Energy Giants Positioned to Thrive Despite Uncertain Oil Prices
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Consolidation through M&A is allowing major energy companies like ExxonMobil, Chevron, and Occidental Petroleum to reduce costs and increase cash flow.
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Many upstream companies have plans to at least break even at oil prices around $40/barrel, with upside if prices rise.
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Majors like Exxon and Chevron have strong balance sheets to withstand lower oil prices. Midstream and downstream companies also provide stability.
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The energy sector overall has attractive valuations, with a P/E of 7.5x and dividend yield of 3.6%.
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Even if oil prices stay flat or decline modestly, the sector is set up for success given the improved efficiency and financial strength of companies.