Even as tensions in Ukraine ease with Russian President
Vladimir Putin asserting that military intervention is not on the
cards and force will be used only as a last resort, the
confrontation between Moscow and the West - the most serious
since the end of the Cold War - has captivated world energy
In particular, Russia's bloodless seizure of border posts in
Ukraine's Crimea not only threatens to derail hydrocarbon
deliveries bound for Europe but also disrupt oil/gas exploration
in the region. This could translate into big uncertainties for
major energy firms in a market that contains 25% of the global
natural gas reserves.
Let's take a closer look at how the Ukraine crisis will play out
for big energy companies:
) is the highest stakeholder with just under 20% interest in
Russian energy giant Rosneft, which is responsible for a third of
BP's output. In case of any Western sanctions against Russia, the
London-based group will be hit hard. On the other hand, the
company's 30%-owned Baku-Tbilisi-Ceyhan (BTC) pipeline may gain
from the turmoil, as it transports oil from the Caspian Sea via
Georgia and Turkey to the Mediterranean - a detour that avoids
) is also heavily involved in the eastern European country and
has recently signed a $10 billion 50-year shale gas
production-sharing agreement. A potential Russian takeover of
Ukraine will be a major dampener to the deal.
Last but not least, oilfield service providers like
Baker Hughes Inc.
Weatherford International Ltd.
) are all established players in Russia and any trade embargo
against the country over its actions in Ukraine may land their
investments in jeopardy.
Among the companies mentioned above, while Halliburton carries a
Zacks Rank #4 (Sell), the remaining entities retain a Zacks Rank
Any intensification/dilution of the Ukraine conflict will guide
the brokerage analysts to downgrade/upgrade their forecasts on
these players, leading to negative/positive estimate revisions
and the subsequent change in their Zacks Ranks.
BAKER-HUGHES (BHI): Free Stock Analysis
BP PLC (BP): Free Stock Analysis Report
CHEVRON CORP (CVX): Free Stock Analysis
HALLIBURTON CO (HAL): Free Stock Analysis
WEATHERFORD INT (WFT): Free Stock Analysis
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