Like The Green …

Like The Green Lobby, Big Oil Companies Fear Shale Revolution

 
Big oil companies admit they are ‘losing their shirts’ due to the shale gas boom and low gas prices. It all stands in stark contrast to a couple of years back when oil majors were telling shareholders not to worry, ‘we’re Big Gas as well’.
Quarterly results are normally a fairly predictable affair in energy. Depending on what companies have been up to – some are up, some are down – but they all ultimately reflect whatever’s been happening on international oil markets. With benchmark prices averaging historic highs ($114/b) in the first half of the year, bumper profits should be rolling in. And true enough, big oil has delivered some big results this time round. But read between the ‘numbers’, and it’s becoming alarmingly clear – big oil has major problems cross subsidising cheap gas right now, and nowhere more so than in the United States. Something has to give.
Take Exxon Mobil as the best example. Breakdown its second quarter $15.9bn profits, (up $5.2bn from last year), and they start to look less impressive. It made handsome returns spinning off a Japanese refining unit, further buttressed by $7.5bn divestments and tax related items, which once subtracted, leaves you with a rather more modest $8.4bn. That’s not the worrying bit for the Houston major, but the fact that Exxon only made $678m in its US upstream operations due to depressed gas prices. The consistent line from Rex Tillerson was that Exxon had deep enough pockets to invest through the cycle after its acquisition of XTO in 2010. Not so last month; Tillerson admitted energy companies were ‘losing their shirts’ from low gas prices.

Read more: http://thegwpf.org/best-of-blogs/6262-like-the-green-lobby-big-oil-companies-fear-shale-revolution.html

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