Nowadays, the oil sector is going through troubled time. Several years ago, investors had to join a queue to allocate funds for a project in the oil sector. Recently, the situation has changed drastically. Owners of energy companies are struggling for every would-be investor. After a three-year slump in oil prices, such giants as Royal Dutch Shell and Total are again at the forefront of the oil market. However, Exxon Mobil, the largest publicly traded oil company in the world, disappoints investors with bleak prospects.
Prospects are the primary concern for investors in decision making. Amid fierce competition, owners have to woo investors, pledging them a robust advance of oil companies and paying bigger dividends. Due to the slump in oil prices in 2014, drilling companies had to slash expenditures. At present, when crude oil holds steadily at $50-55 a barrel, oil companies can allocate the same money for research and development as at a time when crude traded at $100. Most analysts expect the oil price to be at $60 a barrel on average in the medium term. Thus, large oil companies intend to pay out higher dividends to stockholders. For instance, French Total made a bold statement, unveiling its plans to raise dividends by 10% and buy back shares worth $5 billion by 2020. Besides, the French oil supermajor is going to cancel the policy of issuing shares instead of paying out money dividends. This policy was introduced in the years of a protracted bear market.
