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Visualized: How the Oil and Gas Industry Spends Its Profits

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Visualized: How the Oil and Gas Industry Spends Its Profits

How the Oil and Gas Industry Spends Its Profits

2022 was a highly profitable year for the oil and gas industry. Due to Russia’s invasion of Ukraine, energy prices skyrocketed, and the industry amassed an astounding $4 trillion in profits.

So, how were these 2022 profits spent? And how does this spending compare to previous years?

To find out, we’ve visualized the distribution of cash spending by the global oil and gas industry between 2015 and 2022, according to the International Energy Agency’s 2023 World Energy Investment report.

Distribution of Cash Spending: 2015-2022

Unlike previous years, a majority of the oil and gas industry’s 2022 profits were channeled towards enhancing shareholder dividends and reducing debt burdens.

This means that capital expenditure for oil and gas production dropped below 50% of total spending for the first time in more than 15 years.

Distribution of Spending20152016201720182019202020212022
Oil and gas capital
expenditure
87%93%82%72%71%73%60%47%
Clean energy
capital expenditure
0%0%0%0%0%0%1%1%
Dividends* 13%7%18%28%29%27%26%39%
Net debt repayment0%0%0%0%0%0%13%13%
TOTAL100%100%100%100%100%100%100%100%

*Dividends include share buybacks, exclude share issuances.

Shareholder pressures for greater returns, as well as long-term demand and cost concerns, were primary reasons for the reshaping of this spending.

Conversely, even with the continued demands for the sector to contribute more to addressing climate change, cash flow allocated to clean energy remained around 1% of spending.

Subnational Spending Trends

The International Energy Agency (IEA) predicts that expenditure on new fossil fuel supply will experience a 6% increase in 2023, reaching a total of $950 billion.

While this refers to global numbers, noteworthy disparities do exist based on geographical location and different types of oil and gas companies, including:

  • Most of the growth in new supply expenditure is expected to come from Middle Eastern national oil companies. Based on their announced spending, they are the only subset in the industry that is planning to spend significantly more in 2023 than in 2022.
  • Real spending on oil and gas supply continues to fall short of 2019 levels for a majority of North American and European companies.
  • While only making up 1% of total spending in 2022, investment in carbon capture, utilization, and storage (CCUS), hydrogen, and bioenergy are growing in the industry. Most of these projects are led by major private players, along with national oil companies from Europe and North America.

What About the Energy Transition?

While there are shifts in the oil and gas industry’s spending, it’s important to note that current capital expenditures in fossil fuels are more than double what is required to achieve the IEA’s 2050 Net Zero Emissions Scenario.

Therefore, more meaningful and substantial shifts in spending are necessary to bring down the emissions of the sector.

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Energy Shift

Visualized: The Growth of Clean Energy Stocks

Visual Capitalist partnered with EnergyX to analyze five major clean energy stocks and explore the factors driving this growth.

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This line chart shows the growth of clean energy stocks and hints at their cumulative five-year returns.

The Growth of Clean Energy Stocks

Over the last few years, energy investment trends have shifted from fossil fuels to renewable and sustainable energy sources. Long-term energy investors now see significant returns from clean energy stocks, especially compared to those invested in fossil fuels alone.

For this graphic, Visual Capitalist has collaborated with EnergyX to examine the rise of clean energy stocks and gain a deeper understanding of the factors driving this growth.

Sustainable Energy Stock Performance

In 2023, the IEA reported that 62% of all energy investment went toward sustainable sources. As the world embraces sustainable energy and technologies like EVs, it’s no surprise that clean energy companies provide solid returns for their investors over long periods.

Taking the top-five clean energy stocks by market cap (as of April 2024) and charting their five-year cumulative returns, it is clear that investments in clean energy are growing:

CompanyPrice: 01/04/2019Price: 12/29/20245-Year-Return %
First Solar, Inc.$46.32$172.28272%
Enphase Energy, Inc.$5.08$132.142,501%
Consolidated Edison, Inc.$76.55$90.9719%
NextEra Energy, Inc.$43.13$60.7441%
Brookfield Renewable Partners$14.78$26.2878%
promotional graphic with a button and wheel that promotes the EnergyX investment site

But how does this compare to the performance of fossil fuel stocks?

When comparing the performance of the S&P Global Oil Index and the S&P Clean Energy Index between 2019 and 2023, we see that the former returned 15%, whereas the latter returned an impressive 41%. This trend demonstrates the potential for clean energy stocks to yield significant returns on an industry level, sparking optimism and excitement for potential investors.

A Shift In Returns

With global investment trends moving away from traditional, non-sustainable sources, the companies that could shape the energy transition provide investors with alternative opportunities and avenues for growth.

One such company is EnergyX. The lithium technology company has patented a groundbreaking technology that can improve lithium extraction rates by an incredible 300%, and its stock price has grown tenfold since its first offering in 2021.

promotional graphic that promotes the EnergyX investment site
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Energy Shift

Visualized: A Decade of Clean Energy Investment

In this graphic, Visual Capitalist has partnered with EnergyX to explore the growth of global clean energy investment.

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Visualized: A Decade of Clean Energy Investment

Global energy investment is growing every year. But recently, investments in clean energy have been significantly outpacing investments in fossil fuels.

For this graphic, we partnered with EnergyX to explore how global energy investment has changed and learn how investments in clean energy are starting to pay off for their investors.

The Rise of Sustainable Energy Investment

Propelled by various climate initiatives such as the Paris Agreement and the widespread adoption of EVs, global investment in sustainable energy surged to over $1.7 trillion in 2023, the highest ever, and the IEA projects that this growth could continue:

Energy Product20202021202220232030F
Clean Electrification$0.97T$1.05$1.21T$1.34T$1.65T
Low-Emission Fuels$0.01T$0.01$0.01T$0.02T$0.05T
Energy Efficiency$0.28T$0.35$0.39T$0.38T$0.49T
Clean Energy Total$1.26T$1.41T$1.61T$1.74T$2.19T
Natural Gas$0.26T$0.27T$0.31T$0.32T$0.35T
Oil$0.42T$0.48T$0.52T$0.55T$0.60T
Coal$0.16T$0.16T$0.18T$0.18T$0.11T
Fossil Fuel Total$0.84T$0.91T$1.01T$1.05T$1.06T
Total Energy Investment$2.10T$2.32T$2.62T$2.79T$3.25T
promotional graphic with a button and wheel that promotes the EnergyX investment site

Between 2020 and 2030, global investment in sustainable energy could increase by 74% to nearly $2.2 trillion, compared to just 26% additional investment in fossil fuels, with a forecast total of $1.06 trillion. This shows that sustainability is the future of energy investment.

Sustainable Investor Success Stories

While the growing investments in clean energy show that the world embraces sustainability, energy investors will still look for decent returns. Now, in 2024, clean energy investments are beginning to bear fruit. Here are just a few examples:

  • Between 2019 and 2023, Tesla had a cumulative return of 1,073%
  • NextEra Energy’s quarterly dividend increased by over 10% as of February 2024
  • Investors in EnergyX have 10x’ed their investments since the company’s first offering in 2021

Lithium plays a critical role in powering electric vehicles (EVs) and facilitating the transition to sustainable energy. EnergyX has patented technology that enhances lithium extraction rates by up to 300%, contributing to meeting the growing demand for lithium and fueling the EVs of the future.

promotional graphic that promotes the EnergyX investment site
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