BP Oil.    Oil giant BP moved into the top bracket of oil companies in the late nineties with the acquisitions of US concerns Amoco and Atlantic Richfield. More geared to oil production and exploration than its main rivals, BP has moved into the former Soviet Union to secure future production as its current key assets in the North Sea and Alaska wind down.

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Burren Energy    is the 100% owner and operator of the onshore Nebit Dag PSA, Turkmenistan and holds non-operating interests of 35% and 25% respectively in the onshore Kouilou and Kouakouala PSA permits in the Republic of Congo. As at the beginning of December 2003 the gross daily production from company held interests was approximately 23,000 bopd. Burren has expanded rapidly and established the following businesses: Oil production from the Burun field within the Nebit Dag Production Sharing Agreement area, onshore western Turkmenistan, where Burren is operating. Oil exploration and production in the Kouilou and Kouakouala production sharing agreement areas onshore in Congo (Brazzaville), West Africa. Management of a shipping fleet of 8 tankers under a 15 year charter agreement. Upstream activities now account for greater then 90 per cent of gross profit. Burren is headquartered in London and has 2 overseas offices.

Upper graph = 12 month share price with 6 month moving average
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Cairn   is an independent oil and gas exploration and production company. The main area of focus is South Asia.

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Dana Petroleum plc    is a leading British independent oil company, committed to maximising shareholder value through the creation and execution of high impact opportunities.

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Dragon Oil plc has principal production and exploration interests located in the Cheleken Contract Area in the Caspian Sea, offshore Turkmenistan. The Cheleken Contract Area covers approximately 950 sq.kms and comprises two offshore oil and gas fields, Dzheitun (LAM) & Dzhygalybeg (Zhdanov), in water depths of 10 to 37 metres.

Upper graph = 12 month share price with 6 month moving average
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JKX Oil & Gas plc    is an oil and gas exploration and production company. The company has license interests in Ukraine, Georgia, Italy, Bulgaria, Turkey, Russia and the United States.

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Premier Oil plc    is a leading independent oil and gas company with producing interests in the UK, Indonesia and Pakistan. Exploration and appraisal is ongoing in the UK, South and South East Asia and Africa.

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RDSA   Royal Dutch Shell Group is an Integrated oil company. The Royal Dutch/Shell Group of Companies consists of the upstream businesses of Exploration & Production and Gas & Power and the downstream businesses of Oil Products and Chemicals. It also has interests in other industry segments such as Renewables and Hydrogen.

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RDSB

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Sibir Energy plc is an independent, integrated Anglo-Russian energy company. It is engaged in the acquisition, exploration, development and production of oil and gas reserves, refining of oil, and the sale of oil and refined products through export channels and a Moscow retail service station network. Sibir is the only UK-listed oil company entirely focused on Russia, and as such, it provides the opportunity for Western investors to participate in this dynamic emerging market. Since its creation in 1996, Sibir has grown its attributable reserves to one of the largest of any of the UK-listed independent energy companies. Sibirs Western management team has combined with its largest Russian shareholder to meet the challenges sometimes raised by emerging markets and has strengthened the company at each turn. As the Russian market has matured, so too has Sibirs asset base, and 2005 has seen significant progress in the development of both its upstream and downstream assets. In the upstream, Sibirs current production comes from its own-operated Magma field and from its joint venture with Shell in the Shell-operated Salym group of fields. Sibirs attributable oil and gas reserves amount to 446 million barrels. Currently, Sibirs total attributed production is more than 8,000 barrels per day, primarily from Magma and early production from the Upper and West Salym fields. Sibirs share of daily production is expected to rise to more than 20,000 barrels per day by the end of 2005 as Salym begins to ramp-up to full production, and to further increase to more than 60,000 barrels per day by 2009. In the downstream, Sibir is uniquely positioned through participation in the Moscow Oil & Gas Company (MOGC), a joint venture with the City of Moscow. Sibirs crude oil production is either exported or refined in the Moscow refinery and sold as refined products in the export market. Gasoline and diesel products are marketed in Moscow through MOGCs MTK-branded service stations.

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SOCO International plc    is an international oil and gas exploration and production company headquartered in London. Although the Company has designated core areas in the Far East / Southeast Asia and Middle East / North Africa regions, it employs a strategy for building shareholder value through a portfolio of oil and gas assets by focusing on Recognising Opportunity, Capturing Potential and Realising Value. SOCO holds its interests in Vietnam, all in the Cuu Long Basin offshore, through its 80% owned subsidiary SOCO Vietnam Limited ("SOCO Vietnam"). SOCO Vietnam holds a 25% working interest in Block 9-2, which is operated by the Hoan Vu Joint Operating Company and a 28.5% working interest in Block 16-1, which is operated by the Hoang Long Joint Operating Company. SOCOs Yemen interests are held through its majority owned (58.75%) shareholding in Comeco Petroleum, Inc. ("Comeco"). Comeco holds a 28.57% working interest in Block 10, East Shabwa Development Area.

