Job Cuts Continue as Fossils Report Massive Quarterly Losses
Seven of the world’s 10 largest oil companies are posting substantial losses for the third quarter of 2015, and another 10 have yet to report their quarterly results.
“The world’s top oil companies have struggled to cope with the halving of oil prices since June 2014,” Reuters reports. “They have cut spending repeatedly, made thousands of job cuts, and scrapped projects.”
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Over the last quarter, “the lower-for-longer outlook for oil prices took its heaviest toll yet,” the news agency notes, “as oil companies again reported a dramatic drop in income. Some saw results swing into the loss column, and the industry had billions of dollars in impairment charges.”
Notables so far include:
- Royal Dutch Shell reporting a loss of US$7.4 billion, compared to a US$4.5-billion profit over the same period last year, right after cancelling a project in the Alberta tar sands/oil sands and abandoning a US$7-billion drilling venture in the environmentally delicate Chukchi Sea, after just one exploratory well
- Husky Energy posting a net loss of C$4.1 billion, cutting 1,400 jobs, and announcing it might try to sell assets as a result of low oil prices
- ConocoPhillips reporting a quarterly loss of US$1.1 billion
- Suncor Energy announcing a C$376-million loss, compared to C$919 million in third-quarter profits last year
- Imperial Oil showing quarterly profits of C$479 million, down from C$936 million last year
- Marathon Oil cutting its dividend 76% “to preserve cash as it tries to weather the slump”
- Cenovus planning to cut its staff by 1,500, or 24% of the total, by year-end.
“The sector is rapidly moving into the red,” oil and gas analyst Jason Gammel told Reuters. “It is slowly going to claw its way back into the black through cost-reduction efforts, but that will take time. It will depend on price movements, but it will take time to get all these cost savings through the system.”
Reuters points to the fundamental economic challenge the companies face: “Even after cost efficiencies and spending cuts, European oil companies on average will require an oil price of around US$78 a barrel in 2016 to cover spending and dividend payments.” Analysts expect benchmark Brent crude oil to sell for an average of US$58.60 in 2016. It closed Sunday at US$49.56.