Monday, 18. December 2017  
16.07.2017 16:05
Author: Nic Wright

STOCK SCREEN: Oil & Gas Stocks With High Dividend Yield And Solid Balance Sheet

 

When OPEC decided in November 2016 to clear a global glut and reduce its output by 1.2 million barrels a day to 32.5 million starting Jan. 1., other producers including Russia joined the deal. Noteworthy, Libya and Nigeria were both exempted from the cuts, and Iran was allowed to raise production by 90,000 barrels a day as it was recovering from sanctions. This way OPEC wanted to recognize that Libya, Nigeria, and Iran have faced “severe challenges” and welcome their increased production.

 

The global cuts accord between OPEC and non-OPEC producers face various “headwinds” this year, starting from a rebound in supply from Libya and Nigeria to Iran and U.S. shale output. So far crude stockpiles did not to decline fast enough and benchmark Brent crude has dropped 16 percent this year. Some industry experts say for a supply gap to emerge that U.S. producers can’t fill, it could easily take until the end of the decade. 2020 might be the year for better times to return to an industry that’s already endured a longer slump than most people expected.

 

But when expectations are so low, it is time to screen the sector for cheap stocks with solid balance sheets and attractive dividend yield.

 

Here are our filter criteria:

1. Market capitalization above 1bn.

2. NetDebt to EBITDA ratio below 3 times

3. Dividend Yield above 3 percent.

 

Despite high dividend yield, valuation upside seems rather capped in the sector with only few stocks above our Intrinsic Value estimate. Here is our list of stocks in alphabetical order. Company names in the table below are linked to the ANALYZER, our single stock analysis tool. Intrinsic Value Model assumptions can be adapted to analyse different growth scenarios with our MODELER forecasting tool:

CLICK COMPANY NAME FOR DETAILED STOCK VALUE ANALYSIS

COUNTRY

LAST PRICE

MARKET CAP.

MEAN MULTIPLE UPSIDE [%]

GRAHAM UPSIDE [%]

GREENBLATT UPSIDE [%]

PRICE / BOOK

DIVIDEND YIELD [%]

NETDEBT / EBITDA

 BP PLC

 United Kingdom

448.45

114409

-14.1

-78.8

-100.0

1.2

6.9

0.0

 ENI SPA

 Italy

13.21

47971

-3.2

5.6

-100.0

0.9

6.1

0.9

 GALP ENERGIA SGPS SA

 Portugal

13.43

11133

2.6

-69.8

-88.3

2.1

3.7

1.1

 HELLENIC PETROLEUM SA

 Greece

8.25

2521

-18.0

-83.7

-81.1

1.1

4.1

2.4

 MOTOR OIL (HELLAS) SA

 Greece

19.83

2197

-20.9

1.0

24.1

2.2

5.3

0.6

 NESTE OYJ

 Finland

36.34

9318

-37.4

-51.0

-24.1

2.2

3.5

0.2

 PETROFAC LTD

 United Kingdom

440.10

1967

191.9

148.1

-89.2

1.5

10.1

0.8

 REPSOL SA

 Spain

13.81

20665

5.5

-50.6

-100.0

0.6

5.7

1.5

 ROYAL DUTCH SHELL PLC-A SHS

 United Kingdom

2064.00

220767

-27.1

-57.8

-100.0

1.1

7.0

1.9

 SARAS SPA

 Italy

2.11

2007

-23.2

-55.9

-81.5

1.9

5.6

-0.1

 STATOIL ASA

 Norway

139.50

55464

-22.8

81.7

-65.6

1.5

5.1

0.1

 TOTAL SA

 France

43.08

107716

-12.7

4.8

-92.7

1.1

5.5

1.1

 WOOD GROUP (JOHN) PLC

 United Kingdom

604.00

2989

16.7

-34.3

-59.8

1.3

4.3

0.6