Total Share Discussion Threads

[ariane] 12/8/2020 17:43

Australian oil field buoys Total Energy Q2 report

The Canadian Press






Total Energy Services (TOT:CT)
2.29 0.09 (4.09%)
As of: 08/12/20 12:39:37 pm


CALGARY - Shares in Total Energy Services Inc. are up after it reported a 68 per cent decline in revenue in the second quarter due to a near collapse in oilfield activity in North America but beat analyst estimates for adjusted income.

The Calgary-based drilling company's stock rose by as much as 7.7 per cent or 17 cents to $2.37 in early trading in Toronto on Wednesday.

Total reported adjusted earnings of $12.9 million on revenue of $70.8 million in the three months ended June 30, was down from $17.5 million on $212.7 million in the year-earlier period.

Adjusted earnings beat analyst expectations of $7.3 million despite revenue coming in well below forecasts of $100.7 million, according to financial data firm Refinitiv.

Total said utilization of its drilling rig fleet dropped to one per cent in Canada, where it has 80 rigs, and three per cent in the United States, where it has 13 rigs. Its five rigs in Australia, in contrast, operated at 72 per cent utilization.

The company suspended its dividend and cut its 2020 capital budget from $23 million to $10 million to deal with the lower North American activity. It said it received $4.5 million in grants under the Canada Emergency Wage Subsidy program in the quarter.

“Our strategy to diversity geographically and operationally paid off during the tremendously challenging period,” said chief financial officer Yuliya Gorbach on a conference call on Wednesday.

“Reductions in North American revenues were somewhat offset by relatively stable revenues from Australia during the second quarter of 2020.”

[grupo guitarlumber] 12/8/2020 07:03

extract, smile or smirk


In the Albertine region of Uganda where oil exploration and developments are taking place, there are several environmental, social, economic and cultural issues emerging from the petroleum sector activities. Amidst the aforementioned issues, oil companies have carried out CSR projects in different areas but they are often scattered, and not planned with the communities where they are implemented.

In addition, the main principles of CSR governance like transparency, accountability, participation and equity are often neglected by the joint venture companies in the planning and execution of CSR projects. For instance, on August 19, 2019, a football game was stopped just 20 minutes into the game in Nwoya by the district chairperson after discovering that Total E&P hadn’t put local content into consideration.

The joint venture partners have implemented CSR in the Albertine rift. However, according to a recent report on Ugandan perspectives on oil and gas by MaendeleoYa Jamii (MYJ), there is a great mismatch between community needs and aspirations and what the OCs have actually provided in form of CSR in the major oil districts of Uganda.

[grupo guitarlumber] 11/8/2020 10:28

5. What about the Europeans?

BP Plc said in June it was cutting its estimates for oil and gas prices in the coming decades between 20% and 30%, while also expecting the cost of carbon emissions to be more than twice as high as before. As a result the company is reviewing its projects, which could lead to some oil being left in the ground. Royal Dutch Shell Plc, BP and Total SE have written off billions of dollars of assets as the pandemic destroyed oil demand and prices, making some fields unprofitable to drill. The bulk of Total’s impairment applied to Canadian oil sands, which are costlier and more carbon intensive than conventional fields.
6. What type of assets are at risk?

BP said Aug. 4 that it’s now targeting a 40% decline in hydrocarbon production and won’t explore for oil in any new countries. The company’s chief of staff Dominic Emery said back in 2019 that complicated projects could be shelved in favor of fields that are quicker to develop. The pressure to curb emissions may prompt companies to leave the most carbon-intensive reserves untouched. Across the industry, projects most at risk include deep-water discoveries off Brazil, Angola and in the Gulf of Mexico, as well as some Canadian oil sands assets, according to Parul Chopra, vice president for upstream research at Rystad Energy A/S.

[misca2] 11/8/2020 08:32

Alibaba Group Holding plans to provide digital services for the China operations of Total S.A., as the Chinese tech giant signed its first international oil-major client for its business-operating system.

The two companies signed a Memorandum of Understanding for the partnership on Tuesday, they said in a joint statement.

Under the agreement, Alibaba will offer services including online payments, big data and enterprise management to Total, and will cover the French energy firm's major operations in China ranging from service stations to car care.

