Q2 Results – Oil Companies Make Profit in Tough Times

article-image

During last few days major Oil & Gas Companies revealed their second-quarter earnings and believe or not, almost all of them are higher than expected. Is it sign of the end of downturn and back to wealthy times? I wouldn’t say so, but reported results shows that Oil Companies adapted to the market conditions and now they can make profit from diverse sources like downstream or manufacturing and not only from Upstream. Furthermore, in many cases Upstream is now not the strongest branch. The price around $50 per barrel isn’t that bad for companies to prosper well. The biggest companies managed it by making redundancy and savings.
Let’s take a closer look to these reports:

Total

French company reported Q2 earnings above expectations and is approaching to meet the goals for 2017.

“Total again delivered an excellent set of quarterly results with adjusted net income of $2.5 billion, a 14 percent increase compared to a year ago,” Chairman and Chief Executive Officer Patrick Pouyanne said in statement.

A Reuters poll of analysts expectations had pegged Total’s second quarter adjusted net income at $2.3 billion.

Total said operating cash flow before working capital changes surged 33 percent to $5.3 billion in the quarter, while Brent crude price only increased by 9 percent during the same period.

In the upstream segment, Total’s operating cash flow before working capital changes increased by almost 50 percent compared with the same quarter in 2016, benefiting from production growth of more than 3 percent, and driven by start-ups and ramp-ups of new projects, Pouyanne said.

In the downstream segment, Total’s refining throughput fell 7 percent in the quarter due to several planned refinery maintenances, however, it said refining and petrochemical margins remain favourable at the start of the third quarter.

Total’s downstream is on target to generate operating cash flow before working capital changes of around $7 billion in full-year 2017.

The company maintained its 2017 cost savings target of $3.5 billion with the aim of decreasing production costs further.

Statoil

Statoil reports adjusted earnings of USD 3.0 billion and adjusted earnings after tax of USD 1.3 billion in the second quarter of 2017. IFRS net operating income was USD 3.2 billion and the IFRS net income was USD 1.4 billion.

“We expect to deliver around 5% production growth this year, and at the same time realise an additional one billion dollars in efficiencies”, says Eldar Sætre, President and CEO of Statoil ASA.

Exxon Mobil Corp.

Analyst forecast didn’t match this time. Exxon failed to live up forecasts and made no surprise with positive results.

Exxon reported second-quarter net income of $3.35 billion, or 78 cents a share, compared to $1.7 billion, or 41 cents, a year earlier, the company said in a statement. Revenue for the quarter rose 9 percent to $62.87 billion from $57.69 billion a year earlier.

Exxon’s oil and natural gas production dropped by almost 1 percent to the equivalent of 3.922 million barrels a day. Analysts had expected output to climb 1.5 percent to 4.015 million barrels, based on the average estimate. Additionally, profit from chemical plants fell 19 percent to $985 million as margins for the building blocks of plastics and other products shrank.

Chevron

Chevron showed its second-quarter profits on the level of $1.45 billion, or 77 cents a share, compared to a loss of $1.47 billion, or 78 cents, a year earlier, the company said Friday in a statement.

‘We’re delivering higher production with lower capital and operating expenditures,” Chief Executive Officer John Watson said in the statement.

Shell

Last but not least to beat analyst expectations is Europe’s largest oil firm. Shell reported profits for its second quarter that were three times larger than at this time last year.

Here are the key second-quarter metrics:

Revenue: $72.13 billion vs. expected $67.78 billion, according to Thomson Reuters.

Net profit (on a current cost of supplies (CCS) basis) $3.6 billion, up 245 percent from $1 billion for the second quarter of 2016.

Higher contributions from downstream driven by improved operational performance and stronger chemicals and refining industry conditions were one of the main reasons for the firm’s performance. Upstream also supported the results with higher prices and production in new fields, the company said.

Ben van Beurden, chief executive officer at Royal Dutch Shell said in a statement: “Cash generation has been resilient over four consecutive quarters, at an average oil price of just under $50 per barrel.”

Next few days will be also encouraging to keep attention, BP will present its own results on Tuesday, 1st of August.

Sources:

Rigzone Total Statoil Exxon, Chevron Shell

 

About author