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US Energy Companies Outperformed Their Chinese Peers in 3Q15

Robert Scott

Comparison of Chinese Energy Companies with US Peers in 3Q15

Sales contracted more for US-based energy firms

In 3Q15, CNOOC (CEO), China Petroleum & Chemical Corporation (SNP), and PetroChina (PTR) saw their sales contract by about 4%, 2%, and 1%, respectively, on a YoY basis, whereas ExxonMobil (XOM) and Chevron Corporation (CVX) saw their sales contract by approximately 6.5% and 9%, respectively. The average drop in sales of the US-based energy companies was higher than that of Chinese peers.

CNOOC, China Petroleum & Chemical Corporation, and PetroChina represent the large-cap (large capitalization) Chinese ADRs (American depositary receipts) in the oil and gas sector. China Petroleum & Chemical Corporation and PetroChina are integrated oil and gas companies, and CNOOC operates only in the offshore upstream sector. ExxonMobil and Chevron Corporation represent large-cap US energy companies.

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YTD performance

On a YTD (year-to-date) basis, US energy giants have outperformed their Chinese peers with an average fall of 16%, as compared to a fall of 26% for their Chinese peers. The US-based energy benchmark, the SPDR Energy Select Sector ETF (XLE), has fallen about 15% on a YTD basis.

The EPS (or earnings per share) of the US-based energy companies fell about 2.5% on a YoY (year-over-year) basis in 3Q15, as compared to a 13% fall in EPS for Chinese energy firms. The chart above illustrates the YTD performance and YoY percentage change in EPS of the five major energy companies mentioned above. CNOOC’s EPS rose by 7% YoY in 3Q15 but have fallen by 22% YTD.

Production mix

• ExxonMobil operates with a production mix of 46% in both natural gas and crude oil.
• Chevron Corporation has a production mix of 33% in natural gas and 66% in crude oil.
• CNOOC has a production mix of 17% in natural gas and 82% in crude oil.
• China Petroleum & Chemical Corporation has a production mix of 16% in natural gas and 81% in crude oil.
• PetroChina has a production mix of 34% in natural gas and 65% in crude oil.

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