Friday, May 27, 2016
In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy sector. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.
Let’s take a look.
1. Rising debt for oil majors
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- The oil majors are taking on ever more volumes of debt in order to finance their spending programs and maintain generous dividend policies.
- The six largest oil companies have issued $37 billion in new debt so far this year, double the levels from 2014 when oil prices were at their highs.
- Generous interest rate policies from central banks have kept the appetite for top-quality debt high, meaning that the oil majors can borrow cheaply.
- Borrowing costs are at their lowest level in more than a year as oil prices have rebounded from lows. BP (NYSE: BP) issued $1.25 billion in new debt in April with yields of only 3.12 percent. Shell (NYSE: RDS.A) offered $1.5 billion in fresh debt at a 1.99 percent yield.
- Still, with cash flows not high enough to cover capex and dividends, net debt at all of the oil majors is rising.
2. New discoveries at 64-year low
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- The global oil industry only discovered 12.1 billion barrels of new oil in 2015, the lowest total since 1952.
- Part of the terrible result last year is due…
