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Oilexco LSE:OIL London Ordinary Share CA6779091033 COM SHS NPV (CDI)
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 6.90p 0.00p 0.00p - - - 0 06:36:16
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Oil & Gas Producers 174.0 59.2 -18.1 - 15.44

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florenceorbis: Oil Majors Optimistic Despite Price Plunge By Tsvetana Paraskova - Feb 11, 2018, 2:00 PM CST Offshore rig The earnings season for the oil majors is over. Judging from their results, so is the three-year downturn that has transformed the industry after companies slashed spending and jobs and downsized growth plans. The supermajors — who reported Q4 and 2017 figures in the past week — are now making nearly as much profits as they did in Q3 2014, when oil prices were just above $100 a barrel. Higher oil prices in Q4 2017 helped the largest oil companies to double and triple profits, end the scrip dividend programs, and some of them — raise dividends and signal resumption of share buybacks to finally reward shareholders (even more). The price of Brent plunged by more than $5 in the past week amid a selloff in global markets and a surge in U.S. oil production that rekindled concerns that the oversupply will persist despite some investment banks predicting that the oil market is likely already balanced. Still, Brent topped $60 a barrel in October 2017 and has not fallen back below that threshold since then, helping the oil supermajors to book much stronger Q4 profits compared to year-ago levels. While the U.S. supermajors ExxonMobil and Chevron disappointed with earnings misses, Europe’s Big Oil fared better, with BP saying it wrapped up its “strongest year in recent history”, Shell toppling Exxon as the largest cashflow generator in the industry, and Statoil and Total planning to raise dividends. Cash flows also increased with higher oil prices, signaling that oil majors are now largely capable of covering their investments and dividends without having to pile up more debt loads. Now that they finally generate more cash — for the first time in three years — oil majors may face other, not as gloomy as before, dilemmas: how to spend that cash. According to Andy Critchlow, head of energy news EMEA at S&P Global Platts, oil majors now have three obvious options—to boost near-term shareholder returns by higher and/or all-cash dividends and share buybacks; ditch discipline and study a risky acquisition of a rival; or invest more in new upstream projects to secure longer-term growth and shareholder returns. “Despite lingering concerns over the sustainability of recovering prices, the third course of action could be the best option for both energy markets and shareholders in the long term,” Critchlow argues, citing BP as an example. Shareholders will eventually demand more growth to see greater returns, so it would make sense for the UK supermajor to re-invest more cash into new large-scale projects, according to Critchlow. Related: LNG: Glut Today, Shortage Tomorrow This year, BP, for example, is set to start up five major upstream projects in which it is a shareholder, after it launched seven others in 2017. Still, Big Oil’s top executives are level-headed as far as spending in the near term is concerned, and are assuming quite conservative oil price scenarios for their planning this year, in stark contrast with the big investment banks that significantly lifted their oil price forecasts just days before the financial and energy market carnage this week. While Goldman Sachs and JPMorgan see oil prices reaching the high $70s and even topping $80 as early as in mid-2018, BP’s CEO Bob Dudley told CNBC “We’re not planning on $70 a barrel. We’re going to plan our year on $55 to $60, roughly, and if is higher we’ll more than deliver on our promises.” This week, Statoil proposed lifting dividends, but it doesn’t expect oil prices to be above $70. Total now plans a 10-percent dividend increase and up to $5 billion share buybacks over the next three years, but CEO Patrick Pouyanné said that the oil market is not balanced yet. Total expects oil prices at $50-$60 a barrel this year, but he manages the company as if the price of oil were at $50, Pouyanné said this week, signaling that rigid spending discipline and conservative assumptions still dominate plans. Related: Venezuela Is Moving From Crisis To Collapse It looks like Big Oil is now focused on the first of the three options that S&P Global Platts’ Critchlow outlined — rewarding shareholders with all-cash dividends, in some cases higher dividends, and share buybacks to offset the dilution from the scrip dividend plans under which investors could choose to be paid in shares instead of in cash. In terms of spending on new upstream projects, there are signs that the slump will level off this year. Oil majors will continue “to cherry-pick opportunities, building on the great progress already made in repositioning portfolios for lower prices,” Wood Mackenzie said in its 2018 upstream outlook. In order to win investors again after dismal stock market performance over the past year, the oil industry needs a pipeline of new projects capable of successfully delivering at oil prices at $50; free cash flow that can grow at $50 oil; and companies start building “compelling cases for long-term investment,” according to WoodMac. By Tsvetana Paraskova for
