15 oil companies flush with cash

And while the FTSE 350 Oil & Gas Producers index managed to tick up a modest 2 per cent in the first half, it has gained a further 5 per cent so far in July. But demand for risky junior explorers has yet to fully recover. The Aim All-Share Oil & Gas index plunged 19 per cent in the first half amid a wider sell-off in nearly every other commodity, and clawed back a meagre 6 per cent in July.

What does this tell us? Clearly, large and mid-sized oil companies are a much safer bet during this period of extreme sector volatility. We’re broadly bullish on the large- and mid-caps going into the second half, although we remain wary of rising US oil and gas production becoming an increasingly important headwind for oil prices.

There may also be some value on offer in the smaller Aim stocks, assuming investors become less risk averse in the second half and oil prices stay firm. And there is some evidence that this could turn out to be the case. Statements from central bankers in early July suggested monetary policy will be kept loose in the near term, and that has given an early boost to equity markets. Meanwhile, oil prices have been supported by drawdowns on US inventories and fresh concerns over Egyptian political unrest spilling into the Suez Canal - a key oil transport route.

What’s more, the oil and gas sector remains in decent financial health. In the year to 30 June 2013, the sector raised £1.67bn* in new and secondary equity offerings, according to data from Investors Chronicle and S&P Capital IQ. This is only slightly down on the £1.98bn* raised in the first half of 2012. Below, we’ve compiled a list of the companies with the most net cash on their balance sheets, as well as the ones with the highest level of net debt. (Note: high net debt does not necessarily mean a company is in poor financial shape. Tullow Oil, for example, generated $1.2bn (£789m) in operating cash flow last year).