Conflict with Financial Goals — Another Installment — Is Big Oil Doing Enough?
May 11, 2023
Tuesday’s Wall Street Journal (May 9) lead story hit the nail on the head (https://www.wsj.com/articles/big-oil-has-150-billion-in-cash-and-investors-want-a-share-b5cdea35?st=kmn8twtikurvdoj&reflink=desktopwebshare_permalink). This story, rehashing the breathtaking profits generated by “Big Oil” in ’22 and now 1Q23, zeroes in on why aren’t oil companies spending more to boost daily production. Here is a critical excerpt:
“President Biden has called on producers to ramp up output in a bid to lower prices at the pump. “These balance sheets make clear that there is nothing stopping oil companies from boosting production except their own decision to pad wealthy shareholder pockets and then sit on whatever is left,” White House Assistant Press Secretary Abdullah Hasan said.
But investors have favored financial discipline, and executives are increasingly compensated based on shareholder returns. It marks an about-face in the U.S. oil patch, where companies for years chased production growth by tapping gushers of crude in regions such as the Permian Basin in Texas and Bakken shale in North Dakota.”
The basic point is that Boards of Directors have recalibrated their priorities to build value through shareholder distributions which means an abandonment of the historic mantra that has driven this industry for decades, “Build value through the drill bit”. That’s a depressing thought for companies positioned to service a vibrant and growing O&G industry. And that’s what we offer – Pecos industrial property to buy so that the critical service & supply sector can be domiciled in modern facilities. And, Reeves County and the greater Delaware Basin are the epicenter of America’s push to halt the invasion by the anti-democratic USSR (ooops! Made that mistake again!). As much as the oil industry wants to complain about the Democratic-led federal government, it is strange times to see the liberal-leaning government jawboning for more oil and the conservative-leaning oil industry resisting. What an upside-down world!
We urge you to check out this article through the link above (you do not need a WSJ subscription to view this).
The opinions expressed above reflect only those of the author and do not represent those of the First Keystone Pecos Industrial Park organization. First Keystone welcomes responsible fact-based discourses on these topics.