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Page added on February 5, 2019

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Oil Supermajors Smash Analyst Estimates

Business

The world’s biggest oil companies are pumping out cash like crude’s at $100 a barrel again, and investors love it.

Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp. and BP Plc smashed analysts’ earnings estimates for the fourth quarter, giving investors assurance that their dividends and buybacks are secure even with oil trading near $60.

Those companies together generated close to $43 billion of cash flow from operations, the highest in more than four years. They achieved this despite a deep slump in crude prices at the end of the year, maintaining returns by keeping a tight grip on spending and squeezing more out of projects at lower prices.

“The 12-month rolling cash flow continues to point upwards, and I think that’s what’s important,” said Oswald Clint, an analyst at Sanford C. Bernstein Ltd. “It isn’t just refining-led improvements, it isn’t just an upstream oil price, it’s widespread across the businesses.”

Clint expects the sector to generate record free cash flow in 2019, the second year in a row.

The market rewarded the companies’ efforts. BP surged the most in almost three years after its profit beat even the most optimistic analyst estimate. Shell’s B shares gained 3.6 percent when it reported earnings on Jan. 31, while Exxon and Chevron increased by a similar amount on Feb. 1. France’s Total SA, the fifth member of the oil-supermajor group, reports earnings Feb. 7.

The group’s strong performance comes at a crucial time. They need to remain attractive for shareholders who stuck with them through a years-long downturn because of the reliability and size of their dividends. Shell’s cash payout of almost $15.7 billion was the largest in the world, besting its Big Oil rivals and other corporate giants such as Apple Inc. and AT&T Inc.

Beyond the dividend, major oil companies need to demonstrate they can maintain share buybacks, increase production, and still invest to grow. Shell’s Chief Financial Officer Jessica Uhl said the company can “do it all.” BP can curb debt, repurchase shares and invest with oil at $50 a barrel, CFO Brian Gilvary said.

Chevron gave the market a pleasant surprise with a $25 billion stock-buyback pledge. Exxon surpassed analysts’ forecasts with the biggest refining bonanza in six years and Permian Basin crude output that almost doubled. Exxon Chief Executive Officer Darren Woods said he would ramp up both spending and asset sales this year as the company plows billions into new drilling and refinery expansions.

“Exxon Mobil is taking steps to recapture its top spot among Big Oil by acquiring low-cost resources and moving away from high-cost assets,” said Fernando Valle, an analyst at Bloomberg Intelligence. Its results “demonstrate that its turnaround plan is ahead of schedule.”

Still, some concerns remain. BP’s debt is rising and its gearing — the ratio of net debt to capital — has breached the upper end of its target range of 30 percent. Shell didn’t replace all of the oil and gas reserves it produced last year, raising concerns among some analysts about future production. These issues could become significantly more urgent if oil prices were to fall again.

The companies are seeking to preempt these concerns by promising to remain efficient and disciplined with their spending and operations. For now, investors seem convinced, but companies will have to work hard to maintain this hard-won respect.

Asked in a Bloomberg interview what his focus for this year would be, BP’s Gilvary said: “Capital discipline, capital discipline, capital discipline.”

RIGZONE



25 Comments on "Oil Supermajors Smash Analyst Estimates"

  1. asg70 on Tue, 5th Feb 2019 10:50 pm 

    So much for Short’s analysis…

  2. Cloggie on Wed, 6th Feb 2019 1:52 am 

    Indeed, peak oil now, hahaha, priceless!

    Heinberg, Gail, Davy, mobster, 2012-me, totally proven wrong.

    Peak fossil demand 2030, give or take a few years.

  3. print baby print on Wed, 6th Feb 2019 3:10 am 

    Clog you are funny guy . They can invest how much they want toilet paper in looking for oil they will come with zipo, null , nada zero hahahhahah
    Tell me how many elephants field have been discobered since 1970? And upon those fileds this civilization exist

  4. Cloggie on Wed, 6th Feb 2019 3:16 am 

    “Tell me how many elephants field have been discobered since 1970? And upon those fileds this civilization exist”

    How about the elephant coal field under the North Sea to the tune of up to 23 trillion ton or 40 times or more the amount of fossil fuel cummulatively burned by humanity and can easily be harvester via UCG?

    https://deepresource.wordpress.com/2015/04/07/fracking-is-for-amateurs/

  5. print baby print on Wed, 6th Feb 2019 3:17 am 

    The short is close as it anybody can come close to this matter . Short analysis are ok

  6. print baby print on Wed, 6th Feb 2019 3:19 am 

    Are you serious man what field, on the mars there is a giant field under the crust, 1000years of beautiful sweet light crude

  7. Cloggie on Wed, 6th Feb 2019 4:46 am 

    You are seriously unable to discern the difference in significance of a fossil fuel resource on Mars and below the North Sea?

    I know that many Americans have ‘issues’ with geography, but you are the true champion.

    Your problem, big shrug.

