I Would Love To Point Something Out, But My Opinion + $1.98 Will Get You A Starbucks Coffee -- November 15, 2015

The Wall Street Journal is reporting:

The world’s biggest energy companies have doubled down on their promise to protect dividends, despite a precipitous drop in profits this year, driven by a steep decline in oil prices.

In the first nine months of the year, the four oil companies known as the supermajors— Royal Dutch Shell PLC, Exxon Mobil Corp. , Chevron Corp. and BP PLC—have seen their collective earnings fall by more than 70% from a year earlier. Over the same period, they have handed out nearly $28 billion to their shareholders, a roughly 10% increase from the 2014 period.

“The dividends and payouts to shareholders have no reason to be as volatile as the oil price,” said Patrick Pouyanné, chief executive of France’s Total SA, the world’s fourth-largest oil company by production, at a conference in Abu Dhabi this week.

He added that it would be a “terrible mistake” to remove dividends and a sign that “we aren’t good at our business.”

Oil prices are currently trading slightly above $40 a barrel—their lowest levels since August—and more investment banks, energy companies and analysts don’t see the price rising above $60 a barrel until 2017. The International Energy Agency said Tuesday oil prices would slowly rise to $80 a barrel by 2020, but also outlined a scenario in which they stayed at $50 a barrel.

This has raised questions on a potential cash crunch at oil companies, a problem the firms acknowledge and say they are taking steps to address. The companies say they retain robust balance sheets that give them flexibility to raise more funds to help cover costs when needed.

Much more at the link.

And the usual disclaimer. Yada, yada, yada.

The Wall Street Journal is also reporting that things don't look so rosy for Houston's pensions:

Houston is weathering a prolonged plunge in oil prices, but the city may have an even bigger problem: its pensions.

Though economic growth has only slowed, not stalled, in Texas’ largest city, its finances are showing what several investors and analysts describe as warning signs.

Those include a rapidly growing gap in funding its retirement plans for public workers and a limit on its revenue-raising capabilities imposed by a voter-approved cap on property taxes.

The $3.2 billion pension-funding gap is threatening Houston’s Aa2 credit rating from Moody’s Investors Service, hurting demand for its debt and emerging as an issue in the city’s mayoral race.

Moody’s this summer warned it may downgrade the city’s debt if Houston fails to address its pensions, noting the cap limits the city’s financial flexibility.

Much more at the link.