According to the World Wildlife Fund, the Javan rhino and the Amur leopard top the global list of most endangered species. Broadening the scope, in 2014-20 we probably would have added the E&P investor to the list, as shareholder returns plunged deep into negative territory for seven consecutive years on volatile commodity prices and massive industry overspending. Almost miraculously, a combination of higher prices and a strategic shift to distribute cash flow to equity holders resulted in record shareholder returns that brought investors back into the fold. However, weakening prices and significant increases in investment have dramatically shrunk returns this year. As we discuss in today’s RBN blog, total shareholder returns in 2023 were mixed: good for gas-focused E&Ps but less so for diversified and oil-focused producers.
The RBN NATGAS Haynesville is a weekly natural gas fundamentals analysis focused on supply, flow, and LNG-driven demand dynamics within the Haynesville basin.
First, a quick definition: Total shareholder return (TSR) is a measure of financial performance that calculates the total amount that a stock returns to those who invested in it over a specified period — in our analysis, that period is from the end of 2022 to December 15, 2023. TSR is expressed as a percentage, and is calculated by summing the capital gain or loss from the rise or fall in the stock price and the dividends paid, then dividing that sum by the stock price at the beginning of the period.
As shown in Figure 1, annual E&P shareholder returns went from minimally positive to disastrously negative in the decade preceding 2021, driving all but the most masochistic (or pig-headed) investors out of the industry as share prices plunged more than 90%. Then, the E&P sector swore off its growth-at-all-costs mantra and transitioned to a maintenance capital spending strategy to maximize cash flow to repay debt and reward long-suffering shareholders with dividends and share repurchases. The industry quickly won back investors in 2021-22 as cash flows fueled by higher commodity prices post-COVID sent dividends soaring. As a result, the combination of rising equity prices and higher dividends boosted total shareholder returns to record levels.
Figure 1. Total Return S&P E&P Index 2010-23. Source: Bloomberg
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About the song
“First I Look at the Purse” was written by Smokey Robinson and Robert Rogers and appears as the second song of side two of The J. Geils Band’s debut album, The J. Geils Band. The band later used it as the opening song on their first live LP, “Live” Full House, released in September 1972. The song was first released as a single by a Motown act, The Contours, in 1965 — that went to #12 on the Billboard R&B and #57 on the Billboard Hot 100 Singles charts. Personnel on The J. Geils Band versions were: Peter Wolf (lead vocals), J. Geils (guitar), Seth Justman (piano, organ), Magic Dick (blues harp), Danny Klein (bass), and Stephen Jo Bladd (drums, percussion).
The album The J. Geils Band was recorded in August 1970 at A&R Studios in New York City with Dave Crawford and Brad Shapiro producing. Released in November 1970 on Atlantic Records, it went to #195 on the Billboard 200 Albums chart. “Live” Full House was recorded in April 1972 at The Cinderella Ballroom in Detroit with Geoffrey Haslam and The J. Geils Band producing. It was released in September 1972 and went to # 54 on the Billboard 200 Albums chart.
The J. Geils Band was an American rock band formed in Worcester, MA, in 1967 by J. Geils, Peter Wolf, Seth Justman, Magic Dick, Danny Klein, and Stephen Jo Bladd. They released 11 studio albums, three live albums, nine compilation albums, and 30 singles. Peter Wolf left the band in 1984 to pursue a solo career. The band made one more album without him featuring Seth Justman on vocals before calling it quits in 1985. Beginning in 1999 the group had several reunion shows prior to founder J. Geils’s death in April 2017. The band has been nominated for induction into the Rock and Roll Hall of Fame five times, but amazingly still have not been picked. Peter Wolf continues to record and tour as a solo artist and harpist Magic Dick still records and tours as a blues artist.
