Over 100 of the world’s largest energy companies are running out of cash
Some of the summer’s biggest news stories took place in the bombed schools of Gaza, the abandoned hospitals of the Democratic Republic of Congo, the wheat fields of eastern Ukraine and the bloody mountains of northern Iraq.
But one of the most important made virtually no headlines at all, and seemed to only appear on the website of the U. S. Energy Information Administration.
Last July the government agency, which has collected mundane statistics on energy matters for decades, quietly revealed that 127 of the world’s largest oil and gas companies are running out of cash.
They are now spending more than they are earning. Profits have lagged as expenditures have risen. Overburdened by debt, these firms are selling assets.
The math is simple. The 127 firms generated $568 billion in cash from their operations during 2013-2014 while their expenses totalled $677 billion. To cover the difference of $110 billion, the energy giants increased their debt load or sold off assets.
Given that the gap between earned cash and spending stood at a modest $10 billion in 2010, that’s a significant change for the industry as well as the global economy it fuels.
This post was published at Silver Bear Cafe on August 30, 2014.