00:00 Speaker A
But Julie, what was that best performing sector for this year?
00:04 Julie
Energy.
00:05 Speaker A
Energy. Yes, it was. We got the biggest day of the quarter for energy this morning. Uh, BP earnings coming out overnight and then Exxon and Chevron here in the states coming out. The story is the same as it was last quarter, but it is even stronger now. These companies are seeing some banner profits, record profits even, because of the refining scarcity. I mean, you look at BP, profit reaching the highest level in 18 years because of the refining margin. Exxon beating profit expectations, raising its dividend for the 44th straight year. Chevron beating estimates, refining profit highest level on records at $4.93 billion. It’s a great time to be turning oil into anything else and selling it.
01:00 Julie
Yeah, it definitely is.
01:02 Speaker B
Yeah, I was looking at uh Chevron this morning. and Chevron and Exon, their stocks are both trading at about 15 times forward earnings. Um, and that actually tells me that for better or for worse, people sort of expect this level of profitability to continue, right? Classically, with oil at 100, you might even expect single digit PEs because wait a second, things will normalize. Uh the PEs are pretty much in line with history, which sort of tells me that, um, you know, you look at the forward strip and you and you look at all of these oil, sophisticated oil measures, but it it seems like we may have higher for longer.
01:52 Speaker A
Higher for longer.
01:52 Julie
Well, and even if the prices, the crude price doesn’t remain higher, the idea that they can still maintain some level of those refining margins. They might be continuing on that. I mean, you flagged this number this morning, the profitability of the Venezuelan oil that Chevron is producing.
02:18 Speaker A
Right. Chevron’s saying this morning that its its uh its production cost for Venezuelan barrels is around or below $20 a barrel, which makes it one of the most profitable oil fields and oil sources in the world. They’re uh expecting to get to 300,000 barrels per day by the end of the year in Venezuela. They want to kick that up to 600,000 barrels. If you’re Chevron, if you’re Mike Wirth, those are the positions to go after because look at the the margin you’re capturing, $20, and then the international price is at 100, 110. Your refining products are even higher. That is a crazy margin to be capturing.
Source: finance.yahoo.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
