The devastating economic impact of the coronavirus outbreak has prompted energy majors to slash shareholder distributions, rack up increasing levels of debt, and sell or write-down the value of their assets.
Speaking during an earnings call with investors shortly after the world's largest oil company posted a 50% fall in profits for the first half of its financial year, NasserYet, as energy industry peers warn of significantly lower oil and gas prices through to 2050, others are not so sure.
The sector has consistently disappointed investors since 2010, Hipple said, with oil and gas companies clearly finding it "increasingly hard" to raise enough cash flow from their operations to cover shareholder distributions. "That is financially unsustainable," she continued. "You might be able to get away with that from time to time but that is certainly not a long-term strategy to run a business."Oil demand is back to 90% pre-Covid, but there's a risk of a plateau, analyst saysOne myth of the energy industry exposed by the pandemic, Hipple said, was the idea that oil and gas companies would be able to profit from petrochemicals.
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