Crude Price vs. Oil Industry Performance
Here is a comparison of the price of crude-oil and an index made up of 10 industry heavyweights. I just picked 10 companies as quickly as possible. I will probably add to this list in the future. Four majors - XOM, BP, CVX, COP. Three Driller/Explorers - GSF, NBR, RIG. Two Oil Services companies - HAL, SLB. One Independent - OXY.
I used their closing stock prices in June 2006 as the baseline. I did not account for dividends. I did not inflation-adjust either their stock-prices or the price of oil. GSF did not trade before June 1997, so I used that price to back-fill the twelve months of 1996. The index is an average of these 10 companies' monthly closing share prices. weighting is equal.
I'm not sure if the dates came out big enough. June 1996 to June 2006. I threw in $70 for oil in May and June since the data I used didn't have those months. I'll correct this when I update chart.
Thanks to Bill for the idea.
posted by Oil CEO @ 6:02 PM
4 comments
4 Comments:
Hi CEO
interesting. so the 97-98 gap of stock price over oil price I'll attribute to mergers and takeovers. the 02 gap of oil price over stock index I'll say is - no one believed prices would stay up. Apart from that it seems to be pretty linear. (is there some way of doing a co-relation regression analysis?) the market does not seem to give any premium for reserves in the ground. if they did, those companies would have a multiple on the industry standard. The other important consideration is cost of production. so if you found a comapny with (relatively) big reserves, low cost of production, and a low stock price, this would be a good buy, because stock price would have to adjust over time, as the analysts caught up.
Bill
"(is there some way of doing a co-relation regression analysis?)"
Bill, I'll work on anything you want, but you gotta speak english to me. You are confusing me with Einstein. If you can explain a co-relation regression analysis to me, I'm sure I could implement it.
Upper-level statistical analysis I am not trained in, but will gladly pick it up. Give me a few weeks. :)
Is there any chance you can update this following last 2 weeks "bloodbath".
Also, would be interesting to post a similar graph comparing oil price to companies in the oil sands patch: SU, COSWF, CNQ, ECA, NXY, IMO, PCZ (weighted by expected production in 2010)
Yes, I will be updating this, but probably not so soon. I want to add some other indices to it.
I will create a tar sands index. I am currently working on a comprehensive tar-sands report and will be covering all these companies.
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