Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on July 24, 2018
Big Oil Is Raking in Cash
The dark storm clouds that have been hanging over the oil industry during the crude-price slump have suddenly started raining cash.
After cutting billions of dollars of costs to survive the biggest downturn in decades, Big Oil is now riding a price rebound to generate enough cash to pay dividends and still have plenty left over. The big question is what they’re going to do with it.
Company bosses are at a crossroads. On the one hand, investors who stuck around during the price collapse want to see money returned through share buybacks. On the other, CEOs still have an eye on growth — either through investments, acquisitions, or both. On either path, they would still have to maintain hard-earned discipline on spending.
“Rolling back a year ago, the narrative was around the sustainability of dividends. Now it’s about shareholder returns in excess of those dividends,” said Ryan Kauppila, a Boston-based fund manager at Putnam Investments, which manages $172 billion. “The market is still very focused on capital discipline. That doesn’t mean don’t spend, it means spend it well.”
Investors will be listening keenly as Big Oil’s second-quarter earnings roll in starting July 26, when Royal Dutch Shell Plc, Total SA, Equinor ASA and Repsol SA report. Exxon Mobil Corp., Chevron Corp. and Eni SpA announce the next day, and BP Plc on July 31.
These eight companies, and Galp Energia SGPS SA, will together have $8 billion of surplus cash in the second quarter even after stock repurchases, according to Royal Bank of Canada.
The hunt for growth has already started. BP has emerged as the front-runner to buy BHP Billiton Ltd.’s onshore oil and gas operations in the U.S., and is competing with Shell and Chevron, according to people familiar with the sale process. BP’s offer, said to value the assets at about $9 billion, would make it the company’s biggest deal in years.
Meanwhile, BP’s stock has dropped 2 percent this month while its European rival Shell’s B shares in London have gained 0.4 percent and Total is up 0.8 percent. One reason: BP investors are worried the company will overspend and the purchase will “inhibit BP’s ability to increase shareholder return in the near future,” said Jean-Pierre Dmirdjian, an analyst at Raymond James Financial Inc.
Mixed Feelings
While blockbuster deals secure future reserves and production, shareholders have mixed feelings about big spending.
The industry has often been accused of losing control over costs when oil prices are high and profits are flowing. In the years of $100 a barrel crude, they spent billions drilling in the most remote and expensive-to-operate areas and built mega liquefied natural gas projects that took years to complete. Some of these LNG projects suffered cost blowouts and delays, and when they finally started up in the last couple of years, a global gas glut was driving prices and profits down.
“Our focus is to remain capital disciplined and our intent is to manage our costs,” Todd Levy, Chevron’s president for Europe, Eurasia and the Middle East, said in an interview. The company plans to maintain spending at $18 billion to $20 billion a year to 2020 because the higher oil prices may not be here to stay, he said.
Also looming over oil-company bosses is the question about demand as the world transitions to a cleaner energy system.
Shell and BP predict oil consumption may flatline in the mid-2030s, while Equinor sees a scenario where that could happen in the late 2020s. This could be influencing decision-making, and mega fossil-fuel projects or expensive exploration are unlikely to find favor right now, according to Alasdair McKinnon, fund manager at Scottish Investment Trust Plc, which owns Shell shares.
“A lot of people will be out there saying oil companies are doomed on a 10-year view,” he said. “They are dinosaurs, and there’s going to be some magical new energy in 10 years that will replace oil and gas.”
On the supply side, fresh flows of crude have been unleashed over the past 15 years through technological innovations in shale, deep water and oil sands.
“If you sampled 100 average investors of the supply and demand outlook for oil and copper out to 2030, your variance around oil would be significantly greater,” Kauppila said.
Meanwhile, the investor buzz-words are dividends, buybacks and projects that start generating profit quickly.
“I think they’ll remain very disciplined,” said Brian Youngberg, a St. Louis-based analyst at Edward Jones & Co., said of oil companies. “They’ve learned from the past, that increasing spending and pushing prices back down is like shooting yourself in the foot.”
19 Comments on "Big Oil Is Raking in Cash"
Harquebus on Tue, 24th Jul 2018 5:58 pm
Big oil is enjoying the effect of currency creation fueling debt based growth.
Currency creation is being curbed and interest rates are rising. Different results will be coming along shortly.
“The Smart Money Flow Index (SMFI) is a leading-indicator in markets.”
https://palisade-research.com/the-smart-money-is-bailing-out/
The South Korean Leading Economic Index, a reliable indicator of economic trends, is in free fall and indicates an earnings drought within six months.
Last drinks everyone.
twocats on Tue, 24th Jul 2018 6:05 pm
buybacks is just another word for cashing out at the casino. investors want returns on their investment. a lot of assets are about to be vaporized one way or another.
Makati1 on Tue, 24th Jul 2018 7:52 pm
twocats, I share your view. It is the last gasp of capitalism. The oligarchs are moving their assets out of corporations and the stock market before it crashes.
