Cash-Flow Considerations
There is no substitute for cash flow in the energy sector. Whether an energy producer is in renewable energy, nuclear, oil, or gas, the ability to generate sustainable earnings to service debt and carry out its capital expenditure planning is of prime importance. To this end, we favor companies with solid revenue growth and relatively conservative cost structures. The prime importance is sustainable earnings during depressed commodity prices.
The most vulnerable casualty of a downturn in the commodity cycle is cash flow. Cash-flow protection is paramount. The integrated majors or IOCs tend to be very good at instituting cost-management measures. Some NOCs are more challenged in preserving their cash flow.
Cash flow is ...
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