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| Music Forum Index » Rush Music Forum » weeew, Gary ConocoPhillips suffered severe drop, Gary... |
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| LIBERATOR... |
 Posted: Wed Nov 04, 2009 2:39 am |
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Gary owns ConocoPhillips as well as Chevron. Conoco just took a big
hit, it's not in this story though.
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http://online.wsj.com/article/SB125659491543609007.html
OCTOBER 27, 2009
Investors May Be In for a Crude Correction By MARK GONGLOFF
The recent surge in oil prices hasn't benefited Big Oil much, and the
moment may be passing.
BP reports third-quarter results Tuesday, kicking off a week of
results from the world's biggest integrated oil companies.
ConocoPhillips reports Wednesday, Exxon Mobil and Royal Dutch Shell on
Thursday and Chevron on Friday.
It is expected to be a tough quarter for the group, in part because
year-ago comparisons will be brutal.
In the third quarter of 2008, crude-oil prices on the New York
Mercantile Exchange averaged $118 a barrel, lifting revenue in
exploration and production. Exxon's $14.83 billion in net income then
set a record for profit from recurring business by a U.S. company.
Fast forward to the third quarter just ended, when oil prices averaged
$68 a barrel. Analysts expect Exxon's income for the period to be less
than half of the comparable quarter last year.
Oil has recently surged back to $80 a barrel, a 71% run-up since March
9 that outpaced the S&P 500-stock index, though oil dropped below $79
on Monday.
The burst would seem to be a boon to these companies. Yet, the Dow
Jones U.S. Integrated Oil and Gas Total Stock Market index is up less
than 21% for the same period.
Part of the problem for some of these companies is sheer scale, which
makes it difficult to significantly add to reserves or production.
"Investors are leaning more toward smaller-cap companies because they
can see more potential for growth," said Oppenheimer analyst Fadel
Gheit.
The group also is exposed to the dismal refining business, in which
just 81% of capacity is in operation due to low demand.
There also is reason to doubt the sustainability of $80 oil, with
global inventories still high and demand still weak.
U.S. oil supply at last count was 339 million barrels, higher than its
long-term average and up nearly 28% from last year.
Under the circumstances, oil should be priced closer to $50 a barrel,
said Mark Gilman, analyst at the Benchmark Co.
"We're at these prices due entirely to excess global liquidity," Mr.
Gilman said. "When it corrects, it's not going to be pretty." |
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