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Big oil incurred record loss in 2020, joint output fell by 0.9 million boepd

Public Policy


OSLO — The downturn brought by the COVID-19 pandemic and the accelerating energy transition has created a new reality for the world’s oil and gas industry, whose production will peak lower and earlier than expected before the 2020 market crisis, a Rystad Energy analysis shows.

The five integrated supermajors — ExxonMobil, BP, Shell, Chevron and Total — posted a combined record loss of $76 billion in 2020.

The major chunk of this loss, $69 billion, can be attributed to asset impairments and write-offs as the supermajors re-evaluated their strategy to focus on energy transition and become less dependent on petroleum.

Their combined oil and gas output dropped by nearly 5%, or 0.9 million barrels of oil equivalent per day, in 2020 from the year before.

Lower emission targets and demand for cleaner energy have significantly impacted the long-term production outlook for the majors.

Rystad Energy forecasts that the majors’ net production will be around 17.5 million boepd in 2025 and peak at around 18 million boepd in 2028, based on our latest revisions.

For context, our internal forecast in February 2020 — before the shockwaves from COVID-19 — stood at 19 million boepd for 2025 and 20 million boepd in 2028.

“Last year has certainly tested oil and gas majors like never before. Some recovery can be expected in the near future as demand rebounds and oil prices cross the $60 mark.

“However, the key to success for the five majors over the next decade will be to strengthen their business in more resilient regions, restructure and resize to match the market needs, and pay back their high debt levels,“ said Rahul Choudhary, upstream analyst at Rystad Energy.

The majors’ net income declined sharply last year as low oil prices, OPEC production cuts, collapsing refining margins and weak chemical margins left no business segments unscathed.

All the five majors reported net losses in 2020 with ExxonMobil reporting the largest at $22.4 billion, followed by Shell and BP which also incurred losses of more than $20 billion. Total and Chevron fared better than their peers, relatively speaking, as the two companies reported net losses of $5 billion to $6 billion.

Before COVID-19 and the price crash, most companies had assumed an oil price in the range of $70 to $80 per barrel, which allowed them to pursue several higher-cost projects.

After the price slump and with continued uncertainty around future oil demand, companies have reduced their price assumptions to between $55 and $70 per barrel, making high-cost projects unviable to pursue.

European majors Shell and BP accounted for the largest year-on-year drop in production with about 300,000 boepd each, while ExxonMobil and Total cut their production by 200,000 boepd and 150,000 boepd, respectively.

Chevron was the only major to increase its production in 2020, largely due to its $13 billion acquisition of Noble Energy that partially offset the production curtailments.

At the end of the year, the total spending cuts stood at $26 billion, or 32% of the five majors’ initially announced guidance. Most of the capex cuts relate to greenfield development projects as the majors wait for a recovery in prices and demand before moving ahead with new projects.

Rystad Energy estimates that the five majors approved $30 billion less in greenfield investment in 2020 than they did the year before — a decline of 90%.

US majors ExxonMobil and Chevron raised a record amount of debt during the year, adding $19 billion and $18 billion respectively to their net debt. As a result, both majors increased their gearing ratio by 10% in 2020.

While Chevron’s gearing ratio remains below 25%, ExxonMobil’s gearing ratio is now close to 30%, and the company plans to avoid any additional debt in the near future.

Due to the heavy debt burdens, both majors had their S&P credit ratings lowered a notch from AA to AA-.

European majors BP and Shell raised their cash in hand by around 50%, thus reducing their overall net debt for the year. However, all of the majors had their gearing ratio raised in 2020, with BP and Shell both ending the year with a gearing above the 30% mark. — Rystad Energy


6 Comments on "Big oil incurred record loss in 2020, joint output fell by 0.9 million boepd"

  1. print baby print on Sat, 20th Feb 2021 4:07 pm 

    Very important issue must be resolved this year , about transgender pronouns , we can’t continue like this any more . Poor human race.

  2. Cloggie on Mon, 22nd Feb 2021 12:19 am 

    European oil is moving away from oil:

    “Total 100GW renewables target to put oil giant in green power top league”

    – Total 100 GW renew by 2030 (35 GW by 2025)
    – BP 50 GW
    – Shell merely wants to sell green hydrogen, produced by others, which is a pity. Not sure if they get away with that low ambition level with their shareholders.

  3. Cloggie on Tue, 23rd Feb 2021 1:56 am 

    “Overlord no more”, Biden caves in on North Stream 2:

    “Republicans sound alarm over major U-turn by Biden admin on Russia-to-Europe gas pipeline”

    “The Biden administration is signaling it is willing to let the pipeline be completed with catastrophic implications for American national security and for the energy security of our European allies,” Texas Senator Ted Cruz, a member of the Senate Foreign Relations Committee, said in a statement.

    F* you, Ted Cruz. Why don’t you pack your bags and move to Mexico permanently as Texas has proven to be too cold for you.

    “Cruz calls Cancun, Mexico, trip ‘a mistake’ as Texans remain without power amid historic winter storm”

    “Biden silent on sanctions as Nord Stream 2 speeds ahead”

    Biden clearly doesn’t want to start his presidency with a major trade war with Europe.

    This is a big victory for continental Europe and a clear sign that within the West, power is shifting (back) towards Europe.

    Our American friends need to get used to the inclusion of Russia into Eurosphere, not as a US-colony, like between 1991-2000, but as a major European power and as such lay the groundwork for the geopolitics of the 21st century, a multi-polar world of “big tent identitaireanism”, with Eurosphere and Sinosphere the two leading poles and the New Silk Road as the #1 planetary trade backbone, replacing the Atlantic.

  4. Biden's hairplug on Tue, 23rd Feb 2021 2:10 am 

    “Special Relationship” latest:

    “Boeing 777s are BANNED from flying over Britain: Grant Shapps says ALL planes with same engine as one that caught fire over Denver cannot enter UK airspace”

    Happens after THREE recent incidents over Denver, Japan en Holland.

    First the new B737-Max, now the B777 (1995). Those are big blows.

  5. Cloggie on Wed, 24th Feb 2021 6:38 am 

    Nuclear energy dead as a brick:

    The UK government finally found a party (EDF-France) willing to build a new nuclear power-station, after the Japanese withdrew earlier, now it turns out they can’t find a financier willing to stick his neck out.

    Fossil en nuclear are out, renewable just won the battle, for the hearts and minds (and wallets).

  6. Biden's hairplug on Wed, 24th Feb 2021 6:43 am 

    Heathrow used to be the largest airport in Europe by a stretch, for decades, now it tumbled to #6, behind Paris (#1), Amsterdam, Frankfurt, Istanbul and Moscow:

    Expect Heathrow not to recover. After all, Havana Airport is not that big either. Isolation is definitely not good for business.

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