Analyzing 2015 Performance and 2016 Outlook for the Energy Sectors

(Continued from Prior Part)

Production mix

ConocoPhillips (COP) has a production mix of 43% and 46% in natural gas and crude oil, respectively. In contrast, EQT (EQT) and Cabot Oil and Gas (COG) have production mixes of 90% and 95%, respectively, in natural gas. Companies with high exposure to natural gas and crude oil will likely be impacted the most by changes in these commodities’ prices. Integrated energy producer ExxonMobil’s (XOM) production mix was 46% in both natural gas and crude oil. ExxonMobil has the highest individual weight in the Energy Select Sector SPDR Fund (XLE).

The average production mix of the above upstream companies is 50% in natural gas. These upstream companies have a 38% production mix in crude oil.

Other upstream companies such as Pioneer Natural Resources (PXD) and EOG Resources operate with a production mix of 45.8% and 48.5% in natural gas, respectively. However, these companies have a production mix of 32% and 38% in oil, respectively. Anadarko (APC) operates with a production mix of 51% and 34.6% in natural gas and crude oil, respectively.

Price-to-BOE reserves ratio

Below is a breakdown of three other companies’ price-to-BOE (barrels of oil equivalent) reserves ratios:

• ConocoPhillips (COP) has a price-to-BOE reserves ratio of 7x.

• EOG Resources (EOG) has a price-to-BOE reserves ratio of 18x.

• Apache (APA) has a price-to-BOE reserves ratio of 7.6x.

However, it’s important to note that a lower ratio usually indicates that a company is undervalued compared to its peers. In the next part, we’ll discuss moving averages and analyst estimates for downstream companies.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - The Oil and Gas Industry Hit Multiyear Lows in 2015

• Part 2 - What Do Analysts Estimate for the Upstream Sector?

• Part 3 - Bearish Outlook for Upstream Sector: Rising Rates and Growing Debt