Mid-Sized Domestic E&Ps Lead the Pack in 2000
During a year that saw fears of natural gas shortages send
prices through the roof, spurring E&P companies into frenzied
drilling, energy company shares reached a median total return of
48% in 2000, according to a new report by John S. Herold, Inc., a
Connecticut-based independent energy research consulting firm.
In the report titled "Oil Share Market Performance 2000," Herold
states that natural gas producers, drillers and the midstream
sector led the growth, with all but one of the peer groups
outperforming the Dow Jones Industrial Average.
"The price recovery that began in 1999 has enabled many
companies to adopt more aggressive exploration and capital spending
strategies, particularly aimed at finding and developing U.S.
natural gas reserves," said Art Smith, CEO of Herold. "The market
has recognized the value this represents, rewarding, by providing
capital for successful players in these sectors. We expect this
recognition to continue in 2001."
The Herold report, which followed 307 publicly traded energy
companies in every sector of the international oil and gas
industry, showed the biggest winners in 2000 were U.S. E&P
companies. In response to high natural gas prices, mid-sized
domestic E&Ps posted a 118.5% median gain, followed
by large domestic E&Ps and small domestic E&Ps with
gains of 94.1% and 79.8% respectively.
According to the report, Canadian E&Ps trailed their U.S.
counterparts for the first time in three years, which also fueled
an active merger and acquisition market in the North country.
Overseas E&Ps also posted a median return of 22.7%.
Reinforcing the unusual 2000 theme that "smaller is better," The
Herold study showed that large integrated oil companies as a whole,
only posted a modest 10.1% median gain, while the overseas
integrated oils, due to weak performance by South American and
Eastern European companies, showed an overall 16.1% decline.
Other notables within the energy industry study were pipelines,
oil service and the drillers, which posted median returns of 70.6%,
50.1% and 49.3% respectively. The consulting firm said that the
most surprising result from this year's study, was the turnaround
of the marketing and refining sector. The segment came from a 17.7%
decline in 1999, to a 32.4% total return for the year 2000.
The firm said that the most impressive performances within the
industry came from a handful of companies. Among companies trading
above $5 per share, Cross Timbers Oil posted a 359% return,
followed by Key Production with a 347% gain, and Prima energy and
Swift Energy, both posting 227%.
Of the U.S. integrated oil companies, Amerada Hess led the pack
with a 29% return, followed by Phillips Petroleum with 21%, and
Conoco with 16%. Petro-Canada led the International integrated oil
sector with an 87% gain. The poorest return in the sector came from
Repsol YPF, which lost 29% of its year end 1999 value according to
the Herold report.
For more information on the 21-page report, contact Tom Sommers