Oil Companies Curb Spending, Saving Cash for Dividends

Reuters reported that oil and gas firms have been cutting back on investments in order to improve profits and save cash for dividends. The publication writes that this could be a sign that decade-long boom in capital spending is coming to a halt.

According to Reuters:

suppliers and analysts expect investment growth to slow sharply this year and in 2014, in line with a projected fall in oil prices. The spending boom has squeezed budgets and forced companies to sell assets and issue debt to pay dividends.

Onshore spending will be hurt the most, including the saturated U.S. shale segment. New ultradeep markets, such as Brazil, West Africa and Mexico, will still flourish, however, as they offer the rare opportunities for big finds.

Magnus Lundetrae, the chief financial officer of Seadrill , the world’s biggest offshore rig operator said:

Oil firms have a dilemma: They still need to grow their production, which is virtually flat and even declining, so they have to spend but will have to become much more selective.

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