LONDON – Shell again boosted its dividend and share repurchases on Thursday after fourth quarter profits hit their highest in eight years, fuelled by higher oil and gas prices and strong gas trading performance.
The strong results cap a dramatic recovery in 2021 for Shell and the oil and gas sector after energy demand and prices collapsed in 2020 in the wake of the COVID-19 pandemic.
Shell, which moved its headquarters from The Hague to London last month, said it expected to lift its dividend by 4% in the first quarter of 2022 to $0.25 per share, which would be the fourth rise since Shell cut its dividend in early 2020 for the first time since the 1940s.
The company also said it would buy back $8.5 billion worth of shares in the first half of 2022, including $5.5 billion from the sale of its Permian shale assets in the United States. That compares with share buybacks totalling $3.5 billion in 2021.
“2021 was a momentous year for Shell,” Chief Executive Ben van Beurden said in a statement.
Shell’s results came on the day British regulators hiked energy prices by 54% in response to higher power prices, prompting calls to levy a tax on oil and gas producers.
Natural gas and electricity prices around the world have soared since the middle of last year on tight gas supplies and higher demand as economies rebounded from the COVID-19 pandemic.
Benchmark European gas prices and Asian LNG prices hit all-time highs in the fourth quarter.
Shell, the largest trader of liquefied natural gas (LNG), said its integrated gas earnings were boosted by “significantly higher” profits from trading.
Trading helped offset an 11% fall in LNG sales and a 7% drop in LNG production in 2021 as a result of plant maintenance and unplanned outages, including at its flagship Prelude floating LNG plant in Australia.
Prelude would stay shut for the first three months of 2022, van Beurden told reporters, adding that Shell would help supply Europe with gas in case of Russian disruptions.
https://graphics.reuters.com/SHELL-RESULTS/akpeznoedvr/chart_eikon.jpg
U.S. rival Exxon Mobil on Tuesday reported its largest profit in seven years, while Chevron’s profit missed estimates.
BP , TotalEnergies and Equinor report results next week.
Shell officially ditched “Royal Dutch” from its name this month and merged its dually-listed shares after moving its head office from The Hague to London as part of a tax and structure simplification drive, which van Beurden said would help the company plan to grow its low-carbon business.
Fourth-quarter 2021 adjusted earnings rose by 55% from the previous quarter to $6.4 billion, well above an average analyst forecast provided by the company for a $5.2 billion profit. It earned $393 million a year earlier.
For the year, Shell’s adjusted earnings rose to $19.3 billion, compared with $4.85 billion in 2020.
“Net income came in 22% ahead of consensus expectations and net debt fell sharply. On top, Shell announced an $8.5 billion share buyback programme for (the first half), also ahead of market expectations,” Morgan Stanley analyst Martijn Rats said.
The energy company said it planned this year’s spending at the lower end of the $23 billion-$27 billion after spending $20 billion in 2021.
Net debt dropped in the year to $52.55 billion from $75.4 billion at the end of 2020. Shell’s debt-to-capital ratio, or gearing, dropped to 23.1% from 32.2% over the same period.
Shell’s cash generation soared by a third to $45 billion in 2021 as global economic activity recovered from the pandemic.
GRAPHIC – Shell’s annual profits
https://graphics.reuters.com/SHELL-RESULTS/zdvxoaxawpx/chart_eikon.jpg
https://graphics.reuters.com/SHELL-RESULTS/lbvgnwlznpq/chart.png
(Bloomberg) — Exxon Mobil Corp. will accelerate the pace of a $10 billion share buyback after posting the biggest profit in almost eight years amid a broad rally in energy prices.
Net income adjusted for one-time items was $2.05 a share, 12 cents above the average of analyst estimates compiled by Bloomberg. Exxon paid down $9 billion in debt during the fourth quarter, reducing outstanding obligations to pre-pandemic levels. The shares rose as much as 5.9% to the highest intraday level since April 2019.
