Devon Energy Corp (DVN), EOG Resources Inc (EOG): Are Big Oil’s Best Days Gone?

Also, Petrobras faces challenges in its refinery operations. In Brazil the price of gasoline is not set by the market, but the government. In the most recent quarter, Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR)’ refineries are running at 99% utilization, forcing the company to import gasoline at a loss. Given the sensitive political environment about transportation costs, do not expect Brasilia to have a change of heart any time soon.

Investment takeaway
By investing in smaller upstream companies it is easier to find long term growth potential. EOG Resources Inc (NYSE:EOG) and Devon Energy Corp (NYSE:DVN) are both great examples of how a company can grow shareholder value with shale oil plays.

Big firms like BP plc (ADR) (NYSE:BP) and Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) have hundreds of billions of dollars in revenue, but have been forced into risky ventures. BP is stuck in Russia where the government is increasingly hostile to western interests. Petrobras is owned by Brazil. Recent populace protests over transportation costs make it clear that it is easier for Brazil to compress Petrobras’ margins than it is to face the populace ire. Also, the probability that Brazil will increase the tax burden on oil extraction is higher than ever, due to the need to compensate for loss of tax revenue in the face of falling Chinese demand.

The article Are Big Oil’s Best Days Gone? originally appeared on Fool.com.

Joshua Bondy has no position in any stocks mentioned. The Motley Fool recommends Petroleo Brasileiro S.A. (ADR). The Motley Fool owns shares of Devon Energy. 

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