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Big Oil Slick – US-FOREX.US

Forex-Publisher — Fri, 31 Jul 2009 13:46:04 +0000

Taking stock can sometimes lead to taking profit, especially for the oil industry. Total and Eni were the last of the big European majors to report quarterly earnings on Friday-with the exception of StatoilHydro-and the industry-wide pattern of slumping profits, falling production levels and crumbling refining margins were all on display. After a week of similarly lackluster results, investors headed for the exit.Oil and gas stocks were down 3% across Europe on Friday afternoon, and Eni
led the sector downwards with a share-price drop of 6.3%, to 16.58 euros , in Milan, after the company cut its dividend. Total
was down 2.9%, to 38.85 euros , in Paris, while Royal Dutch Shell
and BP
-which both reported results earlier this week-were down around 1% in London.The near-50% drop in oil prices over the year has led to similar falls in profit for big oil companies, as they struggle with a weaker demand environment and less profitable refining operations. Eni and Total’s earnings announcements still disappointed expectations, though: Italy’s Eni reported a 75.8% drop in profits, to 830 million euros , while Total’s profits were halved over the year, to 2.2 billion euros .”The refining segment of Total was very weak,” said Gudmund Halle Isfeldt, an analyst with DnB Nor. Operating income from Total’s refining, or “downstream,” operations came in 73% lower over the year, to 156 million euros . Total’s overall earnings before interest and tax of 2.9 billion euros came in some 8% below consensus forecasts.BP, Royal Dutch Shell and ExxonMobil
have all reported profit falls of 50%-70% this week. The atmosphere for the industry now is one of caution and cost-cutting as commodity demand remains weak. BP proved its mettle earlier in the week by raising its savings target for the year to 3 billion, from 2 billion, while Shell Chief Executive Peter Voser said more jobs were expected to go to help turn the company into a more efficient enterprise.
This has led to fears that the majors will have to squeeze dividend payouts. Eni announced a cut to its six-month dividend to 50 euro cents , from 65 euro cents , on Friday. Total said it was fully focused on cost-cutting efforts on Friday, but kept its dividend steady.

Exxon Chevron Next Up – US-FOREX.US

Forex-Publisher — Wed, 29 Jul 2009 21:45:59 +0000

Steep second-quarter profit declines aren’t over yet for the oil sector as Exxon Mobil reports second-quarter results on Thursday and Chevron releases its second-quarter report on Friday. By now the market is well-versed in the difficult year-over-year comparisons plaguing oil companies so far. During 2008′s second quarter crude oil traded at 125 a barrel, about twice this year’s prices. Refining margins have been hampered by high gasoline inventory levels and weak fuel prices. On Wednesday, integrated oil company Hess
posted an 89% second-quarter profit pitfall and ConocoPhillips
reported a 76% drop in second-quarter earnings on the heels of the 53% earnings slump posted on Tuesday by BP
. Despite deteriorated profits, results have largely met analysts’ lowered expectations for the sector.Analysts polled by Thomson Reuters expect Exxon Mobil
to report a second-quarter profit of 1.02 a share on sales of 71.3 billion on Thursday and Chevron
is projected to post earnings of 95 cents a share on sales of 33.4 billion. Ahead of the releases, both companies assured investors that dividends would remain intact with Chevron boosting its quarterly payout by 4.6% to 68 cents a share. Exxon retained its 42-cent quarterly dividend.Investors will be looking to see how the companies are using capital during the period of weak commodity prices.Shares across the oil sector closed Wednesday’s trading session lower as the U.S. energy department reported an unexpected increase in crude stocks, which rose 5.2 million barrels to 347.8 million barrels in the week ended July 24. Crude oil lost 3.88, or 5.8%, to settle Wednesday’s session at 63.35 a barrel. The Energy Select Sector
exchange-traded fund shed 1.17, or 2.3%, to close at 49.44. Exxon’s stock finished down by 1.54, or 2.1%, at 70.35 and Chevron closed Wednesday’s trading session 1.76 lower, or 2.6%, at 66.58.
Thomson Reuters contributed to this article.

