Running Out of Gas? Far From It
Several North American E&Ps are still strong plays in declining environment.
The proverbial pendulum has swung for oil and gas exploration-and-production companies over the course of 2011. Stock prices of the oil and gas firms that we cover surpassed our fair value estimates early in the year, hitting a high price/fair value ratio of 121% on January 12, as oil prices climbed on fears of supply disruptions in the Middle East. Recently, however, spot oil prices have begun to fall due to the anticipated conclusion of the civil war in Libya.
The decline also has been spurred by speculation of lower global oil demand due to U.S. and European recession fears and lower oil import volumes in China, as the government there seeks to slow domestic GDP growth.
Robert Bellinski, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
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