the grumpy old men: LONDON -- Big dividends and share buybacks are making a comeback in the oil industry amid a fragile market recovery. French oil giant Total SA on Thursday said it would raise its dividend by 10% over the next three years and buy back up to $5 billion-worth of shares in the latest sign of growing confidence in the industry. Chevron Corp., Statoil ASA, Anadarko Petroleum Corp. and ConocoPhillips have all announced higher investor payouts this year. Those moves followed British oil giant BP PLC's announcement of a new share-buyback program in October. Buying back existing stock generally makes the remaining shares more valuable. The companies are rewarding shareholders as profits return to the industry after a three-year slump in oil prices. The crash forced some companies, including Total, to offer investors the option to take their dividend in shares as a way to preserve cash. Other firms, like Conoco and Italian oil titan Eni SpA cut the payouts to weather the downturn. In the past year, the oil market has clawed back some of its losses. Brent crude, the international benchmark, closed at $65.61 on Wednesday, its lowest level since Dec. 22 but still up over 140% since the market bottomed out in the winter of 2016. Higher oil prices -- coupled with the industry's painful, yearslong efforts to cut costs -- are now starting to pay off for investors. Total's announcement Thursday came as the company reported a 86% rise in net profit for the fourth-quarter compared with the prior year. Full-year earnings rose 39%, boosted by rising oil prices and growing production. The strong financial results infused Total with "the confidence to be bold and give shareholders a real prize today," said analysts at Bernstein. "2018 will be the year of higher than expected cash returns." Shares in Total rose nearly 2% in early European trading. The company capped off a set of mixed results for the world's biggest oil companies. Rivals Exxon Mobil Corp. and Chevron both missed profit expectations, sending their share prices down. Royal Dutch Shell PLC's cash flow disappointed, while BP suffered almost $2.7 billion in one-time charges that marred an otherwise healthy set of profits. Still, Chevron said it would boost its quarterly dividend by 4% and signaled that more cash returns could be on the way if oil prices remain around current levels. Shell has outlined plans to start a $25 billion share-buyback program by the end of the decade. On Wednesday, Statoil, the Norwegian state oil company, said it would increase its fourth-quarter dividend by 4.5%. American oil and gas producers Anadarko Petroleum Corp. and ConocoPhillips also announced increases to their quarterly shareholder payouts and raised the size of their share buyback programs. Both companies reduced their dividend during the worst of the oil price crash. Write to Sarah Kent at (END) Dow Jones Newswires February 08, 2018 05:23 ET (10:23 GMT)
florenceorbis: Three Wild Cards That Could Hurt The Oil Rally By Kent Moors - Jan 28, 2018, 2:00 PM CST oil unit The 2018 oil rally is happening at breakneck speed. As I write this, West Texas Intermediate (WTI) is above $66 a barrel while Brent crude is breaching $71 a barrel for the first time since December 2014. That means, as of yesterday’s close, WTI has risen 12.2 percent for the month; Brent 8.1 percent. Now, I’ve written about the narrowing of the global crude oil balance for some time. But it’s looking more and more like that balance is arriving quicker than anticipated. And this is what it’ll mean for oil prices… The Single-Most Important Factor For Oil Prices The amount of surplus volume in the market will stabilize. That’s a fact. But unlike what some pundits may say, the point isn’t to eliminate the surplus. Excess available supply provides a necessary buffer that restrains on large swings in pricing. It’s when traders have concluded the supply is increasing due to overproduction that the downward pressure on prices unfolds. If that overproduction is further fueled by operators’ desperate attempts to keep the doors open, the pricing pressure becomes even more acute. The last month has indicated that we are now out of that period. Wellhead prices – the first arms-length transaction, the oil exchange at which the producer makes its money – are now in the range of the low $50s. At this point, most U.S. producers can run a profit and feeding excess volume in to the market to avoid the sheriff becomes less of a concern. Any oil trader will tell you that predictability is the most important single factor in stabilizing transactions. Of course, there will still be fluctuations in either direction. But the range will be less. The OPEC-Russian agreement on restraining production is holding, with some cartel members even extending the cuts beyond the levels agreed upon. Continuing production problems in member nations Venezuela, Libya, and Nigeria have improved the decline perspective. There are just three wild cards that we have to factor in… Wild Card #1 – U.S. Production The impact of U.S. production has always been a wild card when it comes to the price of oil. American volume has never been a part of the OPEC accord. With U.S. exports increasing to the global market, how much is produced in the States has a much more direct influence on prices. For years now, crude oil prices have been determined globally, especially in developing regions, not in North America or Western Europe. Until Congress allowed the exports after a four-decade prohibition, the U.S. influenced the marker primarily in the level of daily imports it required. Now, U.S. producers can export to outside markets having higher than average prices, improving profit margins and relieving somewhat the domestic pricing pressure from having the produced supply remaining in the local market and depressing WTI levels. Therefore, in the current climate, traders have concluded that the level of U.S. production does not have the same impact it had six months ago. Related: OPEC Drives Oil Prices Back Up At home, companies can balance production since the sell revenues are higher. Abroad, the problems in several main producing countries combined with the OPEC cuts provide greater flexibility to absorb American exports. But that’s not the only thing improving the floor for prices… Wild Card #2 – The Dollar The next wild card we have to factor in is that the exchange value of the U.S. dollar is, currently at least, buttressing the price of crude. The vast majority of daily oil sales worldwide are denominated in dollars. When the value of the dollar rises vis-à-vis other major currencies like the euro, the pound sterling, and the yuan, it costs more