I figured now would be a good time to talk about some oil companies, not just the big guys though. Specifically I wanted to talk about the largest providers of lubricants, or specifically engine oil. This is largely due to the fact that I recently added Valvoline (VVV) to my watch list and the fact that I am currently going to school for 2nd year HET which focuses heavily on engines. Obviously the vast majority of the top lubrication companies will also be the oil companies that everyone knows and loves to hate, but there may be a few that you have never thought of before.
The 10 largest automotive lubrication companies in the world consist of 4 private (or non north American listed) companies and 6 public companies. The private oil companies are China National Petroleum Corporation, FUCHS Petrolub SE, Kluber LubricationMunchen SE & Co, and B.P. P.L.C. (Castrol). Obviously I am not going to get into these companies, but it is always good to know who the competition is. The companies that I will talk about in this article are Shell International B.V, Chevron Corporation, Exxon Mobil Corporation, Phillips 66 Company, Petrobras (Petroleo Brasileiro S.A.), and Valvoline Inc.
Royal Dutch Shell (RDS-A/RDS-B)- Is a British-Dutch oil and gas company headquartered in the Netherlands. They are currently ranked as the 21st largest public company in the world by the Forbes Global 2000 for 2020. Shell is active in every facet of oil and gas exploration and production, refining, transport, distribution and marketing, petrochemicals, and power generation. They are also active in renewables including biofuels, wind energy, energy-kite systems and hydrogen fuels. Shell produces about 3.7 Million barrels of oil equivalent per day and has 44,000 service stations worldwide. One thing to note about Shell is that they have 2 different shares available to buy. Their RDS-A shares which have a Dutch source for taxes which are subject to a 15% withholding tax for dividends (RRSP should be exempt from this but I would make sure before buying), and RDS-B shares which are subject to UK taxes and do not have a 15% withholding tax.
Like a lot of companies during Coronavirus Shell is losing quite a bit of money right now largely thanks to all of the shutdowns and low oil prices. They do pay a decent dividend of a little over 3.5% and have a projected price to earnings of 17.66. If you can stomach some risk this could be a good investment for the long term as it is likely just a matter of time before they start making good money again.
Royal Dutch Shell (RDS-A/RDS-B)- A Share Price $38.10/ Market Cap $78.13Billion/ 52 Week Range $21.26-$61.17/ P/E N/A/ EPS -$4.295/ Dividend $1.332/ Yield 3.5%
B Share Price $36.65/ Market Cap $67.92Billion/ 52 Week Range $19.19-$62.27/ P/E N/A/ EPS $-4.295/ Dividends $1.332/ Yield 3.63%
Chevron (CUX)- Is an American energy corporation. They are one of the successor companies of Standard Oil. They are involved in every aspect of oil and gas including, hydrocarbon exploration and production, refining, marketing and transport, chemicals manufacturing and sales, and power generation. They are ranked as the 61st largest public company in the world on the 2020 Forbes 2000 list. In 2018 they produced 791,000 barrels of net oil equivalent per day in the United States.
Not surprisingly Chevron is also losing quite a bit of money right now with the low oil prices and shutdowns. They haven’t cut or reduced their dividend yet which is a good sign, but they may have to cut or reduce it if things stay low long enough. For now though they have a fairly attractive 5.84% yield if you are willing to risk buying and holding them for a while.
Chevron (CUX)- Share Price $88.41/ Market Cap $170.19Billion/ 52 Week Range $51.60-$122.72/ P/E N/A/ EPS -$6.4076/ Dividends $5.16/ Yield 5.84%
Exxon Mobil (XOM)- Is an American oil and gas corporation out of Irving, Texas. It is the largest direct descendant of Standard Oil. Their primary brands are Exxon, Mobil, ESSO, and Exxon Chemical. The 2020 Forbes 2000 has them as the 13th largest public company in the world.
