Energy Prospectus

Oil majors’ reserves falling. The oil majors, including ExxonMobil (NYSE: XOM), Statoil (NYSE: STO), Royal Dutch Shell (NYSE: RDS.A) and Total (NYSE: TOT) are all suffering from a falling reserve base as they fail to replace the reserves that are being produced, according to a Reuters analysis. Exxon, for example, saw its reserves fall to an equivalent of just 13 years’ worth of oil, given its current rate of production. That is the lowest lifespan since 1997. Shell has the lowest reserve life since 2008, even after incorporating the large oil and gas reserves from its purchase of BG Group. Historically, the volume of reserves was one of the most important metrics for Wall Street. But in an age of low oil prices, that is no longer the case. Shareholders are increasingly willing to overlook a declining reserve base as long as the majors keep debt and spending in check. Of course, that raises questions about a supply shortage years from now because of a failure to find and discover new reserves.

Keep in mind that a big part of drop was caused by the price of oil used in the year-end reserve reports.

2020s to be “decade of disorder.” Former head of the U.S. EIA Adam Sieminksi told Platts Capitol Crude podcast this week that there could be turmoil in the oil market over the course of the 2020s because of a severe slowdown in upstream investment today. “I am thinking the decade of the 20s is going to be one of difficulties. That's why I called it the decade of disorder. We are not getting enough capital investment now. I don't know that shale is going to be able to do it all,” Sieminksi said.