ConocoPhillips CEO Ryan Lance spoke at CERAWeek in Houston this week, and as CNBC and others are reporting – Mr. Lance says the energy sector wants investors to like it again.
Mr. Lance made the following claim at CERAWeek “Most investors are underweight energy, not by a little but by a lot.” Is this due to the industry simply being a higher risk investment, is the lack of attention and excitement for the future a political issue, or one of ignorance?
The article points out that the Energy Select Sector SPDR EFT is down 6.5% other the past year while the S&P 500 is up more than 14.5%, and that ConocoPhillips shares are trading at just under $54, are midway between a 52-week high and low.
This all got me thinking about the “Oil” industry PR problem. It’s not sexy anymore to have oil in your portfolio, despite the investment opportunity, and potential. The cost per barrel is around $40 for several majors and their diversification of assets, including alternative energy, is one that is often overlooked. So, is the answer simply, higher dividends as Lance suggests (“20-30% of capital should go to shareholders”) or is it simply stability over time, as investors are simply waiting for the next bubble to burst, and not knowing when that could happens, keeps them on the sidelines?
Published in Industry News, Markets