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Big oils can survive at $40 but need $60 to thrive, BMO says

Jun. 26, 2017 6:49 PM ETExxon Mobil Corporation (XOM) StockXOM, TTE, CVX, SHELBy: Carl Surran, SA News Editor47 Comments
  • Global oil majors including Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), Total (NYSE:TOT) and Royal Dutch Shell (RDS.A, RDS.B) can survive in a $40-$50/bbl oil price range but they really need oil above $60 to thrive, according to analysts at BMO Capital.
  • The analysts say that at $40 oil, the group's operating cash flows fail to cover current capex and dividend expectations, even with the aid of scrip, whereas at greater than $50/bbl, the majors should on aggregate be able to match full cash outflows
  • BMO sees only XOM able to cover its full cash dividend at ~$50/bbl in 2017, although the others should be able to organically cover their dividends at $50-$55 with the aid of financial levers such as scrip dividends, project deferrals (for re-engineering), further cost reductions and efficiency gains.

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