and 6 but the rapid spread of the virus has increased pressure on the group to make a decision on deepening or extending production cuts in the face of weaker demand.West Texas Intermediate for April delivery fell $1.95 to settle at $51.43 a barrel on the New York Mercantile Exchange.Brent for April settlement declined $2.20 to settle at $56.30 on the ICE Futures Europe exchange. The contract lost 3.8% on Monday, after enjoying the longest run of gains in more than a year last week.How the Virus Is Interrupting Supply Chains From Watches to LobstersThe virus also rocked other commodities, with copper sliding 1.2%. U.S. wheat was among the biggest losers, settling 3.1% lower. Corn and soybeans also dropped. Amid the flight from risk to haven assets, gold prices climbed to seven-year highs.\--With assistance from Grant Smith.To contact the reporter on this story: Jackie Davalos in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: David Marino at email@example.com, Catherine Traywick, Mike JeffersFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- The most obvious symptom of coronavirus’ spread in the energy sector is the slumping oil price. The less obvious, but equally serious, signs can be found in the financing market for oil and gas producers.Exxon Mobil Corp., that haven of havens in oil, just saw its dividend yield spike above 6% for the first time since the merger that formed the modern company more than 20 years ago. If you want true stability among Big Oil in stormy seas these days, you have to go to Saudi Arabian Oil Co., or Saudi Aramco, which yields a mere 4.2% (prospectively). Then again, the remarkably subdued price moves and turnover in Aramco’s stock amid the turmoil rather underscores how its IPO was quarantined already from the wider world long before that behavior caught on elsewhere. Exxon’s fall from grace is roughly inversely correlated with its counter-cyclical investment binge; the sort of thing that worked better with investors when they (a) trusted oil majors to spend money wisely and (b) trusted oil demand to never stop going up. It will be interesting to see if the messaging on strategy has shifted at all when Exxon faces analysts in 10 days’ time.The really vulnerable crowd, however, is those oil and gas producers who had compromised their immunity with excessive leverage, exposure to natural gas or both. As I wrote here in November, E&P stocks with higher debt have performed notably worse than less encumbered peers since last spring. Coronavirus’ impact on commodity prices and sentiment in general has exacerbated that. Since the start of the year, low leverage stocks in my sample are down about 16%; not great, but better than the very-high leverage index, which has fallen more than 40%.The really eye-catching action is in the bond market. The rush to safety in Treasuries has widened an already gaping risk premium on high-yield bonds for energy issuers. The option-adjusted spread for the ICE BofA U.S. High Yield Energy Index ended Friday at 772 basis points. That’s up from 650 points at the start of 2020. But another way to look at it is that the gap between the energy index’s spread and the spread for the broader CCC-rated bond index — the junkiest end — has narrowed sharply. Indeed, this spread-of-the-spreads is now narrower than at any time since early 2016, the very depths of the oil crash:Besides the echoes of that earlier panic in today’s market, the structure of the sector plays a part. In terms of face value, almost a fifth of the energy high-yield index — which is the biggest sector of the overall index — is rated triple-C or less. That segment of the market is highly concentrated in relatively few issuers, with the top five accounting for roughly half the market value, according to CreditSights. That, er, upper echelon is dominated by the truly suffering oilfield services sector, with issuers such as Transocean Inc. and struggling gas-weighted producer Chesapeake Energy Corp., whose stock hasn’t traded above a buck since early November.Meanwhile, single-B issues account for roughly another 40% of the index. While this segment is less concentrated, the biggest issuers consist of oilfield services again, gas-heavy producers and midstream names such as Genesis Energy LP, which, as an aside, slashed its dividend in late 2017 to save cash but now sports a higher yield than before that (see this for some history).This is a target-rich environment for a curve ball like coronavirus. While oil dominates, keep an eye on natural gas, which had been hit hard by the mild winter already. Benchmark prices are below $2 in the late February, and they are only that high because of the escape valve of liquefied exports. Now coronavirus is leading some buyers to refuse cargoes. If that spreads, then the effect will move quickly back up the chain to crash prices further in a U.S. market where the flaming flares of west Texas illuminate the glut in depressingly literal terms.There was some relief in energy circles last week, and not just because virus-related fears had subsided. Several Permian-focused E&P companies, such as Diamondback Energy Inc. and Pioneer Natural Resources Corp. reiterated plans for bigger payouts, signaling they were sticking with newfound strategies of drilling less and rewarding shareholders with more cash. Monday serves as a reminder that the hole, dug over the course of years, is deep. A broad shift in the sector’s mindset, while welcome, has come late and under duress. And the duress is intensifying. To contact the author of this story: Liam Denning at firstname.lastname@example.orgTo contact the editor responsible for this story: Mark Gongloff