The top trio of European-listed integrated oil companies — BP ( BP ), Shell ( SHEL ) and TotalEnergies ( TTE ) — currently trade at more than a 40% discount to their U.S. peers, according to Citi analysts, who propose maybe it’s the right time for an American oil giant such as Exxon Mobil (NYSE: XOM) or Chevron (NYSE: CVX) make a move.
“The reward for US IOCs would appear to be significant, with increased value through the ability to finance at a lower cost [cost of equity] as well as the cost synergies we estimate [net present value] terms in the region of 15%-30% of target market capitalization,” Citi said on Wednesday.
European politicians may have some objections, “but given that they have already put forth an anti-oil narrative, it seems unlikely that they would intervene directly,” Citi said.
In US hands, European companies would not spend as much on low-carbon investments, “a part of the business that should be a cash drain for European IOCs in the coming years,” according to the bank.
Exxon Mobil (XOM), whose shares are trading at around $1 off an all-time high, “is a bull trap ahead of Q4 earnings,” writes The Asian Investor in an analysis recently published on Seeking Alpha.