Customers will be able to access Total's products and services on various Alibaba apps such as the e-commerce platform Taobao and payment portal Alipay.

"We hope the partnership will not only improve our business in this country but also create a best practice that we can roll out to Total Group's overseas business," said Ian Lepetit, President of Total (China) Investment.



Write to Yifan Wang at [e-mail]



(END) Dow Jones Newswires

August 11, 2020 02:56 ET (06:56 GMT)

[gibbs1] 08/8/2020 09:24

Hot weather sends natural gas prices surging

WTI remains above $41 as it stays in narrow price band

By Mella McEwen, MRT.com/Midland Reporter-Telegram Published 5:55 pm CDT, Friday, August 7, 2020

West Texas Intermediate eked out a small gain this week, remaining above $41 a barrel as it continues to be stuck in a narrow trading band.

West Texas Intermediate eked out a small gain this week, remaining above $41 a barrel as it continues to be stuck in a narrow trading band.

Natural gas prices, however, saw strong gains this week, starting with a 30-cent jump Monday that put it over $2.10 per Mcf on the New York Mercantile Exchange. That was followed by a 9-cent gain Tuesday, then prices slumped lightly Wednesday and Thursday before gaining 7 cents Friday to close at $2.24 per Mcf. That’s well above the $1.80 Mcf at last Friday’s close.

“NYMEX Henry Hub posted substantial gains on August 3 and 4 due to an easing of storage availability fears, excessive heat in June and July and more of the same expected in August and signs of strengthening LNG export demand,” Midlander Mike Banschbach, an oil gas, and natural gas liquids marketing consultant, told the Reporter-Telegram by email. “However, prices in the Permian were tempered by the rising basis between Waha and Henry Hub, resulting in a modest 15 cent per MMBtu gain in Waha prices for the fourth quarter.”

Banschbach said that if crude prices creep up above $45 a barrel later in the year, prompting Permian producers to drill and complete wells, that will result in more natural gas – associated with the crude production – being put in the market and that will put downward pressure on the Permian natural gas price.

WTI on the NYMEX reported three days of gains this week, putting it above $42 a barrel Wednesday before prices slumped the final two days of the week. WTI fell 73 cents to close at $41.22 per barrel Friday, up from $41.04 at Monday’s close. The posted price ended the week at $37.75 a barrel.

Bloomberg reported that crude prices were weakened by renewed tensions between the U.S. and China, which the news service said rattled markets already reeling from uncertainty over a new round of economic stimulus to help the economy through the COVID-19 pandemic.

According to Bloomberg, crude is testing the upper bound of its recent trading range after hitting a five-month high this week amid shrinking U.S. stockpiles. But taking the wind out of any sustained breakout rally is the spotty recovery in oil consumption, with crude imports into China shrinking in July.

Roger Diwan, vice president, financial services at IHS Markit, said in a market assessment that prices are emerging “bruised and battered from the worst of the COVID-19 outbreak” and are now at a delicate point as prices transition to what his company calls Phase II of its three phased of market recovery.

The second phase is the “just-in-time” phase in which surplus inventories are being worked down in parallel with rising supplies as spare supply capacity returns from the OPEC+ alliance and North American producers.

“The record cuts set in motion in May and June by Saudi Arabia and its OPEC+ partners played a pivotal role in accelerating the improbable rebalancing of global oil markets. With demand recovering from April lows and after giving markets an extra month to find their footing, these exporters have now moved from managing the immediate surplus of the crisis towards managing the recovery,” Diwan wrote in his assessment.

“The recent display of restored harmony among OPEC+ heavyweights Saudi Arabia and Russia illustrates that the strategic debate within the group over price levels and market share has time to run,” he wrote. “As long as prices hold in the current range, demand concerns will likely help keep the agreement on course. When prices surpass $50 a barrel, potentially lifting capital spending in the United States higher, that is when changes to the tenor of the discussion, and the divergence of interest could start to play out.”

