Refiners Awash in Shale Oil Offer 10 Times Exxon Returns |
| Bloomberg - Aug 10, 2012 |
Gasoline refiners, shunned by investors because of falling demand and rising regulation, now count Warren Buffett’s Berkshire Hathaway Inc. and billionaire Carl Icahn among shareholders as lower oil prices promise wider returns for fuel makers.
U.S. refiners such as Valero Energy Corp. (VLO) have delivered 10 times the returns of Exxon Mobil Corp., gaining an average 43 percent to Exxon’s 4.2 percent and outperforming every other energy sector in the Standard & Poor’s 500 Index. Gushing shale wells from North Dakota to the U.S.-Mexico border have lowered costs and more than doubled profit margins on gasoline and diesel production.
Buffett’s firm and Icahn are among bullish investors buying into refining stocks as analysts forecast a new era of profits akin to the industry’s so-called “golden age” in the mid 2000’s, when rising global demand and tight capacity lifted earnings.
“The prospects for U.S. refiners have turned around dramatically,” said John Auers, senior vice president of Turner Mason & Co., a Dallas-based energy consulting company. “Cheap crude has given an advantage to the U.S. refining system, already the most advanced, most complex and most efficient in the world.”
Read Full Article from Bloomberg
- Posted: 2012-08-10 15:12:36
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