Last week, British Petroleum said it needed oil to hit $50-60 a barrel for the company to be profitable for 2009. This was after it turned in an earnings report where the company reported a $3.3 billion loss.
Since then oil has dipped below $40, and the prospects for big oil companies don’t look any brighter.
Meanwhile the few public solar companies that exist, turned in decent quarters. Looking at this got us thinking, who will have better 2009, as measured by net income: Big Oil or Solar companies? (Start sharpening your knives now, commenters.)
Here’s the Q4 earnings for big oil companies:
- Exxon Mobile: 7.8 billion in net income
- Chevron: $4.9 billion net income
- Conoco Phillips: $31.8 billion on $34 billion write down
- BP: $3.3 billion loss
- Royal Dutch Shell: $2.96 billion loss
Here’s the Q4 earnings for the public solar companies:
- Evergreen Solar: $52.1 million loss
- SunPower: 29.5 Million net income
- GT Solar: $43.1 million net income
- SunTech: Raised Q4 estimates
With BP saying that it needs oil at $50, is it possible that solar companies could beat oil companies for 2009? The chances are slim, but if the bottom drops out on oil then it’s possible.
We missed this awesome graphic that the Financial Times ran last week on the cash flow prospects for oil companies going into 2009. (We saw it on Seeking Alpha today.) It makes plain the troubled future for oil companies this year. At $35 a barrel, all oil companies save for Exxon Mobil and Total will have a negative operating cash flow. At $70 a barrel, they’ll earn plenty of cash.
Of course, solar companies aren’t going to have it any easier. If anything, they’ll have it much tougher. The solar market is oversupplied and it isn’t exactly a mainstream technology. However, on the plus side for solar companies is the hope that the government will push some cash towards them.
In the long run, we’d choose oil to win the battle. If alternative energy companies heat up, oil companies could use their cash (what’s left of it, anyway) to snap up these tiny competitors with ease. In the short term, though, solar could make a game of it.