Capital Stewardship: The Best Defense

 

Despite the collapse in oil and gas prices, many upstream companies could and perhaps should be acquired or their assets sold.

These companies have a negative enterprise value and their assets should be under the stewardship of another management team. A company’s assets will find the right home with those who can maximize their value.

The key measure of upstream performance in return on capital. We examined the North American Upstream segment of the Oil and Gas Sector to understand how the approximately 90 companies performed. We compared return on capital to each companies weighted average cost of capital for the 10 year period ended December 331, 2014. This precedes the collapse in oil prices and includes the rise of the Shale Revolution and historically high oil and gas prices. With both rising volumes and high prices, most companies should have performed well. This, however, is not the case. Fewer than a third of these companies returned their cost of capital. In this white paper, we present our findings along with some observations about the future of the sector.

 Down Load White Paper: Capital Stewardship

Recent Blogs

b2ap3_thumbnail_PGI_colorLogo.png
PowerGen 2016
The Business of Oil and Gas
Continue Reading...
0
b2ap3_thumbnail_Putin-and-Saudi-Prince.jpg
OPEC Head Fake
The Business of Oil and Gas
Continue Reading...
0
b2ap3_thumbnail_10000_USD_note_series_of_1934_obverse.jpg
Good Money Chasing Bad
The Business of Oil and Gas
Continue Reading...
0
b2ap3_thumbnail_ring-of-fire.png
Fighting Fire with Fire - How Saudi Arabia's Oil Policy Backfired
The Business of Oil and Gas
Continue Reading...
0
b2ap3_thumbnail_FRED-WTI_20160930-211009_1.png
North American Oil & Gas Companies - After the Fall
The Business of Oil and Gas
Continue Reading...
0