in local currencies and the oil price declines. However, the converse tends to the case when the dollar weakens. That is the case now. The softness in the greenback has been providing support for rising oil prices. This relationship seems less direct than had been the case in the recent past. But it is still a factor. Good if your selling oil abroad. Not so good if you are importing French wine. Wild Card #3 – Short Contracts The last wild card is short contracts. Oil’s price rise has also been supported by the unraveling of short contracts – something I have addressed on several occasions in the past. Shorts are run when a trader believes prices are going to decline. Some shorts are even drawn in the hope of being self-fulfilling contracts. Related: Bank Of America: EVs To Lead To Peak Oil Demand In 2030 After all, if I appear on TV saying the sky is falling and others believe it, oil prices decline, and I laugh all the way to the bank. Of course, running shorts when the price is rising is a certain formula for losing a lot of money. That’s because the shorts must be covered when due. That means the short holder must move back into the market and buy the contracts “covered”; by the short. If the underlying price at redemption is higher than the price paid when the short was introduced, it costs the short artist more than the short’s initial face value. Taking options on the short changes some of the dynamics but not the overall result. In the squeeze resulting, shorts will be liquidated early, resulting in a spike in the underlying crude oil prices. Both the dollar exchange rate and the volume of short positions may change. At the moment, both are contributing to a rise in oil prices – and will continue to drive prices even higher. Fact is, oil’s meteoric climb over the past few weeks has been incredible. Enough so that I will be revising my 2018 oil price prediction over the next couple of days. You see, we not only blew through my original prediction, I said WTI would be trading between $59 and $61 a barrel; Brent between $63 and $65… We also exceeded my second quarter predictions that Brent would be trading between $67 and $69 a barrel. All of which proves one important thing – the crude oil balance is here. By Dr. Kent Moors More Top Reads From
grupo: The 4 Best Oil Stocks of 2017 When oil and gas finally started to outperform, these stocks from across the industry were the big winners. John Bromels (TMFTruth2Power) Jan 3, 2018 at 4:33PM Oil stocks are flops. That may have been true in 2014, 2015, and even 2016, but in 2017, oil prices finally began to rise significantly above the critical $50-per-barrel mark. And oil and gas industry companies were poised to benefit. However, some benefited a bit more than others -- particularly Royal Dutch Shell (NYSE:RDS-A) (NYSE:RDS-B), Statoil (NYSE:STO), HollyFrontier (NYSE:HFC), and ConocoPhillips (NYSE:COP). Here's why they did so well, and what to expect from them in 2018. A smiling man raises his arms next to an oil barrel above which is a cloud of paper money. If you were lucky enough to buy one of these four oil industry stocks at the beginning of 2017, you should be happy with their outperformance. But will they do it again in 2018? Image source: Getty Images. Royal Dutch Shell: Best of the biggest The best oil stock of 2017 -- by just about any measure -- was Royal Dutch Shell. The oil major not only had an impressive stock rally, up 22.7% for the year, but also has one of the best dividend yields in the entire oil industry, at more than 5.6% (only BP's is higher, at about 5.7%). The company's outperformance was far from a sure thing, though. In 2016, Shell took on about $50 billion in debt to acquire BG Group. While the acquisition increased Shell's exposure to the up-and-coming liquefied natural gas market, management announced it would sell $30 billion in non-core assets to try to get a handle on the company's debt. Shell's return metrics -- a measure of how well management is deploying the company's capital -- have also improved, as has the company's cash flow, thanks to some smart cost-cutting measures. Ultimately, Shell seems to simply be running more efficiently, and the market has taken notice. With oil prices on the rise, expect Shell to continue to outperform. Statoil: Back in the game Statoil had a surprisingly strong 2017. I say "surprisingly" because the company posted some big losses in 2015 and seemed headed for middling production growth. Fast-forward to last year, and the company was able -- like many of its peers -- to successfully cut costs and generate a decent amount of cash flow at $50-per-barrel oil. In addition, Statoil has some ambitious projects in its pipeline, including a pair of offshore blocks in Suriname, right next door to ExxonMobil's promising Liza discovery in Guyana. All that was enough to boost the company's stock by 17.4% in 2017. Couple that with a 4.1% dividend yield, and Statoil looks like a compelling prospect for 2018. ConocoPhillips: Winning the losers' game The largest independent U.S. oil and gas exploration and production company (E&P) was also 2017's biggest winner among its peers, with a stock price that rose 9.5% during the year. That isn't nearly as much as Statoil or Shell, of course, but considering that many E&Ps finished the year down 20% -- or more -- Conoco represents a rare bright spot in this corner of the industry. Unsurprisingly, the company outperformed for many of the same reasons that Statoil and Shell did. It got rid of underperforming assets and used the cash to pay down debt, like Shell. It cut costs like Statoil. It also unveiled a clear shareholder-friendly plan and began executing it, to the delight of its investors. Conoco will continue to reward shareholders into 2018, but there's a very strong case to be made that there are probably better values among the E&Ps whose shares were hammered in 2017 but that have made similar moves and will benefit from the same industry trends that boosted Conoco this year. HollyFrontier: Top of the heap The most impressive