One measure of cash flow more than tripled to almost $18 billion during the final three months of 2021 compared with a year earlier as oil and gas prices soared. Exxon and its four supermajor peers probably raked in record free cash flow during 2021, according to analyst forecasts, and with energy prices still rising this year may be even more bountiful.
Chevron Corp. reported record free cash flow late last week. Shell Plc, BP Plc and TotalEnergies SE are scheduled to post fourth-quarter earnings during the next two weeks.
The boost in cash flow will allow Exxon to increase the pace of a $10 billion share buyback previously announced as taking place over two years. Now, the company expects the buybacks to be “faster than that 12-24 month pace,” Chief Financial Officer Kathy Mikells said during a conference call.
Exxon also expects to grow oil production in the Permian basin of West Texas by 25% in 2022 after increasing by the same amount from 2020 to 2021. That dwarfs the 10% increase that rival Chevron announced last week and is the latest sign that U.S. shale is ramping up again after years of restraint.
Exxon’s results come a day after the driller disclosed yet another belt-tightening move, this time involving shuttering its corporate headquarters in suburban Dallas and consolidating those offices near Houston. Exxon shares have risen more than 20% this year, capping an almost 50% advance in 2021 for the best annual performance in at least four decades.
Natural gas sales provided the primary uplift in fourth-quarter results as Exxon and other suppliers reaped hefty returns amid fuel shortages across Europe and parts of Asia. Escalating oil prices also proved a boon to the Western world’s largest crude explorer.
Chief Executive Officer Darren Woods’ decision to reverse course on a pre-pandemic growth plan and hold capital spending at historically low levels means high commodity prices are translating directly into massive cash flow.
While some observers have raised concerns about Exxon’s long-term commitment to fossil fuels, in the near term the company is profitably harvesting older reserves and replacing them with high-margin barrels from new discoveries in places such as Guyana.
In 2021, Exxon garnered ample cash to repair its balance sheet, pay the S&P 500 Index’s third-largest dividend and pledge to restart share buybacks. It’s a remarkable financial turnaround for the oil giant a year after it incurred its first annual loss in at least 40 years during the darkest days of the pandemic.
Exxon is under pressure to do more on climate change, especially after activist investor Engine No. 1’s success last year. Its recently announced ambition to eliminate emissions from its operations by 2050 is one step in that direction but the company will also have to allocate more cash to its low-carbon business over time, especially in areas like carbon capture and biofuels.
HOUSTON -Exxon Mobil Corp on Tuesday reported a fourth-quarter profit of $8.87 billion, its largest in seven years, as the top U.S. oil producer benefited from strong energy prices.
The company slashed spending after fuel demand cratered two years ago. Since then, earnings have topped pre-pandemic levels, helped by the rise in oil prices, with the global oil benchmark Brent also at a seven-year high.
The revamping will “position us to lead in cash flow and earnings growth, operating performance, and the energy transition,” Chief Executive Darren Woods said in a statement.
A continuation of high oil prices would “cause us to increase the pace of the share repurchase program,” Chief Financial Officer Kathryn Mikells said. Exxon restarted buybacks last month after a long suspension, with pledge to buy $10 billion by the end of 2023.
Shares in midday trading went up 5% to $80.02, near a three-year high.
“ExxonMobil closed a tumultuous year with results that can be described as solid,” Peter McNally, global sector lead at research firm Third Bridge.
Exxon reported an adjusted profit of $2.05 per share, 11 cents above analysts’ forecast as the bottom line benefited from soaring oil and gas prices, higher volumes and asset sales. In the same quarter a year ago, Exxon posted an adjusted profit of 3 cents a share.
Oil and gas production, Exxon’s largest business, posted a $6.1 billion operating profit, the highest in two years. Earnings benefited from an 80% increase in oil prices and doubling of natural gas prices compared to 2020.
It now plans to raise production in the top U.S. shale basin by 25% this year, in addition to a similar increase last year in the Permian, where output reached 460,000 bpd.
Even with a substantial spending increase into the end of the year to $17 billion, Exxon managed to use the extra proceeds from oil prices to reduce debt, said Biraj Borkhataria, Co-Head European Energy Research at RBC Capital Markets.
