It was generally a rough day for energy stocks.
Fair value estimate on stock unchanged after incorporating latest results.
Russia-Ukraine war likely to keep oil and gas prices high.
Management will continue to dedicate cash to deleveraging until gross debt reaches the high teens from $26 billion today.
We've lowered our near-term forecasts, but the pendulum could quickly swing back to oversupply.
Sector is pricey, but oil-services companies are trading at a discount.
Some pockets of the energy sector are more impervious than others.
What will higher oil prices mean for production and consumption?
This quarter it announced a quarterly dividend increase to $0.13 a share along with a $3 billion buyback program.
Russia will get its oil to the global market, whether or not it invades Ukraine.
Marathon comfortably met financial and production targets in the fourth quarter.
We've raised our global consumption forecast for 2022, but our 2023 outlook is unchanged.
The oil services segment looks especially cheap.
We think oil consumption will continue to recover.
Services and integrated firms trading at discounts to fair value.
But the sector's current tailwinds are likely unsustainable, so investors should prioritize high-quality businesses with stable balance sheets.
Even after the rally, the sector is undervalued, with the average stock trading at a 9% discount.
How the vaccine affects this sector, and two of our top picks.
We expect a nearly complete recovery in crude demand as the pandemic subsides in 2021.
Weaning America off fossil fuels will take decades, even if Democrats sweep Congress in November.
When will crude oil recover?
We expect demand to catch up in 2021 and 2022.
Chevron announces acquisition of Noble Energy, but this won't change its fair value estimate or moat rating.
But first-quarter wallop still stings.
It's been rocky, but the worst is probably behind us.
Widespread social distancing due to the coronavirus has dragged down gasoline consumption and storage utilization is rapidly climbing.
Plenty of reason to worry, but we still expect a nearly complete recovery.
We are taking into account the depressed oil price environment and expectations for companies to continue to slash guidance for 2020 development capital expenditure.
We anticipate lowering our fair value estimates for our U.S. E&P coverage as a result of a strained price environment and lower U.S. production.
The near-term outlook for energy companies is bleak and likely to affect our valuations.
Oilfield services stocks appear to be the most undervalued.
Two main concerns for investors are overblown.
Oilfield services look particularly attractive.
We see some midstream opportunities, but much depends on the speed of recovery.
Diamondback Energy and Continental Resources look especially appealing.
Nearly all the E&P and oil-services stocks we cover trade below what we think they're worth.
We suggest investors avoid betting on near-term oil prices and instead take a longer-term view.
But while the expanded development plan is accretive to our net asset value, we still see little upside remaining.
Our negative stance is underpinned by our view on long-term oil prices rather than operational weakness at the firm.
But we think the latest acquisition is moat-enhancing and fairly priced.
We think these elite producers have sustainable competitive advantages.
We see the price of oil, along with the valuations of many E&P stocks, as frothy today, but DiamondBack is one pocket of value.
President Trump's decision to abandon the Iran nuclear accord could exacerbate the global supply shortage.
The energy sector has been one of the hardest hit in recent days, and Morningstar's David Meats takes a closer look at where investors should look for opportunities.
It's one of the lowest-cost oil producers in our coverage universe.
Good acreage and very lean operations make RSP Permian and Diamondback our top exploration and production picks.
But a few low-cost, low-leverage E&P companies remain undervalued, despite looming commodity headwinds.
We see room for oil prices to fall, but think some shale producers still look attractive over the long term.
We no longer think rig count increases are realistic, and we put the new fair value estimate at $26.
RSP Permian is our top pick in the upstream E&P segment, and we expect it to see substantial growth next year.