Malaysia's national oil company Petroliam Nasional Bhd (Petronas) reported a 12 percent fall in net profit for third quarter of 2014 (3Q 2014) to $4.39 billion (MYR 15.1 billion) from $5 billion (MYR 17.2 billion) in the previous year, according to financial results released by the firm Friday.
The decline in net profit was attributed to lower revenue posted by the firm and higher net loss on foreign exchange, which were partially offset by higher gain on disposal of property, plant and equipment in the current quarter.
Revenue was down 1 percent to $23.4 billion (MYR 80.4 billion), compared to $23.69 billion (MYR 81.4 billion) last year.
Petronas cited the marginal decline in revenue to "lower average realized prices for most major products coupled with the effect of unfavorable U.S. dollar exchange rate movement against the Ringgit, [which was] partially offset by higher crude oil production mainly from Iraq and domestic fields.
On production, Petronas indicated that crude oil, condensate and natural gas output volume in 3Q 2014 was 2.078 million barrels of oil equivalent per day (MMboed), up from 2.064 MMboed in 3Q 2013, with the increased due largely to contributions from higher crude oil production from Iraq and Malaysia.
The company also reported that capital investments during the quarter reached $4.74 billion (MYR 16.3 billion), slightly more than last year's $4.68 billion (MYR 16.1 billion).
Following a decision by the Organization of Petroleum Exporting Countries not to lower its production level, Petronas expected crude oil prices to be trade around $70 to $75 a barrel in 2015, CEO Shamsul Azhar Abbas said, as quoted in Malaysia's newspaper The Star.
Falling oil prices will have an impact on Petronas, with Shamsul saying that the firm is likely to reduce capital expenditure (capex) by between 15 percent and 20 percent next year, while its contribution to government coffers in the form of dividends, taxes and oil royalty for next year will drop 37 percent to $12.51 billion (MYR 43 billion), assuming Brent crude price of $75 a barrel.
“But like every international oil company (IOC) out there, declining oil prices will impact us, and as such, we have to review our capex plans for next year onwards, which is also what the IOCs are doing. We have to assess the feasibility of projects,” Shamsul said, as reported in The Star.
He added that at current oil price levels, marginal oil fields are no longer feasible for Petronas to get involved in, and warned that companies seeking to get involved in this business were “dreaming".
Petronas does not plan to proceed with contracts to award new marginal oil fields unless oil settles at levels above $80 a barrel, Shamsul revealed.
WHAT DO YOU THINK?
Click on the button below to add a comment.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
More from this Author
Most Popular Articles