Industry Overview - The Zacks Oil and Gas Integrated International industry includes companies involved in upstream, midstream, and downstream operations across various global regions [3] - Integrated energy firms are increasingly focusing on renewable energy to lower emissions and carbon intensity [3] Current Market Conditions - The U.S. Energy Information Administration (EIA) anticipates that rising oil inventories will negatively impact crude prices, leading to a challenging environment for exploration and production operations [1] - EIA projects the average spot price for West Texas Intermediate crude to be $65 per barrel in 2025 and $48.50 per barrel in 2026, significantly lower than $76.60 per barrel in 2024 [4] Production and Financial Trends - A slowdown in oil production growth is affecting upstream businesses, as companies prioritize returning capital to shareholders over expanding production [5] - The demand for renewable energy is increasing, which may lead to a decline in the demand for fossil fuel products, adversely impacting integrated energy firms [6] Industry Performance - The Zacks Oil and Gas Integrated International industry has a Zacks Industry Rank of 220, placing it in the bottom 9% of over 250 Zacks industries, indicating bearish prospects [7][8] - Over the past year, the industry has gained only 3.6%, underperforming the S&P 500's 19% increase and the broader sector's 4.8% improvement [9][10] Valuation Metrics - The industry is currently trading at a trailing 12-month EV/EBITDA ratio of 4.50X, lower than the S&P 500's 18.57X and the sector's 5.05X [13] - Historically, the industry has traded between 2.75X and 6.54X over the past five years, with a median of 4.12X [14] Key Companies - BP is planning a significant increase in upstream capital investment to $10 billion through 2027, aiming to boost daily production volumes to 2.3 to 2.5 million barrels by 2030 [17] - ExxonMobil aims to increase its Permian production to 2.3 million barrels of oil equivalent per day by the end of the decade, leveraging advanced technologies [19] - Chevron maintains a stable business model and benefits from softer oil prices in its downstream operations [24]
3 Integrated Energy Stocks Standing Tall Despite Soft Oil Price