LOW OIL PRICES SQUEEZE IOCS’ EARNINGS, PROFIT DROPS BY 40 PER CENT

As members of the Organisation of the Petroleum Exporting Countries (OPEC) are struggling to prevent crude oil prices from falling further, oil majors have continued to record low profits in their quarterly earnings.

The oil and gas industry has weathered its most severe crisis since the collapse of crude oil, leading to the retrenchment of over 20,000 workers in the industry. Worldwide, oil companies have debts surpassing half a trillion dollars, which energy experts say will force many to sell assets to meet interest payments.

For example, oil major, Royal Dutch Shell, posted a 44 per cent drop in earnings for the fourth quarter of 2016, compared to the previous year. The company’s full year 2016 earnings attributable to shareholders were $3.5 billion, an eight per cent decrease compared with $3.8 billion it earned in 2015.

Also, Exxon Mobil’s fourth-quarter earnings fell by 40 per cent, compared to a year earlier. The company’s net income fell to $1.68 billion, which included a $2 billion write-down to account for dry gas operations in the Rockies.

Chevron recorded a full-year 2016 loss of $497 million compared with earnings of $4.6 billion in 2015. Speaking on the result, Chairman and Chief Executive Officer of Chevron, John Watson, said: “The Company’s 2016 earnings reflect the low oil and gas prices we saw during the year. We responded aggressively to those conditions, cutting capital and operating expenses by $14 billion. The company was able to reach noteworthy milestones in 2016 on major capital projects.

“We achieved first gas and cargo shipments at our Gorgon Project in Australia, first gas at our Chuandongbei Project in China, and increased production from our Permian Basin shale and tight oil properties.

“In addition, we announced the final investment decision on the Future Growth and Wellhead Pressure Management Project at the company’s 50 percent- owned affiliate, Tengizchevroil, in Kazakhstan.”

Chief Executive Officer of Royal Dutch Shell Plc, Ben van Beurden, stated: “We are reshaping Shell and delivered a good cash flow performance this quarter with over $9 billion in cash flow from operations.” He said the company’s debt has been reduced, and for the second consecutive quarter, free cash flow more than covered our cash dividend.

New ExxonMobil Chief Executive Officer, Darren Woods, acknowledged in a statement that, “Financial results for the year were negatively impacted by the prolonged downturn in commodity prices and the impairment charge, but the company’s continued focus on fundamentals and our ability to leverage an attractive global portfolio through our integrated business ensures we are well positioned to generate long-term shareholder value.”(Guardian)