Big Oil companies announced their second-quarter results last week. As expected, the results were stronger than the year-ago quarter largely because of higher oil prices. However, as investors, we must realize that external forces (like higher price realizations in the market) cannot be the only guiding factor when deciding which companies have really been growing organically and are capable of sustaining growth in the future. After all, that has the largest influence on the stock price over the long run -- not volatile commodity prices.
Operations matter
What really matters in the exploration and production space is whether these companies have been registering growth or, in other words, increasing production and expanding exploration activities. Here's the lowdown on the performances of some of the E&P majors:
ExxonMobil
Downstream margins registered a phenomenal 95% increase, attributed to higher sales and foreign exchange rates.
Dividends per share increased by 7%, to $0.47. This giant is definitely a long-term investor's ideal pick.
Chevron
The company increased dividends by 8%, which is a positive move. However, from an operational standpoint, I should say that the second quarter was pretty mediocre when compared to Chevron's typical standards.
Royal Dutch Shell
Liquefied natural gas sales rose by an impressive 24%. Expect this segment to grow rapidly in the coming years. Otherwise, a major chunk of its 77% earnings growth is due to higher price realizations in the market.
Downstream operations weren't too impressive. Oil products sales fell by 8%, while chemical products sales volumes fell by 13%, when compared to the year-ago quarter.
ConocoPhillips
The refining and marketing segment was the only bright spot. Against a loss of $279 million during last year's second quarter, this segment posted an impressive $766 million profit this time around. Worldwide refinery utilization was 91% this quarter, which was another notable achievement.
The company is spinning off its R&M segment into a separate company. Investors should take note that the E&P arm could suffer as a result.
BP
Chesapeake Energy
The second quarter saw the company adding 2.7 trillion cubic feet equivalent of reserves. The future looks really exciting for Chesapeake. Higher natural gas price realizations should only be a huge bonus. Investors should definitely take note.
Foolish bottom line
Big Oil companies have not been too impressive with regards to fundamental growth in the past quarter. Nevertheless, the overall picture going forward looks good.