performances in the industry came from some of the midstream (transportation and storage) and downstream (refining and marketing) companies. While several midstream-only companies -- particularly pipeline operators -- were down by more than 20% for the year, many downstream companies like Valero Energy, Phillips 66, and Marathon Petroleum were up by double digits. The biggest win among the large- and mid-cap refiners, though, was HollyFrontier, which saw its stock rise a jaw-dropping 56.4% in 2017, outpacing every other large- or mid-cap company in the industry. Even more impressive, that's not just a one-year fluke. Over the last three years, HollyFrontier's share price has risen 36.7%, while many upstream or integrated companies' stocks -- including those of Conoco and Shell -- are down over the same period. HollyFrontier rode the same trends as its peers: An improving refining market and a busy summer driving season led to increased demand for refined petroleum products. HollyFrontier was ahead of the pack thanks to some savvy moves to take advantage of the price discounts from harder-to-process crudes from Canada and elsewhere. While we can't be sure whether the refining trend will continue, Holly's 2.6% dividend yield and past success should bode well for its continued performance versus its peers.
waldron: What Will Drive The Next Oil Price Crash? Tyler Durden's picture by Tyler Durden Dec 22, 2017 2:10 PM Authored by Tsvetana Paraskova via, As we roll into 2018, analysts and investors are more optimistic that the oil market will further tighten next year and support higher oil prices, but rising U.S. shale production will likely cap any significant price gains. On the demand side, expectations are that global economic growth will support solid oil demand growth. On the supply side, Venezuela’s dire situation, possible new sanctions on Iran, and increased tension in the Middle East mostly with the Saudi-Iran issues and the Iraq-Kurdistan standoff may take more barrels off the market than OPEC and friends plan, and send geopolitical jitters through the oil market. However, according to energy policy expert Michael Lynch, there remain three potential events in the markets that could send oil prices tumbling. These include a large correction in the U.S. stock market that could spread to a sell-off in commodities; one of the OPEC members or Russia breaking away from the unusually strong compliance to the cuts we have seen so far; and U.S. oil production rising so much as to make OPEC see it as a threat to its long-term oil market share. In markets, there are already some signs that we may be seeing some bubbles, Bitcoin being the most likely candidate, according to Lynch. In addition, the price to earnings ratio of the S&P 500 index is now over 25, well above the mean historical average of just over 15. Last week, Fed Chair Janet Yellen said, referring to the high valuation in some asset classes, “the fact that those valuations are high doesn’t mean that they are necessarily overvalued.” According to VTB Capital’s Global Macro Strategist Neil MacKinnon, the ultra-low volatility in U.S. equities this year is “very vulnerable” to shocks, and current stability could actually bring future instability. According to Lynch, if the U.S. market moves into bear territory next year with a big correction, it could spread the financial contagion to commodities such as oil. Another potential threat to oil prices is that of an OPEC/non-OPEC pact participant beginning cheating outright—Iraq and Russia, for example—which could lead to the Saudis deciding to let the price of oil drop, Lynch argues. Yet the Saudis have little choice but to support oil prices because of their heavily oil-reliant economy and the planned IPO of Saudi Aramco, Amy Myers Jaffe at the Council on Foreign Relations wrote in the Houston Chronicle last week. According to Myers Jaffe, if Russia makes a U-turn and boosts its oil production, the ultimate battle for market share will be between the U.S. and Russia, despite the fact that Saudi Arabia continues to hold influence in the oil policy of OPEC and its partners. “For now, Russia seems content to collaborate with Saudi Arabia on oil market stability, which ironically also suits the current U.S. administration, whose America-first jobs message is tied heavily to the economic engine of the shale revolution,” Myers Jaffe said. The shale revolution and the rise of U.S. oil production is the third possible factor that could lead to an oil price collapse, Lynch argues. If OPEC sees that it needs to defend market share in the long run, chances grow that the cartel may decide to let oil prices drop, Lynch says. OPEC is now outright acknowledging that U.S. shale outperformed initial expectations, and last week the cartel revised up its projections for non-OPEC supply growth for this year and next. The International Energy Agency (IEA), for its part, said that while OPEC producers had decided to roll over the production cuts to the end of 2018, non-OPEC supply would increase more than previously expected, and total supply growth could exceed demand growth next year. The EIA forecasts in its latest Short-Term Energy Outlook (STEO) that total U.S. crude oil production will average 9.2 million bpd this year and 10.0 million bpd in 2018, which would mark the highest annual average production, surpassing the previous record of 9.6 million bpd from 1970. OPEC is well aware of the second U.S. shale resurgence, and it looks like it’s currently sacrificing short-term market share in the name of higher oil prices—or “oil price stability”, as it loves to call it. As for letting the price of oil slide, OPEC members’ budgets may currently need higher oil prices even more than some U.S. shale drillers do. While many analysts and OPEC expect the oil market to finally rebalance at some point in late 2018, a sharp correction in the financial markets, a dip in OPEC/non-OPEC compliance, and the market share wars could result in lower oil prices, or in the extreme case—in an oil price crash.
