International Oil Companies

Shell Bids a Long Goodbye to Middle Eastern Oil

Royal Dutch Shell RDS.B 1.35% PLC is giving up on its last oil fields in Iraq, leaving the world’s second-biggest oil company with a dwindling footprint in the Middle East—a region it helped build into a petroleum powerhouse. Shell said Monday it is selling for an undisclosed amount a stake in the West Qurna 1 oil field in Iraq to Japan’s Itochu Corp. ITOCY 0.77% , the latest step in a gradual retreat from the region. The company is also expected to give up its holding in Iraq’s Majnoon oil field later this year, though it will retain its natural-gas interests in the country. Shell’s departure from Iraqi oil assets marks one of the final chapters in a slow pullback from the Middle East’s vast fields of petroleum. Shell pumped as much as 450,000 barrels of oil in […]

Should Big Oil Pay For Climate Change?

On Wednesday, New York City announced that it would sue the five oil majors—ExxonMobil, Chevron, ConocoPhillips, Royal Dutch Shell and BP—over their role in fueling climate change. Also, New York City Mayor Bill de Blasio said that the city’s $189 billion pension fund would divest itself of fossil fuels, although such a move would need to be approved by the funds’ trustees. “This is a tragedy that was wrought by the fossil-fuel companies,” de Blasio said at a news conference. “We are going after those who have profited. And what a horrible, disgusting way to profit.” The proposal would withdraw the $5 billion it has in fossil fuel investments. The lawsuit seeks compensation for the cost that the city would incur to insulate itself from the effects of climate change, which would include a long list of actions, such as upgrading sewer and water infrastructure, coastal defenses, seawalls, and […]

To Fight Climate Change, New York City Takes On Oil Companies

Seeking to position himself as a national leader against climate change, Mayor Bill de Blasio on Wednesday announced a two-pronged attack against the fossil-fuel industry, including a vow that city pension funds would divest about $5 billion from companies involved in the fossil fuel business. The mayor also announced a lawsuit against five major oil companies, seeking to collect billions of dollars in damages to pay for city efforts to cope with the effects of climate change. “This city is standing up and saying, ‘We’re going to take our own actions to protect our own people,’” the mayor said, wearing a green necktie and sitting in front of large green sign that said “NYC: Leading the Fight Against Climate Change.” He added, “We’re not […]

Shell, Barclays Detail Billions in Charges Related to U.S. Tax Changes

Royal Dutch Shell RDS.B -0.04% PLC and Barclays BCS 0.09% Bank PLC said they would take large charges attributable to the U.S. tax overhaul —joining a parade of global firms in recent days disclosing how American tax-bill changes will affect their bottom line. Shell estimated its U.S. tax-related charge in the fourth quarter could amount to between $2 billion and $2.5 billion, stemming from a reduction in the value of its deferred tax assets. Companies can log such assets during unprofitable periods and can use them to offset future tax payments. Those assets—essentially credits toward future tax payments in the U.S.—are worth less on paper after the tax overhaul sharply reduced headline corporate tax from 35% to 21%. Barclays, meanwhile, said it would take a noncash charge of £1 billion ($1.3 billion) in […]

Exxon ends restrictions on meeting shareholders

ExxonMobil, the world’s largest listed oil group, will allow shareholders to meet members of its board, as new chief executive Darren Woods moves to end restrictions that had vexed some large investors. The company said that its board had decided, “where appropriate, to engage directly with key shareholders”, adding that it understood the importance of keeping investors informed about its business. The move follows Exxon’s decision, announced last week, to bow to a shareholder vote calling for it to report on the potential impact of climate policy on its business. Exxon has until now been unusual for a leading US company in refusing to allow even its largest shareholders to meet board directors.

The company said that shareholder engagement had “always been a priority”, and last year it had “engaged with” investors holding more than 1.1bn of its shares, or about a quarter of its total equity. However, under Rex Tillerson, the previous chief executive, shareholders met investor relations executives, not board directors, and that policy continued into this year.

In May, Exxon said it had used “in-person meetings, teleconferences, group meetings and an annual webinar” to communicate with investors, but the standard practice for shareholders wanting to contact independent directors was to fill in an online form, which has a 2,000-character limit. Calpers, the California state employees’ pension fund, was one of the investors to express frustration with these arrangements.

