"The oil & gas industry is showing signs of terminal equity disease."

Goldman Sachs report “Death and rebirth of an Industry” (no url): “The oil & gas industry is showing signs of terminal equity disease: falling free cash flow and returns, increasing reliance on high oil prices and stagnant growth.” “Yet in our view the future has never been brighter (for some), with a new wave of high-return discoveries and the opening of shale opportunities worldwide. We analyze this conundrum by splitting mature fields and new developments, highlighting a dramatic deterioration of legacy assets and high-return investment opportunities led by the exploration and shale revolution….
….Global oil & gas incumbents have experienced a dramatic deterioration of their asset base over the past decade, with three key indicators: 1) breakeven prices for the industry have increased to US$115/bbl; 2) returns have declined by 25% since peaking in 2005 despite a doubling in the oil price; and 3) decline rates have deteriorated by two percentage points over the past five years
….Frontier exploration and “oil shales” are bringing the industry new life due to a group of independent companies that are transforming the oil & gas cost curve for the better. On our estimates, the industry has added 13 mn bls/d of future oil production with a full-cycle breakeven below US$80/bbl in just three years of exploration and shale unlocking. Ultra-deepwater in particular is the most material and most profitable of these new development areas, despite the considerable technical challenges.”