European Majors See Mixed 1Q Results from Upstream
Two European oil and gas majors released results for the first quarter Tuesday that show contrasting performances in their respective upstream operations. While France's Total reported a "resilient" performance, the UK's BP said that its upstream segment was "significantly affected" by lower oil and gas prices.
Total reported that its first-quarter adjusted net income was $2.6 billion, compared to $3.3 billion. Total's 1Q 2015 earnings report said while the Brent oil price decreased by 50 percent compared to last year, the firm's adjusted net results for the first quarter were down by just 22 percent "thus demonstrating its resilience and profiting from its integrated model".
Total noted that in its upstream segment production growth, along with the first positive results from the company's cost reduction program, partially offset lower oil prices. In spite of this, Total's upstream business segment still registered a 56-percent decline in adjusted net operating income to $1.36 billion for its first quarter, compared to 1Q 2014.
Commenting on the results, Total CEO Patrick Pouyanné said they included "a number of significant accomplishments in all segments". In the upstream business, Pouyanné highlighted that the firm's CLOV deep-water development project offshore Angola had produced above plateau, as well as the start up of the firm's West Franklin Phase 2 and Eldfisk II developments in the North Sea and the Ofon Phase 2 start-up offshore Nigeria. Total also benefited from its entry into the new ADCO concession in Abu Dhabi.
Over at BP, upstream fared less well. The firm reported underlying pre-tax replacement cost profit of $0.6 billion for its upstream segment during the first quarter, compared with $4.4 billion for 1Q 2014. This result included a $545 million loss for BP's US upstream business.
BP said the upstream result was significantly affected by lower oil and gas prices as well as weaker gas marketing and trading, and $373 million of costs connected to the cancellation of contracts for two deep-water rigs in the Gulf of Mexico that are no longer required for BP's reset drilling program.
BP Group Chief Executive Bob Dudley commented in a company statement:
"We are resetting and rebalancing BP to meet the challenges of a possible period of sustained lower prices. Our results today reflect both this weaker environment and the actions we are taking in response.
"We are continuing to progress our planned divestment program, we are resetting our level of capital spending, and we are addressing costs through focusing on simplification and efficiency throughout BP."
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