  8. Davy on Wed, 6th Feb 2019 4:51 am 

    cloggie “Print” is from Serbia. It makes me laugh how you anti-Americans always peg a comment American even when they are not. It is just your natural tendency I mean your whole mentality is programed to hate Americans and everything American. WTF

  9. Davy on Wed, 6th Feb 2019 5:06 am 

    “Indeed, peak oil now, hahaha, priceless! Heinberg, Gail, Davy, mobster, 2012-me, totally proven wrong. Peak fossil demand 2030, give or take a few years.”

    I admitted to being wrong as a peaker back a few years ago but I am right that the systematic issues of declining net energy found in peak oil dynamics is alive and well and this makes you totally wrong clogged. You are also not yet right on renewables. I am way ahead of you on both counts. This is because I understand that behavior is the real problem. You are just a tech guy. Everything revolves around tech except your racist PBM political model then all you are is a fantasy Empire lusting and race busting blowhard.

  10. print baby print on Wed, 6th Feb 2019 5:20 am 

    Nothing to add to Davy comments

  11. Davy on Wed, 6th Feb 2019 5:36 am 

    “5 Things To Watch In Natural Gas”
    https://tinyurl.com/ydynf87u
    graph: https://tinyurl.com/ycsbfea7 https://tinyurl.com/ycdyyf6h

    “Significant LNG production growth, the rise of US gas to challenge Russian dominance in Europe, insatiable demand in Asia, price pressure in selected regions, and a need for final investment decisions on planned liquefaction plants are the key market-movers identified in the report.”

    “Theme 1: Ramp up in US and Australian LNG production Global LNG production is expected to rise 11% and reach 350 million tonnes per annum (tpa) this year, as fresh liquefaction capacity is added, leading to a looser market. Total liquefaction capacity is set to increase to 434 million tpa in 2019, up almost 10% from 2018. “This is mostly driven by the commissioning of US projects. The US is expected to see capacity more than double in 2019, thereby making it the country with the third-largest exporting capacity and pushing Malaysia into fourth place. Australia could also overtake Qatar as the world’s largest LNG exporter this year,” Torres-Diaz remarked.”

    “Theme 2: Russia vs US in Europe One of the key outstanding questions for 2019 is how much LNG Europe will import, and whether Russia will cut back on gas exports in response or rather try to maintain its market share despite the risk of undercutting prices.”

    “Theme 3: Continued surge in demand in China and rest of Asia Total Asian natural gas demand is forecasted to increase to 884 Bcm by 2019, driven by higher consumption in China and selected other countries. China, already the world’s largest gas importer, is expected to import around 87 Bcm of LNG this year, an increase of 21% from last year.”

    “Theme 4: Will prices in Asia and Europe drop?”

    “Theme 5: Need for new LNG plants The market could tighten substantially in 2023 as rising Asian demand catches up with supplies, posing an upside risk for prices in this period.”

  12. Davy on Wed, 6th Feb 2019 5:48 am 

    “China’s S-Curve Of Expansion, Stagnation, And Decline”
    https://tinyurl.com/y7cqycat

    “Natural and human systems tend to go through stages of expansion, stagnation and decline that follow what’s known as the S-Curve. The dynamic isn’t difficult to understand: an unfilled ecological niche is suddenly open due to a new adaptation; a bacteria evolves to exploit a new host, etc. Expansion is rapid until the niche is fully occupied, and then growth matures and stagnates; the low-hanging fruit has all been picked, and it’s much more costly to reach what little is left. Human economies starved of capital, credit, access to markets and freedom are akin to unexploited ecological niches. Lacking capital, credit and the freedom to innovate, experiment and advance, economies wallow in a self-reinforcing stagnation.”

    “The heavy cost of corruption that was offset by growth in the boost phase becomes destructive in the stagnation phase. Stripped of growth, the economy is sapped by institutionalized corruption: bribes, sweetheart deals, poor quality being ignored, accounting fraud–all become embedded and institutionalized, to the detriment of organic growth.”

    “China entered 2008 with $8 billion in officially counted debt; 10 years later that debt is $40 trillion, plus unknown trillions more in the shadow banking system which expanded the options for risky speculation and massive expansions of credit. Like all the other stagnating economies, China’s “solution” to stagnation was to expand debt-funded speculation and “investments” with little to no actual return. The high water mark of China’s financialization orgy was 2018. From now on, adding debt simply adds more drag on the underlying economy, as income is diverted to service speculative debt and defaults start hollowing out both the official banking system and the shadow banking system. All the policies that worked in the Boost Phase no longer work. the policy tool chest is empty, and so China’s leadership is doing more of what’s failed: burying bad debt off the visible balance sheets, re-issuing new loans to pay off defaulted debt, and all the usual tricks of a failed banking/credit system.”

