Since Oil fell from over US $100 a barrel back in June of 2014 to a low of below US $30 a barrel in February this year, many oil companies globally have cut back on capex oil exploration, reduced or eliminated dividends as they look to conserve cash and improve cash flows as oil companies revenues fell sharply over the last 2 years.
Companies in Australia like Woodside, Santos, Origin Energy have been slashing capex and dividends as they bunker down and conserve cash and attempt to ride out the oil slump that is effecting their business models and profits.
However over in the US, the big 4 major oil companies are taking a completely different path. The oil majors have continued to spend big on capex oil exploration, keep dividends at similar levels or even raising them whist their revenues are collapsing due to oil prices below US$ 50 a barrel level.
So how are these Big 4 US Oil companies funding all this spending as their cash flows are being squeezed?
Simply by growing their debt levels to all time high of US $184 B.
Since the biggest US oil companies are continuing to spend large amount on looking for new oil reserves, and oil demand is falling domestically oil inventory levels are also at the highest level in US history.
The first question I would want to know if I was shareholder of these oil companies is:
Q1 - Is the board of these oil companies paying attention to the above chart.
Followed up with:
Q2 - What happens to the future of these company if oil prices don't recover to 2014 levels of over US $ 100 a barrel.
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I am a private trader and equities investor that loves the trading and investing world, following the markets and everything in between.