Adapt Or Die: Oil Majors In The New World

The world’s biggest public oil company is facing a challenge: it needs to continue to grow in a world that is drastically different from what it used to be, back when Exxon reigned supreme and the world had insatiable hunger for its oil. That time is now behind us. Today, we have the Paris Agreement on climate change, a major drop in large new oil discoveries on a global level, sanctions against two of the countries with the biggest oil reserves in the world, and, of course, a shift from oil to gas and renewable energy. All of these are potential headache inducers for Exxon, and this is reflected in the movement of its stock price and analyst price targets, according to a Bloomberg article . While the shares of the company still trade at a premium to its peers, this premium is shrinking, Kevin Crowley writes, as the […]

Chevron Cuts Total 2018 Capex, Boosts U.S. Shale Investment

Chevron Corporation plans to cut its total capital and exploratory budget for a fourth consecutive year in 2018—to $18.3 billion, compared to the $19.8 billion that it planned for this year, but the supermajor is significantly boosting spending on U.S. shale, especially in the Permian. Chevron’s capital expenditure for 2017 envisaged a $2.5 billion allotment for shale and tight oil and gas, most of which was to be invested in the Permian Basin in Texas and New Mexico. For 2018, Chevron’s investment in U.S. shale includes $3.3 billion—just for the Permian—and another $1.0 billion for other shale and tight rock investments, for a total of $4.3 billion. “We’re fully funding our advantaged Permian Basin position and dedicating approximately three-quarters of our spend to projects that are expected to realize cash flow within two years,” Chairman and CEO John Watson said in Chevron’s press release. “With production currently exceeding guidance […]

Eight energy majors commit to reduce methane emissions within natural gas industry

BP, Eni, ExxonMobil, Repsol, Shell, Statoil, Total and Wintershall committed to reduce further methane emissions from the natural gas assets they operate around the world. The energy companies also agreed to encourage others across the natural gas value chain—from production to the final consumer—to do the same. The commitment was made as part of wider efforts by the global energy industry to ensure that natural gas continues to play a critical role in helping meet future energy demand while addressing climate change. Since natural gas consists mainly of methane, a potent greenhouse gas, its role in the transition to a low-carbon future will be influenced by the extent to which methane emissions are reduced, the partners said. The eight energy companies […]

Exxon joins European oil firms in initiative to limit emissions

Exxon Mobil joined European peers including Royal Dutch Shell and Total in a new initiative to find ways to reduce potent emissions in their rapidly growing natural gas operations. BP, Italy’s Eni, Exxon, Spain’s Repsol, Shell, Norway’s Statoil, Total and Wintershall “committed to further reduce methane emissions from the natural gas assets,” they said in a joint statement. Methane, one of the most potent greenhouse gases emitted into the atmosphere, is released during the extraction, processing and transporting of natural gas. For example, around 10 percent of gas transformed into liquefied natural gas (LNG) is released into the atmosphere between production and consumption, according to Shell. The new initiative is the latest step by the world’s leading oil and gas companies to reduce carbon emissions from their operations to help meet […]

Exxon, Shell, BP Join Forces to Cut Emissions From Natural Gas

Exxon Mobil Corp. has joined with seven other big energy companies to reduce pollution from natural gas production, an effort by the industry to present itself as part of the solution as governments and consumers demand more environmentally friendly energy. Big oil companies like Exxon and Royal Dutch Shell RDS.B 1.21% PLC have increasingly touted natural gas as a core tool to combat climate change, since it is produces fewer greenhouse gas emissions than the fuel it often replaces in electricity production, coal. The rare trans-Atlantic alignment was first reported by The Wall Street Journal, ahead of the companies’ announcement Wednesday. The collaboration by companies including Exxon, Shell, BP PLC and Total SA, shows the oil and gas sector is proactively trying to address burgeoning concerns about natural […]

Has The Big Oil Fire Sale Started?

The world’s largest sovereign wealth fund is exiting the oil market—a fact that is sure to have shaken Big Oil to the core. Divesting $35 billion worth of supermajor stocks is no small thing. Yet opinions are divided on what this means for the industry. On the one hand, the divestment is all bad news for an industry that has only recently begun to recover from the heavy blow of the 2014 oil price collapse and is still vulnerable to price shocks. If Norway’s fund has decided to curb its exposure to oil, so how many other large investors might follow suit? Especially at a time when the industry is under fire for, well, being the oil industry, and under threat from renewables and electric cars. On the other, it could actually highlight Big Oil’s resilience to all sorts of shock—a resilience the industry has worked hard to develop […]

BP begins share buybacks as years of austerity pay off

BP said on Wednesday it would begin a share buyback program, making it the first major European energy company to resume buybacks since the 2014 price slump in a sign years of austerity have paid off. The British oil company, which recently reported a doubling in third-quarter profit, said the buyback program had been authorized for between Nov. 15 and the date of its 2018 annual general meeting, with the maximum number of shares not exceeding 1.96 billion. BP first announced the buyback on Oct. 31, as it gradually shakes off the impact of the deadly 2010 Deepwater Horizon spill, known as Macondo, that cost it over $63 billion in clean-up costs and penalties. BP said then it would buy back the equivalent number of […]

Shell’s divestment streak continues, shedding Woodside shares

Picking up from where it left off before stating its earnings, Royal Dutch Shell said it was taking $1.7 billion for the sale of a stake in Australia’s Woodside. Shell said early Monday it sold off 64 percent of its shares in Woodside Petroleum, leaving its Australian subsidiary with a 4.8 percent interest in the liquefied natural gas player. “This sale is another step towards the completion of our three-year $30 billion divestment program, which is an important part of our strategy to reshape Shell, to deliver a world class investment case, and to strengthen our financial framework,” Shell’s […]