ariane: IEA's Shocking Revelation About U.S. Shale November 15, 2017, 08:38:39 AM EDT By Shutterstock photo The oil market is exhibiting signs of having reached a “new normal,” according to the IEA, with the floor for oil prices jumping from $50 to $60 per barrel. But a few factors could poke holes in that price floor, and market watchers should be careful not to become overly optimistic about the trajectory for oil prices, the agency says. In its latest Oil Market Report, the Paris-based energy agency says that a confluence of events have pushed up Brent prices. Lower-than-expected oil production figures coming out of Mexico, the U.S. and the North Sea have combined with unexpected outages in Iraq (-170,000 bpd in October), Algeria, Nigeria and Venezuela. Those outages, plus the geopolitical turmoil in Iraq, and especially Saudi Arabia, have heightened tension in the oil market. Inventories also continue to decline. OECD commercial stocks fell below the symbolic 3-billion-barrel mark in September for the first time in two years. That seems to have put a floor beneath Brent crude prices at $60 per barrel, creating a “new normal” after prices had bounced around in the $50s for months. But the IEA cautions that the floor is not a solid one, and that a “fresh look at the fundamentals confirms…that the market balance in 2018 does not look as tight as some would like.” For one, some of those outages are temporary. North Sea and Mexican production recovered from maintenance, Iraq is scrambling to restore output (and raised exports from its southern fields to compensate for outages in the north), and shut-ins related to Hurricane Harvey in the U.S. have largely been restored. Libya and Nigeria saw their output inch up in October. But the real news is that the IEA downgraded its demand forecast for both this year and next. The agency lowered its 2017 forecast by 50,000 bpd, which may not seem like much, but is the result of a more recent slowdown – the agency says that demand in the fourth quarter will likely end up being 311,000 bpd lower than it previously thought. There are a variety of reasons for this, including fewer heating degree day numbers for the winter, lower demand in the Middle East (Iraq and Egypt), and some “modest changes elsewhere.” On top of that, oil prices have jumped 20 percent over the past two months, putting a dent in demand. The IEA assumes a price elasticity of oil demand at -0.04, which means that every 10 percent increase in prices implies a 400,000-bpd decline in oil demand (given that total demand is at nearly 100 mb/d). Overall, the IEA revised down its 2018 oil demand forecast by 190,000 bpd. The deceleration in demand will leave the market with a surplus in the fourth quarter, and that slowdown will continue into 2018. Global supply will exceed demand by a rather substantial 0.6 mb/d in the first quarter of next year, and the surplus will linger in the second quarter, narrowing to 0.2 mb/d. That comes after a lot of progress was made this year in lowering inventories. The supply surplus suggests that inventories will resume their climb for the next few months, perhaps through mid-2018. The sudden pessimistic outlook for the oil market is a symptom of explosive growth from U.S. shale, which, combined with other non-OPEC producers, will result in an additional 1.4 mb/d in fresh supply in 2018. That is a staggering number, and so large that “next year’s demand growth will struggle to match this,” the IEA said. The agency warned that “absent any geopolitical premium, we may not have seen a ‘new normal’ for oil prices.” In a separate report – the IEA’s annual World Energy Outlook – the agency dismissed predictions about peak oil demand, arguing that any increase in EVs will be more than offset in robust demand growth from other sectors, including trucks, aviation, maritime transport and petrochemicals. Moreover, the U.S. will apparently be the one that meets that growth in demand. The IEA said that the U.S. shale revolution will mean that combined oil and natural gas will have to rise to “a level 50% higher than any other country has ever managed.” The IEA says that the 8 mb/d increase in tight oil production between 2010 and 2025 “would match the highest sustained period of oil output growth by a single country in the history of the oil markets.” In other words, the shale revolution still has a long way to go, and when all is said and done, the U.S. will have added more supply in a shorter period of time than even Saudi Arabia did at its peak. Taken together, the two reports from the IEA may have just burst the oil price bubble – prices plunged on Tuesday, erasing a large chunk of the gains seen in recent weeks. This article was originally published on The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
