Oil and gas stocks shine in miserable year for U.S. equities

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Oil and gas companies shunned when climate concerns reached Wall Street have made a stunning stock market comeback. Find out more.

The turnaround is especially stark in the U.S. shale sector, where a decade of debt-fuelled drilling brought low and volatile returns. Occidental Petroleum was a prime example when it borrowed US$40 billion to buy a rival in 2019, driving shares down by almost 90 per cent in two years.Article content

“Companies have pristine balance sheets, there’s very little near-term debt risk, and are … moving forwards towards a net-cash position” while offering bumper dividends and share buyback programs, said Matt Portillo, head of research at TPH&Co., an investment bank. “In a recessionary environment, that’s a great spot to be in.”

It has also brought a political backlash, with U.S. President Joe Biden describing oil companies’ buoyant returns this year as the “windfall of war” and his senior energy adviser, Amos Hochstein, labelling Wall Street’s pressure on shale groups not to increase drilling as “un-American.” The cash bonanza means U.S. oil and gas companies could become debt-free by 2024, wiping out more than US$300 billion in losses accumulated in the decade leading up to the coronavirus pandemic, according to Deloitte Touche Tohmatsu Ltd.Article content

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Oil and gas stocks shine in miserable year for U.S. equitiesOil and gas companies shunned when climate concerns reached Wall Street have made a stunning stock market comeback. Find out more. A dark cancerous oily shine.
Source: financialpost - 🏆 7. / 85 Read more »