ConocoPhillips vows financial discipline as it aims to boost output

ConocoPhillips ( COP.N ) said on Wednesday it will boost oil and natural gas output for the rest of the decade but vowed it would do so only when it was financially prudent and that it would strictly adhere to shareholder returns. Logos of ConocoPhillips are seen in its booth at Gastech, the world’s biggest expo for the gas industry, in Chiba, Japan, April 4, 2017. REUTERS/Toru Hanai The largest U.S. independent oil and natural gas producer plans to spend an average of $5.5 billion annually for the next three years as long as oil prices CLc1 stay above $50 per barrel. “Our value proposition is not built around production growth. It is built around returns,” Chief Executive Ryan Lance said in an interview on the sidelines of the company’s investor day in New York. The spending forecast, an increase from 2017 and higher than […]

Supermajors Square Off For The Top Spot In Oil

Brent’s close to $65 a barrel and WTI is climbing closer and closer to $60—and analysts are rushing to make bullish forecasts for the fourth quarter of the year. Big Oil is preparing for an even better three-month period than Q3, when all supermajors beat profit expectations. Two of them stand out: Exxon and Shell. It’s no secret that Shell has ambitions to overtake Exxon as the world’s number-one oil company in terms of value. It’s actually on track to beat Exxon on cash flow from operations for full 2017. The Anglo-Dutch company is also considering a share buyback at some point in the future as financial performance improves and the company gains confidence that it can cover dividend payouts with cash on hand. Meanwhile, Exxon, according to some analysts, is stretching itself thinner and thinner in order to keep its dividend payout ratio at 100 percent, as it […]

Peak oil? Majors aren’t buying into the threat from renewables

Two decades ago, BP set out to transcend oil, adopting a sunburst logo to convey its plans to pour $8 billion over a decade into renewable technologies, even promising to power its gas stations with the sun. FILE PHOTO: The Chevron Oil Refinery is seen in Cape Town, South Africa, June 30, 2016. REUTERS/Mike Hutchings/File Photo That transformation – marketed as “Beyond Petroleum” – led to manufacturing solar panels in Australia, Spain and the United States and erecting wind farms in the United States and the Netherlands. Today, BP ( BP.L ) might be more aptly branded “Back to Petroleum” after exiting or scaling back its renewable energy investments. Lower-cost Chinese components upended its solar panel business, which the firm shed in 2011. A year later, BP tried to sell its U.S. wind power business but couldn’t get a buyer. “We made very big bets in […]

Shell Gears Up For Peak Gasoline

Since the oil price plummet it 2014, Shell has transitioned its business model over to refining oil, offering other refined oil products, and producing petrochemicals. The oil giant will produce well beyond gasoline to serve other growing economic sectors, and to offset the role EVs will play by the 2030s. Rapid growth in the global economy, especially Asia, will grow demand for other refined oil products and petrochemicals. Asia will see new roads added, with demand creating economically viable substitutes for asphalt. Shell wants to be poised and ready to provide that supply. The oil giant will also be ready to provide the polymers and chemicals that go into plastics used in vehicles and many other products, said Shell’s head of manufacturing Lori Ryerkerk, who is in charge of refining. Shell will double the size of its chemical operations by the mid-2020s with several new plants coming to Louisiana […]

Exxon Dedicates New Funding to Green Energy

When most people think of green energy supporters, fossil fuel companies rarely spring to mind. It is no secret that there is huge money in oil, and coupled with its complex role in international politics, few are surprised by the desire of energy companies to maintain the status quo. However, warnings regarding climate change and so-called “peak oil” have not fallen on deaf ears, and as a result at least one major oil and gas corporation is pursuing green energy projects. Exxon Mobil , the largest of the world’s oil companies by a wide margin, revealed that it is dedicating at least $1 billion each year towards alternative energy projects. The massive pool of funding is shared among over a hundred different research and development projects, ranging from converting emissions into electricity to breeding synthetic algae that generate sustainable biofuels. Vijay Swarup, the Vice President of Research and Development […]

Oil majors on road to recovery after years of pain

The surge in profits that Royal Dutch Shell announced on Thursday brought to a close a strong set of third-quarter results from the world’s biggest oil and gas groups, where higher crude prices and lower costs are finally bringing recovery after three years of financial pain. Shell’s forecast-beating 47 per cent increase in earnings to $4.1bn followed similar performances from BP, Total, ExxonMobil and Chevron.

At the same time, Brent crude, the international benchmark, has risen to more than $60 a barrel for the first time since 2015 as rising demand begins to outstrip supplies after the deepest downturn for a generation. However, just as important has been the sharp spending cuts that have created a leaner industry capable of generating more cash at current prices than companies did before the crash from more than $100 a barrel in 2014.

