The energy sector posted a stellar performance in 2021. Among the Select Sector SPDRs that categorize the S&P 500 into 11 sector index funds, the energy sector outperformed the others. The sector generated a 53.3% return that includes the dividends paid over the year. Furthermore, every sub-sector of the energy sector has outpaced the broader market index.
Due to loosening public-health restrictions and a growing economy, global petroleum demand has increased faster than its production. The benchmark Brent Crude oil spot price has surged from $50 per barrel at the start of 2021 to $86 per barrel in late October. In addition, the United States Energy Information Administration (EIA) expects global consumption of petroleum and liquid fuels to increase by 3.5 million b/d in 2022 to average 100.5 million b/d.
SM Energy Company (SM)
SM in Denver, Colo., in an independent energy company that acquires, explores, develops, and produces oil, natural gas, and natural gas liquids (NGLs) in Texas. The company holds oil equivalent of estimated proved reserves, working interests in productive oil wells, and productive gas wells.
On Dec. 20, SM announced that the company had set targets to reduce Scope 1 and 2 emissions. SM has set targets of zero for routine flaring at all its operations by 2023, a 50% reduction in its Scope 1 and 2 GHG emissions by 2030 and maintaining its low methane emissions. This demonstrates SM’s commitment to environmental stewardship.
On Sept. 22, SM declared a $0.01 per share of common stock semi-annual dividend, which was to be paid to shareholders on Nov. 5, 2021. This reflects the company’s ability to pay back shareholders.
For its fiscal third quarter, ended Sept. 30, SM’s total operating revenues and other income increased 170.5% year-over-year to $760.24 million. Its adjusted EBITDAX improved 49.1% from the prior-year quarter to $346.66 million. Its adjusted net income and adjusted net income per common share came in at $91.45 million and $0.74, respectively, up substantially from their negative year-ago values.
A $0.74 consensus EPS estimate for the fourth fiscal quarter of 2021 indicates a 3,600% year-over-year increase. And the $591.73 million consensus revenue estimate for the same quarter reflects an 84.8% improvement from the prior-year quarter. Furthermore, SM has an impressive surprise earnings history; it has topped consensus EPS estimates in three out of the trailing four quarters.
The stock has gained 436.8% in price over the past year and 36.2% over the past six months to close yesterday’s trading session at $34.14.
Aemetis, Inc. (AMTX)
AMTX in Cupertino, Calif., is a renewable natural gas and fuels and bio-chemicals company. AMTX acquires, develops, and commercializes various technologies that replace traditional petroleum-based products. It sells bio-diesel, refined glycerin, ethanol, wet distiller grains, and distiller’s corn oil.
On Dec. 22, AMTX announced that it had signed a Master Development Agreement with the city of Riverbank, Calif., to lease/purchase a 125-acre former military base. AMTX intends to build a sustainable aviation fuel and diesel biorefinery on the site, which should expand the company’s productive capability.
On Dec.17, AMTX declared that it had signed a 10-year, 450-million-gallon renewable diesel supply agreement with a travel company. The agreement is expected to generate more than $3 billion in revenue AMTX.
AMTX’s revenues increased 21.9% year-over-year to $49.90 million in its fiscal third quarter, ended Sept. 30. For the nine months ended Sept. 30, its net cash provided by financing activities rose 294.6% from the prior-year quarter to $43.35 million, while the company’s cash and cash equivalent balance came in at $6.39 million, up 7,987.3% from the same period prior year.
Analysts expect AMTX’s EPS to increase 59.7% year-over-year for its fourth fiscal quarter of 2021. And the Street expects its revenue for the same quarter to improve 53.8% from the prior-year quarter to $57.40 million.
Over the past year, AMTX’s stock has gained 356.3% in price to close yesterday’s trading session at $12.96. It has gained 21.7% over the past six months.
Vertex Energy, Inc. (VTNR)
Houston, Tex.-based VTNR operates as an environmental services company that provides services designed to aggregate, process, and recycle industrial and commercial waste systems in the Gulf Coast and Central Midwest region of the United States. The company operates through the three broad segments of Black Oil; Refining and Marketing; and Recovery.
On Oct. 27, VTNR priced a $155 million offering of convertible senior notes due 2027. The company intends to use the expected $133.9 million net proceeds for its pending acquisition of a refinery located in Mobile, Alabama, to improve its Mobile refinery’s hydrocracking unit and general corporate purposes.
On Sept. 29, VTNR announced that its shareholders had approved a proposed sale of its used motor oil collection and recycling assets to Safety-Kleen Systems, Inc., a subsidiary of Clean Harbors, Inc. (CLH). The sale aligns with the company’s value creation strategy.
For its fiscal third quarter, ended Sept. 30, VTNR’s revenues increased 78.3% year-over-year to $28.97 million. Its net income and income per common share came in at $10.64 million and $0.12, respectively, registering a substantial increase from their negative year-ago values.
The Street’s $1.09 EPS estimate for VTNR’s fiscal year 2022 indicates a 619% year-over-year increase. Also, the Street’s $2.27 billion revenue estimate for the same year reflects a 1,151.8% increase from the prior year.
The stock has gained 563.6% in price over the past year and 12.8% over the past month to close yesterday’s trading session at $5.03.
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SM shares were trading at $33.80 per share on Wednesday afternoon, down $0.34 (-1.00%). Year-to-date, SM has gained 14.65%, versus a -0.30% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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