grupo: Https:// Supermajors Shell and ExxonMobil square off for the top spot in oil Irina Slav, Published 8:00 a.m. ET Nov. 11, 2017 Pause 0:00 0:00 Fullscreen For the few women in oil, this site creates community Pink Petro has gotten support from large companies in the industry. Video provided by Newsy Newslook getty-row-of-oil-pumps_large.jpg (Photo: Getty Images) CONNECTTWEET 4 LINKEDINCOMMENTEMAILMORE Brent’s close to $65 a barrel and WTI is climbing closer and closer to $60 — and analysts are rushing to make bullish forecasts for the fourth quarter of the year. Big Oil is preparing for an even better three-month period than Q3, when all supermajors beat profit expectations. Two of them stand out: Exxon and Shell. It’s no secret that Shell has ambitions to overtake Exxon as the world’s number-one oil company in terms of value. It’s actually on track to beat Exxon on cash flow from operations for full 2017. The Anglo-Dutch company is also considering a share buyback at some point in the future as financial performance improves and the company gains confidence that it can cover dividend payouts with cash on hand. Meanwhile, Exxon, according to some analysts, is stretching itself thinner and thinner in order to keep its dividend payout ratio at 100 percent, as it has throughout the oil price crisis. The reliability of dividends is vital for oil supermajors since they’re the top reason investors favor the industry these days. Yet, the oil price crash created another vector for Big Oil’s dividend reliability in addition to oil prices, booked reserves, and production. This vector is diversification, as it’s becoming increasingly clear that even if Exxon doesn’t feel threatened by electric cars, they may have another threat to consider. There is also climate change legislation, which, if implemented without delays, will seriously undercut the demand for fuels that constitutes Big Oil’s main revenue stream. Right now, when it comes to diversification of revenue streams, Shell is a step ahead of Exxon. The Anglo-Dutch supermajor recently bought Europe’s biggest EV charging network, NewMotion. It also has plans to double its chemicals business size by 2025, betting big on shale gas. Part of its new planned capacity is a $10 billion petrochemicals complex in the Marcellus shale. More: Goldman Sachs report makes a very bullish case for commodities More: Production quotas in question: Is $60 oil too tempting for OPEC to cheat? More: Energy stock earnings: The remarkable recovery of big oil Shell’s ambitions don’t stop there. It will spend $1 billion annually on green energy projects until 2020, and plans to derive a fifth of its global fuel station sales from EV recharging and low-carbon fuels. That’s in addition to its shift to gas following the acquisition of BG Group two years ago. Meanwhile, Exxon is also spending $1 billion annually on cleaner energy projects, but its focus in predominantly on biofuels and on projects whose commercialization lies far in the future. It is pursuing its core business as it has for decades: expanding in the shale patch. It also recently entered Brazil’s deepwater offshore zone with a $1.2-billion bid for 10 oil blocks at an auction. At the same time, Exxon is growing its petrochemicals production capacity as well. The latest piece of news in this respect was the announcement of a major investment in a petrochemical complex in China. Exxon seems to be a strong believer that petrochemicals and diesel demand from heavy-duty machinery will completely offset any increase in EV adoption. In fact, Vice President Jeff Woodbury recently said Exxon had no problem with EVs, which, according to a company forecast, would only represent 6 percent of the global passenger car fleet in 2040. Exxon won’t have a problem even if gasoline demand ended some day, it will just produce more diesel, Woodbury said. Play Video Royal Dutch Shell reported a near 50 percent rise in quarterly profits, driven by strong refining, while solid cash generation underscored the oil and gas company has adapted well to a world of low oil price. Newslook However, research is happening in the field of electric trucks as well. Tesla is set to unveil its Semi later this month. Maritime vessels are switching to LNG. Nickel and cobalt demand is rising fast, indicating a rather bullish outlook for EVs, contrary to Exxon’s skepticism. In fact, Daimler, which showcased an electric truck at the end of October, believes we’re just two years away from electric trucks that can sell for the same price as diesel vehicles, thanks to the quick drop in battery prices. Can petrochemicals alone drive Exxon’s profits up in the near-to-long term? We’ll have to wait and see, but in the current industry context and global trends in energy demand, Shell’s bet on gas and EVs in addition to chemicals and oil seems a safer one than sticking to the core business. More: Follow USA TODAY Money and Tech on Facebook is a USA TODAY content partner offering energy industry news and commentary. Its content is produced independently of USA TODAY.