“All the majors are proving they can work at $50 oil, which the market was sceptical could happen this quickly,” said Rohan Murphy, energy analyst at Allianz Global Investors. Shell’s turnround has been stronger than most, helped by new production and cost synergies from its $50bn acquisition of BG Group, completed last year. At an average oil price of $52 a barrel, Shell generated cash flow of $10.1bn in the three months to the end of September, enough to cover capital expenditure and the dividend for a fifth successive quarter.

Oil Majors to Increase Exploration CAPEX for 2018

Oil companies are set to resume hydrocarbon exploration but will not exploit reserves as oil price remains a challenge for big ticket developments. Leading oil majors are expected to increase their exploration capital expenditure (CAPEX) by 20 to 30 percent next year, resume drilling in deepwater in a bid to build hydrocarbon-based assets, said John Jeffers, Group Development Director for Oil & Gas at SNC-Lavalin. Jeffers sees asset swaps among the majors, with a good level of acquisitions of reserves from medium or small holders in the industry. Companies are more efficient having slashed capital expenditures (CAPEX) and operational expenditures, added Jeffers. “Oil majors can no longer stay away from building reserves,” Jeffers told Rigzone at the Singapore International Energy Week, adding it is a matter of their standing in the global businesses. Opportunities are there as daily rig rates are at $50,000 to $60,000, down from the $120,000 […]

Shell completes $4.4 billion in sales a day before earnings report

Royal Dutch Shell said Wednesday it made further progress in a major divestment plan by completing the sale of assets in Gabon and in the North Sea. For $628 million, Shell said it completed the sale of its entire Gabonese oil and gas interests to a company controlled by The Carlyle Group. The transaction includes the sale of all of Shell’s onshore oil and gas interests, which includes nine total fields, and the associated infrastructure, including pipelines and export terminals. Shell last year produced an average 41,000 barrels of oil equivalent per day from Gabon. When disclosing the intention of the sale earlier this year, Andy Brown, a director for Shell exploration and production programs, said […]

Shell’s Caution May Prove Better Part of BP’s Valor

BP and Shell have similar levels of indebtedness—net debt to equity ratios in the mid-30s—and both say they can break even at oil prices around $50 a barrel, meaning their cash flows would cover expenses, capital spending and dividends. There, however, the similarities end: BP announced a big share-buyback program for the first time since the oil crash in 2014 with its results. Shell hasn’t. Royal Dutch Shell became the latest major oil companyto report a big jump in third-quarter profits on Thursday. It has been a tough few years for BP shareholders and it is understandable that management would want to signal to investors confidence in the firm’s rebound. But given the uncertainty in oil markets—oil prices were languishing around $45 a barrel as recently as June—it may be early for Europe’s indebted oil and gas firms to start returning more cash to investors, particularly with dividend yields […]

Exxon, Chevron results linked to oil price, not cost cuts

Rising oil and natural gas prices boosted third-quarter profits at Exxon Mobil Corp and Chevron Corp by about 50 percent, underscoring how reliant they remain on commodity markets for their financial futures than better technology or cost cuts.  Despite deep capital spending cuts and a refocusing on projects that can generate faster paybacks in recent years, the results on Friday showed the pair, neither of whom hedge oil output, are still at the mercy of price gyrations. Exxon and Chevron have pointed to aggressive plans for boosting low-cost U.S. shale production. But in recent quarters total output at both has atrophied and shale is unlikely to deliver a marked lift until the next decade, based […]

Exxon’s third-quarter profit beats expectations despite Harvey dent

Exxon Mobil Corp ( XOM.N ), the world’s largest publicly traded oil producer, posted a higher-than-expected quarterly profit on Friday as higher crude and natural gas prices more than offset the effects of a major hurricane on U.S. operations.  The results highlighted Exxon’s strength in refining as it managed to increase profits at its U.S. downstream operations despite Hurricane Harvey, which shuttered many of the company’s largest U.S. Gulf Coast refineries in late August. Production of oil and gas also increased, even in the United States despite the storm, helped by higher pricing. “A 50 percent increase in earnings through solid business performance and higher commodity prices is a step forward in our plan to grow profitability,” Darren Woods, Exxon’s chief executive officer, said in a statement. […]

Exxon earning and spending more

Exxon Mobil posts big quarterly gains, despite the revenue impact from Hurricane Harvey.  Even though Hurricane Harvey had a $160 million impact on earnings, U.S. supermajor Exxon Mobil said third quarter performance was indicative of recovery. “A 50 percent increase in earnings through solid business performance and higher commodity prices is a step forward in our plan to grow profitability,” Chairman and CEO Darren Woods said in a statement . “For the fourth-consecutive quarter, we generated cash flow from operations and asset sales that more than covered our dividends and net investments in the business.” The company said its earnings from exploration and production rose to $1.6 billion because of a recovery in commodity prices. The price for Brent crude oil is up about 7 percent from the start of the year to around $59 per barrel, thought that point […]

