UK upstream independents league table 2011 – key extracts
League positions have remained broadly stable over the last six months with the top four positions unchanged. However, scratching the surface reveals some interesting changes and developments.
The overall market capitalisation of the top 25 listed oil and gas exploration and production (E&P) companies fell by 4.3% since 31 December 2010. Companies with exposure to the Middle East have been negatively impacted by regional unrest, and investor concerns around country and political risk have taken their toll on the sector overall. Furthermore, concerns surrounding the availability of cheap shale gas in the US and fears of a Euro zone default, have also made investors wary as the short-term Western demand picture becomes clouded.
The fall in total market cap was at odds with the continuing improvement in company balance sheets and financial capacity which has acted as a trigger for large scale operational investments and a return to M&A – all this against a background of strong and relatively stable oil prices. The apparent contradiction is a startling reflection on how little market consensus there is on the direction and level of future oil prices – four years after the global slump, we are still facing strong headwinds through a faltering recovery and a frequently buffeted by unexpected global events.
Tullow, Heritage, Cairn, Premier and Soco have all been involved in material acquisitions or disposals during the period with differing outcomes on their share prices. Heritage’s share price was also impacted by a mixed investor reaction to the gas to oil mix in its Kurdistan portfolio.