[waldron] 08/8/2020 07:30

Brent Crude Oil NYMEX 48.53
Gasoline NYMEX 1.32
Natural Gas NYMEX 2.44
WTI 41.53 USD -1.21%


FTSE 100
6,032.18 +0.09%
Dow Jones
27,433.48 +0.17%
CAC 40
4,889.52 +0.09%
SBF 120
3,869.15 +0.12%
Euro STOXX 50
3,252.65 +0.28%
DAX
12,674.88 +0.66%
Ftse Mib
19,516.43 +0.21%



Eni
7.806 -1.71%


Total
32.795 -0.76%


Engie
11.625 +0.22%

Orange
9.704 -0.35%


Bp
287.25 -2.71%

Vodafone
116.74 +0.64%

Royal Dutch Shell A
1,154.6 -1.80%



Royal Dutch Shell B
1,116.8 -1.74%


Tullow Oil (TLW)
: 25.48: -1.51 (-5.59%)

[grupo guitarlumber] 07/8/2020 15:38

Who to write off?

Avoiding Total disaster in Africa

Posted on Friday, 7 August 2020 15:16


On 30 July, oil giant Total wrote off $8bn of its fossil fuel reserves, admitting they were stranded assets that would never be used due to weak oil demand and the impact these assets would have on the climate.

This follows similar moves from BP, which announced this week that they would be cutting oil and gas production by 40% over the next decade and increasing renewables investment ten fold. However, Total is aggressively pursuing plans to build a new oil pipeline across Uganda and Tanzania that threatens Africa’s future.

READ MORE Climate change is here: time to use all the whole financial toolkit

One of the most important victories for Africa that emerged from the negotiations that produced the Paris climate accord was the agreement that countries would strive to limit global heating to below 1.5°C. Climate-vulnerable countries, including those in Africa, fought for this lower, more ambitious figure, rather than the previous 2°C, because their people in particular cannot risk the climate impacts associated with a 2°C-hotter world.

So it is disturbing to see that it could be new African oil, aided and abetted by fossil fuel giant Total, that ultimately sees global temperatures breaching the 1.5°C guardrail.
Unrefined ideas

The French company is currently seeking permission to build a vast oil pipeline that would snake across East Africa in a bid to get oil from oilfields in Uganda, and later the Democratic Republic of Congo and South Sudan, to the Indian Ocean and then off to refineries.

A recent letter from NGOs to the African Development Bank pointed out that “the reserves in currently operating oil and gas fields alone, even with no coal, would take the world beyond 1.5°C” of heating. To hit the 1.5°C goal, we need to be reducing fossil fuel emissions by at least 6% a year. That means keeping more of it in the ground, not building pipelines to new oilfields. The carbon footprint of the oil from the pipeline, once burned, is estimated to be the size of Denmark.

The 1.5°C Paris agreement goal may have been fought for the self-preservation of vulnerable people in Africa, but it’s ultimately for the benefit of the whole world. The difference between keeping temperature rise to 1.5°C rather than 2°C is too long to list here but includes 9% of the world’s population, rather than 28%, suffering from extreme heatwaves and losing 70% of coral reefs rather than virtually all. And it’s also the risk that we tip into irreversible climate disruption that is beyond our control.

But it’s not just the existential threat of climate change that makes the pipeline a terrible act, it’s also bad economics. Due to the coronavirus, we may actually be living through peak oil. The combination of the economic downturn and the recent price war between major producers means it is highly possible global oil consumption may never recover. Last month saw Shell write off $22bn in fossil fuel assets, while BP wrote off $17.5bn. BP says it believes the price of oil to now remain a third lower than expected for decades to come and its CEO Bernard Looney said: “I don’t think we know how this is going to play out. I certainly don’t know. Could it be peak oil? Possibly. I would not write that off.”

Now is clearly a terrible time to be building a massive new oil pipeline across East Africa that could become uneconomic within a few years. One of Africa’s great strategic advantages is that it is not encumbered with outdated fossil fuel infrastructure and can instead leapfrog that dirty energy and move straight to clean, cheap, solar and wind, with which Africa is blessed in abundance.



Africa’s climate allies are already showing the way. Sweden is aiming to eliminate fossil fuels from electricity generation by 2040 and Costa Rica has produced 95% of its electricity from hydro, geothermal, solar and wind over the past four years and aims to be entirely carbon-neutral by 2021.

