Seeking Alpha: Occidental Has A Good Plan, And Some Value Left

Despite relatively good returns on capital and a solid asset base, Occidental Petroleum (NYSE:OXY) hasn't really been at the top of the Street's list of favorites in the oil and gas sector. Now, management is pushing on with an ambitious restructuring plan that will see its once-core California business spun out on its own, a likely sell-down of its assets in the Middle East and North Africa, and a more aggressive drilling program in the Permian. All told, Occidental should be looking at better production growth and stronger returns than most large peers, with an enhanced oil recovery program supporting a decent dividend. A combination valuation methodology supports a fair value above $110, which I think is a decent implied return.

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Occidental Has A Good Plan, And Some Value Left

Seeking Alpha: Can Petrobras Unlock The Underlying Value In Its Reserves?

In a world where investors are increasingly focused on the production growth prospects of major integrated energy companies and their leverage to oil, Petrobras (PBR) ought to be a popular name. Few companies of comparable size have added more to reserves over the past decade and most sell-side production forecasts for Petrobras are nearly double that of other multinationals like ExxonMobil (XOM), BP (BP), or Chevron (CVX).

Unfortunately, there are a lot of challenges offsetting Petrobras's leverage to huge oil-heavy reserves. The company has established a record of missing production guidance and production costs are increasing. Even more troubling is a systemically troubled refining operation and a government that is all too willing to take a big role in the company's operations. Despite that, the company looks undervalued enough on near-term earnings prospects to be worth a look and could double from here if the company can maximize its upstream value and stem the losses downstream.

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Can Petrobras Unlock The Underlying Value In Its Reserves?

The Motley Fool: Statoil ASA's Focus on Returns and Higher-Grade Assets Should Pay Off

This year has already started off on a much better foot for Statoil (NYSE: STO  ) than its recent stock market experience. Maligned for its high finding and development costs, its dependence on high oil prices, and its weaker near-term production growth, Statoil investors had to endure a frustrating stretch where the short term-obsessed market wasn't willing to give the company its due.

Now, though, the market appears to be taking a more optimistic view. The turbulence in Ukraine has drawn attention back to Statoil's position as the largest supplier of gas to Europe outside of Russia. At the same time, management has openly turned to a more returns-oriented approach and has spent the last year upgrading its portfolio and making some major oil and gas discoveries. Valuation for oil and gas companies may be frustratingly imprecise, but Statoil seems to be offering a good mix of improving returns, capital appreciation, and a solid yield.

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Statoil ASA's Focus on Returns and Higher-Grade Assets Should Pay Off

Seeking Alpha: A Cleaner, Tighter Abraxas Petroleum Ready For 2014

Some investors get nervous when they see E&P companies selling acreage, but I suspect that may be due to a basic misunderstanding of how oil and gas companies create value. Acreage and reserves are definitely a critical part of long-term production and profit growth, but "acreage at any cost" has to be tempered with profitability and liquidity. I think Abraxas Petroleum (AXAS) has been making a lot of good decisions in 2013, shoring up a once-stretched balance sheet by selling off non-operating acreage in non-core areas and focusing its attention on its Bakken and Eagle Ford properties where the company has been seeing surprisingly good results given the previously assumed quality of the acreage.

Looking into 2014, Abraxas has a cleaner balance sheet and a tighter operating focus. Large acreage positions in areas like the Niobrara and Duvernay give some optionality to long-term development (or sale) plans, while a focused drilling program for 2014 should support the solid execution that the company has been displaying recently. Valuation has me a little cool on this name right now, but I'd definitely keep an eye on it and reconsider if the stock were to pull back to the $3 area.

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A Cleaner, Tighter Abraxas Petroleum Ready For 2014

Investopedia: Chevron Disappoints, But Offers A Little Value

With the results in hand from Exxon Mobil (NYSE:XOM) and refiners like Valero (NYSE:VLO) the big surprise for the second quarter would have been if Chevron (NYSE: CVX) had posted a good quarter in refining. Chevron didn't do so, and the company's performance in the upstream E&P business was also a little light. Coupled with a somewhat higher capex spend this quarter, it was a pretty “blah” report for this international energy major. By the same token, given that growth isn't going to really change much until Gorgon gets going (around 2015), it's not a story-changing quarter and Chevron continues to look like a decent pick in the major energy space.

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Investopedia: Petrobras Will Grow, But Will It Be Profitable Growth?

