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Are oil super majors falling behind the competition?

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Gerald Herbert/AP/File

(Read caption) An oil rig is seen in the Gulf of Mexico near the Chandeleur Islands, off the southeastern tip of Louisiana. Right now, the only clear benefit of the oil super majors is their technology development capabilities, Alic writes.

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The oil super majors haven’t done anything terribly impressive in the past five years—a period that has seen the juniors shine in places like Iraqi Kurdistan, and even in Texas.

This is what happened in the late 1990s to create the super majors we have today:

•    BP Plc (NYSE: BP)took over Amoco and Arco
•    Exxon (NYSE: XOM)acquired Mobil
•    Total SA acquired Fina and Elf
•    Conoco (NYSE: COP)and Phillips merged
•    Chevron (NYSE: CVX) and Texaco merged

That worked then, but it may not be working now. The performance of these giants hasn’t been that impressive of late. There have been production gains, but they haven’t been significant and since the massive wave of mergers, these companies haven’t really grown in any noticeable way. More importantly, most of the bottom line improvement has been because of gas, not oil.

 

Today, the most significant work is being done by the juniors in Africa, the Middle East and North America even offshore where it’s more expensive. 

Some of the more notable ambitious juniors include: (Related Article: The Petroleum Rollercoaster)

•    Canadian-based Africa Oil – operating in Somalia (Puntland) and Kenya
•    Tullow with its big finds in Kenya (and Africa Oil’s partner there)
•    Turkey’s Genel Energy – the key operator in Iraqi Kurdistan and the first explorer Somaliland
•    UK-listed Heritage Oil – pushing ambitiously into the majors’ game in Nigeria
•    Canada’s Emperor Oil – operating in Sudan and Turkey

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These are the new exploration champions, and while the smaller juniors’ major goal is to be bought out by a major, the larger juniors may go it alone and they’ve been very successful so far.

In Iraqi Kurdistan, it was the juniors who got there first; the majors followed suit once they saw the potential based on junior exploration and development.

Here are the top 10 performing juniors for 2012 listed on the TSX Venture Exchange:

1.    Emperor Oil (TSXV:EM); current price: $0.41;  year-to-date gain: 561.54 percent
2.    Africa Oil (TSXV:AOI); current price: $6.75;  year-to-date gain: 323.42 percent
3.    PetroAmerica Oil (TSXV:PTA); current price: $0.35; year-to-date gain: 238.10 percent
4.    Wellstar Energy (TSXV:WSE.H); current price: $0.15; year-to-date gain: 211.11 percent
5.    Primeline Energy Holdings (TSXV:PEH); current price: $0.57; year-to-date gain: 171.43 percent
6.    Kingsland Energy (TSXV:KEC); current price: $0.54; year-to-date gain: 170.00 percent
7.    Petromin Resources (TSXV:PTR); current price: $0.10; year-to-date gain: 150.00 percent
8.    Eaglewood Energy (TSXV:EWD); current price: $0.43; year-to-date gain: 145.71 percent
9.    Bayshore Petroleum (TSXV:BSH); current price: $0.33; year-to-date: 113.33 percent
10.  Contact Exploration (TSXV:CEX); current price: $0.33; year-to-date: 113.33 percent

Right now, the only clear benefit of the super majors is their technology development capabilities.

So what is a super major to do? They are going to have to engage in a solid fitness regime, shed some pounds and tone some muscles. They might have to get smaller to get bigger if they wish to avoid being rendered irrelevant by the growing ranks of juniors with solid management teams, an eye for exploration potential and a new no-risk-is-too-scary attitude.

Original source: http://oilprice.com/Energy/Crude-Oil/Super-Majors-Need-to-Step-Up-Their-Oil-Game.html

 

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