Vine Investing
  • Home
  • Home
Search by typing & pressing enter

YOUR CART

7/25/2017 0 Comments

Upbeat earnings for Oil companies may be short lived

PictureSource: Yahoo finance
Earnings season is showing many positive signs for the oil industry. The earnings quarter vs quarter show improvements and expenses are down year over year. This good news could help with the explorers over the near term but weakening demand for oil globally could keep the companies in a declining pattern for longer. Fracturing in OPEC's willingness to cut more production and a fracking resurgence in the US should keep a lid on oil prices, and subsequently share prices of oil and gas explorers.

Picture
Not all of this should be seen as bad news. A longer term outlook is starting to show the deterioration of production capacity as a result of the cuts in capital expenditures that took place at the end of last year. Oil inventories are decreasing in the US which will eventually result in more volatility in the price of oil during any pick up in demand. The fracking story is also not the same as in the past. While record wells are being dug, there are issues with infrastructure to start pulling oil. Completion and Production revenues from Halliburton's recent earnings release shows the profitability of renting equipment that is in short supply.

​In short the outlook for the macro space is not favoring a surge in oil prices in the near future, but oil service companies keeping growth reigned in through less Cap Ex will be able to weather a slowdown easier than in the past and provide a great entry point for a longer term outlook.  
0 Comments



Leave a Reply.

    Archives

    June 2020
    April 2020
    March 2020
    December 2019
    November 2019
    October 2019
    September 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    July 2017
    June 2017
    May 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    April 2014
    March 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    October 2012
    September 2012
    August 2012
    July 2012
    June 2012
    May 2012
    April 2012
    March 2012
    February 2012
    January 2012
    December 2011
    November 2011
    October 2011
    September 2011
    August 2011
    July 2011
    June 2011
    May 2011
    April 2011
    March 2011
    February 2011
    January 2011
    November 2010
    October 2010
    September 2010
    August 2010
    July 2010
    June 2010
    May 2010
    April 2010
    March 2010
    February 2010

    Categories

    All Chinese Debt Commodities European Disunity Inflation Policy US Earnings

    RSS Feed