In 2017 and 2018, ConocoPhillips generated $7.3 billion and $6.3 billion of FCF, respectively. The number fell in 2018 due to the divestment of assets. To put these numbers in perspective, only one other publicly traded oil and gas producer — Canadian Natural Resources — recorded more than $1 billion of FCF in either of those years.
Among the ten largest oil and gas producers half have pretty consistently generated positive FCF since coming out of the 2014-2015 downturn. Joining ConocoPhillips in this group are EOG Resources, Canadian Natural Resources, Continental Resources, and Apache.
I would add that all of the integrated supermajors have generated positive FCF over the past two years. Royal Dutch Shell generated a whopping $21.1 billion in FCF in 2018 after generating $10 billion in 2017. In total, the five supermajors generated $66 billion of FCF in 2018.
Conclusion: Huge Improvements Since 2014
To put it all in perspective, there are still a number of oil companies that are outspending their revenues. But, there are also many companies that are consistently in the black, and the overall industry has made huge strides in recent years.
Consider that in 2013, and with oil prices at $100 a barrel, the Top 20 oil and gas companies produced negative $10.9 billion in FCF. In 2014, that deficit ballooned to $-33.3 billion, but it has improved each year since. In 2018, and with an average West Texas Intermediate price that was $35 a barrel less than in 2013 — those same companies generated $384 million in FCF. Thus, in the past four years these companies have shown an improvement in FCF of nearly $34 billion.
As I explain to people, it’s not that the oil industry can’t generate positive FCF. It certainly can. But many companies choose to aggressively reinvest in their business, at the expense of FCF. That philosophy has waned since the 2014 downturn, but it remains to be seen whether producers can maintain spending discipline as oil prices rise.