Makati1 on Tue, 24th Jul 2018 8:12 pm
More proof of collapsing America: “$52,000/Second: Ron Paul Warns Washington’s Spending Its Way To A Fiscal Crisis”
“Another ominous sign is that this year both Social Security and Medicare will have to draw down on their reserve funds to be able to pay benefits. … (Note: “Draw down”, NOT end – Makati1)
The excessive debt caused by excessive spending will inevitably cause a major economic crisis. …
When the economic crisis hits, there will be no choice but to cut spending and raise taxes. Of course, Congress is unlikely to raise taxes or cut benefits. Instead, it will rely on the Federal Reserve to do the dirty work via the inflation tax. The inflation tax is the worst type of tax because it is both hidden and regressive….
One of the worst features, if not the worst, of the tax reform plan is increasing the inflation tax by authorizing the use of “chained CPI.” Chained CPI hides inflation’s effects by claiming that rising prices do not harm Americans as long as they can still afford low-cost substitute goods to replace products they can no longer afford due to the Federal Reserve’s devaluation of the currency — as if people forced to buy hamburger instead of steak are not negatively impacted by inflation.”
http://www.ronpaulinstitute.org/archives/featured-articles/2018/july/23/spending-our-way-to-a-fiscal-crisis/
Slip slidin’…
Davy on Tue, 24th Jul 2018 8:23 pm
“twocats, I share your view. It is the last gasp of capitalism. The oligarchs are moving their assets out of corporations and the stock market before it crashes.”
Are they 3rd world? Where would that money be going? I don’t think there is anywhere significant for it to go. Not much is changing because it can’t.
Makati1 on Tue, 24th Jul 2018 8:33 pm
Davy, then why are there Trillions of dollars parked offshore by those same oligarchs?
https://www.statista.com/chart/14320/countries-holding-the-highest-value-of-private-offshore-wealth/
or…
https://qz.com/1126274/how-the-super-wealthy-avoid-taxes-by-parking-money-offshore-legally/
or…
https://www.huffingtonpost.com/2013/04/29/wealthy-stashing-offshore_n_3179139.html
http://www.nbcnews.com/id/46375666/ns/business-personal_finance/t/how-hide-your-money-offshore-account/
Slip slidin’…
MASTERMIND on Tue, 24th Jul 2018 8:36 pm
Sacha Baron Cohen Tricks Doofus Republican Into Screaming N-Word, Removing Pants
https://www.youtube.com/watch?v=pD5GL9O0OOI&feature=youtu.be
Only the republicans could be so dumb..and they will do anything some Jew who poses to be part of the Maasad..They are the deep state bootlickers..
Davy on Tue, 24th Jul 2018 8:37 pm
Nothing new 3rd world or did you just wake up to this reality?
3rd world, aren’t you using sources you claim are propaganda sources? If I used those sources you would be on me like stink on shit. Maybe you need to think about your double standard problem.
Davy on Tue, 24th Jul 2018 8:38 pm
“Only the republicans could be so dumb..and they will do anything some Jew who poses to be part of the Maasad..They are the deep state bootlickers..”
MM, what kind of grammar is that? I thought you were a PHD?
Makati1 on Tue, 24th Jul 2018 8:44 pm
“… then why are there Trillions of dollars parked offshore by those same oligarchs?”
This is old news to me. You are the one who disagrees. “Where would that money be going?”
It says that the rats are leaving the sinking American trash barge. You like to twist anything you do not like to hear. It is called “denial”. I’m not rich but I am smart enough to have moved my resources out of the Us and away from the IRS.
JuanP on Tue, 24th Jul 2018 8:53 pm
Davy “Nothing new 3rd world or did you just wake up to this reality?”
Why are you changing the subject. Why don’t you provide references to prove Mak wrong instead of descending into personal attacks. You just lost the discussion.
JuanP on Tue, 24th Jul 2018 8:55 pm
Davy “MM, what kind of grammar is that? I thought you were a PHD?”
Why don’t you provide references to prove that MM is wrong instead of attacking him? Can you?
Makati1 on Tue, 24th Jul 2018 9:04 pm
JuanP, Davy knows he is always wrong, and that there are no references to prove his deluded version of the world and events. Attacks are his only weapon and they are a joke.
When I see Davy’s posts, I see a fat old man with a straggly beard containing living things because he does not wash or groom. Even his goats probably resent the smell.
I have 12 year old grand kids that are more mature and intelligent than he is. Scary that he, and those like him, are still allowed to run lose in Amerika. He would not last a day in most parts of the world.
MASTERMIND on Tue, 24th Jul 2018 9:15 pm
Davy
Its’ PhD not PHD..And why do you keep bringing that up? You could have gone to school but you choose the easy and lazy route..That is your fault..
deadly on Tue, 24th Jul 2018 9:57 pm
If Big Oil doesn’t make any money, they’ll be out of business. Might as well park your car.