chart trader2000: By Sarah Kent LONDON -- BP PLC reported a healthy set of third-quarter profits and plans to restart its share buyback program Tuesday, signaling the company is increasingly comfortable with low oil prices as it ramps up its growth ambitions. London-based BP said it would start share buybacks in the fourth quarter, supported by strong cash generation so far this year that allowed it to cover its spending commitments and dividend at $49 a barrel. Investors are increasingly looking at this break-even metric for signs big oil companies have succeeded in shifting their financial frameworks to operate profitably at lower oil prices. BP's plans to restart share buybacks next quarter sends a strong signal of confidence to the market. The buybacks will offset dilution from the company's scrip program, which gives shareholders the option to take their dividend in stock. Such programs proved helpful to oil companies during the downturn, alleviating the cash burden of their shareholder payouts. But investors are increasingly eager to see companies able to fully cover their dividends with cash. Of the majors with such programs in place, so far only Norway's Statoil ASA has announced plans to halt the program altogether and BP remains among the first to take steps to offset dilution. While BP's replacement cost profit -- a number similar to the net income that U.S. companies report -- was $1.4 billion in the third quarter, down slightly from $1.7 billion in the same period a year earlier, its underlying financials were strong. The company reported its highest underlying earnings in its refining segment in five years, and saw its exploration and production unit return to profit after recording a loss a year earlier. The company's production rose 14% year-over-year to 3.6 million barrels a day in the quarter, as new projects in Australia, Trinidad and Oman began production -- the latest in a series of developments expected to start up by 2020 that will bring the company's production back up to levels last seen before its fatal blowout in the Gulf of Mexico in 2010. BP is still working to put the disaster behind it, after selling off billions-of-dollars-worth of assets and paying out huge amounts in fines, legal fees and cleanup costs, some of which are still ongoing. But after years of retrenchment, prolonged by the sudden slump in oil prices in 2014, the company has signaled it is ready to grow again and is able to do so with the oil price at $50 a barrel. BP is the latest oil major to report a healthy set of results for the third quarter, signaling that the sector has made good progress in adjusting to lower oil prices. Profits at many of the world's biggest energy companies soared over the period, helped by a stronger crude market and stringent spending cuts. Last week, Exxon Mobil Corp and Chevron Corp. both reported increases in third quarter profits of 50% compared with the prior year. French oil major Total SA saw its earnings jump 40%. Royal Dutch Shell PLC will report later this week. The strong set of earnings plays into a run up in international oil prices to more than $60 a barrel last week -- it is highest level since 2015. That has helped lift BP's share price back to January highs when it closed in on levels last seen before oil prices crashed.
fangorn2: Why the Market for Fossil Fuels Is All Burnt Out Here is an early section of this interesting article by Jillian Ambrose for The Telegraph: If Helm is to be believed the oil market downturn is only getting started. The latest collapse is the harbinger of a global energy revolution which could spell the end-game for fossil fuels. These theories were laughable less than a decade ago when oil prices grazed highs of more than $140 a barrel. But the burn out of the oil industry is approaching quicker than was first thought, and the most senior leaders within the industry are beginning to take note. In the past, the International Energy Agency (IEA) has faced down criticism that its global energy market forecasts have overestimated the role of oil and underplayed the boom in renewable energy sources. But last month the tone changed. The agency warned oil and gas companies that failing to adapt to the climate policy shift away from fossil fuels and towards cleaner energy would leave a total of $1 trillion in oil assets and $300bn in natural gas assets stranded. For oil companies who heed Helm’s advice, the route ahead is a ruthless harvest-and-exit strategy. This would mean an aggressive slashing of capital expenditure, pumping of remaining oil reserves while keeping costs to the floor and paying out very high dividends. “They’d never do it because no company board would contemplate running a smaller company tomorrow than today. It’s not in the zeitgeist of the corporate world we’re in, but that’s what they should do,” Helm says. BP and Royal Dutch Shell are slowly shifting from oil to gas and making even more tentative steps in the direction of low-carbon energy. But Helm is not entirely convinced that oil companies have grasped the speed with which the industry is undergoing irrevocable change. “As the oil price fell, at each point, oil executives said that the price would go back up again,” says Helm. “What the oil companies did was borrow to pay their dividends on the assumption that this is a temporary problem. It’s my view that it is permanent,” he adds. For a start, there is scant precedent for the price highs of recent decades. Between 1900 to the late Sixties oil prices fluctuated in a range between $15 a barrel to just