This is the direction Africa should be going in, but oil giants like Total are desperate to exploit African oilfields, even if Africans are going to suffer the climate consequences. The East African Crude Oil Pipeline is aptly named, with the proposed route crossing more than 200 rivers and thousands of farms, cutting an ugly path through vital lion, elephant and chimpanzee habitats. Despite Total claiming to have consulted widely with communities, NGO colleagues on the ground complain that this has been merely a box-ticking exercise with painfully short deadlines for feedback on the proposals.


France has a shameful colonial past when it comes to Africa, one that President Emmanuel Macron described as a ‘crime against humanity’. And yet here we are in 2020 with a French oil firm desperately pushing through a major fossil fuel project so it can profit even more from the climate suffering of Africans.

Ultimately if the world breaches the 1.5°C goal, it will not be Africa’s fault. We make up 17% of the world’s population and have generated only 4% of global emissions. The fault will lie with the politicians and companies of the global North. Instead of helping Africa develop along clean energy pathways, they are greedily shackling us to a dirty fossil fuel future with dire climate consequences for us all.

[waldron] 06/8/2020 17:29

September/25 2020

Ex-Dividend date for the 1st 2020 interim Dividend

September/30 2020

Total Investor Day 2020

[waldron] 06/8/2020 08:29

Following the regulatory approvals and the agreement of partners, Total (Paris:FP) (LSE:TTA) (NYSE:TOT) closed the sale of UK North Sea non-core assets to NEO Energy.



"As announced on May 20, we have worked closely with HitecVision and its portfolio company NEO Energy to conclude this sale. This sale of assets contributes to the action plan currently being implemented to address the economic crisis by focusing on cash delivery and demonstrates our ability to relentlessly lower the breakeven of our portfolio," declared Jean-Pierre Sbraire, Chief Financial Officer of Total.



The detailed transition plan prepared with NEO Energy will ensure a smooth transfer of operations.

[maywillow] 05/8/2020 18:38

NEO Energy completes acquisition of UK North Sea assets from Total

Oil & GasUpstreamOffshore

By NS Energy Staff Writer 04 Aug 2020

The transaction consists of a material, cash generative portfolio of assets in four producing areas of the UK North Sea
shaking-hands-3091906_640

NEO Energy acquires UK North Sea assets from Total. (Credit: Gerd Altmann from Pixabay)

NEO Energy, the full-cycle UKCS focused energy platform, announces the completion of the acquisition of a portfolio of operated and non-operated assets in the UK North Sea from Total Oil UK Ltd and Total E&P North Sea UK Ltd.

The transaction consists of a material, cash generative portfolio of assets in four producing areas of the UK North Sea, with an average 2019 production of approximately 23,000 boepd and substantial development upside. In addition, the portfolio adds reserves of c. 51 MMboe to NEO Energy. The transaction includes operatorship of two asset clusters, the Quad 15 and Flyndre areas, and an operator organisation of more than 60 highly experienced employees and contractors.

Paul Harris, COO and Interim CEO of NEO Energy, commented:

“The expeditious completion of this transaction is a major milestone for NEO Energy as we build a next generation North Sea operator. I am extremely excited by the quality of both the asset portfolio and the group of over 60 outstanding professionals we have assembled.

We have quickly established NEO as a leading UKCS independent with a solid platform from which to continue to deliver our sustainable growth strategy. Underpinned by a meaningful production base and development opportunities, I look forward to embarking on this next chapter in NEO’s development.”

Source: Company Press Release

[grupo guitarlumber] 04/8/2020 07:30

03 Aug 2020 | 20:58 UTC Houston

Total sheds 1 million Tellurian shares as US struggles to advance new LNG projects

Author Harry Weber Editor Valarie Jackson Commodity Coal , LNG, Natural Gas

Highlights

French company VP steps down from the developer's board

Driftwood LNG project proposed to be built in Louisiana

Houston — France's Total has further cut its stake in Tellurian and one of its executives has stepped down from the Driftwood LNG developer's board of directors, according to an Aug. 3 US regulatory filing.
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Total currently does not plan to designate a replacement.

The disclosures come as challenging global LNG market conditions continue amid the coronavirus outbreak, which has hit demand, disrupted trade flows, and pushed down the value of US operators' shares sharply.

