Big Oil: Burning Cash, Running Out Of Time Quickly – BAML

Europe's Big Oil sector is set to burn through approximately $20 billion of free cash flow during 2016, and the sector will require almost $10 billion of debt refinancing throughout the year according to a credit research note on the oil industry from Bank of America Merrill Lynch.

BoA's analysts estimate that in the prevailing sub-$60 oil price environment, Big Oil’s organic FCF will remain persistently negative, which gives the industry a “Trilemma” of struggling to achieve its three main through-the-cycle objectives: (1) Maintain dividends, (2) Maintain credit ratings, (3) Maintain resource base. To continue to meet these three primary objectives, Big Oil has to spend no matter what the prevailing price environment for oil. With this being the...