at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- One of the trendiest ideas in finance is something called “social impact investing,” which is the idea that people should put more money into socially beneficial companies and products, and less into socially harmful ones. That hardly sounds objectionable, but I am skeptical about how much good social impact investing can do.The first risk is that social impact investing will be used to “whitewash” various harmful policies. By divesting from a particular set of companies, an investment fund loses at most a very small benefit from an additional degree of broader market diversification. The fund still is likely to earn the market rate of return on its other investments, and in the meantime it can claim virtuousness. At the same time, the funds can pursue socially harmful policies elsewhere: investing in companies that lobby for tariff protection, say, or emit less visible forms of pollution, or how about refined sugar?A second risk is that social impact investing simply redistributes wealth from investments — maybe to less socially conscientious individuals. Imagine a socially conscious investment firm that declines to participate in the initial public offering of a company that pollutes the ocean. That might create downward pressure on the price of the IPO. But there is a problem: The value of the actual investment has not declined, so at a potentially lower IPO price other investors will step in to fill the demand. In fact, those investors may have the chance to buy at a discount and earn a higher return than otherwise.The net result is that conscientious investors have missed out on a profitable opportunity, while less socially aware investors have earned more. Over time, the less socially aware investors will become richer, and their greater wealth may translate into greater political and economic influence.Maybe this effect isn’t large, but it is negative, and it will become correspondingly larger to the extent social impact investing becomes more popular (in 2018, the money pouring into sustainable investment funds quadrupled, rising to about $21 billion). That doesn’t sound like an appealing trade-off.But put that worry aside and assume that social impact investing simply makes it easier to get a solar power company off the ground with an IPO or an expansion. It’s still not clear that much has been gained. At that late point in the process, the company will succeed or it won’t, no matter what the socially conscious funds do.If anything, it would be more useful to have socially conscious research and development at the very early stages of projects. To some extent there are such investments, and I am more sanguine about being conscientious then than when companies already exist and funds are making investment decisions.It is also difficult to monitor the performance and social efficacy of the funds focused on doing good. In actively managed sustainable equity funds, for example, the most commonly held stocks are estimated to be Microsoft, Alphabet, Visa, Apple and Cisco. I have nothing against those companies, but you have to wonder exactly how much social improvement those investment funds are buying.Norway’s fossil fuel divestment is well-publicized. Less well known is that it exempted Shell and Exxon. There simply aren’t clear benchmarks for which investments to avoid, and of course some critics will portray technology companies as the embodiment of evil.Too many of the empirical arguments for social impact investing stem from a single example: South Africa under apartheid. In that case, a coordinated campaign of divestment and international economic and social pressure did hasten the end of apartheid, all for the better. But most sanctions are not very effective at achieving their stated political goals, or their effectiveness may be unclear. South Africa may have been a special case because it was relatively small and isolated, and because so many South Africans had ceased to believe in apartheid.Investment in socially beneficial activities can be worthwhile. But it ignores the question of who decides what is “beneficial,” and it is yet another example of how politics and media are becomingly increasingly performative. Everything is about looking good instead of substance. It is increasingly difficult for businesses and investment funds to perform their proper work under the glare of perpetual debate and periodic condemnation.The notion of extending that same glare to economic investments makes is hardly reassuring. I’ve yet to see a conception of social impact investing that I find convincing.To contact the author of this story: Tyler Cowen at firstname.lastname@example.orgTo contact the editor responsible for this story: Michael Newman at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Tyler Cowen is a Bloomberg Opinion columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. His books include "Big Business: A Love Letter to an American Anti-Hero."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
MOSCOW/LONDON, Feb 21 (Reuters) - Russian oil major Rosneft is facing a logistical headache as several customers have demanded it immediately remove its Swiss trading division, sanctioned by the United States this week, from all supply chains, according to five trading sources. Washington this month imposed sanctions on Rosneft's Geneva-based unit Rosneft Trading (RTSA), accusing it of providing a financial lifeline to Venezuelan President Nicolas Maduro's government. U.S. officials have accused the Rosneft subsidiary of propping up the Venezuelan oil sector and engaging in ship-to-ship transfers to actively evade American sanctions.
