ABN the 27 / 09 / 2007 13h45
Flood of dollars on the majors
The surge in oil prices in recent years obviously represents an unexpected windfall for oil companies whose profits today reach simply surrealist levels; so, Exxon Mobil, a major among the majors, posted a net profit of $ 40 billion last year!
$ 40 billion is all in all 5 times more than the GDP of Senegal or 1 times more than the supposed fortune of Paris Hilton ... What's more, these amounts will of course further increase, the crude oil prices currently registering an increase of almost 30% since the beginning of the year.
Logically, oil companies should therefore invest heavily in production capacity to benefit from the trend increase - and probably lasting - in their operating margins. But the reality is quite different: the majors invest a little here and there but they ultimately spend most of their cash buying their own stocks: for example, Chevron, the second largest American oil company, has just announced a $ 15 billion share buyback program (still 8% of its capital ...). And it does nothing but imitate its competitor Conoco, which had announced a program of the same scope in July; As for Exxon, they break all records, buying their shares at the hallucinatory rate of 7 billion every quarter!
So certainly capitalism without investment it is as absurd as a knife without a blade which lacks the handle... But, demagoguery would be a little easy here: in the final analysis, the attitude of the majors transcribes an unavoidable reality: between the rampant inflation of production costs and the increasingly vindictive attitude of the producing countries, l The era of easily exploitable oil (in every sense of the word) is well and truly over.
Source: Boursorama.com