Business Outlook 2019
BUSINESS OUTLOOK 2019
Figure 19: Production Revenue, Post-Tax Expenditure and Cash Flow
Gross Revenue
70
Post-Tax Expenditure
60
Post-Tax Cash-Flow
50
40
30
20
10
0
Cash-Flow (£ Billion - 2018 Money)
-10
-20
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
Source: Oil & Gas UK, OGA
Companies need to use the cash generated from their portfolios to satisfy various requirements. Funds are used to reinvest in UK and global portfolios, return value to shareholders via dividends and share buy-back schemes and reduce debt levels. Analysis of UKCS E&P companies shows that average gearing ratios (net debt compared to equity) are reducing, however there is a significant spread and debt leverage levels remain above those prior to the downturn. Gearing ratios of UK-focused operators are generally higher than their global counterparts, in part due to company size and strategy, but also as these companies have used the debt market to fund growth projects through mergers and acquisitions.
Figure 20: UKCS E&P Company Gearing Ratios
100
Weighted Average Gearing Ratio Upper Range Lower Range
90
80
70
60
50
40
30
20
E&P Company Gearing Ratios (%)
10
0
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
Q3 2018
Source: WoodMackenzie, Rystad Energy
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