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Repsol, BP, TotalEnergies… They give oil a chance for prize, dividend and context

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Repsol, BP, TotalEnergies… They give oil a chance for prize, dividend and context

A situation that has been marked by the war in Ukraine, the rejection by the United States and the United Kingdom of oil from Russia, Russia’s possible blockade of its imports of raw materials such as natural gas and crude oil into Europe, and the supplies of main economies of this type of natural resources. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, the group known as OPEC+, decide on a few early this month Raised by 400,000 barrels per day for production oil joint.

In this way, from next April, OPEC+ production will be 41.694 million barrels per day, compared to the quota of 41.294 million that was set for the month of March. The group of countries, which includes OPEC and other allies such as Russia, Mexico or Kazakhstan, concluded that the fundamentals of the crude oil market and the prospects pointed to a “well-balanced market.” In addition, they assured that the current “volatility” of prices is not caused by fundamental problems but by geopolitical reasons.

The barrel of Brent has accumulated a rise of 46.5% so far this year, while in the last twelve months it has revalued 77.6% in a context marked by the withdrawal of limitations due to the pandemic and the recovery of mobility and transportation to a large part of the planet, in addition to the armed conflict. “The current realistic scenario is that a large part of Russian crude, as well as its refined oil products, will not be palpable in the market and will create a supply deficit for the duration of the armed conflict,” explains analyst Louise Dickson, of Rystad Energy company.

“I don’t know if the price of oil is really going to be able to continue above 100 dollars for a long time, but a few months ago Goldman Sachs and JPMorgan Chase ventured before the conflict in Ukraine that crude oil would end up at 120 dollars due to the pressure in the dichotomy between supply and demand. There was not enough supply to satisfy the enormous demand for oil that was being experienced in the market”, adds Rafael Ojeda, global macro analyst at Fortage Funds.

Do oil companies have potential?

Given this scenario, the European sectoral index STOXX Europe 600 Oil & Gas appreciates 11.9% so far this year and 19.5% in the last 52 weeks. The Portuguese Galp is revalued this year in the Portuguese PSI 20 by 28%, the Dutch Shell by 22.4%, Repsol is revalued in the Ibex 35 by 14%, British Petroleum by 6.4% and the French TotalEnergies by 2, 4%.

2022e

BY

PLUG

PCF

EV/EBITDA

POLYVINYL CHLORIDE

ROE

PRODUCE

NFD/EBITDA

NFD/PN

R.STABILITY

Repsol

6

0.46

3.04

2.96

0.75

12.50%

5.61%

0.73

0.25

0.83

Total Energies

5.24

0.24

3.2

3.01

0.89

17%

6.65%

0.63

0.24

0.89

bp

5.78

0.26

2.96

3.35

1:13

19.70%

4.74%

0.76

0.4

0.92

SHELL

6.23

0.12

3:18

3.64

1.02

15.90%

4.01%

0.62

0.24

0.89

FLAG

9.91

0.17

3.41

3.35

2.04

20.54%

5.81%

0.87

0.71

0.75

MEDIA

6.63

0.25

3:16

3.26

1:17

17.13%

5.36%

0.72

0.37

0.86

Comparative table of the main stock market ratios of the large European oil groups, based on forecast results for 2022 of Investment Strategies and price at the close of 03/16/22.

“European oil companies are going through an extraordinary moment. Among the oil companies of the Old Continent I would stay with BNP and Repsol. The Spanish company has given a fantastic result and as long as crude oil is above 100 dollars per barrel, it will have huge profits and it will do really well. At this moment in which there may be shortages, with that 11% of Russian oil that is no longer on the market, understanding that it is a very good moment for the oil sector”, indicates Ojeda.

In addition, the market context in which the oil companies operate also offers advantages due to valuation and fundamental ratios such as dividends, which are vital for investors in times of decline. “The entire European oil sector is cheap based on its multiples The results are estimated for 2022. The average PER for Repsol, TotalEnergies, BP, Shell and Galp is only 6.63 times, with the first three standing out with the most moderate ratio”, comments the fundamental analyst of Investment Strategies, María Sight.

“If we adjust the P/E for estimated earnings per share (EPS) growth, the price-earnings-to-growth (PEG) multiple shows a strong undervaluation for the sector, with an average multiple of less than 0.3 times. Also growth margin by ratio over cash flow or by EV/EBITDA that is even less than 3 times for Repsol. The market price is 1.17 years and the average library value for five oils, with Repsol and Total Energies standing out for cotton with lower PVC and 0.9 years. In terms of profitability, the ROE (return on shareholder contributions) is very high for all companies and also very juicy dividend yieldwith an average of 5.36%, surpassed by Repsol and Total Energies”, underlines Mira.

The analysis of solvency and balance sheet stability is surpassed with flying colors by the 5 energy groups, with net financial debt/EBITDA and net financial debt/net equity at absolutely controlled levels, which will make it easier for you to carry out your strategic plans without stress on the balance sheet. .

In the medium and long term, Mira values ​​the transformation and repositioning plans that the sector towards energy transition and renewables. “The recommendation under fundamental analysis criteria is positive for the five groups, although it would highlight the potential for business and positioning of Repsol and TotalEnergies. Repsol maintains its commitment to carrying out a transformation of its business and leading the energy transition that will lead to net zero emissions by 2050. TotalEnergies, for its part, has also set out to carry out an ambitious transformation plan and is fully focus on achieving carbon neutrality by 2050, in line with European objectives”, he argues.

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