Charlie Maxwell - By 2011 BP, Shell, Conoco, Total Will Be Unable To Increase Production - Bloomberg

[hatrack]

EDIT

Buybacks are the rage in the cash-laden oil industry. Exxon Mobil is buying back about $30 billion of its shares each year. If that continues, Exxon will have repurchased all its stock by about 2024. This isn't as absurd as it seems. Oil companies aren't merely catering to a Wall Street enthralled with buybacks. While such repurchases increase the amount of earnings and assets behind the remaining shares in a company, the party for shareholders would end if assets and profits begin to fall.

And investor-owned oil companies -- along with government- owned producers outside the Organization of Petroleum Exporting Countries -- are only a few years away from going into decline. By 2011 or so, these companies, including Royal Dutch Shell Plc and BP Plc in the U.K., France's Total SA and ConocoPhillips in the U.S., will no longer be able to increase their production, says Charles Maxwell, an analyst at Weeden & Co. in Greenwich, Connecticut. By 2014, their output will begin a long decline, says Maxwell, who has been involved in the industry for 50 years, mostly as an analyst. ``They'll be in liquidation,'' he says.

Backsliding

The industry isn't finding new crude-oil reserves fast enough to keep up with world demand for gasoline and other fuels made from crude. Right or wrong, oil executives hold back on exploration, insisting that the risk of finding and producing more -- even with crude prices of $80 a barrel and more -- is too great. Weeden's Maxwell says the rule of thumb in the industry today is that $45 a barrel is about the breakeven point.

While Exxon Mobil will spend $21 billion this year on exploration and plant improvements, that's considerably less than it will spend on buying back its shares. (Emphhasis added)

EDIT

http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_pauly&sid=akIQ2arQB4Qs

[GliderGuider]

1. Peak Oil awareness is creeping out into the sunshine.

I was at a local-produce farmer's market yesterday, and got into a casual conversation with a retired aircraft mechanic who had a stall there. The talk turned to the globalization of trade and from there to his idiot economist son who couldn't see that Chinese manufacturing might not be an unalloyed blessing for humanity. I opined that events within the the next decade or two would show him the error of his ways. The fellow asked if I thought a revolution was on the way, and I said, "Not at first, no. What will happen first is oil depletion." He got all excited and said, "I've been worrying about that for years. Have you ever read a book called ... ummm... errr... 'Peak Oil' I think it was called? It's all about that! Man, I don't have anyone to talk to about this stuff, they all think I'm nuts!"

A month ago I was staying at a rural motel in northern Ontario and got into a chat with the fellow staying in the next unit. Within 5 minutes we were into the convergence of Peak Oil and Climate Chaos. People are getting it, thanks to the whispering start of an avalanche of news stories like this one.

[pocoloco]

2. Not to worry.

By 2011 we could be pumping from and tapping the potential of our new fields in Iraq and Iran.

By the way does Syria have oil?

[hatrack]

3. Yes, Syria has some oil left - however, they peaked in 1995

Would you like to trade Syria for what's behind the Zagros Mountains, uh, I mean, what's behind Door Number Three?

[terisan]

4. The oil execs know how to stay on top-they have long experience. Head for the alternatives now.