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Four Oil Giants to Keep an Eye on – Barron’s
By SA Editor, Rachael Granby2008 was a rocky year for crude prices, and oil giants are feeling the pain of crude more than $100 below July’s high. But investors with an eye on the long-run can expect a recovery in both crude prices and oil stock prices at some point. Barron’s highlights several oil giants worth thinking about.
1) ExxonMobil (XOM) is the priciest of this list but, cash-rich, is also the most likely to raise its dividend. It has low reserve-replacement costs and a sharp, conservative management team. Its shares have been the most stable of the big energy firms, losing just 6% over the past 12 months. Speculation has been growing as to whether Exxon will make an acquisition, possibly for BG Group (BRGYY.PK) or for all or part of Royal Dutch Shell (RDS.A).
2) Total’s (TOT) outlook has improved thanks to the appeal of liquefied natural gas, especially outside the U.S. The company’s nat-gas reserves are expected to be bolstered significantly by a recent agreement with Russia’s Gazprom. 2008 production was hurt by unexpected shutdowns in Africa and the North Sea. However, European margins were up 88% in Q3, and with low-cost African production and rapid Middle East expansion, Total should do well if oil holds steady or rises. S&P has a 12-month target price of $92 vs. Friday’s $47.42
3) BP (BP) earnings will likely take a short-run hit from low crude prices from in Russia, where a joint venture contributes around 25% of production. In the meantime, BP has been working on expanding its nat-gas operations. CFO Byron Grote says BP’s $3.36-a-year dividend isn’t at risk if oil stays in the 40s or higher.
4) Petrobras (PBR) is a smaller player and a more speculative buy than the other firms on this list. It has made some interesting energy discoveries, but not all can be exploited profitably at current petroleum prices. The Brazilian government, which owns around a third of Petrobras, has encouraged the company to return more profits as dividends, so its 3.7% yield could rise slightly this year. Deutsche Bank cut its target to $35 last month, but that’s still a gain from Friday’s $24.58.
The story is less positive for other big players, including Royal Dutch Shell, ConocoPhillips (COP) and Chevron (CVX). So while long-term industry prospects are positive, investors will have to be picky to find the winning companies.
- Tim Guinness, of the Guinness Atkinson Global Energy Fund, calls all the integrated oil stocks a ‘screaming buy’ with over 50% upside. He assumes petroleum prices will average $60 in 2010 and $70 in 2011.
Royal Dutch Shell conspired directly with Hitler, financed the Nazi Party, was anti-Semitic and sold out its own Dutch Jewish employees to the Nazis. Shell had a close relationship with the Nazis during and after the reign of Sir Henri Deterding, an ardent Nazi, and the founder and decades long leader of the Royal Dutch Shell Group. His burial ceremony, which had all the trappings of a state funeral, was held at his private estate in Mecklenburg, Germany. The spectacle (photographs below) included a funeral procession led by a horse drawn funeral hearse with senior Nazis officials and senior Royal Dutch Shell directors in attendance, Nazi salutes at the graveside, swastika banners on display and wreaths and personal tributes from Adolf Hitler and Reichsmarschall, Hermann Goring. Deterding was an honored associate and supporter of Hitler and a personal friend of Goring.
Deterding was the guest of Hitler during a four day summit meeting at Berchtesgaden. Sir Henri and Hitler both had ambitions on Russian oil fields. Only an honored personal guest would be rewarded with a private four day meeting at Hitler’s mountain top retreat.
IN JULY 2007, MR BILL CAMPBELL (ABOVE, A RETIRED GROUP AUDITOR OF SHELL INTERNATIONAL SENT AN EMAIL TO EVERY UK MP AND MEMBER OF THE HOUSE OF LORDS: 
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A head-cut image of Alfred Donovan (now deceased) appears courtesy of The Wall Street Journal.
