The industry bounced back from a significantly tough year in 2016, with companies posting strong operational results in 2017. This was due not only to increased oil prices but also because many oil and gas companies had to dig deep to find ways to remain increasingly profitable in a lower oil price environment.
One of these was to cut costs, with British Petroleum Plc (LSE: BP) and Statoil ASA (OSL: STL) surpassing their third-quarter profit estimates after deep cost cuts and higher crude prices. JPMorgan Chase & Co estimates that European companies’ overall earnings rose by 9%, compared with a 6% rise for US companies, with energy firms leading the way in both regions.
The energy sector has regained investor confidence and sector ratings are starting to look positive, with investors embracing oil and gas shares again. Bloomberg reported that since October 2017, when most companies began reporting financial results, energy sector shares gained the most, an average of 2.8%, with only four other sectors rising, including real-estate and automobiles. The revived growth in the energy sector has helped boost demand in other big industries.