I don't know about "you," but in the big scheme of "all things energy" I thought 2022 was a pretty lackluster year for oil investors.
There was no OPEC embargo; there was no huge production cut coming out of OPEC; WTI / Brent didn't trade at particularly high levels; for the most part .... let's do this in bullets:
- there was no OPEC embargo;
- there was no huge production cut coming out of OPEC;
- WTI / Brent didn't trade at particularly high levels;
- for the most part China was still shut down for most of the year due to Covid;
- China's demand for crude oil was way down;
- gasoline demand in the US was way down;
- more than 50% of office workers were still working from home at the end of the year;
- President Biden flooded the US market with oil from the SPR which not only resulted in more oil in America but more oil being exported overseas;
- there were the usual currency issues but for the most part "hurt" US companies.
And with all that, XOM, COP, CVX, TTE reported best profits -- not just revenue -- but the best profits in their entire history -- and these companies have been around a long time and have had some really good years in the past -- and they didn't just have a great year, they reported the best profits ever in their company's career and in many cases doubled their profit year/year and that was with a very, very lackluster year when it came to oil.
Imagine when China is fully open; the Russian sanctions fully implemented; US driving season is back; US office workers return to work; WTI hits $100 as predicted by "almost everyone."
A lackluster year in oil last year and oil companies are reporting their best profits ever in their companies' history.
That just blows me away.
Another thought along that same line:
- these companies sell absolutely 100% of the product they produce, and they sell it in less than a month after it's produced, so not a lot of wasted / stagnant inventory;their product doesn't sit on the shelf and expire after some "use-by" date;
- month-after-month; every bit of the product these companies produce is sold;
- none of the product is thrown out because it expired
- these companies are cutting rigs and cutting CAPEX simply because they can
- these companies are no longer focused on growing their companies; they're focused on growing their free cash flow; their dividends; and, their share buyback programs.
What's not to like?
By the way, how are the EV companies doing? Over the past six months:
- LCID: down 34%;
- RIVN: down 45%;
- GOEV (Canoo): down 70%;
- ARVL: down 78%;
- F: down 12%;
- TSLA: incredibly well; shares have doubled over the past six months;
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