As a major Tellurian shareholder and the only committed equity investor so far in the proposed Driftwood project in Louisiana, Total is an important partner. Total began selling blocks of Tellurian shares, now totaling more than 1 million, July 8, cutting its stake in Tellurian from 19% when Total first agreed to invest in Driftwood to 17.4% as of the filing with the Securities and Exchange Commission.

A Tellurian spokeswoman declined to comment. Total officials did not respond to several messages seeking comment. Total said in an earlier filing that it would continue to sell Tellurian shares "from time to time."

Widespread cancellations of US LNG cargoes scheduled to be loaded at existing terminals this summer have added to the market uncertainty that is currently keeping a lot of project investors on the sidelines. Feedgas flows to the six major US liquefaction terminals in operation hit a 17-month low in July and shut down entire trains at some facilities before rebounding slightly at the end of the month and into the beginning of August.

The US cancellations have been a "wake-up call" for the industry that new LNG projects will not automatically be profitable, a senior Total official said June 12. Earlier, in May, Total's CEO said during an investor call that Total did not expect to expand its North American LNG business in the near term and that he believed it would be "strange" for Driftwood to move forward.

Total has offtake contracts for some 3.2 million mt/year of LNG from Cheniere Energy's Sabine Pass and Sempra Energy's Cameron LNG export facilities, both in Louisiana. Total also controls over 2.2 million mt/year of LNG from the third train at the Freeport LNG export terminal in Texas. It inherited that commitment when it acquired Toshiba's US LNG business last year before the coronavirus began to spread globally in January.

Freeport LNG was among the US operators that shut down trains in July because of weak market conditions, according to a July 31 air emissions report to Texas regulators. The terminal recently began flaring because of the restart of Train 1, the report said. A separate air emissions report said that as part of initial commissioning of Train 3 at Cheniere's Corpus Christi Liquefaction terminal in Texas, the company would begin the startup of the fuel gas, feedgas, refrigeration, and flare systems Aug. 2.

Total can back out of its Driftwood commitments if Tellurian does not declare a positive final investment decision by June 2021, according to a person familiar with the terms. Tellurian has already delayed until next year a decision about whether to begin construction.

Remaining stake

Total currently holds 44.9 million Tellurian shares, versus about 46 million on April 5, 2019. A few days earlier, Total agreed to make a $500 million investment in Driftwood in exchange for the right to lift 1 million mt/year of LNG for the life of the up to 27 million mt/year terminal. Total also agreed to buy 1.5 million mt/year of offtake from Tellurian's marketing unit, indexed to the Platts JKM, the benchmark price for spot-traded LNG in Northeast Asia.

The transaction included Total's plan to buy $200 million in additional Tellurian shares, to boost its stake in the company to about 20%.

Per a 2017 agreement with Tellurian and its founders, Total was allowed to name a director to Tellurian's board. According to the latest SEC filing, Eric Festa, Total's vice president of midstream gas assets, resigned from the Tellurian board July 31.

The filing did not say why, noting only that the reason did not result from any disagreement between himself and Tellurian, Tellurian's management, or Tellurian's board.

Recently, India's Petronet resumed talks with Tellurian about potentially investing up to $2.5 billion in Driftwood. The two sides have given themselves until December to reach a final agreement, according to a person familiar with the situation.

[gibbs1] 31/7/2020 21:03

TOTAL S.A.'s (TOT) CEO Patrick Pouyanne on Q2 2020 Results - Earnings Call Transcript
Jul. 31, 2020 1:06 AM ET
|
About: TOTAL SE (TOT), TTFNF
Subscribers Only
Earning Call Audio

TOTAL SE (NYSE:TOT) Q2 2020 Earnings Conference Call July 30, 2020 7:30 AM ET

Company Participants

Patrick Pouyanne – Chairman and Chief Executive Officer

Jean-Pierre Sbraire – Chief Financial Officer

Conference Call Participants

Irene Himona – Societe General

Michele Della Vigna – Goldman Sachs

Christyan Malek – JPMorgan

Lydia Rainforth – Barclays

Jason Gammel – Jefferies

Thomas Adolff – Credit Suisse

Biraj Borkhataria – RBC

Jon Rigby – UBS

Oswald Clint – Bernstein

Christopher Kuplent – Bank of America

Henry Tarr – Berenberg

Martijn Rats – Morgan Stanley

Peter Low – Redburn

Jason Gabelman – Cowen

Lucas Herrmann – Exane

Jason Kenney – Santander

Operator

Ladies and gentlemen, thank you for standing by, and welcome the Total Second Quarter 2020 Results Conference Call hosted by Patrick Pouyanne and Jean-Pierre Sbraire. [Operator Instructions] I must advise you this conference is being recorded today.