The company has eliminated the tab taken on during the 2020 downturn to keep paying dividends to shareholders. It has now returned to pre-pandemic debt levels, down $20 billion last year to $47.7 billion.
“We have been cautious on the Exxon investment case through the pandemic,” said Borkhataria. “But we believe the overall sector tailwinds are likely to outweigh company-specific factors in 2022.”
The company had flagged gains from asset sales and a $752 million, or 17 cents a share, hit to upstream results from impairment charges.
Its refining business posted fourth-quarter operating net of $1.4 billion, up sequentially and a big swing from a year ago when results were hurt by pandemic-related demand declines.
Chemical operating earnings were more than twice the profit a year ago when the business was hurt by the pandemic. Exxon said on Monday it would combine its refining and chemicals businesses.
Feb 1 – Canada’s Imperial Oil Ltd IMO.TO on Tuesday posted a quarterly profit that narrowly missed estimates, as extreme cold weather hit the company’s production.
Oil sands mining, which accounts for the bulk of Canada’s crude output, was hit by icy temperatures in December and January that slowed production.
The company, majority-owned by Exxon Mobil Corp XOM.N , said fourth-quarter production fell 3.3% to 445,000 barrels of oil equivalent per day.
However, the fall in production was offset by higher commodity prices and increased demand for motor fuels.
Brent crude prices nearly doubled to an average of $80 per barrel in the last three months of the year, as fuel demand remained strong with the Omicron variant of the coronavirus being milder than expected and as energy supplies remained tight around the world.
Imperial said prices for bitumen rose by C$31.34 per barrel in the fourth quarter, while synthetic oil prices rose by C$41.26 per barrel from a year earlier.
Throughput at its refineries averaged 416,000 barrels per day (bpd), compared with 359,000 bpd a year earlier.
Imperial also hiked its first-quarter dividend by 26% to 34 Canadian cents per share.
Net income, excluding items, rose to C$813 million ($640.46 million) in the quarter ended Dec. 31, from C$25 million a year earlier.
On a per share basis, the company earned C$1.35, excluding items, below the average estimate of C$1.37 per share, according to Refinitiv IBES data.
LONDON (Reuters) – Past changes in oil prices are closely associated with U.S. consumers’ and investors’ expectations for overall inflation in future, which helps explain why they are sensitive for central banks and other policymakers.
In the last three decades, the rise and fall in oil prices has correlated with expectations about future inflation measured by the University of Michigan’s monthly consumer survey and breakeven rates derived from U.S. Treasury Inflation Protected Securities (TIPS).
Cyclical changes in Brent prices over the previous 12 months have a pronounced association with changes in the expected rate of all-items inflation over the next 12 months in the University of Michigan survey.
Price changes also have a pronounced association with changes in the expected rate of all-items inflation over the next five and ten years evident in U.S. Treasury breakeven rates.
The price of oil and by extension gasoline and diesel is one of the most prominent and high-frequency prices experienced by most consumers and investors, which could explain why they correlate with expected inflation.
Consumers base their expectations of future inflation, in part, on their recent experience of actual price increases, with fuel prices playing a disproportionately prominent role.
But oil prices and expected inflation probably also both respond to common factors, most importantly the state of the business cycle.
In policymaking circles, there is an active debate about whether consumers’ and investors’ inflation expectations are relevant for setting interest rates and other elements of economic policy.
“Economists and economic policymakers believe that households’ and firms’ expectations of future inflation are a key determinant of actual inflation” Federal Reserve economist Jeremy Rudd wrote recently in a research paper.
But he concluded “a review of the relevant theoretical and empirical literature suggests that this belief rests on extremely shaky foundations” (“Why do we think that inflation expectations matter for inflation?”, Rudd, 2021).
Nonetheless, to the extent policymakers take inflation expectations into account, the association with oil prices ensures they are a matter of concern for senior officials.
In the last three months, front-month Brent futures prices have been roughly double what they were in the same period last year, with prices increasing at the fastest rate for two decades.