Recession Holds Down Oil Earnings – US-FOREX.US

Forex-Publisher — Wed, 22 Jul 2009 21:46:04 +0000

The energy sector will get a look at two sides of the industry on Thursday when both Occidental Petroleum, an exploration and production oil and gas company, and Diamond Offshore Drilling, a drilling contractor, report second-quarter earnings.
Occidental Petroleum
is extremely well-positioned with its low exposure to the U.S. gas market, stable domestic production and growth opportunities in the Middle East, according to Barclays Capital analyst Thomas Driscoll. “Considering the run-up in oil prices last quarter and falling service costs [moving in sympathy with natural gas prices], we expect Occidental to enjoy more significant margin expansion when compared to peers,” he said.In April, the international E&P company Occidental Petroleum reported oil and gas production growth of nearly 8% year-over-year, despite realized prices of global crude oil that were nearly 55% lower than in 2008′s first quarter, and gas prices that were roughly 57% lower year-over-year. When the Los Angeles company reports second-quarter earnings on Thursday, analysts will be expecting a profit of 79 cents a share on sales of 3.8 billion, according to Thomson Reuters. Investors will pay particular attention to the company’s margins since realized crude prices are anticipated to be 35% stronger than the prior quarter, according to Driscoll. With the second-largest deepwater rig fleet in the world after Transocean
, Diamond Offshore Drilling
should benefit once exploration and production companies are able to increase their spending, but the timing of such a turnaround remains uncertain. According to a recent Barclays Capital E&P spending survey, E&P companies’ budgets are expected to decline by 15% in 2009. Any comments offered by management regarding the company’s outlook will be welcomed by the market, which has been anticipating second-quarter earnings of 2.63 a share and sales of 942.5 million.
Both companies’ shares traded lower ahead of Wednesday’s market close. Occidental’s stock lost 54 cents, or 0.8%, at 69.68, while Diamond shares were down by 95 cents, or 1.1%, at 87.58.

A Mideast Pipe Dream – US-FOREX.US

Forex-Publisher — Tue, 14 Jul 2009 20:46:04 +0000

The story goes that the Nabucco pipeline project got its unusual name from Giuseppe Verdi’s opera, which the founding members of the project all trooped to see after their first meeting in Vienna. The six energy companies from Turkey, Romania, Bulgaria, Hungary, Austria and Germany evidently saw a parallel between the opera Nabucco-which tells of the Hebrews’ suffering and exile at the hand of the Babylonian king Nebuchadnezzar-and their own dreams of escaping the yoke of European dependence on Russian gas supplies.The Nabucco partners may even see modern-day Babylon, in Iraq, as a potential key supplier for the pipeline, which will run from Turkey to Austria. Iraqi Prime Minister Nuri al-Maliki has reportedly offered 15 billion cubic meters of gas annually to supply Nabucco once it is completed in 2015, which would already represent half the pipeline’s capacity. The goodwill may even stretch to neighbor Iran, which has been singled out as “fundamental to Nabucco” by European Union foreign policy chief Javier Solana, and as a desired partner by Turkish Prime Minister Reccep Tayyip Erdogan-when conditions allow.But even allowing for the six years needed to actually build the pipeline, it’s difficult to see how these Persian Gulf countries could make a strong contribution to Nabucco. Iraq’s gas fields are mostly undeveloped, according to IHS Global Insight’s Samuel Ciszuk, and with years of investment and domestic needs to think about, it is extremely unlikely that Iraq will be on hand to serve as a major export partner in just a few years’ time. “Iraq’s domestic needs for the long term are significant,” said Ciszuk. “They’re using a lot of oil in producing electricity.”As for Iran, the long-running storm surrounding its nuclear program has shown no signs of abating, despite talk of a new package of discussion proposals from the Islamic Republic. United States and United Nations sanctions on Iran have prevented the country from developing its energy infrastructure with foreign investment, despite talked-up agreements with China and Russia’s Gazprom
. Iraq’s potential for foreign investment is brighter, but again too far off to warrant excitement about Nabucco. Two of Iraq’s gas fields were put up for tender as part of a first round of foreign investment deals last month. One is close to the Syrian border, so could be eventually connected to Syrian infrastructure, but the other is close to the disputed territory of Kirkuk, near the border with Iraqi Kurdistan-it received no bids.