I would now like to hand the conference over to Mr. Patrick Pouyanne, Chairman and CEO of Total. Please go ahead, sir.

Patrick Pouyanne

Hello, everybody. Good afternoon or good morning. I hope that all of you are well and staying safe.

At Total, we are almost all of us back to Paris office, 75%, 80% of the staff, taking, of course, all the appropriate precautions, consistent with our safety culture. But it's good to be, again, together. We are more innovative when we are collectively at the office not in front of screens. And in the fields, all the business units are fully operational today. And that's, of course, of big priority, our main priority, keeping people safe, but at the same time, maintaining all our business operational.

I'm happy to welcome you this afternoon together with Jean-Pierre for this earnings call. I'm joining you today because we felt important that in – with unprecedented times, the Chairman and CEO of the company can directly give you the big picture of where the company stands. And Jean-Pierre will explain you in detail all the Q2 results how resilient we had been before we go to the Q&A.

So during this quarter, I will not be very original, we faced some very exceptional circumstances, the worst since 2014. The COVID-related lockdown led to unprecedented global demand destruction, and this was made worse by the drop in oil and gas prices. The Brent fell by 60%, dipping below $20 per barrel in April and averaging less than $30 per barrel for the quarter, with high differentials – negative differentials between the Brent marker and the real crude prices, around $5 to $6 per barrel, because of low demand. And the natural gas prices in Europe and Asia dropped by 60% to historic lows.

Of course, the production was strained mainly by OPEC+ countries, helped lead the way to the market recovery, but as seen Brent come back to an average of more than $40 per barrel since the beginning of June. And I would say we are optimistic about the willingness of all these producing countries to take actions and maintains a crude price above $40, which is, in fact, a low flow for most of them if not all.

Of course, given our exposure to some of these countries, the impact of quotas on Total was close to 100,000 barrels per day in the quarter. And so we have revised slightly our full year production outlook to be in the 2.9 million, 2.95 million barrel per day range because the discipline of OPEC+ countries is stronger than ever. But again, that's good news for the market and for the crude price, and it is a matter of value over volume.

In the downstream, refining margin collapsed at a very low, even negative levels during several weeks. And we had to limit the refining utilization rate under 60%. And marketing volumes fell by 30% in the quarter as an average. However, in Europe, we can give you some good news from Europe. Also since June, we have seen a rebound here in Europe and activity in our marketing networks is back to I would say 90% of the pre-COVID levels. And our gas, electricity business and marketing are close to the pre-crisis levels.

[waldron] 31/7/2020 17:31

Brent Crude Oil NYMEX 43.14 -0.25%
Gasoline NYMEX 1.15 -3.09%
Natural Gas NYMEX 1.81 -1.58%
WTI 39.84 USD -1.08%


FTSE 100
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Dow Jones
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CAC 40
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Euro STOXX 50
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Ftse Mib
19,181.04 -0.25%



Eni
7.541 -3.54%


Total
31.3 -1.97%



Engie
11.29 +4.01%

Orange
9.912 -0.44%


Bp
275.15 -2.89%

Vodafone
115.56 -2.55%

Royal Dutch Shell A
1,121.6 -3.21%



Royal Dutch Shell B
1,080.8 -2.96%


Tullow Oil (TLW)
25.12 : -1.02 (-4.23%)

[waldron] 31/7/2020 16:38

Big oil companies endured one of their worst second quarters ever and are positioning themselves for prolonged pain as the coronavirus pandemic continues to sap global demand for fossil fuels.

Exxon Mobil Corp. posted a quarterly loss for two straight quarters for the first time this century on Friday, reporting a loss of $1.1 billion, compared with a profit of $3.1 billion a year ago. Exxon, the largest U.S. oil company, hadn't reported back-to-back losses for at least 22 years, according to Dow Jones Market Data, whose figures extend to 1998.

