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Four of the five biggest oil majors have reported a huge increase in earning, the clearest indication yet that the world is turning the corner from bearish oil prices.
All four companies benefited from a stronger market; Brent crude, for example, averaged about an extra $5 a barrel in the third quarter compared with a year before.
American oil giants, Exxon Mobil Corporation announced estimated third quarter 2017 earnings of $4 billion, compared with $2.7 billion a year earlier, as commodity prices improved and performance in the upstream and downstream strengthened.
Italian oil giant, Eni which is about one-third government-owned, returned to profit in the same period posting earnings of $400 million, compared with a loss of 562 million euros a year earlier.
Chevron, American multinational oil company similarly, reported net earnings of $2billion, compared with $1.3billion reported in the same period in 2016.
French oil and gas major Total, reported a 29 percent jump in third-quarter net adjusted profit for the quarter hitting $2.7 billion, as ramp-ups and new projects lifted production. High demand for petroleum products, the company said also led to a sharp increase in its refining margin.
“A 50 percent increase in earnings through solid business performance and higher commodity prices is a step forward in our plan to grow profitability,” said Darren Woods, chairman and chief executive officer of ExxonMobil.
ExxonMobil’s upstream earnings rose to $1.6 billion as oil prices hovered around $50 from about $40 in the same period last year.
Analysts had expected poorer margins in the downstream as Hurricane Harvey was forecasted to knock out over 15 percent of US refining capacity which translates to about 2.45 million barrels per day which shut in after Tropical Storm Harvey flooded plants and shut seaports in Houston, the capital of US oil production.
But margins held. ExxonMobil’s downstream results increased to $1.5 billion buffered by $380 million Canadian retail assets sale. Total said its European refining margin indicator rose sharply to $48.2 per tonne in the third quarter of 2017 compared with $41.4 in the third quarter of 2016 thanks to strong demand for products after last month’s hurricane Harvey led to numerous shutdowns of refining capacity.
“The downstream benefited from favorable refining margins and increased its results by 18 percent compared to the second quarter, despite the impact of Hurricane Harvey on American operations,” said chief executive Patrick Pouyanne in a statement.
A positive result bodes well for projects in the sector. “We believe that most major subsea projects can move forward at today’s oil prices, said Doug Pferdehirt Technip FMC’s CEO involved in subsea contracts for major oil companies.
In its Q3 presentation, the firm lists major projects it expects to see awards for going forward. These include expected contracts on $1 billion+ projects including Shell’s Bonga Southwest and Eni’s ZabaZaba, both off Nigeria, west Africa, ONGC’s KGD5 98/2, off India, and Anadarko’s Golfinho LNG project, offshore Mozambique. Common among all these large projects are that they’re in deep water areas
Both Exxon Mobil and Chevron have made a lot of progress in covering investment and dividends, restoring positive free cash flow. Analysts say Exxon Mobil Year-to-dates spending of about $11 billion are running well below expectations.
Brent for December settlement jumped $1.14 to end the session at $60.44 a barrel on the London-based ICE Futures Europe exchange. Prices are up 4.7 percent last week. The global benchmark traded at a premium of $6.54 to West Texas Intermediate.
ISAAC ANYAOGU