Gas production at the Groningen field in the northern Netherlands can be lowered to below the 11.8 billion cubic metres (BCM) initially targeted this year, the government said on Friday. "A further reduction is possible this year: from the expected 11.8 BCM to 10 BCM," it said in a statement. The Dutch government had said it would lower production as quickly as possible to prevent earthquakes caused by extraction.
Guyana's third-ever crude cargo for export, entitled to the government as profit oil from the Liza project, set sail on Thursday on tanker Cap Philippe, bound for Panama, according to Refinitiv Eikon data. The 1-million-barrel cargo, along with other two shipments of the same volume to follow, were sold by the Guyanese government to Royal Dutch Shell in a December tender. The first two cargoes of crude produced at the Liza project were entitled to Exxon and exported by the company to the U.S. Gulf Coast and Panama, according to the Eikon data.
The list of cocktail parties during London's International Petroleum Week has shrunk even further as hosts like ExxonMobil and Azerbaijan's SOCAR continue to cancel events due to the coronavirus, trading sources said. IP Week is a key oil traders' gathering that takes place every year in February. Spooked by the epidemic, several oil companies based in Asia said last week that they would skip IP Week this year.
U.S. gasoline prices on Tuesday continued a week-long climb as unplanned weekend refinery outages compounded earlier shutdowns at major U.S. Gulf Coast and East Coast plants, gasoline traders said. The average retail price for a gallon of unleaded gasoline was $2.45, up from $2.33 a year ago, according to petroleum analytics firm Gas Buddy. Prices have been falling this year as inventories rose and crude oil prices slumped.
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(Bloomberg) -- While climate-change activists are urging Harvard University’s endowment and New York City’s pension fund to rethink their fossil-fuel holdings, New Jersey says the best way to fight for cleaner energy is as an investor.Phil Murphy’s administration says that joining a global oil-and-gas divestment wave would eliminate its shareholder voice. Climate activists, though, say New Jersey’s holdings in Exxon Mobil Corp. and others like it contradicts the Democratic governor’s vow to help tackle global warming.In January, Murphy set a goal for 100% clean energy by 2050 and made New Jersey the first state to require builders to evaluate the climate impact of projects to win approval. Those steps, he said, will help counteract President Donald Trump’s support for coal, withdrawal from the 2016 Paris Accord and other attacks on greenhouse-gas reduction policy.Still, Exxon is the New Jersey pension’s 10th-largest stock holding, with an almost 1% portfolio share as of Oct. 31. The state has holdings in 148 energy stocks, including Phillips 66, Royal Dutch Shell Plc and China Shenhua Energy Co., that make up 3.7% of the equity in New Jersey’s $80 billion pension.“Why are you investing in companies that are involved in the destruction of people’s habitats -- and then fueling extreme weather events that affect other parts of your portfolio?” said Tina Weishaus, a spokesperson for the DivestNJ Coalition, a group of environmental organizations that’s pressuring the State Investment Council to abandon fossil fuels and urging lawmakers to ban such investments.The S&P 500 energy sector returned 7.6% in 2019, the index’s weakest performance by far, and is expected to continue a years-long streak of lagging behind the broader market amid a glut in supplies and threats to demand. Since Murphy took office in January 2018, Exxon has lost 30% of its value.Murphy, a retired Goldman Sachs Group Inc. senior director, said at a Feb. 11 news conference in Maple Shade that the state has a “sort of social responsibility parameter that applies to our investment decisions, which are taken by the investment council, not by yours truly.”The state investment division is seeking climate-risk analysts and planning to hire a sustainable portfolio manager, according to Jennifer Sciortino, a treasury spokesperson.The division “believes the best financial outcomes will result from active engagement on climate change issues,” Sciortino said in a statement. “Divestment, in contrast, eliminates the division’s influence as a shareholder and, consequently, its ability to effect positive change that may lead to favorable investment returns.”Plant EmissionsExxon spokesperson Casey Norton declined to comment on New Jersey’s holdings, but said the company has invested more than $10 billion in pollution-lowering technology over 20 years.