Oil prices reached seven-year highs on Friday amid rising geopolitical tensions and a winter storm in the United States. The international oil benchmark, Brent crude, gained 1.7% to trade at $92.67 per barrel. West Texas Intermediate crude, the U.S. oil benchmark, rose 1.9% to hit $92.02 per barrel. Both benchmarks were on track for a seventh consecutive weekly gain.
Oil demand is expected to grow to 100.23 million barrels per day (mb/d) in 2022, up 3.5mb/d from 2021 and higher than the pre-pandemic levels in 2019. Despite pressure from top consumers such as the U.S. and India to raise output faster, the OPEC+ decided to stay put in its output increases.
Given this backdrop, we think foreign oil stocks, BP p.l.c. (BP), Eni S.p.A. (E), Petróleo Brasileiro S.A. - Petrobras (PBR) are ideal additions to your portfolio.
BP p.l.c. (BP)
BP engages in the energy business worldwide. It operates through Gas & Low Carbon Energy; Oil Production & Operations; Customers & Products; and Rosneft segments. The company is headquartered in London, the United Kingdom.
In October 2021, Cognite announced that it had signed a multi-year agreement with BP to use Cognite’s industrial dataops solution for increasing efficiency and sustainability of well operations. “BP is pleased to extend our strategic partnership with Cognite to focus on optimization through contextualized data,” said Ahmed Hashmi, Senior Vice-President Digital, Production & Business Services, BP.
For the fiscal third quarter of 2021, total revenues and other income increased 44.2% year-over-year to $37.87 billion. This can be attributed to a rise of 37.5% in sales and other operating revenues from the prior-year quarter to $36.17 billion. Net cash provided by operating activities came in at $5.98 billion, up 14.8% from the same period the prior year.
Street expects the company’s revenue to increase 34.6% year-over-year to $46.50 billion in the fiscal first quarter ending March 2022. The consensus EPS estimate of $1.14 indicates a rise of 45.6% year-over-year. In addition, BP has topped the consensus EPS estimates in three of the trailing four quarters, which is impressive.
BP shares have gained 51.2% over the past year and 25.2% over the past six months to close its last trading session at $32.15.
BP’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree. BP has an A grade for Momentum. In the 46-stock Foreign Oil & Gas industry, it is ranked #27. The industry is rated A.
In addition to the POWR Ratings grades we’ve stated above, one can see the additional BP ratings for Growth, Value, Stability, Sentiment, and Quality here.
Eni S.p.A. (E)
Headquartered in Rome, Italy, E explores, develops, and produces crude oil and natural gas. It operates through Exploration & Production; Global Gas & LNG Portfolio; Refining & Marketing and Chemicals; Eni gas e luce, Power & Renewables; and Corporate and Other activities segments.
On October 29, E reported that it started the launching process of IPO of its newly-formed businesses comprising EGL, retail, renewable energy production, and EV charging points divisions. The company plans to complete the transaction in 2022.
E’s adjusted operating profit increased 364.1% year-over-year to €2.49 billion ($2.83 billion) in the fiscal third quarter of 2021. Its adjusted net profit, attributable to E’s shareholders, grew 1,035.3% from the year-ago value to €1.43 billion ($1.62 billion), while its per-share value increased 1,100% from its year-ago value to €0.40.
The consensus revenue estimate of $89.04 billion for fiscal 2022 indicates an increase of 10.7% year-over-year. Likewise, the consensus EPS estimate for the same period of $3.12 reflects a rise of 45.1% from the prior year. In addition, E has an impressive surprise earnings history as it has beaten the consensus EPS estimates in three out of the trailing four quarters.
The stock has gained 47.5% over the past year and 26.9% over the past six months to close its last trading session at $30.63.
It’s no surprise E has an overall B rating, which translates to Buy in our proprietary rating system. The stock has an A grade for Momentum and Sentiment and a B grade for Growth and Stability. It is ranked #13 in the Foreign Oil & Gas industry. Click here to see the E’s ratings for Value and Quality.
Petróleo Brasileiro S.A. - Petrobras (PBR)
Headquartered in Rio de Janeiro, Brazil, PBR produces and sells oil and gas internationally. The company operates through Exploration and Production; Refining; Transportation and Marketing; Gas and Power; and Corporate and Other Businesses segments.
On December 9, TechnipFMC plc (FTI) announced that PBR had awarded it three frame agreements. The agreements reflect PBR’s drive to increase its oil recovery in its brownfield developments, mainly in post-salt fields in offshore Brazil.
PBR’s Sales revenues increased 76.9% year-over-year to $23.26 billion in the fiscal third quarter of 2021. Its gross profit stood at 81.4% from the prior-year quarter to $11.39 billion, while consolidated net income attributable to the shareholders of PBR came in at $5.94 billion, indicating an improvement of 2,616.1% year-over-year. Its adjusted EBITDA increased 87% from its year-ago value to $11.62 billion.
Analysts expect the company’s revenue to increase 61.8% year-over-year to $85.19 billion for the fiscal year 2021. Likewise, Street expects EPS to improve 495.3% from the prior year to $2.21 for the same period.
Over the past year, the stock has gained 21.8% and 24.8% over the past six months to close its last trading session at $13.34.
PBR’s POWR Ratings reflect its solid fundamentals. The company has an overall B rating, which translates to Buy in our proprietary rating system. PBR has a Momentum and Quality grade of A. It is ranked #19 in the same industry. To see additional PBR ratings for Growth, Value, Stability, and Sentiment, click here.
BP shares were trading at $33.02 per share on Friday afternoon, up $0.87 (+2.71%). Year-to-date, BP has gained 24.00%, versus a -4.74% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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