At the same time, U.S. consumers’ expectations for inflation over the year ahead have almost doubled to 4.8% compared with 2.6% this time last year.
And investors’ expectations for the average inflation rate over the next five years have increased to 2.9% compared with 1.6%.
Rising prices for oil and other forms of energy such as coal, gas and electricity are part of a broader pattern of price increases that is pushing up the cost of living for households and input prices for businesses.
The Fed has characterised these price rises as “transient”, a one-off adjustment to the price level, as the economy recovers from the pandemic-driven recession last year, rather than an ongoing inflationary increase in prices.
Nonetheless, the escalating price of oil has become an increasing source of concern for policymakers at the White House, the U.S. Treasury and the Fed itself.
Rising oil prices are also making real interest rates, based in part on expected inflation, increasingly negative, which is making monetary policy more stimulative, potentially worsening the instability in the business cycle.
Senior White House officials have begun to press their counterparts in Saudi Arabia for faster increases in production to help stabilise or reduce prices and indirectly to control inflation.
If oil prices stop climbing, or at least start rising more slowly, it will filter through into slower inflation and lower inflation expectations, which would comfort policymakers as well as investors, businesses and households.
If they do not, both realised and expected inflation are likely to accelerate further, increasing the probability that central banks will have to start boosting interest rates earlier and further than planned and increasing the probability of a mid-cycle slowdown if not a premature end to the current expansion.
(John Kemp is a Reuters market analyst. The views expressed are his own.)
Oilfield firm Baker Hughes Co reported quarterly profit that fell short of analyst expectations on Wednesday, in part due to global supply chain issues, sending its shares down sharply in early trading.
Oil service firms are expected to be supported by a rebound in oil prices to pre-pandemic levels as demand recovers and the Organization of the Petroleum Exporting Countries, Russia and their allies stick to their output-increase schedule instead of accelerating production.
But some companies are seeing earnings clipped by higher prices for materials and disruptions to global supply chains. Baker Hughes and rival Halliburton have also been negatively impacted by Hurricane Ida, which disrupted operations on the U.S. Gulf Coast and Gulf of Mexico in August and September.
Baker Hughes reported adjusted net income of $141 million, or 16 cents per share, in the third quarter, missing forecasts for 21 cents per share, according to Refinitiv IBES data. Revenues of $5.093 billion also fell short of expectations of $5.321 billion.
Shares slipped 4% to $25.79 in early trading. They are up about 29% year-to-date, lagging gains in global oil prices, which have risen about 62%.
“As we look ahead to the rest of 2021 and into 2022, we see continued signs of global economic recovery that should drive further demand growth for oil and natural gas,” Baker Hughes Chief Executive Officer Lorenzo Simonelli said.
On a call with investors, Simonelli acknowledged Baker Hughes experienced “some mixed results across our product companies.”
Its oilfield services unit was negatively impacted by Hurricane Ida and supply chain problems, which costs the company roughly $30 million to $40 million during the quarter.
Higher costs for chemicals, which have not yet been fully passed onto customers, also weighed on earnings.
Wall Street analysts were underwhelmed by the report, calling it neutral to negative.
“At the segment level, there were a number of different moving pieces which may drive some uneasiness today,” Tudor, Pickering, Holt & Co said in a note, pointing to disappointing results in oilfield services and digital solutions. Those units offset a margin beat in its Turbomachinery and Process Solutions unit.
Its digital solutions unit was also negatively impacted by supply chain problems related to semiconductors, boards and displays, executives said on the call.
Net income attributable to the company was $8 million, marking Baker Hughes’ first quarterly profit since the fourth quarter of 2020.
Crude prices climbed 4.5% in the quarter ended Sept. 30. and are currently trading just above $84 a barrel.
Calgary, Alberta and Houston, Texas–(Newsfile Corp. – October 13, 2021) – PetroTal Corp. (TSX…
US oil and gas producer EOG Resources Inc (EOG.N) surpassed analysts’ first-quarter profit forecast and announced a special dividend of $ 1 per share on Thursday due to the launch of COVID-19 vaccines and increased travel demand driving crude oil prices.
