Low crude oil prices: The toll continues on oil majors

Oil majors are tackling the oil price rout by reducing capital expenditure, cutting jobs and deferring big projects but the toll on them continues.

ConocoPhillips tables asset for sales

ConocoPhillips is pulling some of its assets off the market as a prolonged industry downturn makes it harder to get the desired prices. The third-largest US oil producer is among oil firms that have turned to asset sales and cost cuts to cope with crude prices 60 percent below their 2014 peak.

The company was considering the sale of Western Canadian assets estimated to be worth $792 million. ConocoPhillips has some assets on the market in Indonesia as well as portions of its deep-water portfolio.

As raising cash through sales proves difficult and the company had a net loss for the fourth straight quarter in the first three months of the year, ConocoPhillips is reducing spending further.

The 2016 capital budget was lowered 11 percent to $5.7 billion, primarily driven by cuts to deep-water exploration, deferrals and lower costs across the portfolio, the Houston-based company said in an earnings statement. The producer maintained its full-year guidance for production and operating costs, and its earnings per share beat analysts’ estimates by 10 cents.

ConocoPhillips is reducing spending further as it posted the fourth straight quarterly loss amid an oil rout that continues to strain independent producers. The cost cuts, while consistent with plans to reduce deep-water activity, raise the question of how ConocoPhillips will maintain its production guidance.

ExxonMobil posts smallest profit since 1999

Exxon Mobil Corp. posted its weakest quarterly profit in more than a decade amid tumbling energy prices. First-quarter net income fell to $1.81 billion, or 43 cents a share, from $4.94 billion, or $1.17, a year earlier, Exxon said in a statement. It was Exxon’s sixth straight drop in quarterly earnings, the longest losing streak since 2001-2002.

The results reflect the new reality for an oil industry hammered by a more than 60 percent drop in crude prices since 2014 that has forced radical reductions in spending and personnel.

Exxon’s capital budget during the first quarter dropped 33 percent from a year earlier, reflecting a drive to survive a price downturn that has already cost the company a perfect credit rating.

While posting a loss in upstream, the company’s chemical business improved. Chemical earnings increased 38 percent to $1.4 billion on stronger margins and higher sales volumes, capturing increased specialty and commodity product demand along with significant cost benefits from both gas and liquids cracking advantages at integrated sites, the company said in the statement. The Downstream segment earned $906 million as global gasoline demand remains relatively strong.

Despite the rout in crude markets, Exxon raised its quarterly payout to stockholders by almost 3 percent to 75 cents a share. The pledge will cost the company $3.1 billion when the dividend is paid in June.

Chevron reports loss of $725 million

Chevron Corporation reported a loss of $725 million for first quarter 2016, compared with earnings of $2.6 billion in the 2015 first quarter. The last time the world’s third-largest oil explorer by market value posted a first-quarter loss was 1992, when crude traded for about $18 a barrel.

Sales and other operating revenues in first quarter 2016 were $23 billion, compared to $32 billion in the year-ago period.

The company’s worldwide output was 2.67 million oil-equivalent barrels a day, barely down from 2.68 million a year earlier. Production increases from project ramp-ups in the US, Nigeria and other areas helped offset a shut-in in the Partitioned Zone, an area between Kuwait and Saudi Arabia, as well as normal field declines.

“Our Upstream business was impacted by a more than 35 percent decline in crude oil prices. Our Downstream operations continued to perform well, although overall industry conditions and margins this quarter were weaker than a year ago”, said Chairman and CEO John Watson.

China’s biggest oil company posts 52 percent decline in profit

China National Petroleum Corp., the country’s biggest oil and gas producer and the parent of PetroChina Co., said profit fell 52 percent as lower oil prices punished global explorers.

Profit in 2015 fell to $12.7 billion, the Beijing-based company said in a statement. The unlisted, state-owned company did not specify whether the profit is pretax, gross or net. Revenue fell 26 percent to 2 trillion yuan, while oil and gas output rose 1.8 percent to 259.5 million metric tons, it said.

CNPC owns oil and gas assets in politically unstable areas, including Sudan, and controls 86 percent of the listed company. PetroChina’s net profit tumbled 67 percent to 35.5 billion yuan in 2015, the lowest since 1999, the company said last month.

CNPC last year added 730 million tons of crude and 570 billion cubic meters of natural gas reserves in China. It did not provide a figure for total reserves. CNPC sold 116.3 million tons of oil products last year, 40 percent of the country’s market share. Domestic natural gas sales rose 2.6 percent to 122.6 billion cubic meters.

ENI in net loss but profit beat expectations

Italian oil and gas group Eni beat operating profit expectations in the first quarter despite swinging to a net loss because of weak oil prices and a charge on its Saipem holding.

Adjusted operating profit fell 95 percent 73 million euros but was above an analyst consensus of 22 million euros.

State-controlled Eni, which has taken a final investment decision for its giant Zohr gas field in Egypt, expected to start production in 2017, said its production of oil and gas had grown 3.4 percent in the quarter. It confirmed that it expects output this year to be in line with 2015.

Eni swung to a first-quarter net loss of 792 million euros from an 832 million euro profit a year earlier, citing weak oil prices and the charge on the Saipem holding it deconsolidated this year.

FRANK UZUEGBUNAM