A monitor displays Apache Corp. signage on the floor of the New York Stock Exchange in New York on Friday, Nov. 30, 2018. Apache is an oil and gas company that has consistently generated positive cash flow in recent years. Photographer: Michael Nagle/BloombergOne of the refrains I often hear about the oil industry -- particularly on those focused on shale and tight oil -- is that it collectively doesn't make any money.
When oil prices plunged in 2014, many companies were caught off guard. Some were extremely leveraged and went bankrupt. All of them had to slash spending. And that leads to the second point that is frequently overlooked. Also consider Anadarko, which Chevron and Occidental are aggressively competing to acquire. In the past ten years, they have only generated FCF three times. But the company is viewed as an extremely attractive asset.Then there's ConocoPhillips, which is active in the Eagle Ford, Bakken and Permian Basin. In recent years, COP has been the king of cash flow among the pure oil and gas producers.
In 2017 and 2018, ConocoPhillips generated $7.3 billion and $6.3 billion of FCF, respectively. The number fell in 2018 due to the divestment of assets. To put these numbers in perspective, only one other publicly traded oil and gas producer -- Canadian Natural Resources -- recorded more than $1 billion of FCF in either of those years.
Time to buy DNR Earnings today!