US oil majors lose money on home oil and gas production

ExxonMobil and Chevron, the two largest US oil and gas groups, are continuing to lose money on oil and gas production in their home country, in spite of the rise in commodity prices since last year. The losses raise a question over the companies’ forecasts of strong growth in US production, particularly in the Permian basin of Texas and New Mexico. Reporting earnings for the third quarter, Exxon said it lost $238m on oil and gas production in the US, while Chevron lost $26m. The losses were reduced from the equivalent period of 2016, but came as both companies made healthy profits on their international operations. In presentations for analysts on Friday, both companies set out projections showing strong growth in production from US shale resources. Exxon forecast average annual growth of 20 per cent in its shale oil and gas production, with 45 per cent growth in the Permian region. It has been building up its position in the region in recent years, and in September did another deal to acquire more drilling rights, increasing its 6bn barrels of oil equivalent resource base by a further 400m boe. Chevron similarly projected strong growth in production in the Permian Basin, where it has retained a large legacy position built up over decades. John Watson, Chevron’s chief executive who is stepping down at the end of January, said the company was “exceeding expectations” in the Permian. However, unlike “conventional” oil developments, where an initial capital cost to drill wells and install facilities is followed by a long period of production that declines only slowly, shale resources require continual drilling to maintain output.

Disappointing Output Betrays Exxon, Chevron Profit Victories

Exxon Mobil Corp. and Chevron Corp. fell after reporting disappointing production for the third quarter that undercut outsized earnings results fed by climbing crude oil prices. Exxon churned out the equivalent of 3.97 million barrels a day, short of the 4-million average estimate from analysts. Chevron’s tally was 2.717 million barrels a day, underperforming its 2.777-million average estimate. In both cases, the figures rattled investors, even as the U.S. oil giants easily beat estimates on their overall earnings. Since 2014, when crude prices crashed, major oil companies have prioritized one thing — conserving cash. They’ve engaged in mass layoffs, canceled marquee projects and put intense pressure on suppliers and contractors to cut prices. Despite a recent recovery, prices are still about half the level seen three years ago, so there’s little sign […]

ExxonMobil’s output climbs as it plans to boost capex in 2018

Exxonmobil’s liquids and natural gas production climbed to nearly 3.88 million b/d of oil equivalent in the third quarter, up nearly 70,000 boe/d from the same quarter last year, the company said Friday. That climb led the company to earn $3.97 billion in the quarter, up $1.32 billion from Q3 2016, despite the impacts of Hurricane Harvey and relatively stagnant global economic growth. Harvey, which made landfall in Texas on August 25, had a roughly $160 million impact on Exxon Mobil in Q3 as the company shut down refining and chemical operations in Baytown, Mont Belvieu and Beaumont. “We acted quickly to bring in gasoline, diesel and jet fuel from other regions in the US and abroad to supplement our production,” said Jeff Woodbury, Exxon Mobil’s vice president of investor relations, during an earnings call Friday, adding that the company’s upstream operations were only minimally impacted by the hurricane. […]

Big Oil Sinks $1 Billion Into Climate Fund

The Oil and Gas Climate Initiative (OGCI)—the voluntary alliance of some of the biggest oil companies in the world— said on Friday that it had made its first three investments in supporting the low-carbon industry and more efficient engine technology, in its first specific action aimed at supporting the growth of low-carbon technologies. In November last year, OGCI—which includes BP, Shell, Saudi Aramco, Total, Eni, Statoil, Repsol, CNPC, Pemex, and Reliance Industries—said it would allocate US$1 billion for fighting climate change over the next ten years. The investment vehicle, Climate Investments, pledged to focus on investing in carbon capture, utilization, and storage (CCUS); reducing methane emissions; reducing transport emissions; and improving energy efficiency in industry. Today, the fund announced its first three investments, without giving details on how much money it is putting in the ventures. One is in U.S. cement and concrete maker Solidia Technologies, whose patented technology […]

Chevron may shed more of its portfolio

Anglo-Swiss multinational Glencore said Friday it was looking to spend close to $1 billion to buy most of U.S. supermajor Chevron’s assets in South Africa. Glencore said it was looking to take a 75 percent stake in Chevron’s subsidiary in South Africa, and all of Chevron’s unit in Botswana. Combined, Glencore put the value of the deals at $973 million. “Glencore believes that the assets provide an attractive downstream opportunity for its oil business,” the company said in a statement. “The acquisition will include undertakings as to retention of the local management team and workforce.” A minerals-focused company, Glencore has made strides into the energy sector given the overall improvement in commodity prices. In late September, the company signed a multi-year agreement with a […]

ExxonMobil Dethroned As Top Energy Company

Gazprom dethroned ExxonMobil as the top energy company in the world, according to the 2017 S&P Global Platts Top 250 Global Energy Company Rankings . The rankings measure the financial performance of energy firms on four key metrics: asset worth, revenues, profits, and return on invested capital. The list only includes companies that have assets greater than $5.5 billion. For 12 years, ExxonMobil was second to none. But that changed this year – Exxon was ejected from the top spot, and fell all the way to ninth place. Gazprom’s surge reflects its state ownership, its captured market in Europe for its natural gas, as well as the fall of some of its peers. But the Russian gas giant’s ability to weather sanctions, regulatory threats from the EU, low oil and gas prices, and the rise of competition from new supplies of LNG is impressive. The reshuffling was the result […]

