All sectors of the energy industry worldwide enjoyed a second consecutive “superb” year in 2004, with larger gains than broad market indices, according to the 2004 Year End Peer Group Stock Market Performance Review by consulting firm John S. Herold Inc.
The 27-page report notes that nearly 90% of the 360 companies surveyed recorded gains for the year, with 48 more than doubling in value. The median return for the entire group was 39.2%, while in comparison, the Dow Jones Industrials were up 3.1% in 2004 and the Standard & Poor’s 500 increased 9.0%.
Unfortunately for U.S.- and Canadian-based companies, “the best returns came from companies operating outside of North America, not just in the Exploration & Production (E&P) sector, but also in coal production.” In addition, “all categories of independents provided superior returns to the group we categorize as ‘Super Independents,’ those with internationally diversified reserves and production.”
Companies operating outside of North America dominated the E&P segment, registering a 67.1% total shareholder return in 2004. Mid-Size U.S. E&Ps rose 64.4%, followed by Canadian E&Ps (57.7%), Large U.S. E&Ps (45.3%), Small U.S. E&Ps (38.9%), and the Super Independents (36.6%).
The leading U.S. E&P in the survey was Noble Energy, based in Houston, which recorded the median gain for the group with a 39.2% total return.
“Special credit” was given to Fort Worth-based XTO Energy “for ranking in the top third of the group for five consecutive years.” Also Canadian Natural Resources reached the top third for the fourth straight time, and “narrowly missed claming the top spot among Canadian-based E&Ps for the third year in a row.” Canada’s Oil & Natural Gas Corp. was the largest in terms of market capitalization, with EnCana Corp. a close second, “but that title is becoming less important in these days of share buybacks.”
The survey noted that ExxonMobil “made up the ground it lost to BP plc last year, and both continued to outperform Royal Dutch/Shell.”
For the fifth consecutive year, the median shareholder return for the integrated oils, at 31.5%, bettered that of most major market indices, the study found. Total market capitalization was up by $257 billion, a value change about equal to the total market capitalization of the entire E&P sector.
Oil Service Companies (up 38.4%) and Drillers (36.6%) rebounded from lackluster returns in 2003 on increased spending by oil and gas companies. Pioneer Drilling Co. topped the Drillers with a 108% rise, while the NS Group rose 186.6% to lead the Oil Service Companies. Russia’s Yukos Oil recorded the steepest decline of the 360 companies in 2004, plummeting 92%.
To learn more about the study, visit www.herold.com.
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