Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Signs of Life Upstream

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Last week, Chevron's (NYSE: CVX  ) CEO declared that the company's capital budget would hold firm even in the face of falling oil and gas prices. This is welcome news, given that some upstream projects, particularly in the oil sands, are starting to look like nonstarters. Total (NYSE: TOT  ) , for example, has cited $90 as the price it needs to make an acceptable rate of return up in Canada's Athabasca Basin.

The resilience of oil majors like Chevron should be of some reassurance to investors in the energy service names, but ultimately it's spending by the national oil companies (NOCs) that really matters. They're the ones that control about 90% of the world's oil reserves, after all. In that spirit, let's look at two recent announcements by these market movers.

First off, Saudi Aramco is out with an announcement that it's relaunching tenders for its $10 billion Manifa oil project. This is a mixed blessing for the contractors. On the one hand, the contract renegotiations indicate that Aramco is still willing to pony up to get its megaprojects moving forward -- even if there's a modest delay, as with the Yanbu refining joint venture with ConocoPhillips (NYSE: COP  ) . On the other hand, with steel and other raw material prices having dropped dramatically, service companies like Schlumberger (NYSE: SLB  ) and Halliburton (NYSE: HAL  ) are likely going to have to give price concessions on existing contracts, which may or may not cut into margins.

Closer to home, Mexico's Pemex doesn't appear to be throttling back expenditures either. In an interview late last week, the NOC's chief of exploration and production said that the $20 billion budget for 2009 is intact. He further indicated that only sub-$25 oil prices would prompt a pullback in Pemex's development plans.

This isn't much of a surprise, because Mexico really can't afford to let its production continue to deteriorate. Now that the legislature has eased Pemex's ability to contract with foreign firms, I would expect folks like Petrobras (NYSE: PBR  ) to step in and help make the country's deepwater drilling program a success.

Total and Petrobras are both Motley Fool Income Investor recommendations. You can give the dividend-focused newsletter a test run free for 30 days.

Fool contributor Toby Shute doesn't have a position in any company mentioned. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 778164, ~/Articles/ArticleHandler.aspx, 10/20/2016 5:19:17 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,162.35 -40.27 -0.22%
S&P 500 2,141.34 -2.95 -0.14%
NASD 5,241.83 -4.58 -0.09%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/20/2016 4:00 PM
COP $41.49 Down -0.23 -0.55%
ConocoPhillips CAPS Rating: ****
CVX $101.87 Down -0.40 -0.39%
Chevron CAPS Rating: ****
HAL $48.75 Down -0.32 -0.65%
Halliburton CAPS Rating: ****
PBR $12.01 Up +0.13 +1.09%
Petroleo Brasileir… CAPS Rating: **
SLB $82.99 Down -0.45 -0.54%
Schlumberger CAPS Rating: ****
TOT $48.54 Up +0.20 +0.41%
Total CAPS Rating: ****