Gas is no fun. And Exxon is full of it. Its multi billion $ takeover of gas firm (Nam escapes me XTO?) at peak nat gas prices is still haunting it. Since then gas prices tumbled ( too much gas apparently does this).
So its margins have dropped. Exxons global production is down 8 yrs in a row. So it is spending 38 billion this year to add one million barrels by 2017.
Chevron with half the sales of Exxon is spending close to $48 billion to increase production 26% over 4 years! What is a billion here a billion there.
Chevron though has mainly high margin oil. It don't have big boy exxons gas problems. It has increase Capex spending by 70% since 2010. While this year spending is 33.4$, it plans to spend $81 billion in Australia - gas liquefaction.
Readers by now you know what happens when cost goes up while revenues have not kept pace. The non-gassy Chevron had 21billion in cash at end of march. Now? $17.4 billion only! And 6 billion of this is new debt it raised.
Exxon (yes the grassy one) has only 6.6$b cash. Lowest in a decade. It is finally curtailing its stock buybacks program. We recall raising this issue in one of our sister threads, possibly of the nugget variety.
lo jii, khodaa pahaaR aur choohaa bhii na niklaa! title se to lagaa kuchh insaanii problems kaa zikr hogaa magar yahaN to rupaiye paisoN kii baat hoing!
We erroneously stated exxons global oil production down 8 years in a row. One of our staff, while browsing thru today's wsj, found that exxons production down year over year for 8 QUARTERS in a row.
We apologize for the error. The staff member responsible for the error has been given a 2 month sabatical. Why does this have a familiar ring?
Back in March in the financial nuggets thread, we had raised the issue of us oil stocks buying back stock and not investing for the future. After a 2 plus month gap, when our office was closed for the enforced post march holiday season, we had a piece in July ~11 where we indicated European oil stocks are cheaper. Let it not be said we didn’t warn you. Here is the link. Posts are on 2nd last page.
Thank you Readers for sending the following questions which we have attempted to answer.
Q) why did Exxon acquire XTO at 2007 peak for 25 billion?
A) Good question!
Q) if oil majors are depleting their cash at $100 per barrel oil what happens if oil sees $60?
A) you are cracking me up! I agree. Gas would be least of their concern. The sht will hit the fan ( which we hear is occupied with Smt. Beyonces locks)
Q) why did Exxon spend all these billions in share buybacks - when the shares were hardly cheap?
A) you guys are awesome!
Q) Aren't European oil stocks cheaper
A) you certainly read the link we provided above!
Q); How do you know these stocks WILL drop 20%
A) Dear Reader, we don't. But we believe chances are high. As pointed out in the nuggets thread they sell at Pto e of 12 vs 9 for euro oil stocks. We fancy them odds that the spread will narrow.
^ The spread between TOTAL and Exxon et al has narrowed. Total up about 13% since we highlighted its undervalued situation. While Exxon down abt 3%. We will take that.
title se to lagaa kuchh insaanii problems kaa zikr hogaa magar yahaN to rupaiye paisoN kii baat hoing! 