Gazprom steals spotlight from Exxon Mobil

Russian energy company Gazprom was ranked by S&P Global Platts as the top financial performer of the year, ending the reign for Exxon Mobil. Only two U.S. companies were in the Top 10 list of the biggest financial performers, and Exxon’s move from No. 1 to No. 9 was the first time in 12 years it wasn’t ranked at the top. U.S. refiner Valero Energy Corp. was ranked No. 8, down from the No. 3 spot last year. Ed Hirs, an energy economist at the University of Houston, told Platts that government support may explain the change in rankings. “In an environment like we have had this past year, those companies such as ExxonMobil and Chevron […]

Goldman Turns Bullish On European Oil Majors

Goldman Sachs has raised its earnings per share (EPS) estimates for the European oil majors’ third-quarter results, and believes that the stocks will start reversing their underwhelming year-to-date performance when companies report higher Q3 cash flows from a year earlier, thanks to higher oil prices and increased production. The weak dollar against the euro and the reduction of the oil price estimates since the beginning of this year had prompted oil analysts to reduce their earnings estimates on Europe’s Big Oil by 24 percent. “Both these negative drivers [the dollar and oil prices] are coming to an end, with stable FX since the beginning of September and 2018 oil price expectations in line with the forward curve for the first time in over 12 months,” according to a Goldman Sachs note dated Thursday, as reported by The Street . “Our EPS estimates are currently 4% above… consensus expectations for […]

Is Big Oil Going Green?

Oil supermajors rank among the biggest polluters in the world—a hardly surprising fact. In recent years, however, Big Oil has reduced its greenhouse gas emissions, in what may come as a surprising fact about the dirtiest industry globally. The world’s five largest oil firms—ExxonMobil, Chevron, Royal Dutch Shell, BP, and Total—cut their combined emissions by 13 percent, starting from 2010 and ending in 2015, the latest year with available comprehensive data, a report by Bloomberg New Energy Finance (BNEF) released this week showed. BP cut its pollution the most, by 25.5 percent, while the largest polluter among listed companies—Exxon—reduced its emissions by 14 percent. The oil supermajors—excluding Chevron, which only started reporting emissions in 2012—reduced their combined greenhouse gas emissions by 56.7 million tons between 2010 and 2015, according to the BNEF report. The emissions reduction this decade is in stark contrast with the trends in previous decades, when […]

California cities sue big oil firms over climate change

California cities San Francisco and Oakland filed separate lawsuits against five oil companies on Wednesday seeking billions of dollars to protect against rising sea levels they blamed on climate change, according to public documents. The lawsuits, filed in state courts in San Francisco and Alameda Counties, alleged Chevron, ConocoPhillips, Exxon Mobil, BP, and Royal Dutch Shell, created a public nuisance and asked for funds to finance infrastructure to deal with rising sea levels. According to a press release by San Francisco city officials, the lawsuits mirror 1980s-era lawsuits against tobacco companies. They allege the oil giants “knowingly and recklessly created an ongoing public nuisance that is causing harm now and in the future risks catastrophic harm to human life and property.” “Chevron […]

Big Oil Becomes Greener With Cuts to Greenhouse Gas Pollution

Oil majors reduced emissions by 13% in past five years Emissions at non-energy companies fell while revenue climbed It’s no secret that oil majors are among the biggest corporate emitters of pollution. What may be surprising is that they’re reducing their greenhouse-gas footprints every year, actively participating in a trend that’s swept up most corporate behemoths. Sixty-two of the world’s 100 largest companies consistently cut their emissions on an annual basis between 2010 and 2015, with an overall 12 percent decline during that period, according to a report from Bloomberg New Energy Finance released ahead of its conference in London on Monday. The findings suggest the most polluting industries had started fighting climate change before President Donald Trump took office and signaled he’d back out of U.S. participation in the Paris accord on limiting fossil fuel emissions. Now, as European officials say the White House may water down its […]

Schlumberger’s Gamble Could Change Oilfield Services Forever

The world’s largest oilfield services firm has decided that it should take an ownership stake in upstream oil and gas production, rather than simply provide the services for doing so. The new strategy is being closely watched as a potential model for the major oilfield services companies that have drilling prowess but struggle with lackluster activity in a world of $50 oil. Schlumberger has decided to put billions of dollars on the line to become an oil producer, not just a drilling servicer. Typically, Schlumberger and its peers provide equipment, or seismic testing, or well casing and fracking services, or the analysis of oilfield data, etc., while their clients—oil producers—have ownership over the oil and ultimately sell it into the market. By buying ownership into oilfields, Schlumberger can have “a say in drilling decisions, oilfield management and even on hiring other Schlumberger units for service contracts, the company has […]