  13. Davy on Wed, 6th Feb 2019 5:58 am 

    “The Threat Of A US Government Debt Trap”
    https://tinyurl.com/y94xytd9

    “However, the rolling over of old debts and the continual addition of new ones will almost certainly become a problem for governments everywhere…(Carmen Reinhart and Ken Rogoff) came up with a rule of thumb, that once a government’s debt to GDP ratio exceeded approximately 90%, economic growth becomes progressively impaired…At the Rubicon level of 90% and over, median growth rates in the countries sampled fell by 1%, and their average growth rates by “considerably more.”

  14. JuanP on Wed, 6th Feb 2019 7:50 am 

    More China bashing useless links from the board’s foremost deluded American Exceptionalist! LOL! If you want to make sure that everything you know about China is absolutely wrong then read Davy’s comments and follow his links! He has been claiming for over five years that China’s economy is collapsing while China experienced more growth in that time than any other country in the world, including his “beloved” USA. Could he be more wrong than completely wrong? ROFLMFAO! I couldn’t make this shit up!

  15. JuanP on Wed, 6th Feb 2019 7:57 am 

    Delusional Davy “I mean your whole mentality is programed to hate Americans and everything American. WTF”

    There is a very good reason why most of humanity dislikes and/or hates the USA and its people. The US government is the largest criminal and terrorist organization that has existed anywhere in the world in human history, and it has murdered, terorized, and abused more living people and their relatives and friends than any other institution ever. The USA represents everything that is wrong about humanity and why our predicament is completely hopeless, though I know this is not so in Davy’s Lalaland.

  16. Uncle Bill on Wed, 6th Feb 2019 9:21 am 

    I wish I had Uncle Sam’s credit card with no limit spending and near zero interest rates.
    What could possibly go wrong?
    Sorry couldn’t resist.
    Cooking the books is an old art form…
    Glad to see the Oil Majors are keeping it alive… hopefully for ten more years until Im so old I don’t give a hoot

  17. Cloggie on Wed, 6th Feb 2019 9:32 am 

    “It makes me laugh how you anti-Americans always peg a comment American even when they are not. It is just your natural tendency I mean your whole mentality is programed to hate Americans and everything American. WTF”

    We have enabled your independence where you have bombed and raped us. Spare me your standard progressive hypocritical drivel about hate, void of any meaning. If European civilization will have any future at all, it will despite of you and your owners.

  18. I AM THE MOB on Wed, 6th Feb 2019 10:56 am 

    Look what the white man has turned into!

    https://gfycat.com/ampleperkyarrowworm?fbclid=IwAR1b2qGypUHN6kePv7qh7Mw1XvlfRy-ghFPsCZ5r9WwE-aYyhEnkLjuJxHM

    Disgraceful!

  19. Davy on Wed, 6th Feb 2019 11:38 am 

    “We have enabled your independence where you have bombed and raped us.”

    My god listen to the snivelling whining Europussy. You bomb and raped yourself since the middle ages and went on to screw the world up when you got tired of abusing yourselves. Choke on a potato dumpling please.

  20. Davy on Wed, 6th Feb 2019 11:51 am 

    “Choke on a potato dumpling please.”

    I mean what kind of a dumbass pussy rights shit like this?

  21. Not me obv. on Wed, 6th Feb 2019 11:53 am 

    “Choke on a potato dumpling please.”

  22. Outcast_Searcher on Wed, 6th Feb 2019 12:03 pm 

    Yup, asg. Same thing I thought when I saw this. Kind of hard to figure oil is unaffordable to produce and becoming “impossible” to profit from (re ETP bozo nonsense) due to low prices, when the majors are smashing profit records.

    Also, pretty silly to keep moaning about how cash flows doom oil fracking, when fracking is becoming more and more mainstream technology, and the mainstream oil producers are producing tens of $billions in free cash flow.

    I supposes Shorty will have to go back to claiming accounting conspiracy theories and calling everyone names like a 7 year old, while claiming he’s still right and oily doom is right around the corner. LOL

  23. Dredd on Thu, 7th Feb 2019 3:50 pm 

    So, the supermajors now have diarrhea?

    “Oil … is the devil’s Excrement.” OPEC co-founder Juan Pablo Perez Alfonzo

  24. Dredd on Thu, 7th Feb 2019 4:06 pm 

    I guess that means Oil-Qaeda is the bowels of the devil.

  25. I AM THE MOB on Thu, 7th Feb 2019 4:38 pm 

    IEA Chief warns of world oil shortages by 2020 as discoveries fall to record lows
    https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000

    Saudi Arabia’s Energy Minister Warns of World Oil Shortages Ahead
    https://www.wsj.com/articles/saudi-minister-sees-end-of-oil-price-slump-1476870790

    There will be an oil shortage in the 2020’s, Goldman Sachs says
    https://www.cnbc.com/2018/11/09/goldman-sachs-there-will-be-an-oil-shortage-in-the-2020s.html

    German Army Peak Oil Study (2010)- within 15 years oil shortages may collapse global
    economy
    https://www.youtube.com/watch?v=ZyUe7w1gDZo

    Parents are going to have to eat their children soon!

    God help us all! This world will burn!

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