Energy Credit – Short the Super Majors

Credit, Energy


Publicly traded companies mentioned herein: BG Group PLC (BG/ LN), Chevron Corporation (CVX), ConocoPhillips (COP), EOG Resources Inc (EOG), Moody’s Corp (MCO), Royal Dutch Shell PLC (RDSA NA), Statoil ASA (STL NO)

Highlights

The presenter said he is unsure of which way the price of oil will trend over the remainder of 2016 and into 2017, but that the credit profiles (and ratings) of the “top quality” global integrated oil and gas companies are at risk of downgrade. The rating agencies have finally taken the “price deck” to $40/ barrel and Moody’s – for example - placed 29 US E&P names on review for downgrade in December (2015), but is still forecasting $55 oil longer term. He is short the credit of a number of the majors, and provided highlights on Chevron, EOG, Royal Dutch Shell, and Statoil; and believes the risk/ reward is favorable on the credit as a slight rise in the price of oil could drive equities higher, but the debt would not likely respond as favorably as leverage ratios could increase meaningfully over the next two years.

  • Signing up and creating account with us unlocks this content for you. Contact us today for full access to DeMatteo Research and more.

  • Signing up and creating account with us unlocks this content for you. Contact us today for full access to DeMatteo Research and more.

Request access to DeMatteo Research for full access

Request Access

Already have an account?

Idea Discussion

Commentor 1 - 2 weeks ago

Signing up and creating account with us, unlocks this content for you. Contact us today for full access to DeMatteo Research and more.

Commentor 1 - 2 weeks ago

Signing up and creating account with us, unlocks this content for you. Contact us today for full access to DeMatteo Research and more.

Idea Discussions display submitted commentary from our investor community.

To read and participate in the discussion with the presenter and investor base, request access to DeMatteo

Request Access

Already have an account?

An error occurred loading this content. Try again later or contact us.