Exxon Mobil Corporation (XOM), TOTAL S.A. (TOT) & Big Issues Facing Oil Companies

The bottom line
As these developments highlight, the marginal barrel of oil has become – and will continue to become – more complicated and more expensive to extract. Already, this trend is evident in the diminishing returns from upstream capital expenditures.

In the period from 1995 to 2004, the upstream industry spent $2.4 trillion to produce 12.3 million barrels per day of additional oil output, while in the period from 2005 to 2010, the same expenditures yielded a decline of 0.2 million barrels per day, according to energy research and consulting firm Douglas-Westwood.

This suggests that further increases in capital expenditures will fail to yield commensurate increases in oil production, meaning the oil majors will need to find other ways to get more bang for their buck.

The article One of the Biggest Challenges Facing Oil Companies originally appeared on Fool.com.

Motley Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool recommends Chevron and TOTAL S.A. (NYSE:TOT).

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