The Analytics tab provides insights on the valuation gap between Energy Majors such as Exxon
Rank the selection by market cap and enter valuation ratios such as P/E, P/B, P/CF, ROE, ROIC, Net Margin... to highlight gaps with the Majors and potential buy-out targets
The run-up in energy prices even before the start of the war in Ukraine greatly enhanced the profitability of the oil and natural gas producers
However, the abundance of cash has not unlocked many new oil field exploration programs, for a good reason : the shift to renewable energy sources has gained exceptional momentum, to say nothing of the pressure of environmental activists on fossil fuel producers
Recognizing that the transition will take time, even though governments and the general public may hope otherwise, the world's largest oil companies, Exxon, Shell, TotalEnergies, Chevron, ConocoPhillips and BP, still need to secure reserves for the medium term
With Russian energy fields out of reach, the buy-out of smaller oil firms by their giant brethren to secure these reserves does not appear improbable - especially if their price continues to lag the run-up of Exxon Mobil (the benchmark of the theme)
The informal talks between Exxon and shale giant Pioneer Natural Resources about a possible acquisition, reported by the Wall Street Journal, support this analysis, not only for Pioneer and not only for Exxon...
As of May 23, Chevron agreed to buy PDC Energy Invalid tag asset, one of the shale oil producers in the selection, for $6.3 billion to focus on U.S. energy production, according to WSJ
The theme lists energy firms with market caps of at least $5 billion (MEG Energy) up to $70 billion (EOG Resources), all 16 of which could be buy-out targets if their reserves hold up
Set apart by distinct business models
- integrated energy firms, from exploration to marketing, with the larger market capitalizations,
- traditional oil & gas exploration and production companies
- and more recently launched shale oil & gas producers (focused on the Permian and Marcellus basins among others)
may not prove equally attractive for mergers and acquisitions
Trends will be highlighted on the charts, by selecting the listed time frames (15 days to 1 year)