"The global pandemic and oversupply conditions significantly impacted our second quarter financial results with lower prices, margins, and sales volumes," Exxon Chief Executive Darren Woods said in a statement.

Chevron Corp. said Friday it lost $8.3 billion in the second quarter, down from $4.3 billion in profits during the same period last year, its largest loss since at least 1998. It wrote down $5.7 billion in oil and gas properties, including $2.6 billion in Venezuela, citing uncertainty in the country ruled by strongman Nicolás Maduro. Chevron also said it lowered its internal estimates for future commodity prices.

Royal Dutch Shell PLC and Total SA reported significant losses in the second quarter as well earlier this week, as the impact of the pandemic and a worsening long-term outlook for commodity prices spurred them to write down the value of their assets.

The dismal results are ratcheting up the problems for the oil giants, which were already struggling to attract investors even before the pandemic, as concerns over climate-change regulations and increasing competition from renewable energy and electric vehicles cloud the future for fossil fuels.

Holdings of oil and gas stocks by active money managers are at a 15 year low, according to investment bank Evercore ISI. BP PLC, Shell and Total are all trading at 30-year lows relative to the overall S&P 500. Exxon is trading at its lowest level to the S&P 500 since 1977, according to the bank.

Many of the big oil companies have sought to retain investors despite slowing growth and profits over the past decade by paying out hefty dividends, but those payouts are proving hard to sustain during the pandemic.

Crude prices have stabilized at around $40 a barrel, providing modest relief for the industry after U.S. oil prices briefly turned negative for the first time ever in April. But none of the world's largest oil companies now foresee a rapid recovery as countries continue to struggle with containing the coronavirus.

Chevron CEO Mike Wirth said his company faced an uncertain future for energy demand and couldn't predict commodity prices with confidence right now.

"We expect a choppy economy and a choppy market," Mr. Wirth said in an interview earlier this month. "It all depends on the virus and the policies enacted to respond to it."

Oil and gas production by both Exxon and Chevron decreased in the quarter, down 7% and 3%, respectively, from a year ago, as the companies shut off wells to avoid selling into a weak market. Exxon's production and exploration business lost $1.7 billion, which it attributed to lower commodity prices. Chevron's production unit lost $6.1 billion.

Stockpiles of U.S. gasoline and diesel rose last week, according to government data released Wednesday. That indicates a slowdown in demand for transport fuels, which had started to rebound this summer and are key to the industry's recovery, said data analytics firm Rystad Energy. Meanwhile, demand for jet fuel is recovering even more slowly than gasoline, and may not fully bounce back until 2023, according to Bank of America Corp.

U.S. oil prices closed below $40 per barrel Thursday for the first time in three weeks.

"Covid-19 is the elephant in the room and the U.S. death toll passing the milestone of 150,000 has spread concern to every kind of market, and commodities too," said Rystad analyst Bjornar Tonhaugen.

For the entire second quarter, U.S. oil prices averaged $28 per barrel and Brent crude averaged about $33, according to Dow Jones Market Data, prices at which even the largest oil companies struggle to turn a profit, analysts say.

While major stock indexes have recovered from April, when they fell to their lowest levels in years, oil and gas stocks have continued to lag despite the slight rebound in commodity prices, as some investors lose faith in the companies' business model.

Many of the world's largest energy companies, including Exxon and Chevron, have for years used an integrated business model, which has historically allowed them to weather most market conditions.

By owning oil and gas wells, along with the downstream plants to manufacture refined products like gasoline and chemicals, the companies were long able to capitalize in one sector of their business, regardless of whether oil prices were high or low.

But that model has failed to deliver strong returns for most of the past decade, as the world has faced a glut of fossil fuels triggered in part by America's fracking boom, and it isn't protecting the companies now, according to Evercore ISI analyst Doug Terreson.

The largest western oil companies invested about $1.2 trillion in growth projects over the past decade, according to Evercore, an investment banking advisory firm, while their combined debt increased by nearly $200 billion over the same period.

"It's hard to support the idea that the integrated model has created a lot of value for shareholders," Mr. Terreson said. "A broad-based reassessment of the capital management programs at the big oils is required at this point."

Oil companies have been forced to take dramatic action to shore up their finances in recent months, including cutting tens of billions of dollars from their budgets and laying off thousands of employees.

