To please investors, Big Oil makes deepest cuts in a generation
Bruce Bullock, director of SMU's Maquire Energy Institute, talks about oil companies making the largest cost cuts in a generation to reassure investors.
Oil companies are making the largest cost cuts in a generation to reassure investors. They’re risking their own future growth.
From Chevron Corp. to Royal Dutch Shell Plc, producers are firing thousands of workers and canceling investments to defend their dividends. Cutbacks across the industry total $180 billion so far this year, the most since the oil crash of 1986, according to Rystad Energy AS, an Oslo-based energy consultant.
BP Plc Chief Executive Officer Bob Dudley said last week his “first priority” was payouts to shareholders. Chevron CFO Patricia Yarrington said her company was committed to continuing its 27-year record of annual dividend increases.
While the dividend payouts please investors, the producers risk repeating the patterns of 1986 and 1999, when prices slumped and they slashed spending. It took years for them to rebuild their pipelines of production growth. . .
Bruce Bullock, director of the Maquire Energy Institute at Southern Methodist University in Dallas, said that if the cost-cutting continues into early 2016, it will call “into question future reserves and production growth.”