The EU Major Upstream Co Best Placed for 2020 Storm
The European major with the upstream business that is best placed to weather 2020 market volatility is Total SA, according to a new study by GlobalData.
The study - which compared the upstream companies of Repsol SA, BP plc, Royal Dutch Shell plc, Eni SpA, Equinor ASA and Total SA – outlined that Total’s upstream business would be the least impacted by Covid-19 and the current oil price volatility. The upstream company was given an impact score of “very low”, which no other upstream company on the list achieved.
Equinor’s upstream business was judged to be the next least impacted, with an impact score of “low”, followed by Eni and Shell which received a joint “average” score, BP, which received an impact rating of “high” and Repsol, which received an impact rating of “very high”.
GlobalData’s impact rating took into account upstream cashflow sensitivity, reliance on pre-FID projects, 2020 capital expenditure cuts, 2020 exposure to the Lower 48, 2019 debt/equity ratio, 2017-2019 reserve replacement ratio and 2019 reserve life.
“Our latest research indicates that Total’s upstream business is well positioned to handle the market volatility and industry disruption this year,” Daniel Rogers, upstream oil and gas analyst at GlobalData, said in a company statement.
“This is due to the company’s limited exposure to the U.S. shale business, strong exploration performance over the recent years and a comparably low debt to equity coming into 2020,” he added.
Rogers went on to say, however, that the entire peer group saw both revenue and debt “deteriorate” coming into 2020 and highlighted that the recent first quarter earnings from Shell and BP saw quarterly year on year revenue decline.
“Further pain is likely to continue into Q2 and we could see revenues dip to multi-year lows for the group,” he added.
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