Monday, June 15, 2015

Looking At Big Oil In Light of Crude's Price Increase

Since oil prices bottomed on 17 March,closing at 43.88 bbl for NYMEX crude and 53.94 bbl for Brent,analysts have been re-examining oil industry profit forecasts for Q2,raising the estimates as prices climbed back up.Now they are calling for 20% higher profits on average.Shares of most oil industry stocks are predicted to rise 17% over the next 18 months.
For example,oil services firm Transocean has an earnings estimate that has been raised a hefty 80.9%;while Exxon Mobil's has been raised 13.7 % and Chevron's earnings estimate has been hiked 8.7%.Transocean stock is considered overvalued at this time,so it has an average analysts' recommendation of underweight.Exxon has an average recommendation of hold with a price target of 94.35,and Chevron has a hold rating as well and a price target of 113.20.
Transocean has exceeded its price target of 14.19;while Exxon and Chevron are still below theirs-they have room to climb.On the dividend front,Transocean pays 0.85%;Exxon 3.49%;and Chevron leads the pack with a 4.31% payout.*
Today,15 June,NYMEX crude closed at 59.61,and Brent at 62.70.Transocean stock closed at 17.61;Exxon at 83.72;and Chevron at 99.29.All three stocks,as well as crude oil itself,were down on the day from Greek default fears and an oil supply glut.While Transocean stock has risen sharply since the price of oil bottomed out on 17 March,rising from 14.02 up to today's 17.61,Exxon's stock has been flat and Chevron's has declined 3.2%.Only Transocean stock has responded to the oil price climb as of yet,but to the point of rising too much.*
Transocean (RIG),Exxon Mobil (XOM),Chevron (CVX)

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