The Upside to Record High Gas Prices

It’s not all doom and gloom, though. Due to stratospheric oil and gas prices, energy stocks have been the one bright spot in an otherwise dour market this year. Through the end of May, the S&P Oil & Gas Exploration & Production Index gained an incredible 60%, compared to the S&P 500, which fell about 13%.

A number of oil companies, including Shell and Exxon Mobil, reported record profits in the first quarter, and by the end of this year, they’re projected to post record annual profits. According to estimates made by Rystad Energy, publicly traded exploration and production companies are on track to generate an unheard-of $834 billion in free cash flow (FCF) in 2022. That would represent an increase of nearly 70% over last year.

Global Oil and Gas Industry on Track to Generate Record Profits in 2022

No one hopes for high gas prices, and I sincerely doubt anyone hopes they will persist indefinitely. On the other hand, think of this as an opportunity. Many investors may have missed the rally so far this year, but if Rystad’s estimates are accurate, there could be further gains to take advantage of.