U.S. Oil and Gas E&Ps Show Financial Discipline and Return Shareholder Capital
By Shawn Reynolds, Portfolio Manager, VanEck
For the last several years, the global diversified mining sector has emphasized financial discipline and return of shareholder capital. There is now clear evidence of widespread adoption in the U.S. oil and gas industry and, this year, a number of energy companies have made significant capital returns to shareholders in the form of dividends and/or share repurchases.
We are encouraged by the fact that:
- Exploration and production companies (E&Ps) have demonstrated discipline despite, at times, higher commodity prices;
- Share price performance of these E&Ps appears to be less susceptible to macroeconomic headwinds, which, in recent years, drove a more substantial negative impact; and
- Improvements have been made in the multi-year visibility for enhanced free cash flow yield in the space, even in a moderately depressed commodity environment.
About the Author:
Mr. Reynolds joined VanEck in 2005 as senior analyst focusing on energy, and currently serves as portfolio manager of VanEck's natural resources strategies. Prior to joining VanEck, he was employed at Petrie Parkman & Co. as an energy analyst covering U.S. oil and gas exploration and production companies. From 1991 to 2001, Mr. Reynolds covered North American, European and global energy companies out of New York, Australia and London with Goldman Sachs, Lehman Brothers, and Credit Suisse First Boston. Prior to his career in finance, Mr. Reynolds worked at Tenneco Oil Company from 1987 to 1989 as an exploration geologist. Mr. Reynolds received a bachelor's degree in engineering from Cornell University in 1985, a master's degree in petroleum geology from the University of Texas, Austin in 1987 (Phi Kappa Phi), and an MBA in finance from the Columbia Business School in 1991 (Beta Gamma Sigma). In 2000, he was chosen as The Wall Street Journal's «Best on the Street» for E&P stock selection, and was recognized as «Best Up and Comer», E&P Sector, for Institutional Investor magazine's 1999 All-America Research Poll. Mr. Reynolds has also authored several technical geology articles published in periodicals such as the American Association of Petroleum Geologists.
The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.