As Big Oil Shrinks, Boards Plot Different Paths Out Of Crisis



Reuters

LONDON/HOUSTON, Feb 7 (Reuters) - As oil and gas companies cut ever-deeper into the bone to weather their worst downturn in decades, boards have adopted contrasting strategies to lead them out of the crisis.

Crude prices have tumbled around 70 percent over the past 18 months to around $35 a barrel, leading to five of the world's top oil companies reporting sharp declines in profits in recent days.

Executives at energy firms face a tough balancing act: they must cut spending to stay financially afloat while preserving the production infrastructure and capacity that will allow them to compete and grow when the market recovers.

Companies have opted for differing approaches to secure future growth, often choosing to narrow focus to their areas of expertise and the geographic location of their main assets.

For example, American firms Chevron and ConocoPhillips are deemphasizing costly deepwater projects to focus on shale oil fields on their home turf. Hess Corp, meanwhile, is spending more this year offshore than onshore, a reversal from 2015 spending emphasized onshore.

Britain's BP is betting on offshore gas in Egypt, while Royal Dutch Shell has opted for an alternative route as it seeks to safeguard its future: the $50 billion takeover of BG Group.

In the five years before the downturn began in mid-2014, when crude prices held above $100 a barrel, big energy firms had raced to expand production capacity, including buying stakes in vast, costly fields sometimes located thousands of metres under the sea, and miles from land.


1234

View Full Article

WHAT DO YOU THINK?


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.

RELATED COMPANIES
Company: BP plc more info
Operates 33 Offshore Rigs
 - Exxon, BP Targeted in NYC Suit That Relies on 'Nuisance' Theory (Jan 10)
 - Owners of Louisiana-Illinois Pipeline Eye Reversal Next Steps (Dec 21)
 - Canadian Offshore Oil Interest Grows As Pipeline Woes Sink Alberta Prices (Dec 20)
Company: Exxon Mobil Corporation more info
Operates 16 Offshore Rigs
 - ExxonMobil Reports Papua New Guinea Discovery (Jan 16)
 - Exxon, BP Targeted in NYC Suit That Relies on 'Nuisance' Theory (Jan 10)
 - ExxonMobil Reports More Offshore Guyana Success (Jan 05)
Company: Statoil more info
Operates 1 Offshore Rigs
 - Statoil May Build Onshore Terminal for Castberg Oil -Minister (Jan 16)
 - Canadian Offshore Oil Interest Grows As Pipeline Woes Sink Alberta Prices (Dec 20)
 - Sharp Fall In Applications For Norway's Arctic Oil Permits (Dec 05)
Company: Total S.A. more info
 - Total Starts Up Antwerp Refinery And Petrochem Complex After Upgrade (Nov 30)
 - Hoegh LNG: Pakistan LNG Import Project Consortium Folds (Nov 16)
 - France's Total Buys Engie's LNG Business For $1.5B (Nov 08)
Company: BG Group more info
 - Shell Mulls LNG-Hub Network as Use by Ships and Trucks Expands (Jul 11)
 - Tanzania Laws Would Allow Govt to Tear Up Mining, Energy Deals (Jun 29)
 - Despite Cuts, Big Oil to Expand Production into the 2020s (Sep 05)
Company: ConocoPhillips more info
Operates 12 Offshore Rigs
 - Exxon, BP Targeted in NYC Suit That Relies on 'Nuisance' Theory (Jan 10)
 - ConocoPhillips Vows Financial Discipline As Aims To Boost Output (Nov 08)
 - ConocoPhillips' Profit Beats Estimates, But Budget Cut 10% (Oct 26)
Company: Chevron Corporation more info
 - CB&I, Chevron Lummus Global, Saudi Aramco Launch 'Crude-to-Chemical' JV (Jan 18)
 - Oil Producers Want New Hearing on Impact of Magellan Proposal (Jan 17)
 - Exxon, BP Targeted in NYC Suit That Relies on 'Nuisance' Theory (Jan 10)
Company: Hess Corporation more info
Operates 4 Offshore Rigs
 - Hess Cutting Hundreds of Workers As It Battles Activist Investor (Jan 16)
 - ExxonMobil Reports More Offshore Guyana Success (Jan 05)
 - About 75,000 Bpd Of Gulf Oil Output Still Shut After Shell Fire (Nov 15)
Company: Royal Dutch Shell plc more info
 - Shell to Deploy Pioneering Electrolysis Tech at German Refinery (Jan 18)
 - Shell Ventures Back Into Solar (Jan 15)
 - Shell Braces for Change by Expanding Its Foothold in Electricity (Jan 12)