U.S. crude oil prices rose 23% in the first quarter after the 2020 pandemic affected fuel demand, sparking optimism among shale producers.
EOG’s average crude oil prices have increased by nearly 39% in the quarter from the last three months of 2020 to $ 58.02 per barrel.
However, total production fell from 801,500 boepd of the previous quarter to 778,900 barrels of oil equivalent (boepd) per day, hit by the Winter Storm URI that swept the central and southern states of the United States in mid-February.
A group of US oil and gas producers has recently increased their dividends. U.S. oil producer Chevron Corp (CVX.N) increased its quarterly payment by 5 cents to $ 1.34, while Marathon Oil (MRO.N) increased from 3 cents to 4 cents per share. Continental Resources Inc (CLR.N) refunded the dividend payment. Read more
EOG’s adjusted net income for the March quarter rose from $ 411 million, or 71 cents per share, to $ 946 million, or $ 1.62 per share, in fourth place.
Analysts expected a profit of $ 1.48 per share, according to Refinitiv IBES.
Analysts expected a profit of $ 1.48 per share, according to Refinitiv IBES.
On Wednesday, competitors Marathon Oil and APA Corp (APA.O) also beat their first quarter profit forecast.
Editor’s Note: Range Resources gave the keynote lunch address at EnerCom Dallas – The Energy Investment & ESG Conference earlier this month. Dennis Degner, Sr. Vice President, Chief Operating Officer for Range discussed the company’s ESG goals and accomplishments. A replay of the discussion and a download of the presentation can be found on the conference website – Range Resources – EnerCom Dallas.
FORT WORTH, Texas, April 26, 2021 (GLOBE NEWSWIRE) — RANGE RESOURCES CORPORATION (NYSE: RRC) today announced its first quarter 2021 financial results.
Commenting on the quarter, Jeff Ventura, the Company’s CEO said, “Range continues to make progress on key near-term objectives: improving margins with a focus on cost structure, generating free cash flow, enhancing liquidity, and operating safely while maintaining peer-leading capital efficiency. There were sizable improvements in pricing quarter-over-quarter leading to Range’s $193 million in cash flow from operations before changes in working capital. The corresponding capital spending of $105 million generated solid free cash flow for the quarter.
Range remains committed to disciplined capital spending and generating sustainable free cash flow. Over time, we believe Range will be differentiated as a result of our low sustaining capital, competitive cost structure, marketing strategies, environmental leadership and importantly, our multi-decade core inventory life, which will be an increasing competitive advantage in the years to come.”
Except for generally accepted accounting principles (GAAP) reported amounts, specific expense categories exclude non-cash impairments, unrealized mark-to-market adjustment on derivatives, stock-based compensation and other items shown separately on the attached tables. “Unit costs” as used in this release are composed of direct operating, transportation, gathering, processing and compression, production and ad valorem taxes, general and administrative, interest and depletion, depreciation and amortization costs divided by production. See “Non-GAAP Financial Measures” for a definition of each of the non-GAAP financial measures and the tables that reconcile each of the non-GAAP measures to their most directly comparable GAAP financial measure.
GAAP revenues for first quarter 2021 totaled $626 million, GAAP net cash provided from operating activities (including changes in working capital) was $109 million, and GAAP net income was $27 million ($0.11 per diluted share). First quarter earnings results include a $58 million derivative fair value loss due to increases in commodity prices.
Non-GAAP revenues for first quarter 2021 totaled $645 million, and cash flow from operations before changes in working capital, a non-GAAP measure, was $193 million. Adjusted net income comparable to analysts’ estimates, a non-GAAP measure, was $73 million ($0.30 per diluted share) in first quarter 2021.
The following table details Range’s average production and realized pricing for first quarter 2021(a):
Total production for first quarter 2021 averaged approximately 2,081 net Mmcfe per day. By area, southwest Marcellus production averaged 2.0 Bcfe per day while the northeast Marcellus assets averaged 77 net Mmcf per day during the quarter.
