2014: U.S. UGLY YEAR
Last year was an ugly one for the U.S. energy sector, and while the first trading day of 2015 pointed to continued weakness in oil, investors are starting to look to when the sector might start to recover.
Crude oil prices fell 42 percent in the fourth quarter. The fallout on corporate bottom lines isn't yet known, but forecasts suggest it will be severe. Energy sector earnings are seen down 19.6 percent in the fourth quarter, according to Thomson Reuters data; on Oct. 1, the consensus estimate was for growth of 6.4 percent.
While the flip in expectations is bearish, analysts say the dramatic decline in the stocks means some investors are going to start looking for buying opportunities.
"It won't surprise anyone to see profits fall, so if you have no exposure this is a good time to step in," said Scott Wren, senior equity strategist at St. Louis-based Wells Fargo Advisors, which has an "equal weight" rating on the sector. "The market is ready for bad news."
Investors didn't flee the group even as it fell in the last three months of the year. A total of 85 energy sector funds tracked by Lipper, a Thomson Reuters company, shows five consecutive weeks of inflows dating to late November, with more than $3.5 billion in inflows.
One of the buyers is Michael Matousek, head trader at U.S. Global Investors Inc in San Antonio, who said he was adding exposure "since these stocks are so cheap right now."
Matousek noted that the pain wasn't spread equally across the sector. Denbury Resources and Noble Corp were two of the worst performers in the S&P 500 last year, losing half their value, while big integrated oil and gas firms saw less severe share price declines. Exxon Mobil fell 8.6 percent in 2014 while Chevron Corp lost about 10.2 percent.
Linn Energy and Civeo Corp issued warnings this week, with both citing how lower prices have led to lower production.
Investors seeing the decline in share prices and concern about overleveraged companies could bet on weaker players getting taken out by bigger companies. The energy sector has already seen one big deal, in November, when Halliburton Co agreed to buy Baker Hughes Inc for $35 billion.
"You could start seeing M&A take place, since it makes sense for the bigger players to start gobbling up smaller companies," Matousek said. "They've got plenty of cash on hand and can use it to grow if they're not growing organically."
While energy shares are viewed as one of the market's bigger bargains, that comes with bigger risks. The supply glut that has devastated oil prices shows no signs of stabilizing.
"Certain areas of the sector have come down enough," said Joshua Brown, vice president of investments at Fusion Analytics in New York. "The big high-dividend companies, those probably have, but the smaller companies? They haven't seen enough pain."
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LUKOIL - The plan is based on the conservative $50 per barrel oil price scenario. Sustainable hydrocarbon production growth is planned in the Upstream business segment along with the growth in the share of high-margin projects in the overall production. In the Downstream business segment, the focus is on the improvement of operating efficiency and selective investment projects targeted at the enhancement of product slate.
BP - BP will acquire on completion a 43% equity share in Lightsource for a total consideration of $200 million, paid over three years. The great majority of this investment will fund Lightsource’s worldwide growth pipeline. The company will be renamed Lightsource BP and BP will have two seats on the board of directors.
REUTERS - Brent crude was up 69 cents, or 1.1 percent, at $64.03 a barrel by 0743 GMT. It had settled down $1.35, or 2.1 percent, on Tuesday on a wave of profit-taking after news of a key North Sea pipeline shutdown helped send the global benchmark above $65 for the first time since mid-2015. U.S. West Texas Intermediate crude was up 45 cents, or 0.8 percent, at $57.59 a barrel.
ROSATOM - On December 10, 2017, the construction start ceremony took place at the Akkuyu NPP site under a limited construction licence issued by the Turkish Atomic Energy Agency (TAEK). Director General of the ROSATOM Alexey Likhachev, and First Deputy Minister of Energy and Mineral Resources of the Turkish Republic, Fatih Donmez, took part in the ceremony.