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Simple Chart Elucidates The Trouble That’s Brewing In The Land Of Big Oil

Want a clear visual of the issues facing the oil industry (Big Oil, in particular)? Well, then look no further, simply glance below and take away what you will…

Oil Industry Collapse

For more explanation here, the chart is from a recent investor presentation by BP (British Petroleum) detailing the company’s cash-flow problems. Note the huge drop in sources of cash from 1H 2014 to 1H 2015, and note that expenditures outweighed incoming cash in 1H 2015.

Bloomberg provides more detail and context:

Disposals (selling off assets) and underlying cash flow did not cover capex and dividends in the first half of 2015. It should come as no surprise that BP CEO Bob Dudley spent a good chunk of the call with analysts highlighting how BP is going to cut costs and sell more assets. BP said it will invest “less than” $20 billion this year in projects, rather the “more than” $20 billion it said three months ago.

BP is not alone. Statoil, which also reported on Tuesday, further lowered planned spending for 2015 to $17.5 billion compared with $20 billion last year, deepening cuts by $500 million.

Wow. Things are really starting to get interesting in the oil industry, and given how interconnected the oil industry is with the wider economy, things are really about to get interesting in the economy as well, I’d say. Things really seem to be falling into place lately in order to set 2016 up to be a really interesting year (regardless of the election season entertainment).

 
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Written By

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.

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