WSJ: Oil Sector's Cash Recovery Isn't Total Success

Europe's major oil companies are starting to pay their own way. The sector has beaten the market so far this year in the hope that spending cuts and improving operations would mean companies could cover their investment and dividends from operating cash flow.

Covering its out-goings should shore up investors' faith in the sector's ability to churn out healthy payouts to shareholders, after years where funds were shoveled into grandiose capital projects, depressing returns.

Now the sector finally seems to be making progress. Europe's biggest oil and gas companies—Royal Dutch Shell, BP, Total, Eni and Statoil —generated nearly $32 billion of operating cash flow in the second quarter, notes Morgan Stanley, up 32% on last year. That covers the five's total bill for capital expenditure at $30.7 billion but is some way short of picking up the tab for dividends, a combined $9 billion.
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