For ConocoPhillips, Harvey a test of remote operations

ConocoPhillips is still shut out of its global headquarters nearly two weeks after Tropical Storm Harvey slammed into Houston, so Chief Executive Ryan Lance and thousands of employees are running the world’s largest independent oil and natural gas producer remotely. Lance, whose own Houston home was flooded by Harvey, has 2,800 employees in the region working at home or at smaller offices in Dallas or Bartlesville, Oklahoma, overseeing natural gas trading along with operations in the Texas Eagle Ford shale region and the Gulf of Mexico. Many were moved out of Harvey’s path before the storm. “You can run virtually for a long time if you’ve got the right systems and personnel,” Lance told Reuters on Wednesday. Conoco’s headquarters in west Houston sustained minor flooding damage, but roads to the campus are still submerged under several feet of water. Another nearby ConocoPhillips office was flooded. “Like […]

Lower-For-Longer Drives Leadership Shift In Big Oil

When the Wall Street Journal last week reported that Chevron’s chief executive John Watson would step down, the most likely replacement as a “new leadership for a changing oil world” was thought to be vice chairman Michael Wirth. Wirth’s background in refining and his experience in cost efficiency improvement, according to unnamed sources from the company, had tipped the scales. According to a Goldman Sachs note to investors, Chevron’s move is the latest sign that the oil and gas industry is making cost discipline and improved returns a top priority. Following the WSJ’s report on the Chevron regime change, MarketWatch published an analysis in which author Claudia Assis noted that several other Big Oil companies are also headed by downstream exports rather than upstream vets like Rex Tillerson, for example. Tillerson himself was replaced by a downstream vet, Darren Woods, when he became Secretary of State. A look at […]

Chevron CEO John Watson to Step Down

Chevron Corp. CVX 0.55% Chief Executive John Watson is planning to step down as the energy giant seeks new leadership for a changing oil world, according to people familiar with the matter.  The transition is expected to be announced next month, although Mr. Watson’s successor hasn’t yet been finalized by the board and plans could change, the people said. Mr. Watson isn’t expected to depart immediately and is likely to remain after the announcement for an orderly transition, the people said.  His likely departure underscores the dramatic shift under way at big oil companies as they adapt to a prolonged period of lower prices brought about by the U.S. shale boom. While the companies once favored swashbuckling leaders who bet billions on megamergers and pricey projects in far-flung regions, many are now turning to executives adept at squeezing every last dollar from a barrel through refining, and shorter-term investments that turn a profit faster.

Goldman: $50 Oil More Profitable Than $100 Oil

Big international oil companies are currently generating more cash at around-US$50 oil price than they did when the price of oil exceeded US$100 in early 2014, Goldman Sachs reckons. “Simplification, standardization and deflation are repositioning the oil industry for better profitability and cash generation in the current environment than in 2013-14 when the oil price was above $100 a barrel,” Goldman Sachs analysts said in a research note on Wednesday, as quoted by Bloomberg . Cost cuts and refocusing strategies have allowed Big Oil to adapt to the lower-for-longer oil prices. At US$100 oil price, the majors were spending en masse on giant projects, but these mega projects are now coming online and are starting to produce oil, revenues, and cash, according to Goldman. At the same time, the big firms have slashed expenditure and costs since the price of oil started tumbling in the second half of 2014. […]

Big Oil Posts Healthy Profits

The largest U.S. energy companies reported robust earnings on Friday, continuing a quarter in which the world’s big oil firms have posted some of their strongest gains since a pronounced price crash began in 2014. Exxon Mobil Corp. nearly doubled its second-quarter profit compared with a year ago, to $3.35 billion, and Chevron Corp. jacked up its bottom line to $1.45 billion. The gains came even as oil prices fell again in…

Exxon Mobil profit disappoints Wall Street, Chevron shines

Exxon Mobil Corp (XOM.N) posted a rare earnings miss on Friday, the only international oil producer to do so last quarter, as production slipped in its African and Canadian operations. Exxon’s results were overshadowed by rival Chevron Corp (CVX.N), which easily exceeded Wall Street’s expectations with a double-digit percentage increase in production. Royal Dutch Shell Plc (RDSa.L), Total SA (TOTF.PA) and Statoil ASA (STL.OL) this week delivered profits that topped expectations also. Chevron for years has downplayed profits to spend heavily on megaprojects in Australia, the U.S. Gulf of Mexico and elsewhere. That spending now is boosting Chevron’s profit, whereas Exxon has fewer projects about to come online and many of its older assets require more capital to maintain. While profit rose sharply from a year earlier, the Irving, Texas-based company’s production slipped about 1.0 percent. “Exxon continues to really struggle on getting its output up,” […]

After false dawn, Big Oil to double down on cost cuts

After a brief respite at the start of the year, the world’s top oil and gas companies are set to double down on cost cutting as a recovery in crude prices after a three-year slump falters. Corporate hopes were raised by a deal between members of the Organization of Petroleum Exporting Countries and other non-OPEC producers to cut production, which lifted oil prices above $58 a barrel in January, after they had slid to as low as $27 in 2016. But Brent crude prices have since slipped back below $50 and banks have lowered price forecasts, amid surging output from the United States and other nations not bound by the global oil pact. Investors are again focusing on the ability of top oil firms such as Exxon Mobil (XOM.N), Royal Dutch Shell (RDSa.L) and Total (TOTF.PA) to live within their means and eke out profits when […]

Is Big Oil Betting On The Wrong Horse?

