Integrated Oil and Gas – How the Oil Flows

Increasing shale gas production and rise in the cost of extracting oil reserves are the key headwinds for the oil supermajors

The oil, gas and consumable fuels industry is the largest in the world in terms of market capitalization. It grew at an average rate of 7.23% and posted net revenues of nearly $4 trillion during the last fiscal year.

Integrated oil and gas is the largest sub-sector within the oil, gas and consumable fuels industry. This comprises companies involved in upstream and downstream activities, which include multinational oil firms that are engaged in every process of the oil and gas industry including exploration, extraction, refining, marketing and selling oil and gas. These companies are also called ‘Majors’. Read more

The Best Iron Ore Plays

Here’s a look at the biggest companies in the iron mining industry, and how you can benefit from them

Previously, we left our discussion with a brief introduction to the companies involved in the iron mining industry. The table below shows the extent to which four major mining companies are exposed to the iron ore industry.

Although commodity prices have followed a long-term secular uptrend, a recent cyclical downtrend has exerted pressure on prices. However, as China – the largest consumer of commodities in the world – moves back on track to meeting growth targets, mining stocks are once again becoming a profitable investment. Read more

The Oil Industry: Drill your Way to Profits!

When it comes to the Oil, Gas and Consumable Fuels industry, major oil companies like Exxon Mobil Corp (XOM) and Chevron Corporation (CVX) are the first to come to mind. Oil and gas equipment services companies do not get as much limelight, even though they provide the specialized equipment required for complex exploration and production (E&P) activities and are therefore a crucial cog in the oil and gas industry.

With technological innovations, the oil and gas equipment and services sector is experiencing rapid growth and improving performance, and in this article, we’re looking at whether it’s better to invest in the ‘Big Oils’ – the five largest publicly-traded oil companies – or in the oil and gas equipment and services sector. Read more

Birds of a Feather Flock Together – Oil Stocks and Oil Prices

Here’s a look at how oil prices affect companies in the oil industry’s value chain

Crude oil prices seem to be the single most important determinant of oil companies’ performance. For this article, we ran some tests to find the correlation between Brent Crude prices and a few general performance indicators for oil companies. We found that oil prices do indeed affect oil companies’ performance to a great degree, but the extent to which they do so depends greatly on the companies’ positioning in the industry’s value chain.

For future reference, here’s a brief look at the how the industry is broadly categorized:

• Exploration and Production (E&P) oil companies, which explore oil reserves and produce crude oil.

• Refining and Marketing (R&M) companies, which refine crude oil and market it to end consumers.

• Integrated Oil Companies (IOCs), which are involved in everything from the exploration and extraction activities, to transportation and marketing.

Our results indicate that not only do crude oil prices act as leading performance indicators, they also determine whether it is feasible for the oil industry to explore, extract, refine and sell crude oil and other petroleum products. Read more

Is Natural Gas the Natural Selection?

Rising environmental and health concerns associated with the consumption of coal have pushed energy producers to opt for natural gas, but is the shift sustainable?

The consumption of coal has grown rapidly in the past decade due to strong demand from both developing and developed countries. However, this is a major source of concern for environmentalists and climatologists, who warn that the combustion of coal releases harmful greenhouse gases which can exacerbate global warming and environmental pollution.

James Hensen, a climate scientist at NASA, has gone so far as to say that coal is the single greatest threat to human civilization and all life on the planet. He may have a point: according to a 2010 study conducted by Conrad Schneider and Jonathan Banks, coal plant emissions cause approximately 10,000 hospitalizations, more than 20,000 heart attacks, and 13,000 premature deaths every year in the US. Read more

The Iron Ore Industry – Ironclad Investment Indeed!

The iron ore industry looks set to regain its former glory, and growth numbers coming out of China reinforce this outlook.

Iron is the most omnipresent metal: it is used to build the tallest skyscrapers and the smallest sewing needles; the cars on the road, and the cutlery on your dinner table. It makes up 5% of the earth’s crust, and is the second most abundant metal after aluminum.

Iron production first began in the Middle Bronze Age, and the first blast furnaces had been set up as early as the 1st century AD. As scientific advancements shed more light on its structural properties, and as mass production made it cheaper to produce, it became the material of choice in the production of many new products, especially in construction activities. For example, the first iron bridge was built in England in 1779, merely 70 years after the first coke-fired blast furnace started producing cast iron. Read more