BlackRock's Batchelor: Why I am underweight oil majors

BlackRock's Robin Batchelor is running a 30% underweight to oil majors in his £4.32bn World Energy fund, expecting margins will be squeezed as demand for oil intensifies and exploration costs rise.

Batchelor said oil majors are having to work harder to locate new sources of oil, driving up the cost of exploration. The manager is playing oil through companies at the small- to mid-cap end of the spectrum as he sees stronger upside these businesses. “The oil majors are finding it increasingly difficult to find oil and are going into more risky areas which is pushing up the cost of the exploration process,” said Batchelor. “The higher costs are a major concern as if the costs are not controlled then margins will become squeezed. “I am 24% overweight exploration and production ...