With December oil futures contracts trading close to $30 per barrel, it's no wonder OPEC is being blamed for stalling a quick economic recovery by keeping energy costs, namely oil prices, artificially high. The row continues over whether or not OPEC should continue to cut barrel production with prices already so inflated. To give an idea of how much prices have climbed, oil traded as low as $25.22 a barrel back in April. Conversely, OPEC feels the glut of oil production due in the near future will wreak havoc on the cartel's ability to control oil market pricing. The main threats are the Iraqis ramping up crude oil production and the threat of sovereign nations like Russia and Norway aggressively chipping away at OPEC's global market share.

While the price of oil may falter in the coming months, there is no denying that energy firms have done well recently. In fact, according to First Call, S&P 500 energy company earnings were up 93 percent in 2002. Unfortunately, energy stocks have been laggards for investors when compared with the S&P 500. So far this year, the S&P is up close to 18 percent while energy stocks are up just 6.9 percent. Adding insult to injury, energy stocks as a group trade at just 14.4 times the past year's earnings, which gives it the lowest valuation of any group in the S&P, save utility stocks.

Negative sentiment towards the energy sector is prevalent because the market continues to view them as contrarian stocks, only performing well during energy "shocks". Of course, when energy shocks occur just about everyone else under- performs. Here is a quick look at some of the leaders in the energy sector group:

Exxon-Mobil Corp.

(NYSE-XOM)

Last $38.04

Rumours have been swirling around the oil circles quicker then a Texas twister that the worlds biggest oil company, Exxon-Mobil Corp. may strike a deal with Russian oil firm Yukos. Yukos and Sibneft were set to seal a $45 billion merger last Friday to create Russia's biggest oil firm and open the way to foreign capital. Yukos denied speculation Exxon would buy a stake in the newly born company, even though the heads of both companies were speaking at the same Moscow conference.

Exxon-Mobil produces 2.5 million barrels of oil per day and has over 12.3 billion barrels in reserves. For 2002, Exxon-Mobil's net income and cash flow were a healthy $11.5 billion and $24 billion respectively.

Royal Dutch/Shell

(FTSE-SHEL)

Last 381.50 pence

The Royal Dutch/Shell Group of Companies recently reported strong second quarter results for 2003 with net income of $2.8 billion, a rise of 28 percent bringing net income for the half-year to $8.2 billion, a rise of 82 percent. Adjusted current cost of supplies (CCS) earnings for the quarter rose 51 percent to $3.3 billion. Strong cash flow of $14 billion from operations and divestments supported both incremental upstream investment.

The Group's interim dividends have been increased by over 15 percent in US dollar terms at current exchange rates. On this basis the total dividend payout in 2003 will be some $1.4 billion higher than in 2000.

EnCana Corp.

(TSE-ECA)

Last $48.94

With an enterprise value of C$28 billion, Alberta based EnCana prides itself as being the largest independent natural gas producer in North America with daily produced gas sales averaging 2.76 billion cubic feet in 2002. During 2002, oil and natural gas production averaged 231,3000 barrels per day. The company's production targets for 2003 are between 240,000 to 280,000 bpd.

As for reserves, the company boasts fields that hold 9 trillion cubic feet of North American natural gas and 980 million barrels of conventional oil. Total shareholder return in 2002 was 19 percent.

Gavin Davis is an investment advisor at LOM. He can be contacted at 294-7006 or via e-mail at gavin.davis@lom.bm