For the most part, investing in one of the international oil and gas majors these days is about a trade-off between a fairly predictable stream of dividends and share buybacks and sluggish production growth. Well-known companies like Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), BP (NYSE:BP), and Royal Dutch Shell (NYSE:RDS.A) will, for the most part, consider themselves lucky if they grow production much more than 3% or 4% a year over the next decade.

On the flip side of that equation is Petrobras (NYSE:PBR). With its privileged access to Brazil's huge offshore pre-salt deposits, Petrobras could lead the world's major energy companies with 10% annual production growth over the next decade. But while Petrobras is highly likely to deliver high levels of production growth, Petrobras doesn't enjoy the same reputation as Exxon Mobil or Chevron in per-barrel profitability or returns on capital. What's more, the ongoing interference of the Brazilian government looms over the stock. All of that said, it looks like investors are too worried about the bad things that could happen relative to the good things that probably will happen – setting these shares up as a potentially significant bargain in the space.

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Investopedia: Statoil's Turnaround Proceeding Much Too Slowly

I bought Statoil (NYSE:STO) on the idea that this Norwegian energy giant was troubled, but that it would get its house back in order and deliver on its strong legacy of profitably developing energy reserves in challenging locations. So far, not so good. Statoil is one of the worst-performing energy majors over the past year, rising about 3% while Chevron (NYSE:CVX) has risen 29% and Exxon Mobil (NYSE:XOM), Total (NYSE:TOT), BP (NYSE:BP) are all up about 18%.

Statoil continues to struggle to keep a handle on production costs, and unplanned outages have wrecked havoc with a relatively fixed operating expense structure. Though I still believe that Statoil can do better, and is significantly undervalued on that basis, it's getting harder and harder to stay patient with the stock.

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Investopedia: BP Looks Cheap, But A Lot Of Improvements Have To Come Through

The energy sector has been in a rut for a while now. Despite some decent one-off performances, energy screens as one of the worst performers over the year-to-date, one-year, three-year, and five-year periods. With that sort of performance, it's not altogether surprising that many of the majors (Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), et al) look a little undervalued. BP (NYSE:BP) actually jumps out as one of the potentially cheapest names to consider, but there's still quite a bit of work that management has to do to get this one performing again.

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Investopedia: Total Looks Cheap, But There's A Reason

Some investors and commentators treat the international oil majors as an undifferentiated mass, suggesting that investors need only follow dividend yields and/or PE ratios to find the best bargains at a given point in time. Total (NYSE:TOT) offers a good example of why that's not a very good approach. While Total's aggressive exploration program could offer some upside to production and profits down the road, the company's leverage to high oil prices and lower margins/returns underline a riskier business model that ought to trade at some discount to peers.

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Investopedia: Good Profitability And Relative Valuation Make Chevron Interesting

If Exxon Mobil (NYSE:XOM) had the wrong kind of earnings beat, it would seem that Chevron (NYSE:CVX) had the right sort of miss. More to the point, Chevron continues to operate one of the most profitable upstream businesses among the oil majors, and the company has a rich pipeline of growth projects to maintain higher production levels across the next five years. Coupled with an undemanding valuation, Chevron looks like a solid name to consider for broad international energy exposure.

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Investopedia: Exxon Mobil's Profits And Growth Fail To Impress

As trite as it sounds, Exxon Mobil (NYSE:XOM) is what it is – a huge international oil, gas, refining, and chemical monolith that effectively refines crude oil and natural gas into shareholder capital. The process isn't always pretty (as witnessed by the recent pipeline spill in Arkansas) and it's getting harder to squeeze out the same level of profitability as before, but Exxon is still among the best-run oil and gas majors in the market. A little undervalued today, Exxon could offer some upside to investors who want a relatively lower-risk way to play energy.

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Investopedia: Exxon Mobil Looking Steady, But Not Spectacular

It's hard to find too many bad things to say about Exxon Mobil (NYSE:XOM). Not only does Exxon have the best historical returns on capital of the energy majors, the company also has established itself as an efficient converter of oil and gas to cash flow and dividends. Though costs are rising, returns on energy projects are falling, and production growth is not looking very robust. Exxon can still fill a role as a go-to energy major for investors who want exposure to the energy space.

