Is Big Oil Already Becoming Big Natural Gas? Here Are The 5 Biggest Natural Gas Stocks Worldwide

Key Takeaways

• The top energy companies tend to be incredibly profitable, whether they are public companies, state-run entities, or privately-owned companies.
• The biggest oil and gas companies in the world are headquartered in Saudi Arabia, the U.S., England, and China.
• Natural gas remains a highly needed resource, but supplies are at risk due to the Ukraine War.

Natural gas producers are among some of the largest and most powerful companies in the world. With a relatively small group of companies creating one of the world’s most necessary resources, investing in natural gas stocks may offer a good payoff. However, cost, consumer demand for green energy and the ongoing war in Ukraine are all big variables driving the world’s energy market.

If you’re thinking of investing in the energy industry, natural gas will invariably play a part of your investment mix. Here’s a look at the biggest operators who are active in this space to help you evaluate if they make sense for your portfolio.

Saudi Aramco

Saudi Aramco (also known as the Saudi Arabian Oil Co.) is the largest oil exporter in the world. It’s also state-owned by the Saudi government and royal family. Recently, the company announced plans to increase crude oil export capacity by 1 million barrels per day by 2027 by increasing its own country’s use of natural gas, sourced from the Jafura field.

In 2021, Saudi Aramco pulled in $110 billion in terms of net income. This number is back near 2018 levels, before the company went pubic with its IPO in 2019. In 2018, net income was $111.1 billion, but in 2019 and 2020, net income was only $88.2 billion and $49 billion respectively.

Despite Saudi Aramco being one of the most lucrative companies in the world, investing in this energy giant comes with ethical concerns and obstacles, including significant human rights concerns.

If you do want to invest in this company, there are further obstacles to retail investors, like regulations that make it difficult to invest in the Saudi stock market. You probably won’t be able to purchase this stock directly – you’ll instead have to find it in an ETF.

Several things led to Saudi Aramco’s decrease in net income in 2019 and 2020. Oil prices were down, its liquified natural gas facilities began incurring costly attacks from Yemen’s Houthi rebels in 2019, and there were OPEC-related bidding wars with Russia in the midst of a pandemic. As the price of crude rose, so did the company’s profits. That’s a trend one might assume would continue into the future.

Exxon Mobil (XOM)

Exxon Mobil is the largest American oil and gas company. Exxon Mobil’s net income for 2021 was $23.04 million, up from a net loss of $22.44 million in 2020. Net income at Exxon followed a similar trend to Saudi Aramco over the past few years, with lower net income in 2019 and 2020 compared to 2018 and 2022.

Exxon’s natural gas output has been on a downward trend since 2011. It reached its lowest point – 2,574 millions of cubic feet per day – in 2018. It waffled just above that point over the ensuing three years into 2021.

In the fall of 2021, three activist investors worked their way onto Exxon Mobil’s board. Unsatisfied with the way the company had been addressing its contributions to climate change to date, they have attempted to use their influence to shut down oil and gas projects, favoring instead billions of dollars in investments in carbon recapture programs, hydrogen projects, and biofuels as a part of Exxon’s low-carbon unit.

As the price of oil oscillates, we can expect to see Exxon’s net income follow. It remains the largest oil and gas company based in the U.S., regardless of the price of crude.

Chevron (CVX)

Chevron is another major American oil and gas company. While Chevron is an American company, most of its natural gas production actually comes from its work in Australia and Asia. In 2021, it produced 1.69 billion cubic feet of natural gas per day in the U.S., but 6 billion cubic feet per day internationally.

Its net income in 2021 was $15.63 million, up from a $5.54 million loss in 2020. Net income was also low in 2019 at just $2.92 million, but was higher when the market was paying more for oil in 2018 – when Chevron brought in a net income of $14.82 million.

President Biden has recently encouraged American oil and gas companies to increase output to reduce a supply shortage caused by the sanctions placed on Russian companies after the country’s invasion of Ukraine. Chevron has enthusiastically answered the call. In Q1 of 2022, it increased its oil and gas production in the Permian Basin by 10%.

The company’s 2021 net income bounce back is an encouraging sign, though profits are still highly dependent on the price of oil. It will be interesting to see how increased Permian Basin production affects 2022 profits.

Shell (SHEL)

Shell is a formerly-Dutch-now-British oil and gas company. It is currently leading the largest private construction project in Canada’s history by building out natural gas drilling, pipeline, and liquefaction along British Columbia’s coast. It won’t be complete for a few years, but it’s projected to produce and export over 14 million tons of chilled, liquified natural gas per year.

Shell’s net income for 2021 was $14.62 million, recovering from a net loss of $16.91 million in 2020. Its net net income losses in 2019 weren’t as severe as they were for other oil and gas producers – 2019 net income went down to $12.42 million from $17.51 million in 2018.

Just last year, The Hague ruled against Shell for violating the Netherlands’ laws around environmental standards of care. The company was ordered to more than double its carbon emission reduction goals set for 2030. The ruling ultimately led the company to leave the Netherlands altogether and reheadquarter itself in London in dramatic fashion.

Shell’s net income is in line with that of other oil and gas companies over the past four years, dipping in 2019 and 2020, but recovering in 2021. Watch to see how its new British Columbia natural gas facility impacts future profits upon completion.

PetroChina

PetroChina is one of China’s state-run oil and gas companies. While many countries have been sanctioning Russian energy exports in recent months, Russian ally China has been increasing its imports from the country.

Net income in 2021 was remarkably high at about $12.94 billion. Even before the 2019/2020 slump, its net income in 2018 wasn’t that high at just $7.46 billion. Out of all the companies on this list, PetroChina’s net profits have made the most remarkable recovery.

PetroChina and Russia’s Gazprom recently agreed to a pipeline deal that will import 10 billion cubic meters of Russian natural gas to China every year starting in 2023, and ongoing for the next 30 years. PetroChina plans to increase the proportion of its own natural gas production to 55% of its total production by 2025.

PetroChina’s 2022 Q1 and Q2 net income have already eclipsed what the company brought in over the entire year in 2021l. This may be partially attributable to a strategy China used to purchase and store oil while it was cheap earlier in the pandemic, and then resell it across Asia as prices started rising. Whether or not such strategies will lead to sustainable growth over time is questionable; it may just be an extremely profitable, short-term blip.

The war in Ukraine

The war in Ukraine and ensuing sanctions on Russian energy exports have impacted the price of oil and natural gas across the world. China could potentially make even more money by refining the Russian imports it receives, and all companies are likely to see a rise in demand – especially from the Western nations who are primarily the ones enforcing these sanctions.

More demand tends to mean higher prices, and higher prices mean more potential profit for companies in this sector.

Bottom line

Energy stocks are a part of any healthy portfolio, to build a diversified portfolio including energy stocks and beyond, consider an Investment Kit from Q.ai. Leveraging the power of artificial intelligence, you can find the right balance of natural gas stocks, technology stocks, and other industries to align with your investment goals.

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