Yesterday my energy mentor and hero was on CNBC’s Fast Money. I’m referring of course to Mr. Matt Simmons, peak oil advocate and author of the Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.

The Fast Money segment was called “Following Not-So-Big Oil.” The premise of the interview was to get Matt’s opinion on the declining production and declining reserve replacement rates of companies like Chevron and Exxon. You can see the entire interview here: http://www.cnbc.com/id/15840232?video=632312855&play=1

During the interview Matt confirmed what I’ve been telling you for the past 6 months… that Big Oil is now in a race to liquidate itself so that it can reap massive profits and protect its dwindling reserve base. In other words, instead of spending its record profits exploring for more oil… Big Oil is now spending its billions buying back its own stock.

In essence, Exxon and the like are reducing the amount of public stock in the open market.

This alarming development was featured in a Bloomberg report back in October 2007.

According to the report:

"There's a steady liquidation of the world oil industry... Exxon is buying back about $30 billion of its shares each year. If that continues, Exxon will have repurchased all its stock by about 2024."

In other words, Exxon will no longer exist as a public company. It may no longer exist as a company at all! Other Big Oil companies are doing the same.

BP (British Petroleum) repurchased 663 million shares in 2007. In 2006, the company bought back a whopping 1.3 billion of its own stock. The most ever.

So far in the first month of 2008, BP has repurchased 35 million of its shares… for a total of $394 million.

To give you an idea of how aggressive BP has been "retiring" its stock, take a look at how much the company has purchased this decade:

Since 2000, BP has repurchased 60% of all its shares!

Rice University took a look at the situation. And in November 2007 they published their findings. Here’s what they said:

“The handwriting is on the wall. The oil majors used 56% of their cash flow on share repurchases… they are not replacing reserves. It’s as if they’re slowing liquidating their long-term asset base.”

Last week, Shell’s CEO, Jeroen Van der Veer sent an email to all of his employees.

His message was a clear warning that there is trouble ahead regarding the price of oil. In it, he states, "...the world's current predicament limits our maneuvering room. We are experiencing a step-change in the growth rate of energy demand due to population growth and economic development, and Shell estimates that after 2015 supplies of easy-to-access oil and gas will no longer keep up with demand."

He goes further, saying, "...society has no choice but to add other sources of energy - renewables, yes, but also more nuclear power and unconventional fossil fuels such as oil sands."

He’s absolutely correct.

As we walk further into this oil crisis, America will turn more and more to the Canadian oil sands. As a result, capital investment in the sands continues to surge.

Three days ago, Suncor – the 2nd largest oil sands producer – announced an additional $20 billion cap-ex program. The project, known as Voyageur, is designed to lift Suncor's oil output by 200,000 barrels a day to 550,000 b/d in 2012. It is the latest in a flurry of multi-billion dollar investments in the oil sands, encouraged by surging oil prices.

Though we own Suncor in our premium energy portfolio, The $20 Trillion Report, it isn’t our favorite oil sands stock.

Our #1 oil stock is about to revolutionize the entire oil sands sector. They’ve patented a novel oil extraction process that, in addition to being more efficient, reduces greenhouse emissions by up to 50%, something the Alberta government has mandated.

This stock returned investors 224% in 2007 alone.

The stock is also featured in my soon-to-be released book, Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century.

For a limited-time only, you can receive a FREE copy of the book. But you have to reserve a copy now before it’s released to the public. In addition to the book, I have 4 more money-making reports to give you. All have to do with the raging bull market in oil and natural gas.

Get a Free copy of Profit from the Peak.

Or go to: http://www.angelnexus.com/o/web/3875

Good investing,

Brian Hicks
Publisher, Energy and Capital

"Energy stocks... The only way a human is going to make any money."

-- Matt Simmons, Peak Oil's first and most vocal proponent,
and founder of the country's last pure play energy investment banking firm.

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when they are no longer in business,who are the individuals that will hold all the money. i would be interested in knowing these greedy louses.if you think louse isnt strong enough----look it up.

ExxonMobil shareholder equity increased during calendar 2007 by nearly eight billion dollars to $121,762,000,000. That is $121.8 billion dollars of capital increasing at a rate of $7.9 billion per annum. Hardly a scenario of "repurchasing all it shares by about 2024..." and "...Exxon will no longer exist as a public company..." and "...may no longer exist as a company at all!"

Brian,

Great information you put out! I could not agree with you more, yes I have read Twilight in the Desert, and heard Matt speak on numerous occasions. For disclosure, I am a Petroleum Engineer in the industry with a major operator. Do you live in Houston? If so, I would like to have lunch with you.

Mark

To Brian:
Facinating article, but one thing puzzles me:
After these companies buy all the outstanding shares, who owns the company? Presumably, it becomes a private company, but the assets belong to whom, and who decides who owns what? Where do the profits go?