Surprisingly Exxon is one of the few large oil companies that are still making money right now even if it’s not very much per share. They also have an extremely attractive if slightly worrying 8.00% dividend yield. Usually when they are that high they are generally not sustainable, but I don’t see them getting rid of it completely but there is a decent chance they might reduce it at some point.
Exxon Mobil (XOM)- Share Price $43.48/ Market Cap $183.84Billion/ 52 Week Range $30.11-$71.37/ P/E 71.95/ EPS $0.6043/ Dividend $3.48/ Yield 8.00%
Phillips 66 (PSX)- Is an American energy company headquartered in Westchase, Houston, Texas. They are engaged in producing natural gas liquids and petrochemicals. They are ranked 186th on the 2020 Forbes 2000 list. Conoco Phillips who originally spun off Phillips 66 as an independent company is ranked 201st.
Phillips 66 falls into the same category of losing money during Corona as almost every other oil company where they are bleeding money like crazy right now. They do have a half decent dividend yield of 5.36% right now, but you can get a yield like that from quite a few companies that are still making money right now. If you can manage to pick up some of their spinoff company shares you can get a dividend yield of 12.21% and they are currently making money. This company is called Phillips 66 Partners.
Phillips 66 (PSX)- Share Price $67.17/ Market Cap $29.34Billion/ 52 week range $40.04-$114.95/ P/E N/A/ EPS -$6.0658/ Dividend $3.60/ Yield 5.36%
Petrobras (PBR/PBR-A)- Is a state owned Brazilian petroleum company with headquarters in Rio De Janeiro, Brazil. They are ranked 70th on the 2020 Forbes 2000. They are involved in refining, transportation and marketing, exploration and production, distribution, gas and power, as well as biofuels. The Brazilian government owns 64% of shares are owned directly or indirectly.
Petrobras is also currently losing money with Corona but also has a very low dividend yield. In this regard this company is even riskier to invest in, the one helpful thing is that it is in the Brazilian governments best interest for this company to do well. As oil prices come up this company could be a good one to look at as profits start to return.
Petrobras (PBR/PBR-A)- Share Price $11.37/ Market Cap $42.31Billion/ 52 Week Range $4.01-$16.30/ P/E N/A/ EPS -$1.2125/ Dividend $0.0884/ Yield 0.78%
A Shares Price $11.13/ Market Cap $31.17 Billion/ 52 Week Range $4.16-$15.31/ P/E N/A/ EPS -$1.2125/ Dividend $0.2888/ Yield 2.6%
Valvoline (VVV)- Is an American manufacturer and distributor of Valvoline-brand automotive oil, additives and lubricants. They also own Valvoline instant oil change and Valvoline Express care chains of car repair centres. As of 2016 they were the second largest oil change and service provider in the United States with 10% of the market share. Valvoline has been around so long that it was the recommended oil for the Ford Model T and was associated with winning race cars as early as the 1890’s. They are far and away the smallest company on this list, but are still one of the biggest players in their specific market of automotive lubricants for small and large vehicles and equipment.
Valvoline might be the baby of the group at 4.34Billion market cap but their more focused products have allowed them to continue to make money despite Corona. They have a fairly low price to earnings of 13.9 and a decent dividend yield of 2.13%, which is why they have made it onto my watch list. I don’t have plans to buy them at this point but their numbers are definitely good enough to warrant a closer look in my opinion.
Valvoline (VVV)- Share price $23.45/ Market Cap $ 4.34Billion/ 52 week range $9.06-$23.66/ P/E 13.9/ EPS $1.688/ Dividend $0.50/ Yield 2.13%
Most of the oil companies are losing money right nowise they are only really good buys if you have the stomach for a little risk, but it is always good to see what is out there to look at buying in the future. All of these oil companies are more than likely big enough to weather Corona and will likely be around making money for a long time to come and as much as people love to hate oil companies you would be hard pressed to find anything around you that was not made with oil, delivered by oil, or both and that isn’t likely to change anytime in the near future.
Disclaimer: I do not currently hold positions or plan to open positions in any of these companies in the near future. All stock prices are as of December 17, 2020.