Big U.S. oil companies like Exxon Mobil (
), Chevron (
) and ConocoPhillips (
) reported their results last week for the first quarter. While COP
fueled a rally in the broad energy sector, XOM and CVX saw modest
decline in their share prices following the earnings announcement.
Amid the booming shale oil and gas business, the three big oil
companies are still struggling with shrinking production volumes.
This is especially true as domestic oil and natural gas production
at Exxon dropped 5.6% while Chevron oil and natural gas production
slipped 3.6%. Conoco experienced a modest production decline of
1.8% in the first quarter.
Earnings for Big Oil Companies in Focus
The largest U.S. oil company,
, reported earnings of $2.10 per share for the first quarter.
Though earnings outpaced the Zacks Consensus Estimate of $1.88
thanks to lower exploration cost, higher
and strength in upstream division, it deteriorated from the
year-ago earnings of $2.12.
Total revenue dropped 1.5% year over year to $106.8 billion,
missing the Zacks Consensus Estimate of $111.4 billion. The
lackluster result was primarily due to lower oil and gas output
that dropped for the tenth time in the past 11 quarters as well as
weak international refining and chemicals businesses (read:
Will BP Continue to Fuel Rally in These Energy
Similar to Exxon, earnings at
- the third largest U.S. oil company - strongly beat our estimate
by 24 cents and surged 27.5% from the year-ago quarter. This is
mainly thanks to rising output in Texas and North Dakota as well as
higher natural gas prices. Revenues rose 9.5% year over year to
$16.05 billion and comfortably surpassed our estimate of $15.51
, which trails Exxon Mobil, was hit by lower global production and
in the quarter. Earnings per share came in at $2.36, falling short
of the Zacks Consensus Estimate of $2.53 and declining from the
year-ago earnings of $3.18. Revenues fell 6.3% to $53.26 billion
and were a far cry of the Zacks Consensus Estimate of $66.45.
The mixed performance from these three giants along with favorable
supply/demand trends keeps the broad energy sector on a close watch
by investors. Both XOM and CVX have a poor
Zacks Industry Rank
which is in the bottom 32% while COP has a solid Zacks Rank in the
Further, the stocks retain a Zacks Rank #3 (Hold), suggesting more
room for upside. The ongoing tension in Russia and more sanctions
against the country could disrupt the global oil supply that is
considered favorable for the industry (read:
3 Energy ETFs to Buy on the Ukraine Crisis
Given this, most of the ETFs having larger allocation to these oil
companies are in focus in the coming days. Investors should closely
monitor the movement in these funds and grab any opportunity from a
surge in the price or avoid these if the stocks drag them down.
Below, we have highlighted three funds:
iShares U.S. Energy ETF (
This ETF tracks the Dow Jones U.S. Oil & Gas Index, giving
investors exposure to the broad energy space. The fund holds 85
stocks in its basket with AUM of over $2.4 billion and average
daily volume of more than 741,000 shares. The product charges 45
bps in fees per year from investors.
Exxon Mobil and Chevron occupy the top two positions in the basket
and take the bigger chunk of assets at 22.20% and 12.08%,
respectively. ConocoPhillips on the other hand make up for the
fourth position at 4.66%. From a sector perspective, oil & gas
producers make up for three-fourths share while oil equipment,
services and distribution takes the remainder (read:
Energy Exploration ETFs: A Bright Spot in The
The fund added 0.6% over the past five days and has a Zacks ETF
Rank of 3 or 'Hold' rating with a 'High' risk outlook.
Fidelity MSCI Energy Index ETF (
This is the new addition in the energy space that has accumulated
$90.2 million in its asset base since its debut six months ago. The
fund follows the MSCI USA IMI Energy Index, holding 161 stocks in
its basket. Out of these, XOM and CVX take the top two spots at
21.68% and 11.671%, respectively, while COP occupies the fourth
spot with 4.33% of assets.
In terms of industrial exposure, oil, gas & consumable fuels
accounts for nearly 79% of the portfolio while energy equipment
& services take the remainder. The product is the low cost
choice in the energy space, charging just 12 bps in annual fees.
Volume is light, trading in 52,000 shares a day. The ETF is up 0.6%
over the last five trading sessions.
Vanguard Energy ETF (
This fund manages nearly $3 billion asset base and provides
exposure to a basket of 163 energy stocks by tracking the MSCI US
Investable Market Energy 25/50 Index. The product sees a good
volume of more than 156,000 shares and charges 14 bps in annual
all the energy ETFs here
Here again, Exxon and Chevron are the top two firms with 21.8% and
11.7% allocation, respectively, while COP is the fourth firm making
up for 4.2% share. Though the product is skewed toward the
integrated oil & gas sector with 38.60% of assets, exploration
and production, and equipment services provide a nice mix in the
portfolio with double-digit exposure.
VDE added 0.6% in the past five days and has a Zacks ETF Rank of 3
or 'Hold' rating with a 'High' risk outlook.
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CONOCOPHILLIPS (COP): Free Stock Analysis
CHEVRON CORP (CVX): Free Stock Analysis Report
FID-ENERGY (FENY): ETF Research Reports
ISHARS-US EGY (IYE): ETF Research Reports
VIPERS-ENERGY (VDE): ETF Research Reports
EXXON MOBIL CRP (XOM): Free Stock Analysis
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