Oil Majors’ Profits Take A Beating

Tuesday, February 3, 2015
By Paul Martin

By Nick Cunningham
OilPrice.com
Tue, 03 February 2015

The first quarterly earnings reports since the collapse of oil prices are in and the numbers show a significant deterioration in profits for the oil majors.

Royal Dutch Shell went first on January 29, revealing a big jump from the same quarter a year ago, but down from the third quarter of 2014. In fact, Shell announced that it would cut $15 billion in spending over the next few years, an about-face from just a few months ago when it stated that it would leave capital expenditures unchanged in 2015. Shell’s CEO, concerned about the poor state of oil and gas markets, said that it may even consider withdrawing itself from significant assets held around the world, retrenching and focusing on North America.

On the same day, ConocoPhillips also reported gloomy numbers. It plans on slashing 2015 spending by an additional 15 percent, which comes after a December announcement of a 20 percent cut in expenditures for the year.

Chevron followed that up on January 30, posting its worst showing in five years. The $3.5 billion in earnings for the fourth quarter of 2014 was 30 percent lower than from the previous year. The California-based oil major says that it will trim spending by 13 percent.

And on February 2, ExxonMobil reported a drop in earnings from $8.4 billion in the fourth quarter of 2013 down to $6.6 billion for the same quarter in 2014. The company blamed almost the entirety of its 21% fall in earnings on lower oil prices. ExxonMobil was alone in not revealing its spending plans for the rest of this year, pushing off an announcement until March.

BP is expected to fare worse. Analysts expect a sharp decline in quarterly earnings, a result that goes beyond falling oil prices. BP is heavily exposed to Russia’s deteriorating economy, and should see earnings suffer as a result. The British oil giant is set to announce its quarterly earnings before the markets open on February 3.

The earnings reports underscore the volatility of the oil business and the vanishing profits for these corporate titans now that oil prices have tanked.

The Rest…HERE

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