The world's six largest oil companies are on course to pass the $1 trillion (£479bn) profit market this year, despite the recent commodities downturn which has riled the industry.
Broker Canaccord Genuity's report released today said that BP, Chevron, Exxon, Royal Dutch Shell, Statoil and Total are expected to clear this mark by 31 December 2016, based on their reported adjusted earnings. During this time, they would have returned $608bn to shareholders, including buybacks.
But Canaccord points out: "They will have generated just $310bn cash from operations, net of capital expenditure, and sold a net $169bn in assets, as well as funding large settlements [such as the Deepwater Horizon oil spill]: which means they have borrowed hugely over this period."
Oil prices have a long history of booms and busts, with the most recent rout starting in June 2014. Downturns lead oil companies to cut costs by axeing jobs, scaling back or abandoning projects and cutting back on investing in exploration — but less supply typically lays the foundations for the next boom.
Downturns pile pressure onto oil majors' balance sheets. Canaccord expects their net debt to stand at $240bn at the end of this year, up from $22bn in 2006. The broker added that debt has increased rapidly during routs, while barely falling even as the industry has enjoyed year after year of $100 per barrel oil.
"We don't see there is anything inherently wrong with borrowing, and given the secular drop in its cost and massive shareholder pressure to deliver growth, it is hard to see what the companies could have done differently," Alex Brookes, oil and gas analyst at Canaccord Genuity wrote.
"However, high levels of debt inevitably constrain, and it is striking that 2016 was the first quarter in a decade in which none of these companies bought back any stock: indeed, with scrip dividends now a staple feature for all the big Europeans it seems likely a quiet recapitalisation is underway."