In the short term, oil prices drive the investor’s perception of share values
- the dollar – as quoted currency – affects pricing positively when the currency weakens
- economic growth prospects are expected to strenghten energy demand
- geopolitical developments in major energy producing countries (Venezuela, Iran, Russia, Qatar) may affect world production adversely, constraining supply
But most of today's investment decisions of energy majors are made for 2030 and beyond, with choices affecting the energy mix, the technologies and the geopolitical distribution of energy resources in the distant future
The majors, defined for our purpose as companies topping a $50bn market cap (Jan. ’18), are best positioned to include very long term considerations in their global strategies, even if some decisions may take years to come to fruition
Taking the long view on valuation for energy majors, the fit between their energy mix and 2030/2040 projected consumption should be as relevant as resources currently in their portfolio
