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Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

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Oil Majors Have Seen Debt Double And Spending Fall 45%

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

(Click to enlarge)

- 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…

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