2 "Waves" of ROCE for E&Ps

The Gist: For E&Ps, each cycle has two waves of ROCE. Will history repeat?

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A quick update today as were on the road for my son’s club soccer tournament. (Shout out to all current, former, and future parents who do the travel youth sports).

As I did with last week’s update on integrated oil returns on capital (HERE), today I’m focusing on the E&P sector.

For the most part, the gas-focused U.S. E&Ps posted a 0% ROCE based on annualized 1H24 results.

Coterra was a standout at 13.6%, but most of the group hovered around 0%. These companies need more than just data center AI demand to turn things around.

The oil E&Ps performed better, with returns ranging from 4.1% (Hess) to 14.3% for EOG.