InvestingDaily.com

Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.



Close
FEATURED STRATEGY

Renowned Economist Paints Startling Portrait of the Future

Renowned Economist Paints Startling Portrait of the FutureRenowned economist Dr. Stephen Leeb has predicted the last 5 major market shifts. And he’s just revealed his latest prediction: “A market meltdown will wipe out the savings of millions of Americans.” In his latest report, he details which stocks will come crashing down in the coming months, as well as a select few that could double or even triple in value over the next few years. Get your copy here.

 

A Tough Year for Giants

By Robert Rapier on March 15, 2016

Most energy companies have now filed annual reports for 2015. These are important because certain key performance indicators are only updated in the annual report. For example, oil and gas producers are required to provide updates on proved reserves. Proved reserves are an important consideration in valuing an oil and gas company, especially after another year of depressed energy prices.

Leading up to the release of annual reports, I have been refining a stock screener I originally developed a year ago. This tool retrieves and analyzes real-time financial market data from the S&P Capital IQ database. This database is far more comprehensive than you will find at Yahoo Finance, Google Finance or any other free site I’ve seen. The screen is tailored to the financial metrics important to the oil and gas industry.

The database includes publicly traded companies across the energy sector, and from stock exchanges all over the world. The most recent screen I ran pulled in 2,367 publicly traded energy companies. I thought it would be an interesting exercise to highlight the world’s largest energy companies according to Enterprise Value (EV).

If you are unfamiliar with the EV, it’s considered a more comprehensive measure of a company’s capital structure than market capitalization. The EV is calculated as the market capitalization plus debt, minority interest and preferred shares, minus total cash and cash equivalents. The biggest difference between the market capitalization and the EV is usually debt. The inclusion of debt provides a more accurate estimate of the cost of acquiring the company.

With that said, here are the top 10 global energy companies sorted in descending order by enterprise value:

160315TELoiltop10

  • EV – Enterprise Value in billions of U.S. dollars as of March 14
  • FCF – Levered free cash flow for the trailing twelve months (TTM)
  • Change – Change in EV over the past year
  • 1 Yr Ret – Total shareholder return (TSR), including dividends, for the past 12 months
  • SEHK – Stock Exchange of Hong Kong Limited
  • ENXTAM – Euronext Amsterdam
  • ENXTPA – Euronext Paris
  • LSE – London Stock Exchange
  • MISX – Moscow Exchange

Unsurprisingly, the list is dominated by integrated oil and gas companies. These giants are engaged in all phases of the oil and gas supply chain — from production through transportation to refining, marketing, and distribution.

Texas-based ExxonMobil (NYSE: XOM) is by far the largest member of the group (and is also the fourth-largest publicly traded company in the world across all industries.) Of the Western world’s six “supermajors,” only Italy’s Eni (NYSE: E) failed to crack the top 10. (It was #11.)

Schlumberger (NYSE: SLB) is the world’s largest oilfield services company, but the only representative from that sector to make the top 10. You have to drop all the way down to Halliburton at #32 to find the next largest oilfield services company.

Midstream company Kinder Morgan (NYSE: KMI) did make the top 10 list, which may surprise some. After all, the master limited partnership Enterprise Products Partners (NYSE: EPD) has a market capitalization that is $7 billion larger than KMI’s. But KMI has about $20 billion more debt.

No refining (“downstream”) or pure exploration and production companies (“upstream”) made the top 10. The highest-ranking company classified as a refiner is India’s Reliance Industries (NSEI: RELIANCE) at #16. Phillips 66 (NYSE: PSX) is the highest-ranked U.S. refiner at #22, while ConocoPhillips (NYSE: COP) at #13 is the largest E&P company.

This list highlights the challenges the industry faced in 2015, with only 4 of the top 10 generating positive free cash flow last year, and only two with a positive total return over the past 12 months. But sentiment shows signs of shifting in 2016. While challenges in the energy sector will likely persist for at least several more months, the price of West Texas Intermediate (WTI) has quietly recovered by nearly 50% since the lows of February. As a result, the Energy Select Sector SPDR ETF (XLE) — whose major constituents are the world’s large energy companies — has bounced back into positive territory for 2016 for the first time since the first week of January.     

(Follow Robert Rapier on Twitter, LinkedIn, or Facebook.)



You might also enjoy…

 

Boost Your Annual Income By As Much As $12,036

We’ve uncovered a unique income-boosting opportunity that allows you to collect up to $1,003 a month in extra government cash. 

This plan is available to everyone over the age of 18.

The amount you make isn’t dependent upon your marital status…

How much money you currently make…

Or even how much money you made in the past.

Best of all, because of the way Uncle Sam views the money that comes from this plan, your current—or future—Social Security benefits won’t be affected, either. 

There’s still time to get your name on the list for the next check run. 

I’ll show you how here.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.

Stock Talk

  1. avatar
    Gerald Pollack Reply March 22, 2016 at 11:07 PM EDT

    Why does KMI make the top 10 with all it’s debt?Does it have any chance to stay in business?