johnhemming2 wrote:not exactly news. Oil prices go down, oil companies have less money.
It is the scale of the oil price collapse that is the problem here, John, but that appears to have passed you by.
Different oil companies are, unsurprisingly, taking different options
During financial downturns there are Mergers and Acquisitions - particularly in the Energy sector. There are signs that Exxon is preparing to launch a takeover bid
Of course Exxon would also need to assume any debt carried by an acquisition target. But that wouldn’t be a problem — compared with the averaged overleveraged oil company, Exxon has modest gearing with $38 billion in debt outstanding.
Other than Royal Dutch Shell ’s $52 billion takeover of BG Group , we haven’t seen a landmark merger during this downturn. The last time things got this bad for the industry, back in 1998, BP bought Amoco for $48 billion and Exxon bought Mobil for $75 billion.
Who it will be we will find out in due course. BP looks vulnerable though.
However a mega merger is by no means a guarantee that future performance will live up to the hype. In fact it often disappoints.
Bottom line: if you believe in Peak Oil this is just one (albeit a highly significant one) of the signals that we have hit TLTG. Therefore, if this is correct, then we should see this translated into a slowdown in corporate earnings and stagnant/declining profits. That is why I started this thread.
Oh, by the way, the size of the collapse in the oil market? $100 Trillion
A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools - Douglas Adams.