Price Fall Hastens Decline Of 'Big Oil' As Western Majors Retreat
"Oil majors have very little leverage over actual oil prices today," said Jason Gammel, analyst at Jefferies.
Meanwhile the engine of today's growth in oil output - the U.S. shale oil boom - is driven mainly by mid-sized and small producers such as Anadarko, Apache, Occidental and Devon, rather than the majors.
And technology improves so fast on U.S. fields that what looked uneconomical two years ago looks economical today, even with lower prices.
According to an analysis from Barclays, 90 percent of production from the U.S. Bakken province will still be profitable even if oil prices fall to $60 per barrel.
For now, the one form of expenditure that many analysts believe the majors cannot cut is dividends to shareholders, who might revolt if they no longer get their expected payouts.
"Prices will have to go below $90 for companies to start putting projects on the back burner. But dividends is the last thing they will want to cut," said Iain Reid, analyst at investment bank BMO.
According to BMO, Exxon and Eni are effectively trading today as if oil prices were at $102 a barrel, partly thanks to dividend payments that keep the share prices up. For some of the majors, dividend yields are as high as 6 percent.
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