Page 10 - NorthAmOil Week 05

NorthAmOil PEFORMANCE NorthAmOil
Super-majors post
disappointing fourth-
quarter results
US
THE low commodity price environment contin- ues to take a toll on producers and their pro ts, and this is particularly visible as quarterly results are announced. Many independents have yet to report their results, but both US-headquartered super-majors – Chevron and ExxonMobil – have already posted theirs. And these results illus- trate that even the larger players, with diversi- ed operations, are not immune to the ongoing downturn.
ExxonMobil reported net income of $5.7bn, or $1.33 per share, in the fourth quarter of 2019, down from $6bn, or $1.41 per share, a year ear- lier. However, the company’s results were bol- stered by one-o items worth roughly $3.9bn, or $0.92 per share. is largely stemmed from proceeds related to ExxonMobil’s $4.5bn sale of Norwegian assets to Var Energi in September. Without these one-o items, however, the com- pany’s net pro t was about $1.8bn, or $0.41 per share, below analysts’ expectations of $0.45 per share. e weak performance was not limited to upstream operations, with the super-major reporting its rst loss in chemicals since before its 1999 merger with Mobil.
Chevron, for its part, reported a fourth-quar- ter loss of $6.6bn, or $3.51 per share, compared with earnings of $3.7bn, or $1.95 per share, in the fourth quarter of 2018. is was attributed to $10.4bn worth of write-downs related to shale gas production in Appalachia, the Big Foot pro- ject in the US Gulf of Mexico and the proposed Kitimat LNG project in Western Canada, among others. e quarterly loss came in slightly above analyst estimates – and excluding charges, its $1.49 per share pro t topped estimates – but nonetheless the result marked a significant reversal of fortune from the previous year.
Ironically, both companies are focusing on ramping up production in the Permian Basin, the US’ most prolific shale region, but this growth is contributing to downward pressure on commodity prices. ExxonMobil’s Permian pro- duction was 294,000 barrels per day (bpd) in the fourth quarter, up 54% year on year, but at on the previous quarter. Chevron’s Permian output, meanwhile, grew 36% y/y to 514,000 barrels of oil equivalent per day (boepd) during the fourth quarter.
ExxonMobil’s CEO, Darren Woods, noted that Permian production would not grow in a smooth, uninterrupted manner, instead charac- terising anticipated future expansion as “lumpy”.
Chevron’s Permian operations helped to
Chevron’s Permian operations helped to push its global output to an all- time annual high of 3.06mn boepd.
push its global output to an all-time annual high of 3.06mn boepd, up by more than 4% y/y from 2.93mn boepd. But questions remain over whether the company will be able to keep grow- ing beyond the mid-2020s, given the extensive write-downs it had to take across some of its operations.
Despite concerns about performance in the current commodity price environment, both companies reaffirmed their capital expendi- ture plans for 2020. ExxonMobil is targeting $33bn-35bn in capital spending this year, up from $31.1bn in 2019, though Woods said the pace of some projects could be changed if con- ditions warrant it. And Chevron is planning to spend $20bn this year, matching its capex levels for the past two years.
US-based super-majors are not the only ones struggling to perform in the current price envi- ronment. Earlier last week, Royal Dutch Shell reported an almost 50% drop in fourth-quarter pro ts, also as a result of lower oil and gas prices. ere is, as yet, no improvement on the horizon, with Woods predicting that the global natural gas glut would take some time to alleviate. Exx- onMobil also expects that its chemical business will continue to be “challenging” over the course of this year.™
Ironically, both companies are focusing on ramping up production in the Permian Basin, but this growth is contributing to downward pressure on commodity prices.
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w w w. N E W S B A S E . c o m Week 05
05•February•2020