First quarter 2021 natural gas, NGLs and oil price realizations (including the impact of cash-settled hedges and derivative settlements which correspond to analysts’ estimates) averaged $3.01 per mcfe.
The following table details Range’s unit costs per mcfe(a):
First quarter 2021 drilling and completion expenditures were $97.1 million. In addition, during the quarter, $6.4 million was invested on acreage leasehold and $1.9 million on gathering systems and other. First quarter investments represent approximately 25% of Range’s total capital budget of $425 million in 2021.
In January 2021, Range issued $600.0 million aggregate principal amount of 8.25% senior notes due 2029 and used net proceeds to repay borrowings under its bank credit facility. In April 2021, Range redeemed outstanding principal amounts of senior notes due in 2021 and 2022 totaling approximately $26.0 million and senior subordinated notes due in 2021, 2022 and 2023 totaling approximately $37.3 million. Proforma the April redemptions, Range has approximately $218 million in notes that mature through 2022, which are expected to be redeemed via free cash flow at current strip pricing.
Range’s $3.0 billion borrowing base and $2.4 billion commitment amount were reaffirmed during first quarter 2021 with no changes to financial covenants. The credit facility matures on April 13, 2023 and is subject to semi-annual redeterminations. As of March 31, 2021, Range had total debt outstanding of $3.1 billion, consisting of $124 million in bank debt, $3.0 billion in senior notes and $37 million in senior subordinated notes. The Company had over $1.9 billion of borrowing capacity under the current commitment amount at the end of the first quarter.
The table below summarizes estimated activity for 2021 regarding the number of wells to sales for each area.
Range’s liquids marketing continued to expand premiums relative to Mont Belvieu pricing, with first quarter NGL realizations averaging a $1.52 premium per barrel, a best in Company history. The portfolio of domestic and international ethane contracts performed very well during the quarter and generated a significant uplift relative to Mont Belvieu while propane and butane markets benefited from an increase in Marcus Hook export premiums and a supportive macro environment.
Starting April 2021, Range will have an additional 5,000 barrels per day of Mariner East capacity, which is expected to be fully utilized with existing production. In addition, Range has secured new and diverse LPG export-related contracts. These contracts add flexibility, reduce costs, and further enhance realized propane and butane prices, and continue the momentum of achieving strong export premiums. Range expects near-term and long-term benefits of NGL exports out of the Northeast as international demand for NGL products continues to grow. NGL exports out of Marcus Hook provide Range a unique supply option for that demand. In 2021, Range expects to export over 80% of its propane and butane, the highest percentage of propane and butane exported by any U.S. independent, leading to strong year-over-year improvements in NGL pricing and margins. Higher realized NGL prices for Range in 2021 will lead to a slight increase in processing costs as Range’s processing costs are based on the NGL revenue received, providing a partial hedge against NGL price fluctuations.
Including the impact of basis hedging, Range had a natural gas differential of ($0.14) per mcf during the first quarter. The Company’s transportation portfolio provides access to natural gas markets in the Gulf Coast, Midwest, and Northeast, with each region benefiting from strong daily sales prices in February. This revenue uplift was partially offset by higher natural gas fuel cost during the quarter which is reflected in transportation, gathering, processing and compression expense. Range remains on track with its natural gas differential to NYMEX guidance of ($0.30) – ($0.40) for the year.
Range’s 2021 all-in capital budget is $425 million. Production for full-year 2021 is expected to average approximately 2.15 Bcfe per day, with ~30% attributed to liquids production.
Based on current market indications, Range expects to average the following price differentials for its production in 2021.
(1) Including basis hedging (2) Weighting based on 53% ethane, 27% propane, 7% normal butane, 4% iso-butane and 9% natural gasoline.