Exxon, which had previously disclosed a 30% cut to capital expenditures in 2020, said on Friday that it has "identified significant potential for additional reductions" and is now conducting a comprehensive review of its business, adding that it would provide details when plans are completed.

Shell has been among the most aggressive, deciding in April to cut its dividend for the first time since World War II to avoid having to borrow to fund it.

Shell reported a second-quarter loss of $18.4 billion on Thursday, which included a $16.8 billion write-down, while French giant Total posted a $8.4 billion loss including a $8.1 billion write-down. Both companies report net income attributable to shareholders, a proxy for net profits. ConocoPhillips also posted a $1 billion loss Thursday. BP PLC reports Tuesday.

Excluding impairments, Shell and Total actually turned a profit during the quarter as their trading units helped stave off even larger losses.

Exxon increasingly stands alone among its peers for not taking a write-down this year as industry estimates for future oil and gas prices sour. In addition to Chevron, Shell, and Total, Italy's Eni SpA has written off billions of dollars of assets, and BP has said it will also take an impairment. Some have called for Exxon to write-down billions of dollars of shale natural gas assets.

Exxon and Chevron have promised they will maintain their dividends, viewed by many investors as the most attractive part of owning their stocks. But both companies have also taken on more debt this year. Some analysts predict Exxon may be forced to cut its dividend in 2021 if market conditions don't recover.

Exxon's dividend payments cost the company almost $15 billion a year. The company's debt grew by $8.8 billion in the quarter, according to Goldman Sach Group Inc., which said Exxon will need oil prices around $75 per barrel in 2021 to cover its dividend payments from cash flow. Exxon said Friday it wouldn't take on additional debt.

Dan Pickering, chief investment officer of energy investment firm Pickering Energy Partners LP, said the industry can survive at $40 oil but needs significantly higher prices to thrive. According to Mr. Pickering, who said he holds small positions in Exxon and Chevron, oil companies will have to continue cost-cutting for the foreseeable future.

"You've got to assume that this is the world we're going to be in, Mr. Pickering said. "And, if this is the world we're going to be in, the cost structure is too high."

--Dave Sebastian contributed to this article.

Write to Christopher M. Matthews at [e-mail]



(END) Dow Jones Newswires

July 31, 2020 10:22 ET (14:22 GMT)

[waldron] 31/7/2020 08:03

uk.investing.com


Glencore Follows Oil Majors Reaping Bumper Trading Profits


17 minutes ago (Jul 31, 2020 07:36)



(Bloomberg) -- Glencore (LON:GLEN) said trading profit will be at the top end of its target this year as the commodities giant joins big oil companies enjoying a bonanza from volatile price swings.

The company made nearly $1 billion in earnings before interest and taxes in oil trading in the first six months of 2020, similar to what the company made in the whole of 2019, people familiar with the matter said last week.

Oil trading profits have bailed out the energy sector so far this year. Royal Dutch Shell (LON:RDSa) Plc said Thursday that the last quarter was the best on record for its trading business, while French rival Total SE said it was able to exploit extreme price volatility during April’s record supply glut.

“Our marketing business has also risen to the challenge, delivering robust counter-cyclical earnings,” Glencore Chief Executive Officer Ivan Glasenberg said in a statement Friday. “A very strong first-half performance allows us to now raise our full year 2020 EBIT expectations to the top end of our $2.2-$3.2 billion guidance range.”

The trading profit will be a relief for Glencore. Once again, the miner and trader has missed out on an iron rally that has provided bumper earnings for its biggest rivals, such as Rio Tinto (NYSE:RIO) Plc and Anglo American (LON:AAL) Plc. Glencore’s mining profits are driven by coal and copper, but it has no exposure to the steelmaking ingredient.

While copper prices have been resilient through the pandemic, thermal coal has crashed, falling to the lowest levels since the commodity crisis five years ago.

Glencore responded today by saying it would mine less of the fuel, cutting its target for the year to about 114 million tons, from a previous forecast of 132 million tons. The cuts will come from its Colombian mines, which are struggling because of weak demand for the product in Europe. The company said it wants to keep its Prodeco mine in the country closed for now.

Glencore has a long tradition of cutting output to support prices, having held back production in zinc, coal and cobalt in recent years after prices weakened.