It's Getting More Expensive to Grow for Big Oil

By Taylor Muckerman and Joel South – Mar 14, 2013 at 10:53PM

NYSE: RDS.A

Royal Dutch Shell plc

It is becoming more and more expensive for the biggest oil and natural gas companies in the world, like ExxonMobil, to continue growing their reserves. How much money per year are we talking here? It's in the hundreds of billions of dollars.

For companies like ExxonMobil (XOM 0.23%) and Royal Dutch Shell (RDS.A), maintaining or growing energy reserves is easier said than done these days. Oil fields are moving further offshore and into harder to reach places underground. Due to these changing dynamics, capital expenditures are on the rise. Each of these two companies are planning to spend over $35 billion in 2013 to sustain existing growth projects and initiate new ones.

To find oil, these companies are setting sail
One key theme here is that offshore drilling will continue to grow. This clearly benefits two of the largest fish in the sea, Ensco (VAL) and Seadrill (SDRL), who have been expanding operations at a record pace to keep up with demand. The need for more drillships has never been higher, and that is reflected in the increasing day rates these drillers are able to charge. To dig deeper, check out the video below.

Joel South has no position in any stocks mentioned. Taylor Muckerman owns shares of Ensco. The Motley Fool recommends Seadrill. The Motley Fool owns shares of Seadrill. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.