Range hedges portions of its expected future production volumes to increase the predictability of cash flow and to help maintain a strong, flexible financial position. As of April 16, 2021, Range had approximately 70% of its remaining expected 2021 natural gas production hedged at an average ceiling price of $2.79 per Mmbtu and an average floor price of $2.60 per Mmbtu. Similarly, Range hedged approximately 70% of its remaining estimated 2021 crude oil production at an average floor price of $52.00 per barrel and approximately 20% of its remaining expected 2021 NGL revenue. Please see the detailed hedging schedule posted on the Range website under Investor Relations – Financial Information.
Range has also hedged Marcellus and other basis for natural gas and NGL exports to limit volatility between benchmarks and regional prices. The combined fair value of the natural gas basis, NGL freight and spread hedges as of March 31, 2021 was a net gain of $10 million.
A conference call to review the financial results is scheduled on Tuesday, April 27 at 9:00 a.m. ET. To participate in the call, please dial (877) 928-8777 and provide conference code 3782655 about 10 minutes prior to the scheduled start time.
A simultaneous webcast of the call may be accessed at www.rangeresources.com. The webcast will be archived for replay on the Company’s website until May 27.
Click here for the complete press release
TC Energy Corp reported a 13.4% rise in fourth-quarter comparable profit on Thursday, partly helped by lower operating costs for its U.S. natural gas pipelines.
The company behind the Keystone XL oil pipeline, work on which was halted after U.S. President Joe Biden revoked the permit, had said it expects to record a large non-cash charge in its first-quarter earnings, but did not provide the size of it.
TC Energy said it continues to expect its Coastal Gaslink pipeline in British Columbia to be in service by 2023.
Its construction has faced opposition from environmentalists and was disrupted due to restriction imposed by the provincial government to fight the spread of COVID-19 infections after the Christmas holiday break.
The company said due to this project costs for the pipeline will increase significantly and the schedule will be delayed further.
Earnings from the companies U.S. and Canadian natural gas pipelines rose more than 9% each in the quarter.
Comparable earnings rose to C$1.1 billion ($867.30 million), or C$1.15 per share, in the quarter ended Dec. 31, from C$970 million, or C$1.03 per share, a year earlier.
More than $185 million in Free Cash Flow 1 Expected in 2021 Noble…
Schlumberger NV on Friday joined rivals in predicting a steady recovery in the oil industry this year after the world’s top oilfield services provider’s fourth-quarter results beat estimates, aided partly by growing demand for drilling.
Easing of COVID-19 related restrictions has propelled oil demand and prices, which remain stable since a late-2020 rebound from historic lows. Brent crude, which averaged at $45 per barrel in the last quarter of 2020, hovered around $55 on Friday.
Schlumberger Chief Executive Officer Olivier Le Peuch said he was optimistic about demand recovery through this year, as rivals Halliburton Co and Baker Hughes Co have noted, giving investors hope the oil downturn was nearing an end.
However, Le Peuch’s timeline for a full recovery to 2019 level no later than 2023 was behind Halliburton’s view of a rebalancing next year. Baker Hughes also sees strong investment growth in 2022.
Still, Le Peuch said the reset could happen sooner, as some analysts have noted in recent weeks, with international recovery accelerating from second quarter this year and North America activity continuing to build upwards after a strong start to the year.
“Our hypothesis going forward is that the market supply share will rebalance slightly, will favor international and will, as a consequence, pull international activity to 100% or more in the next 2 or 3 years,” he told analysts on a post earnings call.
Schlumberger’s shares were down 1.4% at $24.86in early trading, outperforming rivals and other energy stocks that fell more on latest COVID-19 related restrictions in China. [O/R]
Total revenue of $5.53 billion in the fourth quarter beat analysts’ estimates of $5.25 billion. It’s the first quarter-over-quarter increase in revenue for Schlumberger since the third quarter of 2019.
Since taking over in July 2019, Le Peuch has focused on reshaping Schlumberger through thousands of job cuts, other steep cost cuts and divesting unprofitable businesses, actions that have been received well by Wall Street.
“Schlumberger ripped the cover off the ball with these results,” Tudor, Pickering, Holt and Co analysts wrote in a note on Friday, saying the strong performance wasn’t a big surprise due to the yeoman’s work around cost cuts and improving margins and incremental fee cash flow.
