Woqod was recognised as one of the top 20 performing organisations in terms of total shareholders’ return (TSR) over the past three, five, and ten years, according to Boston Consulting Group (BCG).
The companies in the study were those valued at more than $6bn (as of January 1, 2020), had a free float of at least 20%, and existed before 2015. The study looked at the TSR performance over a ten-year price cycle from July 2010 through July 2020. These analyses provided additional insights into how companies’ performance changed during different oil price and market environments.
“It is important to recognise the top TSR performers in the oil and gas industry, such as Woqod as they demonstrate consistency in their operations, despite the persisting industry challenges,” said Juan Vazquez, managing director and partner, BCG.
Finding that Covid-19 has only added to the woes of a global oil and gas sector, with the largest demand shock in history increasing the pressure being felt due to persistently low TSR; the report said yet despite long-term turbulence and steadily worsening TSR performance over the past decade, some companies (like Woqod) have maintained their status as oil and gas value creators.
Woqod, which is in the midstream segment, was reportedly the only one value creator in the Gulf Co-operation Council’s hydrocarbon sector.
TSR is measured as the return from a stock investment – with the assumption that all dividends are reinvested in stock – and a product of multiple factors, namely profit growth, change in valuation multiple, and cash flow contribution. Fundamental value changes are assessed through a combination of revenue growth and margin shifts, BCG said, adding the impact of investor expectations is determined when factoring in changes in a company’s valuation multiple, which can entail risk factors, financial policies, portfolio changes, and growth and profitability expectations.
BCG’s study found that the international oil companies (IOC) have underperformed the Standard and Poor’s 500 in TSR for more than a decade. After outperforming the S&P 500 in annualised TSR over the preceding five years, global IOCs achieved a median annualised TSR of 7% – less than half of S&P 500 constituents – from January 2009 to December 2015.
Furthermore, the sector delivered median annualised TSR – share price appreciation plus dividends – of -2% for the five years from November 30, 2015, through November 30, 2020.
Two-thirds of the investors surveyed anticipate that demand will return to pre-Covid-19 levels in the second half of 2021 and that oil prices will rise. Nevertheless, few investors expect companies to capture this upside, with 60% predicting that the sector’s median TSR over the next two years will be no higher than it has been over the past two years.