Energy & Environment

Despite Better Earnings, Oil Giants Struggle To Meet Wall Street Expectations

Even as oil markets have rebounded, the value of oil company shares hasn’t kept pace

Oil and gas development seen in the West Texas Permian Basin.

Friday was tough for a lot of stocks, including those in big energy companies. While oil giants have been reporting better earnings amid a recovering oil market, the industry is still facing challenges trying to meet Wall Street’s expectations.

Majors like ExxonMobil, Chevron and Houston’s ConocoPhillips are feeling good about their 2017 numbers. But as Shell CEO Ben van Beurden hinted in an investor video, it’s not like companies are jumping for joy yet.

“We enter 2018 with continued discipline and confidence,” he said.

“Discipline” is the key word, and it’s what has driven the industry’s turnaround.

“Companies did a good job reducing their spending, whether that was through cost-cutting or lower capital expenditures,” said analyst Jacques Rousseau with ClearView Energy Partners. Rousseau said companies have also focused on what he called “shorter cycle” projects to please shareholders.

“This would be oil production from places like the Permian Basin, where investment leads to oil very quickly,” he said.

Still, that West Texas drilling is leading to production increases that some analysts, Rousseau included, say could over-saturate the market and bring oil prices back down. That’s something the stock market is watching too, and it’s part of why even with better earnings, the value of shares in giant oil companies hasn’t kept up with the market’s rebound.

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Travis Bubenik

Travis Bubenik

Energy & Environment Reporter

Travis Bubenik reports on the tangled intersections of energy and the environment in Houston and across Texas. A Houston native and proud Longhorn, he returned to the Bayou City after serving as the Morning Edition Host & Reporter for Marfa Public Radio in Far West Texas. Bubenik was previously the...

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