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Tullow Oil plc    is one of the largest independent oil and gas, exploration and production companies in Europe. Tullow Oil produces over 56,000 boepd, with a primary focus on UK Gas and West African Oil, underpinned by development projects in the UK, Africa and South Asia.

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Venture Production plc    is a leading new generation oil and gas company focused on recapturing the potential of stranded reserves. It acquires, operates, and revitalises stranded assets - oil and gas fields with proven but untapped potential. It brings advanced technology, modern operating practices, and a talented team of engineers, geologists and other professionals - ready to focus on fields that may no longer fit the portfolios of other companies.

Upper graph = 12 month share price with 6 month moving average
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Max King, Analyst - 18 April 2007

Will the price of oil, and the shares of oil stocks, keep rising? Max King, analyst at broker Eden Financial, shares his view...

Where next for crude oil and oil stocks?


The trebling of oil prices in recent years has left both investors and the broader public with the conviction that the world is facing an inevitable energy crisis.
Demand for oil is believed to be rising relentlessly, largely due to rapidly-rising Asian demand, supply growth is limited by diminishing reserves and the result is a growing shortage which can only drive prices higher and higher.
Despite OECD economic growth of around 3% last year, and global growth of nearly 5%, oil demand rose just 0.8% year-on-year in the 12 months ending January to 84.4m barrels per day. Demand growth peaked at 4.6% in early 2005, accounting for the acceleration in the oil price, but growth has since fallen away sharply.
Demand in emerging economies now exceeds that in industrial economies, but growth in the latter is negative and in the former only 2%. US demand has been flat at a little under 21mbd since early 2005; in Europe, it has been flat at around 15.5mbd sine 1999 and in Japan, it has fallen 10% since peaking in 1995.
Annual demand growth has accelerated to 8.6% in China, but growth has slowed in other emerging economies. In Opec countries, where prices are nearly always absurdly cheap, demand has risen 20% in 3 years.
The slowness of demand growth is well illustrated by the UK. Since 1990, total road traffic has increased by just 20%, and passenger distance travelled by only 15%. Average distance travelled by car (5746 miles in 2005) has been broadly constant since 1990.

A 50% increase in rail usage since 1995 has reduced demand growth, but it is also possible that increased air travel has been partly at the expense of car usage. Increased petrol prices are unlikely to be responsible, as the real cost rose only 16% between 1980 and 2005 and total motoring costs fell 15% while disposable income nearly doubled.
When increased fuel efficiency is factored in, oil demand from road transport in the UK has been flat since 1990; petrol demand has fallen 25% but diesel demand has increased. Demand for fuel oil has slumped as a result of the move to natural gas and only demand for jet fuel is increasing, having doubled since 1990.
Other developed economies are likely to be seeing similar patterns. Incidentally, since the road network has been both extended and improved, this means that the belief that road congestion is increasing is a myth. Department of Transport data shows stable average speeds on trunk roads, while gently declining speeds in London are attributable to traffic restrictions.
Non-Opec oil production (about 60% of total supply) is now growing again after a couple of flat years. Growth is coming from Brazil, China, Russia and Canada but declining in the US, Mexico and, until recent months, the North Sea. Opec production has been flat for three years at around 35mbd, but it announced production cuts of 1.7mbd at meetings in October and December.
With demand growth low and non-Opec supply picking up, it would seem that prices are being held up by Opec output restraint. This may be what is happening, but it is also possible that Opec members together with non-Opec members such as Mexico are simply unable to go on pumping at historic rates.
This is either because their oilfields are running out (Indonesia) or because of lack of investment. In most of these countries, oil is produced by a nationalised monopoly. As we know all too well from experience in the UK, nationalised are inefficient and poorly managed and they under-invest.
Other countries, such as Brazil, Russia and China, go for a compromise, favouring partially privatised domestic companies over international ones. This maintains domestic control and political influence while increasing access to capital markets, expertise and technology. Struggling producers such as Mexico, Venezuela and Iran may eventually follow a similar route.

The implications for the oil majors is not very encouraging; a flat or falling oil price in real terms, rising costs, diminishing reserves and limited access to promising exploration areas. This may be why BP and Shell continue to be dull performers, despite their cheap valuations.
Smaller companies may be better placed to exploit opportunities in countries without a domestic industry or with lesser prospects, while oil service and equipment companies should benefit from increasing capital expenditure and the desire to increase efficiency.

Natural gas may offer better opportunities as major companies are better suited to manage the whole supply chain, but long-term growth cannot be taken for granted. Eventually, governments are likely to allow a switch to nuclear generation of electricity as well as encourage the esoteric technology of alternative generation.
The energy sector will continue to provide excellent investment opportunities, especially as the bargaining position of companies with governments is improved if there is a modest surplus of supply.
However, investors will need to be very careful about stock selection, and emerging market giants such as Gazprom, Petrobras and Petrochina may continue to out-perform the longer-established Western companies. A scatter-gun approach which assumes rising prices and rising demand worked in 2004-6, as it did in the early 1980s, but the cycle has moved on.