Oil Giants Have Nowhere to Hide From Doomsday Market

Oil Giants Have Nowhere to  Hide From Doomsday MarketOil Giants Have Nowhere to  Hide From Doomsday Market

Exxon Mobil Corp. and Royal Dutch Shell Plc this week reported their lowest quarterly profits since 1999 and 2005, respectively. Chevron Corp.’s third straight loss marked the longest slump in 27 years, and BP Plc lodged its lowest refining margins in six years.

Exxon missed analyst estimates by 23 cents a share and fell as much as 4.5% on Friday before recouping some of that decline. Chevron posted a surprise $1.47 billion loss after booking $2.8 billion in writedowns, Bloomberg reported.

The company’s per-share loss of 78 cents was in stark contrast to the 19- to 41-cent gains expected by analysts. BP and Shell registered similarly gloomy outcomes.

“What we’re seeing is that there’s just no place for the supermajors to hide,” Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis, said in an interview. “Oil prices, natural gas, refining, it all looks very bad right now.”

Crude prices dropped during the quarter from a year ago amid a global glut in the $1.5 trillion-a-year market. With diesel and gasoline prices also slumping, the companies were deprived of the tempering effect oil refining typically provides during times of low crude prices.

Given the plunge in crude and natural gas markets, “you cannot recover, no matter how efficient you are,” Fadel Gheit, an analyst at Oppenheimer & Co., said in an interview with Bloomberg Television. “The industry cannot survive on current oil prices.”

Shell reported its weakest quarterly result in 11 years and missed analysts’ estimates by more than $1 billion. BP said earnings tumbled 45% amid the lowest refining margins for the second quarter since 2010.

Cut by Half

BP’s profit, adjusted for one-time items and inventory changes, dropped to $720 million from $1.3 billion a year earlier, the company said on July 26. That missed the $819 million average estimate of 13 analysts surveyed by Bloomberg. Downstream earnings, which include refining, declined 19%.

Exxon, the world’s biggest oil explorer by market value, said wildfires that ravaged the oil-sands region of Western Canada, along with aging wells, reduced output.

At Shell, the largest oil producer after Exxon, profit adjusted for one-time items and inventory changes sank 72% from a year earlier to $1.05 billion, less than half the $2.16 billion analysts had expected.

Shell chief executive officer Ben Van Beurden, who this year completed the record purchase of BG Group Plc, has vowed to boost savings from the acquisition following the two-year slump in crude.

Meanwhile, Chevron chairman and CEO John Watson said the company continues to adjust to the lower-price environment by shrinking drilling programs, writing off discoveries that were too costly to develop at current prices and firing one-tenth of the workforce.