Sunday, January 29, 2012

Energy stocks screening

Energy Prices forecast:
mcf - hundreds cubic feet.

January 2012 Analysis major Oil Companies analysis:

 * Gazprom has big exposure to one country only - Russia

For an energy company the most vital parameter is  the mineral base it has and the replacement ratio.  It depends how long the company could sustain its production at current rate. We cannot possible predict what the replacement ratio is going to be tomorrow but we can estimate, how long the company existing mineral base will last.

Based on this analysis I decided not to buy ExxonMobil, as it is more than generously priced already.

There is many many other factors involved - type of operations, how much does it cost to produce a unit for the company, etc.. but this is already factored in the dividends paid.
Should the oil prices go down the company with the more expensive resources might lose the value very quickly. 

BP is the most underpriced  among the Big Oil companies, however this is due to uncertainty  how much will the out of court deal cost on Gulf  Macondo Well disaster. Expected bill $25 bn. If it will happen.

This is NOT a financial advice nor I am a qualified adviser. I do have position in the companies mentioned above. You need to seek professional advise before making any decisions in regards to the shares.

1 comment:

  1. BP is definitely the cheapest of the big oil companies. The Gulf disaster is an overhang on the company that is keeping the price of the stock down. Ten years from now it will be long forgotten, like the Exxon Valdez.