“We’re committed to doing our part to identify scalable solutions for the dual challenge of meeting a growing demand for energy and lower emissions,” Norton said in an email.Over 10 years, the California Public Employees’ Retirement System, California State Teachers’ Retirement System and the Colorado Public Employees’ Retirement Association lost more than $19 billion as a result of their fossil-fuel investments, according to Toronto-based Corporate Knights, a research firm that promotes sustainable business.Fund overseers disagree on whether divesting or investing is a better tool for climate change.Calpers, the largest U.S. pension fund with $404 billion, and the $252 billion Calstrs have cited their proxy power as among the reasons to stay in fossil fuels. Trustees of Grinnell College in Iowa studied divestment for its $2 billion endowment and in 2018 concluded they had “not found any compelling evidence that the action of divesting fossil fuel stocks has an impact on climate change, particularly as a result of financial pressure.”On the other side of the debate, the University of California said in September that it would cut non-renewables from the $13.4 billion endowment and $80 billion pension fund.“We must meet the needs of our current operations and the current requirements of our retirees without compromising our ability to serve future students, staff members and faculty,” according to a statement posted to the website of Jagdeep Singh Bachher, the school’s chief investment officer.A Feb. 4 Harvard faculty vote called for the $40 billion endowment fund to get out of oil and gas; two days later, Georgetown University President John DeGioia said the $1.66 billion endowment will drop non-renewable energy.“Divestment allows us to divert more capital to fund development of renewable energy projects that will play a vital role in the transition away from fossil fuels,” Michael Barry, Georgetown’s chief investment officer, said in a news release.In January, New York City’s pension board created a panel to explore divestment for the $216 billion fund. The New York State Common Retirement Fund, the third-largest U.S. public pension with $226 billion, said it was reviewing 27 mining companies that derive at least 10% of their revenue from coal burned to produce electricity.“Investors who fail to face the risks and seize the opportunities presented by climate change put their portfolios in jeopardy,” State Comptroller Thomas P. DiNapoli, whose Climate Action Plan seeks to cut the state pension’s carbon footprint, said in a statement.To contact the reporter on this story: Elise Young in Trenton at firstname.lastname@example.orgTo contact the editors responsible for this story: Flynn McRoberts at email@example.com, Stacie Sherman, William SelwayFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The Zacks Analyst Blog Highlights: ExxonMobil, ConocoPhillips, Valero Energy, Marathon Petroleum and Chevron
A Nigerian oil reform two decades in the making is urgently needed to get money into its energy sector, industry executives say, as tax increases and regulatory uncertainty scupper investments. Africa's largest oil exporting nation has not carried out a full revamp of the law underpinning its oil and gas sector since the 1960s. Government officials say a sweeping overhaul is imminent and will be presented to the National Assembly next week, which for industry leaders is not a moment too soon.
German fund manager Allianz Global Investors is pushing every company it invests in to improve their climate-related disclosures ahead of the season for annual shareholder meetings. Allianz GI, which manages 557 billion euros ($605.18 billion) as part of insurer Allianz, said it had updated its Global Corporate Governance Guidelines and would push companies to do more to manage what it said was a critical risk. Specifically, it wants every company to use the Taskforce for Climate-related Financial Disclosures (TCFD) framework for assessing the impact of climate risk on their business, an initiative kick-started by the Financial Stability Board.
Exxon Mobil Corp does not have a timeline for restarting fuel-producing units at its second-largest U.S. refinery following a fire Wednesday that cut production, sources said, as the shutdown boosted gasoline prices on Thursday. Some units remain in operation at the refinery including a crude distillation unit (CDU), gasoline-producing fluidic catalytic cracking unit (FCCU) and a coker, the sources said. It was the third Exxon petrochemical plant along the U.S. Gulf Coast to suffer damage in less than a year.
Cost increases and uncertainty in Nigeria's crucial energy sector could lead to a 35% decline in oil output over 10 years as companies delay investments in key oilfields, consultancy Wood Mackenzie said in new research due to be published on Friday. In findings shared exclusively with Reuters, the company warned that three deep offshore fields, which would generate $2.7 billion a year for the government at peak production, are likely to be delayed as companies put their money in regions with better and clearer terms. "Nigeria is going to enter quite a steep decline in production," said Lennert Koch, principal analyst of sub-Saharan Africa upstream with Wood Mackenzie.