Major Oil Companies’ Free Cash Flow

Source: Astenbeck Capital Management

Three years later, we know the answer: The oil majors’ free cash flow plummets. And this applies not only the likes of Statoil and Shell, but also to the wider set of non-OPEC conventional producers, for example, Sinopec and PetroChina. The operators are taking steps to correct the situation, involving both a reduction in capex and a brisk pace of divestments. Their efforts will eventually turn the situation around.

On the other hand, unless capital efficiency improves dramatically, conventional non-OPEC oil production is likely to take a substantial hit, considerably more than most observers expect.