Big Oil buying back stocks over exploring for new oil.

cbxer55

Anyone surprised by this?

The five biggest international oil companies plowed about 55 percent of the cash they made from their businesses into stock buybacks and dividends last year, up from 30 percent in 2000 and just 1 percent in 1993, according to Rice University's James A. Baker III Institute for Public Policy.

If their not willing to spend money looking for it, does that mean they have low confidence that it is even there to find?

Big Oil favoring stock buy backs over exploration
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"Better give me a lotta lumps, a whole lotta lumps!" Pete Puma, circa 1952

Cashmere · Light Sweet Crude Joined: Mar 27, 2008 Posts: 1971

Option A -

Search for oil reserves that, if they exist, will boost stock value tremendously upon your announcement of the find.

or

Don't waste money searching for oil that IS Not THERE, but instead buy back stock, thereby driving stock price up.

Very simple calculus.
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Massive Human Dieoff must occur as a result of Peak Oil. Many more than half will die. It will occur everywhere, including where you live. If you fail to recognize this, then your odds of living move toward the "going to die" group.

SoylentGreen · Heavy Crude Joined: May 25, 2008 Posts: 168

silly boy, big oil already found it all by 1980.

Tyler_JC

Oil companies aren't allowed to explore...ANYWHERE.

ANWR is off limits. Outer continental shelf? Nope.

Venezuela, Mexico, Saudi Arabia, Iran, Egypt, Kuwait, Nigeria, Russia, etc, etc, etc.

The overwhelming majority of the world's oil lies in countries or places that are off limits to multinational oil companies.

It's not that we're out of oil, it's that we're out of free oil.

The major oil companies have been kicked out of many of the most promising regions in the world. They have no option other than buying back stock.

When oil production peaks in the next year or two (if it hasn't already) it will be because the private oil companies weren't allowed to work in places controlled by the government state-run oil companies.

Does anyone think Mexico's oil production would be falling at its current rate if Mexico had allowed Exxon and Friends to drill freely?

Would Iraqi oil production be such a mess if that oil was sitting under Oklahoma instead?

Peak Oil was bound to happen at some point but geopolitical bullsh*t got in the way and now we are seeing a peak well before and at a lower level than the free market would have decided.

Just something to keep in mind.
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"www.peakoil.com is the Myspace of the Apocalypse."

ROCKMAN

The Big Oils suffer from their sheer size. I work with a large independent oil and we are spending money drilling just as fast as we can in certain plays. But the majors can't chase the same plays we do. It's too labor intensive for them. That may be difficult to appreciate for those who haven't worked for mega corporations. ExxonMobil et al need very large and expensive projects to invest in. They literally have neinther the time nor personnel to chase smaller projects (mu groups budget is almost $1 billion this year...and we're just one division). And therein rest the problems. The big and expensive plays are controlled by the NOC's. EM would love to plow $10 billion into the new big offshore Brazil play. But Brz has withdrawn all leasing opportunities away in this basin from all companies even their own Petrobras.

VMarcHart

ROCKMAN

V,

I'm no expert on corporate management but the shareholders expect the company assets to generate increased shareholder value. EM is spending as much as they can on the E&P side but their huge income due to high oil prices still leaves them with too much cash. Putting it into T Bills doesn't earn much these days. Purchasing your own stock increases the value of the shareholder stock (at least in theory). It may sound strange but it isn't view favorably by Wall Street for a public corporation to just be sitting on a pile of cash. EM pays the same dividend rate they have for decades. Thus there's no way for them to share all the new income with the shareholders. After all, it's their money. Folks who might complain about EM's effort to enrich its shareholders should remember who the majority of EM's owners are: the union workers and retirees in the US. They are the majority owners of EM through their pension and retirement funds. Last time I saw the number 60% of EM was owned by these folks even though many don’t know it.