August 10, 2020 Read More →

Plunge in oil prices, COVID crisis set up oil and gas companies for future opportunities

Seeking Alpha:

The oil and gas sector was already under pressure long before the oil price crash in April due to the coronavirus pandemic.

In March, the oil and gas sector radically changed as future prices of crude oil went into negative due to the coronavirus pandemic. However, the decline in the energy sector and the oil and gas sector, in particular, began in the “Fracking Boom” that sent U.S oil and gas production to all-time highs and propelled the U.S to become the world’s top oil producer.

Despite the decline in revenues, oil majors such as ExxonMobil, Chevron, Shell, and BP continued to pay dividends to investors in the past decade; however, they didn’t cover such dividends [from their business activities]. According to IEEFA, the oil majors have paid approximately 200 billion more than their free cash flows, which raises concerns about the business model of such companies.

[Hugo De Vere]

More: Don’t Underestimate The Oil And Gas Sector

Posted in: IEEFA In the News

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