European Oil Majors Adjusting to $60 Barrel
European Oil Majors Adjusting to $60 Barrel

European Oil Majors Adjusting to $60 Barrel

European Oil Majors Adjusting to $60 Barrel

Fitch Ratings says Shell, Total and British Petroleum are adjusting their operations to match the realities of an under-$60-barrel price in the long run, according to a new report by Forbes.
The European oil majors are lowering dividends and spending to minimize breakeven points last year, Oil Price reported.
"The companies all generated neutral-to-positive free cash flows in 2017 after dividends, before mergers and acquisitions," according to their recently released annual results. 
"Developments in their credit quality will largely depend on their ability to preserve financial flexibility, as oil prices are likely to remain volatile.”
The Brent barrel averaged $55 last year, allowing the companies’ free capital to range from -$0.50 to $6.60 a unit, depending on the company. The upward shift is a major improvement compared to previous years.
Even when barrel costs stood above $100—majors’ expenditures would cause the capital spread to vary between -$14 and -$3 per unit. The market crash has forced large corporations to cut excessive spending by refocusing efforts in the downstream and petrochemical sectors and enforcing scrip dividends.
“This should allow integrated oil companies to generate neutral-to-positive free cash flows through the cycle under our price deck assumptions, which supports their current ratings,” Fitch said.
“We doubt that current prices will be sustained. Our base case is that the Brent price will fall from current levels and stabilize in the $50-60 per barrel range, as US shale production is set to increase further.”
BP expects the Brent barrel to reach a $50 average price in 2018 and reduce further to $35-40 by 2021, before a further nosedive to $30.
Statoil’s chief executive, Eldar Satre, told Reuters on Wednesday that oil prices will likely be below $70 per barrel this year, as growing US onshore production as well as rising production from conventional fields will keep a lid on prices.

Short URL : https://goo.gl/o2MMqN
  1. https://goo.gl/BkAXaz
  • https://goo.gl/Tm2zJr
  • https://goo.gl/TXy6S7
  • https://goo.gl/TzZu17
  • https://goo.gl/oFuWQC

You can also read ...

Turkey Cuts Iran Oil Imports
Turkey’s biggest oil importer Tupras has cut back purchases of...
US Oil Industry Lobbies Against Russia Sanctions
The US oil and gas industry is lobbying against tighter...
Lack of Wind Jeopardizes UK Turbine Investments
It has been a stifling summer of disappointment for investors...
Kuwaiti Crude Heading for Japan
Kuwait's newly launched Super Light crude oil is increasingly...
Tabriz Refinery Signs Tail Gas Agreement
Tabriz Oil Refining Company signed a $12 million agreement on...
MAPNA Ready to Increase Installed Power Capacity
Iran's top engineering and energy enterprise MAPNA Group is...
EOR Operations Underway at North Yaran Oilfield
Operations are underway to increase oil production at North...
ICOFC Intends to Boost Gas Condensate Output
The state-owned Iranian Central Oil Fields Company plans to...

Add new comment

Read our comment policy before posting your viewpoints