Many oil majors have steered their strategies and investments into natural gas, aiming to seize the projected global gas demand growth as the world shifts away from coal-fired power generation. Oil and gas supermajors are pitching natural gas as the ‘bridge fuel’ between coal and renewables, with the value proposition that even if it’s a fossil fuel, natural gas burns cleaner than coal and allows for stable power supply until storage solutions paves the way for renewables to become less intermittent. However, the cost of wind and solar is falling and is expected to drop sharply in the long term, and some analysts predict that there is not time enough for natural gas to assert itself as a true transition fuel before renewable energy takes over. Everyone agrees that natural gas demand will grow, but some analysts forecast that the growth may not be as high as it was […]

U.S. fines Exxon Mobil over Ukraine-related sanctions violations

The U.S. Treasury Department on Thursday announced a civil penalty against Exxon Mobil Corp (XOM.N) and its U.S. subsidiaries for violating sanctions regulations related to Ukraine in May 2014, fining the global oil company $2 million. Treasury’s Office of Foreign Assets Control (OFAC) found ExxonMobil had not voluntarily self-disclosed the violations, “and that the violations constitute an egregious case,” it said in a statement posted online. The heads of the company’s U.S. subsidiaries dealt with someone “whose property and interests in property were blocked, namely, by signing eight legal documents related to oil and gas projects in Russia with Igor Sechin, the President of Rosneft OAO” and another sanctioned individual, Treasury said.

Big Oil Opposes Trump’s Budget Plans

In its recent 2018 budget, the Trump Administration included a huge energy announcement. While it went mostly under the radar, the budget included a proposal to sell half of the U.S. Strategic Petroleum Reserve (SPR) for some extra revenue. Now, the SPR was originally established by Congress in 1975 after the 1973-74 Arab Oil Embargo wreaked havoc on America’s fuel supply. It was designed to hold up to 729 million barrels of crude oil, and as of mid-May the SPR’s underground locations in Texas and Louisiana held about 688 million barrels. Selling 350 million or so of those barrels, as proposed, would save some $16.6 billion… But there’s a downside to it, too. A few years ago, I was called on to make an external value assessment of the storage volume contained in the SPR. In that report, I identified another crucial advantage to the SPR system. An advantage […]

BP pumps more capital into North Sea programs

British energy company BP is putting more capital into its North Sea program with nearly $200 million in contracts, an energy services company said. Cape Industrial Services said it secured 400 jobs in the North Sea energy sector in a contract that provides BP with storage tank services and other support across the regional exploration, production and transportation sector. “Cape Industrial Services Ltd. has secured two contracts to extend the group’s longstanding relationship with BP in the U.K. North Sea for a further three years,” the company said in a statement . “These contracts have a combined estimated value in excess of $190 million.” The contract marks a rebound for the North Sea portfolio of BP, which last […]

Oil in the $50s Is New Reality for CEOs Gathering in Russia

Rising shale production will offset OPEC cuts: Rosneft CEO Unclear how OPEC can phase out its curbs, say BP and Total A crude price in the $50s is the new reality for bosses of some of the world’s largest producers as output caps from OPEC and its allies are balanced out by rising U.S. shale. Executives of energy companies from Royal Dutch Shell Plc and BP Plc to Russia’s Lukoil PJSC and Gazprom PJSC , who gathered this week at the St. Petersburg International Economic Forum, see an oil price of $50 to $55 at least for this year. “Unless something extreme happens, we are not going to get back to much higher,” IHS Markit Ltd. Vice Chairman Daniel Yergin, author of the definitive history of the oil industry, said in an interview at the conference on Friday. “The exception was $100 per barrel, that was an aberrant period. […]

Investors expect to meet with Exxon on climate-impact report

Exxon Mobil Corp ( XOM.N ) investors will push to meet with oil company officials this summer to hash out elements of a climate-impact analysis following a shareholder vote calling for studies of technology and climate-related risks to its business. Exxon has said that it will reconsider its opposition to the request, not that it would begin discussions or initiate new studies. The shareholder proposal, filed by 54 groups including financial, religious and corporate governance activists, won the support on Wednesday of 62 percent of Exxon holders. “I anticipate we’ll be having a meeting this summer,” said Tracey Rembert, assistant director of Catholic Responsible Investing, one the 54 co-filers. The White House’s decision on Thursday to withdraw from the Paris agreement on climate […]