SINGAPORE - Oil prices have halved this year, dragging on firms involved in Asian energy projects as costs remain high amid dwindling revenues, yet equity analysts continue to have a largely positive industry outlook.
The share prices of firms involved in oil and gas production developments in Asia Pacific, including Australian and East African liquefied natural gas (LNG) projects, have dropped 10-50 percent since the energy market rout began in June.
Yet, stock recommendations in Thomson Reuters Eikon for 10 such companies showed more than 90 percent of the analysts calling for a "strong buy", "buy" or "hold" and a mere 8 percent advising either a "sell" or "strong sell". Most of the analyst views were updated as recently as this quarter.
Large energy firms such as ExxonMobil, Chevron and Royal Dutch Shell enjoyed more positive analyst views than their smaller, more specialised peers like Santos, Ophir Energy or Premier Oil. While equity analysts kept a fairly positive view, credit analysts have lowered their outlook more aggressively.
"The dramatic deterioration in the oil price outlook has ... resulted in meaningfully weaker credit measures and very substantial negative discretionary cash flows" at companies such as Shell, Total and BG Group BG.L which are involved in Southeast Asian LNG projects, Standard & Poor's said.