• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 23 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 5 days They pay YOU to TAKE Natural Gas
  • 1 day How Far Have We Really Gotten With Alternative Energy
  • 1 day What fool thought this was a good idea...
  • 4 days Why does this keep coming up? (The Renewable Energy Land Rush Could Threaten Food Security)
  • 10 days The United States produced more crude oil than any nation, at any time.

Big Oil May Not Need To Borrow To Pay Dividends For The First Time In 5 Years

The hefty cost cuts that the supermajors have made over the past two years, combined with relatively stable oil prices that are now over $50, could mean that Big Oil may not have to resort to borrowing in order to pay the sacred dividends for the first time in five years, Bloomberg reports, quoting analysts at brokerage Jefferies International.

The slashed costs – including sweeping job cuts – and the canceling and delaying of highly capital-intensive projects have helped the world’s five biggest oil companies to stop bleeding cash and return to generating cash flows.

“As a group they are at peak debt levels now,” Jason Gammel, a London-based analyst at Jefferies, told Bloomberg, referring to operating and capital efficiency at ExxonMobil, Chevron, Shell, Total SA, and BP.

Since the oil prices started crashing in 2014, supermajors had amassed more and more debt. As of the middle of last year, Big Oil’s debts were rising, cash flows dropping, and capex diminishing, but dividends firmly held.

Now it looks like the tide is slowly turning, thanks to higher oil prices, leaner operations, and cost cuts.

Related: Robots Over Roughnecks: Next Drilling Boom Might Not Add Many Jobs

Jefferies has estimated that when oil prices were around US$100 per barrel in 2014, the Big Five had generated a combined US$180 billion in cash from operations. In 2016, the total cash from operations had plunged to US$83 billion. But higher oil prices are expected to help the now ‘leaner and meaner’ oil majors to generate US$142 billion from operations this year, and US$176 billion next year, according to Jefferies.

In the next two weeks, the Big Five will report fourth-quarter figures, and analyst estimates compiled by Bloomberg point to Exxon, Chevron and BP booking their first annual profit rises since 2014. More specifically, Chevron is projected to return to profit; Exxon is expected to book a 5.8-percent increase in income; Shell is seen reporting increased profit for a second quarter in a row; BP is likely to post higher adjusted earnings for the first time in nine successive quarters; and Total is seen posting a 4.3-percent increase in adjusted net income.

By Tsvetana Paraskova for Oilprice.com

ADVERTISEMENT

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage



Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News