Why Investors in Oil Companies Don't Care About Crude's Drop - Bloomberg

Why Investors in Oil Companies Don't Care About Crude's Drop - Bloomberg:

Crude prices are down yet European oil companies are weathering the slump, signaling a change in fortunes for last year’s laggards.

While benchmark Brent crude has fallen more than 9 percent over the past week, the Stoxx Europe 600 Oil & Gas index has retreated just 3.9 percent. The reason? Oil companies’ discipline during the 2014-2016 crash proved to investors they can now easily withstand such crude-price corrections.

“Oil companies have done a good job adjusting their budgets to the lower oil-price environment and their shareholders are now benefiting from that,” said Ahmed Ben Salem, an analyst at Oddo Bhf. “The resilience is mainly linked to the fact that oil companies have an oil cash breakeven as low as $50 per barrel and their budget and share-buyback plans are based on $60.”