Over the past six months, stocks held in the Big Oil Vue have performed well. For the period 1 Sep 2017 – 28 Feb 2018, the Big Oil Vue has generated a +15.25% total return. By comparison, the ASX has gained +7.52% in the same period.
Some of the best-performing stocks include Anadarko Petroleum (NYSE: APC +42.69%), Haliburton (NYSE: HAL +22.69%), and Royal Dutch Shell (AMS: RDSA+20.41%).
Three High Performing Big Oil Stocks
Anadarko Petroleum (APC US)
After a very solid 4Q 2107 earnings report where the company exceeded earnings and cash flow expectations handily (EPS/CFPS of $0.20/$2.66 vs consensus of $0.04/$2.25) industry analysts believe Anadarko Petroleum is now even better-positioned to drive sales volume, cash flow and profitability in 2018.
Closing some US$4 billion of asset sales in 2017 further concentrates focus on its key Delaware, DJ Basin and deep water Gulf of Mexico properties and provides financial flexibility. Prudently tempering capital spending -- US$4.1-$4.5 billion this year vs. US$4.3 billion last year -- even if benchmarks push higher, should further improve free cash flow. Anadarko has also increased the quarterly dividend fivefold to US$0.25 a share (+1.74% yield) and has further expanded its buyback program to US$3 billion (with more than half completed to date) which affirms Anadarko's commitment to returning capital to shareholders.
Royal Dutch Shell plc (RDSA LN)
Royal Dutch Shell plc has recently reached an agreement to sell its shares in Shell entities in New Zealand, to OMV (an international, integrated oil and gas company based in Vienna) for US$ 578 mn. This follows a two-year strategic review of Shell’s interests in New Zealand and the sale of Shell’s interest in Kapuni in 2017. This is consistent with the Shell Group’s strategy of divesting US$30 bn of assets by end 2018, and is in line with Shell’s drive to simplify the upstream portfolio and re-shape the company. The agreement includes Māui, Pohokura and the Tank Farms.
Shell has also entered into an agreement with OMV to sell its interest in (and operatorship of) the Great South Basin venture, which includes a drilling commitment currently estimated to be US$50 million. The Sales and Purchase Agreement is subject to certain conditions which include normal regulatory approvals and is likely to be complete by Q4 this year.
Haliburton (HAL US)
Oil services provider Halliburton has flagged it is deploying capital within North America to capture the growing completion work in the region. They see international demand stable but believe it offers little growth in the near term and Schlumberger is a formidable competitor overseas. Halliburton remains focused on boosting revenue in North America by taking market share and capturing higher pricing. Maintaining consistent margin growth through cost controls by managing the supply chain has become a core company focus.
Early investments in technology and partnerships with Microsoft should also drive growth. Halliburton's North America revenue rose 7% in 2017 and will outpace the rig count throughout 2018 as demand intensifies for pressure pumping crews and pricing increases. Halliburton's North American franchise is mostly exposed to domestic land markets, with the U.S. comprising the majority of its activity. The completion and production stage of the well life cycle, which includes pressure pumping, will remain Halliburton's primary driver. With over 7,000 drilled but uncompleted wells to date, and a large pressure-pumping fleet (a key differentiating factor compared with smaller peers), Halliburton is in a solid position to capitalise on the continuing U.S energy recovery.
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*As of 28/02/2018. Returns are expressed in AUD. Past Performance is not a reliable indicator of previous performance. See how our performance is calculated.