Aided by cost cuts, Schlumberger’s net income excluding charges and credits came in at 22 cents per share in the quarter ended Dec. 31, which also beat estimates of 17 cents, according to Refinitiv IBES data.
In light of the anticipated demand recovery, Schlumberger forecast capital investments this year of between $1.5 billion and $1.7 billion, a slight improvement at the midpoint of the range from last year’s $1.5 billion.
Oilfield equipment and services provider Baker Hughes Co on Thursday joined larger rival Halliburton Co in saying the energy industry’s worst downturn in decades would turn a corner this year.
Oil and gas producers have been forced to cut budgets, restructure operations and reduce employees, to tackle the COVID-19 pandemic-led fallout in energy demand and prices.
“We expect spending and activity levels to gain momentum through the year as the macro environment improves, likely setting up the industry for stronger growth in 2022,” Baker Hughes Chief Executive Officer Lorenzo Simonelli said.
Halliburton on Tuesday predicted a recovery in the global oil and gas industry from the second quarter of this year.
Demand for oilfield equipment and services recovered in the last three months of 2020, with producers completing more wells and drilling some, as crude prices averaged around $45 a barrel in the quarter. Global crude prices hovered around $56 per barrel on Thursday.
Baker Hughes’ adjusted operating profit nearly doubled to $462 million in the fourth quarter ended Dec. 31, compared with the third.
The company has cut its budget, restructured operations, reduced the number of employees, closed facilities and accelerated the exit of non-core products to save cash and cushion the blow from the fallout in demand due to the pandemic.
Total revenue for the reported quarter rose nearly 9% to $5.5 billion, compared with the third, and also beat estimates of $5.42 billion, according to Refinitiv IBES data.
The total revenue was down 13.4% and adjusted operating profit 15.4% lower from a year earlier, as drilling activity was well below last year’s levels.
Halliburton also posted a better-than-expected profit on Tuesday, while top oilfield service provider Schlumberger NV is expected to report results on Friday.
Baker Hughes’s shares were up 3.7% at $23.75 in premarket trading.
MOSCOW – Fallout from the pandemic and a weaker rouble sent Russian energy giant Rosneft ROSN.MM to a third-quarter net loss of 64 billion roubles ($827 million) from net income of 43 billion roubles in the previous quarter, the company said on Friday.
However, plans to extend a share buyback programme until the end of 2021, announced later during a conference call with investors, helped its shares reverse earlier losses.
Rosneft, the world’s second-largest oil producer by output behind Saudi Aramco 2222.SE, was forced to reduce oil production in line with the OPEC+ supply pact aimed at stabilising global markets.
The company’s oil and gas condensate output for the July to September period was down 3.2% from the previous quarter at 3.91 million barrels per day.
It also had to contend with the coronavirus crisis. Its headquarters was placed on a 30-hour working week and pandemic-related costs for the first nine months of the year amounted to 5 billion roubles ($65 million).
Rosneft’s shares were 0.2% higher by 1350 GMT.
The company proposed a $2 billion share buyback in May 2018 to reduce debt and boost investor returns. It eventually started making open market repurchases in March 2020, and had initially planned to complete the programme by year-end.
The company’s earnings before interest, tax, depreciation and amortisation in the third quarter more than doubled from the previous three months to 366 billion roubles.
Run by one of President Vladimir Putin’s closest allies, Igor Sechin, Rosneft had long opposed output production cuts in tandem with OPEC but has been overruled by the president, who is keen to deepen political cooperation with the Middle East.
The company, in which BP BP.L owns a 19.75% stake, said it still planned capital expenditure of 1 trillion roubles in 2021, but the eventual amount depends on how the OPEC+ deal evolves.
The company has had to buy oil from third parties to meet its obligations amid the production curbs.
Rosneft said it bought 27.4 million barrels on global markets in the third quarter, up 35% from the second quarter.
Sign up to receive free Oil & Gas 360 Newsletters