above $30 a barrel – even through two world wars, population growth and a revolution in transport and industry. It was geopolitical events which caused oil prices to surge by more than $100 a barrel following the Middle East oil embargoes of the late sixties and early seventies. They collapsed back to $20 by the Eighties. So, what drove oil prices to the heady levels of $140 a barrel just less than 10 years ago? “China,” says Helm, barely missing a beat. “If you look at both the rapid growth in emissions and the rapid growth of oil, fossil fuel and all commodity prices, it was while China was doubling its economy every seven years. This is a phenomenal rate. David Fuller's view Oil prices spiked above $140 a barrel in 2008 because of supply reductions from OPEC countries, not least due to regional wars. This has never been fully recognised as a huge factor in what is generally remembered as the credit crisis recession which followed. In 2009 OPEC lowered production once again, leading to a move back above $120 a barrel two years later. By 2014 subsidised renewables were gradually eroding the market for crude oil. However, the really big change was the US development of fracking technology, leading to a surge in the production of crude oil and natural gas. We should always remember these two adages, particularly with commodities: 1) the cure for high prices is high prices. These lower demand somewhat but the bigger overall influence is an increase in supply. Conversely, the cure for low prices is low prices. Demand increases somewhat when prices are lower but more importantly, supply is eventually reduced. How have these adages influenced commodity prices in recent years and what can we expect over the lengthy medium term?
chart trader2000: By Sarah Kent and Kevin Baxter LONDON -- The prospect of rising oil prices has the global energy industry considering a strategy that has been unthinkable for much of a two-year-long market slump: Making new investments. Big oil companies are moving ahead with new spending again, says BP PLC Chief Executive Bob Dudley on the sidelines of the Oil and Money conference here. The British oil company he heads has taken final investment decisions on a handful of projects this year and is expected to approve more in 2017, he said. "Investments are back," Mr. Dudley said. "But it's only going to be the very best." Mr. Dudley's comments highlight a pervasive sentiment among oil-industry executives and government officials that there is light at the end of the tunnel, as they grope through one of the industry's darkest moments. For the past two years, the industry has been roiled by oil prices that collapsed to less than $50 a barrel from 2014 highs of $114 a barrel, and never recovering to those previous highs. Now, with the Organization of the Petroleum Exporting Countries promising a modest output cut and prices generally on the rise, executives and industry leaders say they have a sense of guarded hope as oil prices hover around $50 to $52 a barrel. Mr. Dudley predicted an oil price of between $50 and $60 a barrel in 2017, compared with prices that have ranged between $28 a barrel and $53 this year. Ali Moshiri, president of African and Latin America Exploration and Production at Chevron Corp., said U.S. shale producers would invest again if prices rise to $60 a barrel. "The phenomenon of shale oil is real and when prices rise to $60 a barrel you will see the level of active rigs rise. This is inevitable," Mr. Moshiri said during a panel discussion. A rising oil price would allow the energy industry to make needed investments, restore some of the tens of thousands of jobs cut in the past two years and stem some of the economic pain rippling through oil-dependent economies from Venezuela to Saudi Arabia. Cuts by OPEC, the 14-nation cartel that controls more than a third of the world's crude production, would amount to about 1% to 2% of its 33.2 million barrels a day of production and help draw down the vast oversupply of oil that has flooded world markets. But OPEC and other oil producers must be careful, said Fatih Birol, the executive director of the International Energy Agency, in an interview here. Pushing prices too high would boost U.S. oil output, stop rapid declines in production in countries like China and Colombia and put a brake on fragile oil demand, he said. Oil-industry investment declined in 2015 and 2016 and is likely to fall again in 2017 unless there is a sea change -- the first time in recorded history that energy investment would decline for three straight years, Mr. Birol said. John B. Hess, chief executive of the New York-based oil company Hess Corp., warned that without new investments, the world's balance of supply and demand would turn quickly from a glut of oil today to a shortage of petroleum in the future. "We're not investing enough ensure that oil supply keeps up with demand, 2018, 2019, 2020," he said. ConocoPhillips Chief Executive Ryan Lance said the recent rise in prices wouldn't be enough for companies to start spending money again on massive long-term projects. "Prices are still pretty low to justify significant investments," Mr. Lance said. Ian Taylor, the chief executive of the world's largest independent oil trader, Switzerland-based Vitol Group, said the oil-market's supply and demand balance would remain out of whack for the next year. His price prediction for October 2017? $54.99, compared with about $52 in recent days. --Sarah McFarlane contributed to this article.
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