Monday, October 26, 2015

"Cash Crunch Clouds Future for Oil Firms–Energy Journal"

Just a placeholder for now, we'll have more on the subject later in the week.
WTI $44.11 down 41 cents and definitely looking heavy.
From MoneyBeat:

Cash flow is struggling to keep up with spending at oil companies even after all the cuts they have made, Sarah Kent and Justin Scheck report. Analysts expect the companies to show continuing shortfalls when they report earnings this week and, with the oil-price slump now 16 months old and continuing, the companies likely will take years to bring their spending under control unless prices rebound sharply.

Spending on new projects, share buybacks and dividends at four of the biggest oil companies–Royal Dutch Shell PLC, BP PLC, Exxon Mobil Corp. and Chevron Corp.–outstripped cash flow by more than a combined $20 billion in the first half of this year.
“After the initial shock, denial, panic and capitulation, oil producers, service providers, and energy investors must view the future differently based on the lower-for-longer oil price scenario, or risk their own,” Oppenheimer & Co. said.

Energy production is only one of the U.S. industries that say they are facing a long-term slowdown in output, sales and jobs, Theo Francis and Kate Linebaugh report. The oil-price drop has gutted demand for drilling equipment and supplies, and energy sales are expected to drop by more than a third from a year earlier and profits are likely to plummet 65%, Thomson Reuters says, based on analysts’ estimates. Quarterly profits and revenue at big American companies are set to fall for the first time since the recession.

Amid the spending cuts, U.S. oil imports are rising again after a long decline, Nicole Friedman reports. Total crude imports rose for three straight months between April and July....MORE