Peak Corporate Earnings (?)

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emordnilap
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Post by emordnilap »

AutomaticEarth wrote:Peak Bookies:

http://www.bbc.co.uk/news/business-36339782

Ladbrokes and Gala Coral to merge. If they need to sell a bunch of shops, how will casual betters place their bets? Not everyone can use online services.......
I can only speak of Ireland but there are dozens of betting shops spread around every town of any size. Betters may have to walk a few extra metres.
I experience pleasure and pains, and pursue goals in service of them, so I cannot reasonably deny the right of other sentient agents to do the same - Steven Pinker
raspberry-blower
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Post by raspberry-blower »

Bringing this back full circle:

The Great Recession Blog: Stock Share Buybacks Now Bought Out
We are now a nation full of companies with much bigger piles of debt and much less capacity to keep propping up their share prices with buybacks because those companies are rotting from within. Buybacks syphoned money away from capital expansion and research and development in order to deliver candy to investors now at the cost of crippling the company down the road.

All of that was smiled upon (until now) by Wall Street and government for saving the day while losing the decade. Yes, a decade of potential recovery has been consumed by milking corporations dry, and there will be hell to pay as a result of this self-consuming greed.
U.S centric view on things but the underlying message of corporations slowly eating themselves to death is as prevalent in the UK.

As for the bookies - isn't that symptomatic that the hollowed out UK economy has gone to the dogs? :P
A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools - Douglas Adams.
AutomaticEarth
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Post by AutomaticEarth »

raspberry-blower wrote: As for the bookies - isn't that symptomatic that the hollowed out UK economy has gone to the dogs? :P
:lol: Indeed.

Em - the situation is pretty much the same in the UK - betting shops everywhere, at least in most town centres. They won't have far to walk even in one in two were to close.

What I have started to notice more recently is an increase in vacant shop space. It's been bad for while, but seems to have accelerated in the last 2-3 years.
vtsnowedin
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Post by vtsnowedin »

AutomaticEarth wrote:
What I have started to notice more recently is an increase in vacant shop space. It's been bad for while, but seems to have accelerated in the last 2-3 years.
That is the feed back loop from all that online shopping and UPS delivery to your door we are now doing. One robot in a vast DODGY TAX AVOIDERS warehouse does the work of twenty clerks that used to populate the local shops you haven't set foot in in years.
raspberry-blower
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Post by raspberry-blower »

vtsnowedin wrote:
AutomaticEarth wrote:
What I have started to notice more recently is an increase in vacant shop space. It's been bad for while, but seems to have accelerated in the last 2-3 years.
That is the feed back loop from all that online shopping and UPS delivery to your door we are now doing. One robot in a vast DODGY TAX AVOIDERS warehouse does the work of twenty clerks that used to populate the local shops you haven't set foot in in years.
The other side to the same coin is that council rate tax rises for small shops - along with continual increases in ground rent from mall owners/companies owning mall lots - are rendering previously profitable enterprises unviable.
These council rises do not impact charity shops in the same way so there is now a proliferation in them in the UK high street
A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools - Douglas Adams.
AutomaticEarth
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Post by AutomaticEarth »

BHS now confirmed bust. 11k jobs at risk, alongside a £571m pension black hole. :(
vtsnowedin
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Post by vtsnowedin »

AutomaticEarth wrote:BHS now confirmed bust. 11k jobs at risk, alongside a £571m pension black hole. :(
Perhaps when an honest man gets elected ...............
Oh never mind I was just having an idle thought. :roll:
Well anyway it would be nice if executive pay was regulated so that they couldn't vote themselves any stock options or bonuses until after the workers pensions were fully funded each year and all taxes paid.
raspberry-blower
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Post by raspberry-blower »

Trouble at Mill - no this isn't the Spanish Inquisition but a reflection on the mounting problems within the Big Oil companies. In particular, the Big One - ExxonMobil.
Steve Srocco wrote: The era of the mighty U.S. major oil industry is coming to an end as the country’s largest petroleum company is in big trouble. While ExxonMobil has been the most profitable U.S. oil company in the past, it suffered its worst year on record.

