It’s not been the best of starts to 2017 for many oil stocks. While the price of oil has been relatively stable this year compared to previous years, oil stocks have generally been disappointing. Perhaps this is because investors like me were overly optimistic at the start of the year due to supply cuts by OPEC. In any case, here are 4 oil stocks in the red so far in 2017.
Tullow Oil plc’s (LON:TLW) (LSE:TLW.L) stock price has dropped 21% so far in 2017. However, I think it could be a relatively sound performer in the long run. I’m upbeat about its growth potential because of plans to raise production. TEN has already delivered a step change in Tullow Oil’s production, and I think it could mean higher earnings per share and cash flow per share in future. This may allow Tullow Oil to reduce debt levels. It may gradually be seen as a lower risk stock than it is today.
BHP Billiton plc (LON:BLT) (LSE:BLT.L) has declined 4% year-to-date. I think its stock price has good long term potential, as the company has successfully reorganised in my opinion. It has spun-off non-core assets to leave what I believe is a simpler and more efficient business. I also like BHP Billiton’s diversity and I think this could help to protect it from further disappointment in oil stocks during the rest of 2017.
Royal Dutch Shell Plc (LON:RDSB) (LSE:RDSB.L) is one of my favoured oil stocks, although its share price is 6% down so far in 2017. I think there is more growth potential than many investors realise, since the successful integration of BG could lead to higher FCF per share. This may enable dividends per share to rise, which could lead to improving investor sentiment in the stock. I also think Shell has an appealing asset base and balance sheet which could help it to overcome further weakness in the oil sector.
I thought Premier Oil PLC’s (LON:PMO) (LSE:PMO.L) results release this week showed the company is making progress. The integration of the acquired E.ON assets seems to be moving along, and the update on the company’s finances may help to improve market sentiment. Premier Oil may be smaller, less diversified and possibly riskier than BHP Billiton, Tullow Oil and Shell. However, I think its good strategy and increasing production could help it to reverse the fall of 19% in its stock price year-to-date.