Big Oil is poised to reap rewards this year as investments made before the crude-price slump pay off just as the recovery starts.
Seven of the world’s largest energy companies will together boost oil and natural gas output by 398,000 barrels a day, the most since since 2010, according to data from Oslo-based consultant Rystad Energy AS. In 2018, output will rise even faster.
The oil majors aren’t increasing their drilling budgets. Instead they’re benefiting from money invested before the rout. Lower costs combined with higher output would allow companies including Exxon Mobil Corp. and Royal Dutch Shell Plc to maximize their gains from improved oil prices. Should crude remain above $50 a barrel, 2017 could be a break-out year, eliminating the need to borrow to pay dividends, according to analysts at Sanford C. Bernstein.