Is Big Oil's Record Spending Eating Your Lunch?

Big oil companies like Chevron (NYSE: CVX  ) and ExxonMobil (NYSE: XOM  ) are spending record capex figures at a time when production increases are actually very hard to come by. Therefore growth for shareholders needs to be reevaluated especially since many rivals, most recently Anadarko Petroleum (NYSE: APC  ) , look to shed non-core or geographically challenged assets in order to concentrate on projects that may be far less risky.

With both Chevron and Exxon seeing earnings pressured by weak refining margins, I believe the company may be more exposed to shareholder scrutiny of capital intensive projects. This has me thinking Chevron may be putting too much focus on LNG. I say that because I'm concerned the company's focus on LNG is making them very vulnerable to any economic weakness in Asia. As for Exxon, the company's $40 billion bet on XTO Energy has thus far been a black cloud due to natural gas prices at 40-year lows. The company now banking on long-term projects in Alaska, West Greenland, and Russia may see capex estimates rise even more. If Exxon doesn't raise its dividend like Chevron recently did, the behemoth energy player could find itself in a tighter position with shareholders than its oil sands in Canada. 

 

An Alternative Approach to Investing in Energy
Imagine a company that rents a very specific and valuable piece of machinery for $41,000... per hour (that's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report reveals the company we're calling OPEC's Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock... and join Buffett in his quest for a veritable LANDSLIDE of profits!


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

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.

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: 2720658, ~/Articles/ArticleHandler.aspx, 11/23/2014 11:02:44 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...


Advertisement