Issues of concern to people who live in the west: property rights, water rights, endangered species, livestock grazing, energy production, wilderness and western agriculture. Plus a few items on western history, western literature and the sport of rodeo... Frank DuBois served as the NM Secretary of Agriculture from 1988 to 2003. DuBois is a former legislative assistant to a U.S. Senator, a Deputy Assistant Secretary of Interior, and is the founder of the DuBois Rodeo Scholarship.
Wednesday, October 28, 2015
Next Few Weeks Will Reveal Full Extent Of Oil Industry Suffering
Get ready for some bad news and red ink. With the bulk of
quarterly earnings reports in the energy industry yet to be announced,
there are already $6.5 billion worth of asset write-downs, according to Bloomberg.
And that could be just the tip of the iceberg. A Barclays’ assessment
last week predicted $20 billion in impairment charges from just six
companies. Write-downs occur when the expected future cash flow
from an asset falls sufficiently that a company has to report that the
asset has lost some of its value. With oil prices half of what they were
from mid-2014, oil and gas fields around the world are no longer worth
what they used to be. Some oil fields that were previously expected to
produce in the future may no longer even make sense to develop given
current oil prices. As a result, investors should expect billions of
dollars in further write-downs in the coming weeks. Persistently low oil prices are putting a lot of pressure on the
dividend policies of oil and gas producers. The Wall Street Journal
reported that four oil majors – BP, Royal Dutch Shell, ExxonMobil, and
Chevron – have a combined cash flow deficit of $20 billion
for the first half of 2015. In other words, these big players are not
earning enough revenues to cover expenditures, share buybacks, and
dividends. With such a large cash flow deficit, something has to give.
All four are focusing on slashing spending in order to preserve their
promises to shareholders, with dividends especially seen as untouchable...more
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Energy
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