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BIG TROUBLE FOR THE BIG THREE U.S. OIL COMPANIES: Financial Disaster In Its Domestic Oil & Gas Sector

BIG TROUBLE FOR THE BIG THREE U.S. OIL COMPANIES: Financial Disaster In Its Domestic Oil & Gas Sector

There’s no better way to describe what is taking place in the U.S. Big three Oil Companies domestic oil and gas sector than a complete and utter financial disaster. Honestly, I am not exaggerating.  The only place ExxonMobil, Chevron, and ConocoPhillips are making decent money is in their non-U.S. or International oil and gas sector.

While it’s no secret that the U.S. shale oil industry continues to be a trainwreck, the damage is now spreading deep into the financial bowels of the Big Three Oil Majors.  Unfortunately, the largest, ExxonMobil, has the worst-performing domestic oil and gas sector in the group.  So, it’s no surprise that ExxonMobil was forced to borrow money just to pay dividends.  I posted this chart in my last article on ExxonMobil:

As you can see, ExxonMobil’s long-term debt over the four-quarters (Q2-2019 to Q1 2020) increased nearly the same amount as the shortfall between the dividend payouts and the free cash flow.

However, if we look at the Big Three as a group, Q1 2020 wasn’t pretty at all.  The next chart combines ExxonMobil, Chevron, and ConocoPhillips Upstream Earnings and Capital Expenditures (CAPEX) from their U.S. sector versus their non-U.S. or International sector.  The upstream sector refers to the company’s oil and gas wells.

The Big Three suffered a net $900 million earnings loss from their U.S. upstream sector while spending a whopping $5.6 billion ($5,591 million) in CAPEX. Now compare that to the combined non-U.S. or International upstream earnings of $4.3 billion based on investing $4.6 billion in CAPEX.

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