Oil Company Spending Patterns in a Volatile Market

January 7, 2009 - Oil Company Spending Patterns in a Volatile Market With oil prices rising over the past few years, many people want to know about the impact on spending and investment by oil companies. Though prices have dropped in recent months, these questions remain relevant.

Every year, through its Financial Reporting System (FRS), EIA surveys the largest oil companies about their spending and investment decisions over the previous year. FRS data reported in EIA’s recently-released Performance Profiles of Major Energy Producers 2007 show that companies substantially increased investment spending in recent years.

Spending for investing activities averaged $95 billion per year (in constant 2007 dollars) from 2000 to 2007, up from an average of $51 billion for the previous 8 years (Figure 1), and peaked at $179 billion in 2006. The higher investment spending resulted from higher cash flow from operations, which, in turn, resulted from the significant increases in oil prices that occurred over the past several years. Cash flow from operations for the FRS group peaked at $200 billion in 2006, and the average from 2000 to 2007 was double the average from 1992 to 1999.....more (this link will take you to the Energy Information Administration website)