For example, just four years ago, ExxonMobil enjoyed a $45 billion net income profit in 2012. Now compare that to a total $5 billion net income gain for the first three-quarters of 2016. If Exxon continues to report disappointing results for the remainder of the year, its net income will have declined a stunning 85% since 2012.
It couldn't have happened to a nicer company :evil:

The problems in Big Oil extend well beyond the collapse of the price of oil. For starters oil companies pay generously in dividend payments. This is proving a major drain on finances:
Steve Srocco wrote: Now, even though Exxon stated a $45 billion net income for 2012, its free cash flow minus dividends was only $11.5 billion. Moreover, the company didn’t make any money in 2013 or 2014 after dividends were paid to their shareholders. Thus, deducting dividends from the equation provides a more realistic picture, especially since Exxon has been forking out serious sums of money to its shareholders
Then comes Capex or Capital Expenditure. This has been growing as the oil coming onstream is more expensive to produce - EROEI anyone?
Steve Srocco wrote: For example, in 1997, Exxon spent $11.8 billion on capital expenditures while producing 2.5 million barrels per day (mbd) of oil. However, their capital expenditures nearly tripled to $34 billion in 2012 as total liquid production fell to 2.2 mbd. Basically, Exxon spent three times more money in 2012 to produce 300,000 barrels per day less than it did in 1997.
As if that isn't enough - throw into the mix the Corporate craze of share buybacks fuelled by cheap credit - which was the whole point of this thread :)
Steve Scorro wrote: Amazingly, Exxon only spent 11% more on it total capital expenditures than it did on stock buybacks. Which means, the largest oil company in the United States decided to repurchase roughly a third of its outstanding shares (2005 to 2014), than use its surplus cash to fund new oil projects. Exxon’s outstanding shares declined from 6.1 billion in 2005 to 4.2 billion in 2014.

This is certainly an interesting way for the leading U.S. oil company to use its surplus cash. For those who continue to be skeptics of the peak oil theory, YOU NEED TO WAKE UP AND LOOK AT THE DATA.
This has led to reserves being whittled down - by more than announced:
Steve Scorro wrote: At the end of 2015, the company reported a total of 24.7 billion barrels of oil equivalent. That figure includes oil, liquids and natural gas. However, if we just consider their oil and liquid reserves of only 14.7 billion barrels, a 4.6 billion barrel write down would amount to nearly one-third of their oil reserves. This is much greater than the 20% stated in the article.

When Exxon reduces its oil and liquid reserves by 4.6 billion barrels, it will only have 12 years worth of reserves remaining, at current production levels. But, what if the price of oil continues to decline toward the $12 maximum price suggested in The Hills Group Report by 2020? What would that do to Exxon or other U.S. oil companies’ reserves and future oil production??

The 100+ year era of the U.S. major oil industry is coming to an end… and fast. Unfortunately, Americans have no clue just how dire the situation has become as many probably still believe in the delusion of “U.S. Energy Independence.”

I would imagine by 2020, the U.S. will be a much different place. Regrettably, most Americans are not prepared.
Steve Scorro: Big Trouble at ExxonMobil

How long before the ******s are pleading for a bailout? :twisted:
A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools - Douglas Adams.
vtsnowedin
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Post by vtsnowedin »

raspberry-blower wrote:Trouble at Mill - no this isn't the Spanish Inquisition but a reflection on the mounting problems within the Big Oil companies. In particular, the Big One - ExxonMobil.
Steve Srocco wrote: The era of the mighty U.S. major oil industry is coming to an end as the country’s largest petroleum company is in big trouble. While ExxonMobil has been the most profitable U.S. oil company in the past, it suffered its worst year on record.

For example, just four years ago, ExxonMobil enjoyed a $45 billion net income profit in 2012. Now compare that to a total $5 billion net income gain for the first three-quarters of 2016. If Exxon continues to report disappointing results for the remainder of the year, its net income will have declined a stunning 85% since 2012.
It couldn't have happened to a nicer company :evil:

The problems in Big Oil extend well beyond the collapse of the price of oil. For starters oil companies pay generously in dividend payments. This is proving a major drain on finances:
Steve Srocco wrote: Now, even though Exxon stated a $45 billion net income for 2012, its free cash flow minus dividends was only $11.5 billion. Moreover, the company didn’t make any money in 2013 or 2014 after dividends were paid to their shareholders. Thus, deducting dividends from the equation provides a more realistic picture, especially since Exxon has been forking out serious sums of money to its shareholders
Then comes Capex or Capital Expenditure. This has been growing as the oil coming onstream is more expensive to produce - EROEI anyone?
Steve Srocco wrote: For example, in 1997, Exxon spent $11.8 billion on capital expenditures while producing 2.5 million barrels per day (mbd) of oil. However, their capital expenditures nearly tripled to $34 billion in 2012 as total liquid production fell to 2.2 mbd. Basically, Exxon spent three times more money in 2012 to produce 300,000 barrels per day less than it did in 1997.
As if that isn't enough - throw into the mix the Corporate craze of share buybacks fuelled by cheap credit - which was the whole point of this thread :)
Steve Scorro wrote: Amazingly, Exxon only spent 11% more on it total capital expenditures than it did on stock buybacks. Which means, the largest oil company in the United States decided to repurchase roughly a third of its outstanding shares (2005 to 2014), than use its surplus cash to fund new oil projects. Exxon’s outstanding shares declined from 6.1 billion in 2005 to 4.2 billion in 2014.

