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Oil Majors on Track to Post Best Results in Three Years
Oil Majors on Track to Post Best Results in Three Years

Oil Majors on Track to Post Best Results in Three Years

Oil Majors on Track to Post Best Results in Three Years

The world's biggest western energy companies are on track to post the highest annual profits since the oil market crashed three years ago and forced them to restructure for a prolonged era of low prices.
Third-quarter net income at Exxon Mobil Corp. and Chevron Corp. grew more than twice as fast as crude prices compared with the same period of last year, a sign that cost-cutting and a new focus on short-term projects is paying off, MarketWatch reported.
Profits at Exxon and Chevron rose by 50% or more, with Exxon on Friday reporting net income of $4 billion and Chevron $2 billion. France's Total SA reported a 40% improvement in the third quarter, compared with $2.7 billion in the same period of the previous year. Analysts now estimate that the five largest oil companies, namely Exxon, Chevron, Total, BP and Royal Dutch Shell, will rake in more than $50 billion in 2017, according to FactSet. That is the most since 2014, when oil sold for more than $110. Brent crude was trading at just below $60 this week.
"These companies are becoming much more streamlined," said Brian Youngberg, an energy analyst at Edward Jones. "They've all been aggressive in driving costs down to maintain profitability even if oil prices remain low. You're not seeing as many big, expensive projects. Those days are gone."
The fortunes of the companies have also been lifted by strong demand for chemicals and fuels like gasoline and diesel. Exxon, Total and Shell are now run by former refining executives, and Chevron will be as well in February, when Michael Wirth is scheduled to take over from John Watson, the company's retiring chief executive.
The pivot to refining expertise in top executive ranks comes as the oil giants seek experienced hands at managing spending rather than chasing potentially expensive new barrels. To keep costs down, many of the companies have curbed their ambitions, turning instead to smaller, incremental developments that pay back more quickly than multibillion-dollar megaprojects.
Oil prices were 14% higher from July to September compared with the same period in 2016. The spot price of liquefied natural gas, which has increased in importance to the companies as they seek to reduce emissions from their operations, has risen 60% since July, according to analysts at Cowen.
Last year, the five companies spent $31 billion more in cash on new investments and dividends than they generated from operations, according to FactSet. Exxon has fallen 8% so far this year and Chevron's shares are largely flat in 2017.
Shell's American depositary receipts have risen by 12.5%, while the US shares of Total and BP have seen modest gains.

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