Chevron earnings beat; plans layoffs of up to 7000
With oil prices falling rapidly, the USA energy industry is feeling the effects. The issue with most remains, how to meet the growing public expenses and aspirations.
Imperial Oil Ltd., a Canadian affiliate of Exxon Mobil Corp., said profit in the third quarter sank even after it boosted production as oil stuck near six-year lows. Net cash from operating activities fell to $15 billion from $25 billion. That figure would have been a lot worse but for a near-doubling of the refining business’s earnings, to $2 billion.
The good news is that Chevron still has $13 billion in cash and still plans to sell somewhere around $5 billion in non-strategic assets next year, so Chevron should be able to hold over for awhile.
Chevron plans to spend US$25 billion to US$28 billion next year and expects to further slash spending in 2017 and 2018, an acknowledgment that it does not expect oil prices to rebound soon. The Big Foot project, which was scheduled to be online this year, was substantially delayed due to a huge setback last summer with the sinking of at least nine giant tendons that were created to connect the platform to the sea floor.
The Irving, Texas, company posted profit of $4.24 billion, or $1.01 per share, compared with $8.07 billion, or $1.89 per share in the same quarter a year earlier.
Chevron’s downstream segment achieved earnings of $2,211 million, considerably higher than the profit of $1,387 million previous year.
Back in March of this year I wrote that it was ‘difficult to be optimistic about Chevron.’ I estimated this because crude oil prices were low and weren’t showing many signs of recovery.
Shell reported $7.9 billion in charges, including $2.6 billion for its decision to abandon Arctic drilling off Alaska and $2 billion related to the decision to cancel the Carmon Creek project.
The company has taken a major hit from crude oil prices, which have fallen by more than half from last year’s high above $100 a barrel.
Eni SpA too has swung to a net loss in the third quarter. Revenue declined by nearly a third to €18.81 billion. That’s a 67 percent jump from $19.74 a year earlier.
Chevron is cutting its workforce by 10 percent amid crashing oil prices. Eni’s top recent discovery has been a massive natural gas field off the Egyptian coast. It is a large multinational corporation which has essentially had a monkey wrench thrown into its business model, in the form of low oil prices, and is doing anything and everything in its power to stay afloat. Household spending on natural gas, oil and propane for heating homes this winter is to be 10 to 25 percent lower, depending on the type of fuel, the agency predicts. They began the day down 20 percent since the beginning of 2015, while the Standard & Poor’s 500 index rose 1.5 percent.