This is certainly an interesting way for the leading U.S. oil company to use its surplus cash. For those who continue to be skeptics of the peak oil theory, YOU NEED TO WAKE UP AND LOOK AT THE DATA.
This has led to reserves being whittled down - by more than announced:
Steve Scorro wrote: At the end of 2015, the company reported a total of 24.7 billion barrels of oil equivalent. That figure includes oil, liquids and natural gas. However, if we just consider their oil and liquid reserves of only 14.7 billion barrels, a 4.6 billion barrel write down would amount to nearly one-third of their oil reserves. This is much greater than the 20% stated in the article.

When Exxon reduces its oil and liquid reserves by 4.6 billion barrels, it will only have 12 years worth of reserves remaining, at current production levels. But, what if the price of oil continues to decline toward the $12 maximum price suggested in The Hills Group Report by 2020? What would that do to Exxon or other U.S. oil companies’ reserves and future oil production??

The 100+ year era of the U.S. major oil industry is coming to an end… and fast. Unfortunately, Americans have no clue just how dire the situation has become as many probably still believe in the delusion of “U.S. Energy Independence.”

I would imagine by 2020, the U.S. will be a much different place. Regrettably, most Americans are not prepared.
Steve Scorro: Big Trouble at ExxonMobil

How long before the ******s are pleading for a bailout? :twisted:
This is another of those ETP model scares and is way over blown. Of course Exxon had a poor year with prices this low. better luck next year. A lot of the write down in reserves is in the price per barrel not in the number of barrels left in the ground. If and when prices rise more barrels in the ground will once again become economically recoverable.
As to the stock buy backs issue, Exxon bought back a third of their outstanding shares which they have been paying good dividends on quarterly. That means they have reduced their outstanding obligation to the stock holders by one third and the cost of paying future dividends by a third. Good business if the future outlook is tight.
I have to wonder again what those that turned in their XOM stock for cash are doing with that cash?
raspberry-blower
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Post by raspberry-blower »

VT the point about that article on ExxonMobile is that its current business model is "unsustainable" - that in terms of financial matters, not ecologically!

Something will give - IMO I believe that the dividend payments will be slashed and the share buybacks curtailed. The former could trigger a major selling frenzy as many (quite probably all) of the major US pension providers and insurance companies are dependant on this dividend payment as a form of income. It won't be confined to the US as larger European pension and insurance companies also hold this stock for exactly the same reason.

I did view that there would be mega sized mergers and acquisitions in the Oil & Gas energy sector - I'm beginning to change my mind and that there could be company spin-offs. Whatever happens this sector is at an important crossroad at the moment.
A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools - Douglas Adams.
vtsnowedin
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Post by vtsnowedin »

raspberry-blower wrote:VT the point about that article on ExxonMobile is that its current business model is "unsustainable" - that in terms of financial matters, not ecologically!

Something will give - IMO I believe that the dividend payments will be slashed and the share buybacks curtailed. The former could trigger a major selling frenzy as many (quite probably all) of the major US pension providers and insurance companies are dependant on this dividend payment as a form of income. It won't be confined to the US as larger European pension and insurance companies also hold this stock for exactly the same reason.

I did view that there would be mega sized mergers and acquisitions in the Oil & Gas energy sector - I'm beginning to change my mind and that there could be company spin-offs. Whatever happens this sector is at an important crossroad at the moment.
I understood their analysis but disagree with it. Exxon's share of the remaining oil reserves in the world and their ability to refine crude from other sources they don't own places them in a strong position going forward. They will make as much profit going down the back side of Hebert's curve as they made on the up side.
johnhemming2
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Post by johnhemming2 »

I would tend to agree in that resource companies will tend to benefit to a greater extent when resources are scarcer. The big question on energy is how well Solar PV does.
vtsnowedin
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Post by vtsnowedin »

johnhemming2 wrote:I would tend to agree in that resource companies will tend to benefit to a greater extent when resources are scarcer. The big question on energy is how well Solar PV does.
That may well be where a lot of the cash taken out of Exxon's stock is being redirected to.
johnhemming2
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Post by johnhemming2 »

In the end the energy companies are interested in profitable energy whether from sustainable sources or not.
raspberry-blower
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Post by raspberry-blower »

vtsnowedin wrote:
johnhemming2 wrote:I would tend to agree in that resource companies will tend to benefit to a greater extent when resources are scarcer. The big question on energy is how well Solar PV does.
That may well be where a lot of the cash taken out of Exxon's stock is being redirected to.
Evidence that backs up this idiotic assertion please?
A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools - Douglas Adams.
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