During the U.S. shale oil and gas boom over the past 15 years, one of the major challenges for different U.S. energy sector companies is how to provide for the perennial infusion of cash needed to finance their exploration, production, and investment activities.
With rising oil prices during early 2018, many analysts anticipated the challenge subsiding, as several energy companies revealed in third-quarter earnings reports that they were able to cover their capital spending from operating cash flows. Two of the country’s largest oil companies, ExxonMobil (XOM) and Chevron (CVX), reported healthy profits from their US operations after reporting losses in 2017.
But these profits were recorded when the benchmark US WTI crude was trading around $73 a barrel. It follows that the recent plunge in oil prices over the past two months has brought financing concerns/challenges back to the surface again.