Q1 results reveal insight on impact of low crude oil price

The first quarter of 2015 was the first in which the oil price drop will truly reflect in the numbers of the oil and gas companies. The results provided more insights into the extent of damage done to the bottom lines of the oil industry.

Crude prices in the quarter tumbled by about half from a peak about $115 a barrel in June 2014 as global supplies grew and demand was dented by slowing economies in places like China. In recent weeks, it has rebounded to around $60 a barrel.

The low crude oil prices impacted negatively on the revenues of the oil companies but a noticeable trend in the results showed that downstream activities of some of the oil majors offset a decline in revenues and earnings in upstream. A 50 percent drop in crude prices since June has slashed the costs of feedstock for refiners. Thus, while pure exploration and production companies have been stung by low prices, integrated companies such as Exxon and Royal Dutch Shell are relying on their refining units to bolster their bottom lines.

Nigeria’s Seplat hurt by low oil price

Seplat Petroleum posted a 47 percent drop in first quarter pre-tax profit, blaming lower crude prices and pipeline shutdowns. The oil and gas exploration firm said its oil price during the first three months to end-March averaged $52.8 per barrel, booking a premium of $1.52 per a litre, compared with $112.9 bbl a year earlier.

Seplat’s shares fell 5.6 percent on the London stock market to 129.25 pence, while the shares were flat in Lagos at N370 but have dropped by 36 percent since listing last April.

“Whilst we continue to deal with the challenges presented by the lower oil price environment … we are excited about the numerous growth opportunities available to us,” Austin Avuru, Seplat CEO said in a statement.

Seplat, which is pursuing a Nigeria-focused growth strategy, said it had completed a $1 billion refinancing deal of its debt facilities, with a mix of local and international lenders.

Seplat said revenues also fell by 10.3 percent to $131.1 million as sales suffered after the Trans Forcados pipeline, a major export terminal, was shut for 25 days during the period.

Exxon profit beats expectations on refining, output

Exxon Mobil first-quarter profit dropped less than expected as margins at the refining unit of the world’s largest publicly traded oil company surged on tumbling crude prices.

The company earned a first-quarter profit of $4.9 billion, or $1.17 per share, down 46 percent from $9.1 billion, or $2.10 per share, a year earlier. That was much better than analysts’ expectations for a profit of 83 cents per share.

Oil and natural gas output was 4.2 million barrels oil equivalent per day (boed), up 2 percent from a year earlier.

Since the price crash, Exxon said it has driven down costs 20 percent in its US shale oil and gas fields, as producers demand discounts from oilfield services firms.

Exxon’s refining business had a profit of $1.7 billion in the first quarter, up $854 million from the same period a year earlier. Its international refining unit saw profit rise nearly fivefold.

Chevron profit beats expectations

Chevron reported a 43 percent drop in quarterly profit, though results beat analysts’ expectations as cost cuts and robust refining margins helped offset the impact of tumbling oil prices.

The number 2 US oil company reported net income of $2.57 billion, or $1.37 per share, down from $4.51 billion, or $2.36 a share, a year earlier, but much better than analysts’ expectations of 79 cents a share.

Chevron posted a loss in its United States oil production division, a key indicator that the country is one of its highest cost areas.

Production grew 4 percent to 2.68 million barrels of oil equivalent per day, boosted largely by operations in the United States, Bangladesh and Argentina.

Earnings in the company’s refining unit more than doubled to $1.42 billion, as a slump in oil prices of nearly 50 percent since last June boosted margins.

Chevron continued slashing costs during the first quarter, reducing operating expenses by 9 percent.

ConocoPhillips profit falls sharply

ConocoPhillips, the largest independent US energy company, reported sharply lower quarterly profit hurt by a steep decline in crude oil prices.

ConocoPhillips, like other exploration and production companies, has slashed capital spending in response to persistently lower oil prices, and is further reducing its rig count for fields in the lower 48 US states.

By the end of April, the Houston company’s shale rig count will be down to 15 from 32 at the end of 2014, and will be pared to 12 rigs in the second half of the year, said Jeff Sheets, Chief Financial Officer.

Production is expected to fall in the third and fourth quarters in the company’s shale fields, including the Permian in West Texas and the Bakken in North Dakota. But total output was still expected to rise 2 percent to 3 percent for the year, Sheets said.

Profit in the first quarter slid to $272 million, or 22 cents per share, from $2.1 billion, or $1.71 per share, in the same period a year earlier.

ConocoPhillips said the average price per barrel oil equivalent it received was $36.96, down from $71.21 in the same period a year earlier.

Oil and gas output from continuing operations excluding Libya was 1.6 million barrels of oil equivalent per day (boed) in the quarter, up 80,000 boed from a year ago.

Shell satisfied with performance

Taking into account the decline in oil and gas prices, Shell produced robust results overall, although its upstream business segment was severely affected. The firm’s adjusted first-quarter earnings came in at $3.2 billion, compared with $7.3 billion during 1Q 2014.

Shell’s upstream contribution saw its CCS (current cost of supplies) earnings crash to $675 million during 1Q 2015 compared with $5.7 billion in 1Q 2014. But the firm’s downstream segment enjoyed a 68-percent increase in first-quarter CCS earnings to $2.6 billion. Production during the quarter was 3.16 million barrels of oil equivalent per day compared with 3.25 million boepd during 1Q 2014.

“Our results reflect the strength of our integrated business activities, against a backdrop of lower oil prices,” Ben van Beurden, Shell CEO said in a company statement.

Statoil report 28 percent revenue fall

Statoil reported a 28-percent fall in its first-quarter revenues. The Norwegian major’s revenue for 1Q 2015 was $15.8 billion, compared to $22 billion. The firm’s adjusted earnings for the quarter came in 45-percent lower at $2.5 billion, mainly as a result of the significant drop in the price of oil, lower European gas prices and increased depreciation and operating costs.

Statoil said that its successes in exploration during the first quarter, including discoveries in Tanzania, the Gulf of Mexico and Norway, “underline Statoil’s position as a global top explorer”.

Meanwhile, the firm’s equity production during the first quarter of this year was 2.06 million boepd, compared to 1.98 million boepd during 1Q 2014.

Eldar Sætre, Statoil CEO said that the firm was taking “a more cautious view due to the uncertainty in the commodity markets”.

FRANK UZUEGBUNAM