Safer for now, but definitely not sustainable at $40 oil. I suspect that in Q1 this year, even Exxon will be free cash flow negative and be forced to borrow or sell assets to cover the dividend. I really don’t like the anti-cyclical behaviour by the big oil companies. Instead of focusing on short-term results (buying back shares, selling assets, paying out dividends) in order to juice the numbers, they should really be out there buying up the assets of bankrupted competitors at firesale prices.
if XOM goes free cash flow negative then the sector is in massive trouble…
think XOM is AAA rated
XOM goes free cash flow negative for the quarter and has now lost its AAA rating.
The dividend sheep don’t seem to mind the awful numbers though, stock has barely budged.
Good article here on the woes in the O&G industry.
Several noted economists and distinguished investors are warning of a stock market crash.
Billionaire Carl Icahn, for example, recently raised a red flag on a national broadcast when he declared, “The public is walking into a trap again as they did in 2007.”
And the prophetic economist Andrew Smithers warns, “U.S. stocks are now about 80% overvalued.”
Icahn’s a bit of a tit though… wouldn’t pay him much heed. Things definitely slowing down in the States though, so I would be cautious.
Icahn is an idiot. Last year, he told Apple to load up on debt in order to buy back stock. Share price sitting on 30% declines since then.
decent (sceptical) piece on Kerry Group and its cute Kerry management
BP were the first of the major oil companies to report earnings for Q2. They made nothing from extraction at current prices and refining margins fells. But don’t worry, they borrowed a billion dollars this quarter to make sure the dividend was maintained, cheers!