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Spending cuts derail chain of new oil projects

Collapsing oil prices starve companies of cash, cripple growth, set up potential for supply shortage in future

Published Sun, Jan 11, 2015 · 09:50 PM
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Chicago

DANGEROUS and difficult oil fields that looked like goldmines when crude fetched more than US$100 a barrel have turned into money pits as oil crashes to multi-year lows.

Collapsing oil prices not only shrink profits for producers and imperil dividend payouts prized by investors, they can cripple a company's future growth by starving it of cash needed to find, drill, assess and equip discoveries. A spending halt in deep-water fields and Canada's oil sands could disrupt the chain of new projects needed to keep the world supplied as older wells dry up.

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