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Speculators And Analysts Grow More Bearish On Oil

Friday, August 5 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. Cash flow negative after dividends

 

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- The oil majors are not generating enough cash to fund both their capex and their hefty dividend payments.
- All of the oil majors are having to take on debt in order to keep their dividends at such high levels. Only ExxonMobil (NYSE: XOM) was slightly cash flow positive over the past 12 months, but that excludes payouts to shareholders. After including dividends, Exxon had negative cash flow of $12 billion.
- The majors are plugging the deficit with more debt. Exxon saw its debt jump from $33.8 billion last year to $44.5 billion at the end of 2Q2016.
- Shell’s (NYSE: RDS.A) debt-to-equity ratio is the worst, rising close to 30 percent. BP’s (NYSE: BP) debt ratio is not far behind at about 25 percent. Debt ratios are sharply up from 2015.

2. Dividend yields too high?

 

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- The poor earnings from the oil majors is putting renewed scrutiny on their generous dividend payouts. Companies are taking on more and more debt to pay shareholders, but that cannot continue forever.
- The cash flow of the five largest…




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