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Investopedia: Chevron Deserves A Better Valuation

Like other energy majors, Chevron (NYSE:CVX) is trapped in a Wall Street catch-22. Analysts and investors are quick to complain about the low expected production growth rates in the sector, but they complain even louder when the companies announce higher capex budgets to exploit and develop their sizable reserves. Even so, Chevron looks too cheap when compared to peers like Exxon Mobil (NYSE:XOM) and ConocoPhillips (NYSE:COP). Sizable investments have pressured recent returns, but the long-term growth and value-creation potential at Chevron looks better than just worthwhile.

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Commodity HQ: 5 Of The Biggest Oil Finds In History

Oil makes the world go ’round, and finding more oil is one of the principal goals of multinational energy giants like Exxon Mobil (XOM), British Petroleum (BP) and Chevron (CVX). Unfortunately, it has become harder and harder to find fields that really move the needle for corporate or national reserve totals. Nevertheless, just because it is difficult does not mean it is impossible, and investors can look back to some notable successes in the history of the oil industry.

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5 Of The Biggest Oil Finds In History

Investopedia: Post-Robbery, Repsol Still Has Promise

This has been Repsol's (OTC:REPYY) annus horribilis, as the Argentine government's decision to steal YPF (or "nationalize"/"expropriate", if you prefer) walloped the stock and forced Repsol's management to re-evaluate the company's core operating priorities and capital structure. While I would never suggest that losing a business as large as YPF is a long-term positive for the company, this restructuring was arguably overdue and Repsol has a lot of appealing production/reserve growth potential.

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Seeking Alpha: Is Chevron Following The Exxon Game Plan?

Investors have ample choice in the oil and gas sector these days, with plenty of high-quality names like Apache (APA) and Petrobras (PBR) trading at discounts for one reason or another. Add Chevron (CVX) to that list, for while it's not the cheapest energy stock out (nor the cheapest major), the company's valuation seems to give it only marginal credit for following a game plan that looks more than passingly similar to the one successfully put into place at Exxon Mobil (XOM).

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Is Chevron Following The Exxon Game Plan?

Seeking Alpha: Exxon Mobil And The Jam Today/Jam Tomorrow Dilemma

Exxon Mobil (XOM) knows a good thing when they see it - a pristine balance sheet, nearly 20 billion barrels of reserves, and the largest refining system in the world produces almost bond-like cash flow that makes Exxon Mobil a favored place to park cash and capture decent dividends. If management really has anything to worry about, it may be as to whether it's worth risking the wrath of Wall Street to build an even better long-term asset base.

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Exxon Mobil And The Jam Today/Jam Tomorrow Dilemma

Seeking Alpha: BP May Be Cheap, But There's A Lot Of Work Left To Do

It wasn't all that long after the Macondo disaster that investors began speculating as to whether BP (BP) shares had been punished too much and represented a good long-term bargain. While the shares certainly are considerably higher than their worst levels of the disaster, the stock has been range-bound for the better part of 18 months. Although BP does look cheap relative to other major oil and gas names, management is going to have to start executing better for that valuation gap to shrink.

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BP May Be Cheap, But There's A Lot Of Work Left To Do

Seeking Alpha: Should Chevron Management Sweeten What Is Already A Solid Growth Story?

Unlike ConocoPhillips (COP), which I more or less blasted a week ago, Chevron (CVX) is a major oil company with a pretty interesting near-term profile. Although growth in the first quarter was not exactly torrid, the outlook here for production growth in the next three to five years (particularly oil/liquids production) is one of the best among the majors. Better still, this company has a clean balance sheet, solid profitability, and a focus on production sources that other companies tend to avoid.

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Should Chevron Management Sweeten What Is Already A Solid Growth Story?

Investopedia: Exxon Mobil - Biggest and Best, But Blah?

Investment advisers often recommend that investors seek out the best operators in an industry for their portfolio. When it comes to oil and gas, it is hard to do much better than Exxon Mobil (NYSE:XOM). While this company has gargantuan reserves, a well-earned reputation as a superior capital allocator, and ample cash to share with its investors, it sometimes seems as though Exxon is overlooked in favor of more exciting names. Though Exxon does not boast the highest potential returns in the energy space, investors looking for a lower-beta play may yet want to give it serious thought. 

Ho-Hum Third Quarter  
For better or worse, there were no major surprises in Exxon's third quarter results. Production slid 4% as the XTO acquisition rolls off and liquids production was incrementally weaker (down 7%). Realizations, the price Exxon gets for its oil and gas, were fairly strong - liquids prices rose from 35 to 45% by geography, while weak U.S. gas prices were offset by higher prices in Europe. All told, revenue rose about 31% from last year.

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