No fuel for you, get lost, loser. You want oil? Go get your own if you think it is so easy. lol
Big Oil is doing the job, don’t knock it. Never argue with success. Big Oil is a blessing in disguise.
Thank your lucky stars.
“I have 12 year old grand kids that are more mature and intelligent than he is. Scary that he, and those like him, are still allowed to run lose in Amerika. He would not last a day in most parts of the world.” – Madkati 1
It is ‘run loose’ you stupid idiot.
Only losers can’t spell loose correctly.
Also, stop with the berating and belittling, makes you look like a brainless, feckless fool.
Most if not all of the world would agree.
Let’s take a ride in Mr. Peabody’s Wayback Machine and read about some history of Rome.
Ancient Rome
The ancient Romans had no such punishment as life in prison. They could have considered housing, feeding, clothing, and giving medical care, at state expense for a person who broke the law, a total waste of public money. Rome, the capital, had over a million people in 100 C.E., and only one prison. When I visited its ruins years ago, I was surprised how diminutive it actually was. It was reserved only for important prisoners, such as leaders or kings that were defeated by the Roman army during war. The building would have been dark, damp, smelly, full of rats, and the convicts were chained. They might be tortured regularly and, after the emperor tired of displaying them in public during festivals, they were executed.
_______
Punishments for crimes – whether slave or free – were usually carried out in rapid succession. For minor offenses, this might include a severe beating, being flogged or branded on the forehead. More severe crimes might receive a punishment of putting out the eyes, ripping out the tongue, or cutting off ears. The death penalty included being buried alive, impaling and, of course, crucifixion.
The Romans did not hesitate to torture before putting someone to death. One such punishment was sewing a bound prisoner in a heavy sack with a snake, a rooster, a monkey and a dog, then throwing the sack into the river. One can only imagine the agony inside. This punishment was usually reserved for patricide, or a son who killed his father.
For this reason, almost all Roman homes had bars around the windows and literally barred their doors at night. The streets were unlit and no one ventured out after sundown. In the Bible, Jesus tells the parable of the Good Samaritan who helped the man beaten and robbed, while other passersby ignored him. The Romans understood this all too well, for the incident would not have been unusual.
When in Rome, do as the Romans do. If you don’t, you’ll be in a sack with a monkey, a dog, a snake and a rooster. Party time.
Let the punishment fit the crime. If you protest too much, thought crime spoken, you get your tongue ripped out.
It’s a cruel world.
GetAVasectomyAndLetTheHumanSpecieDieGracefully on Tue, 24th Jul 2018 11:03 pm
deadly explains well why I think life is a bad joke and earth is hell.
There is so much violence through human history that one has to ask himself: what does life offer without energy and modern confort such as heating.
The only way to say fuck to life is to stop reproduction. If we do that in 100 years for now there will be no humans left.
So I say get a vasectomy and let the human race die gracefully
Anonymouse1 on Thu, 26th Jul 2018 7:32 pm
Look everyone, ‘mushmind’ > davyturds sock puppet. End of bi-polar story.
Therefore:
-He does NOT have a PHD.
-He likely does, however, have ADD.
Since ‘he’ lives in the same, small tiny cranium as the excetpionalturd, not surprisingly, they ‘both’ share the same set of mental afflictions. Imagine that.
-He does not live in ‘Australia’ or ‘Michigan’, or any other place the turd dreamt up.
Both iterations of the exceptionalturd use the same idioms, and exhibit the same general foul behavior and grammar, separated only by a few degrees. Of the two, davyturd is the……ahem, ‘respectable (lol) one.
That was hard to type out.
He(the turd) snipes at his own sock (on occasion), because…..because. Nevermind, it hurts my head to think down to the turds level. Im sure he thinks arguing with his own sock is accomplishing something worthwhile, but why? Who knows. Best leave that one for the shrinks at whatever facility he eventually ends up in to unravel.
Davy on Thu, 26th Jul 2018 7:39 pm
asperger, got his ass kicked and this is why he is having multiple troll tantrums. Poor widdle kid can’t take it. Here is aspergers last real comment:
Anonymouse1 on Tue, 24th Jul 2018 7:57 pm
It has been two days since the dumbass said anything of substance. It has been 3 or more for his cousin greggor. Numbnut Canadians showing off their country.
GregT on Thu, 26th Jul 2018 9:16 pm
There is nobody on this forum with the username asperger, Davyy, and nobody has had their ass kicked. The only person who routinely throws tantrums is yourself, and it doesn’t sound to me like Anonymouse1 has any problems with holding his own.
Dumbass would be an example of childish name calling, Anonymouse1 is not my cousin, and neither one of us are ‘numb nuts’ or showing off Canada, which is not our country, as it does not belong to either one of us.