Thanks Arjun for this informative piece! How would ROCE for energy sector compare with other sectors of the economy? Trying to understand what a "competitive" ROCE metric looks like across industries.
Prasad, thank you! An ROCE above 10%-12% will be competitive across the market and anything in the teens will be a good number. That said, I used to track this very closely when at GS, but it is in need of a sharper fine tuning on my part. Excellent suggestion.
Really informative piece. It's so important to understand the industry from a full-cycle perspective. It's probably impossible to understand oil stocks in general unless one has a view from the nineties. Thank you for laying it out so plainly. It's so easy to get caught up in the oil price hype when the actual reason for underperformance lies in poor capital allocation.
thank you Isac. It is a topic I am passionate about. I could probably do a never-ending series just on profitability and oil companies...readers might get bored but in my view it is just overwhelming as a foundational driver to explaining the sector and individual companies.
very kind of you, thanks so much. I take a lot of this for granted so if anything ever isn't clear or you have follow-up questions/comments, just let me know.
Thanks Arjun for this informative piece! How would ROCE for energy sector compare with other sectors of the economy? Trying to understand what a "competitive" ROCE metric looks like across industries.
Prasad, thank you! An ROCE above 10%-12% will be competitive across the market and anything in the teens will be a good number. That said, I used to track this very closely when at GS, but it is in need of a sharper fine tuning on my part. Excellent suggestion.
Really informative piece. It's so important to understand the industry from a full-cycle perspective. It's probably impossible to understand oil stocks in general unless one has a view from the nineties. Thank you for laying it out so plainly. It's so easy to get caught up in the oil price hype when the actual reason for underperformance lies in poor capital allocation.
Looking forward to your next set of posts!
thank you Isac. It is a topic I am passionate about. I could probably do a never-ending series just on profitability and oil companies...readers might get bored but in my view it is just overwhelming as a foundational driver to explaining the sector and individual companies.
Thanks for this Arjun, a really insightful piece. I was delighted to see that you launched Super-Spiked a few weeks back.
Look forward to following along going forward.
thanks so much Adam. Was finding Twitter a bit limited for nuance and elaboration :)
Great article - really educational. Learning a lot from your Substack.
Seconded. Highly informative read
very kind of you, thanks so much. I take a lot of this for granted so if anything ever isn't clear or you have follow-up questions/comments, just let me know.