Energy Majors Post YOY Financial Losses, Plan to Increase Production

With Eni S.p.A, Total S.A. and Royal Dutch Shell plc all posting year on year financial losses in the third quarter of 2015, the majority of these energy majors have pledged to increase their production output.

Eni recorded a net loss of $1.04 billion in the third quarter of 2015, compared to a net profit of $1.88 billion in 3Q 2014. Its adjusted operating profit of $824 million for the quarter was 75.2 percent less than last year’s figure and the net cash provided by its operating activities fell by 57.1 percent this quarter to $1.874 billion. Following the divestment of a 12.5 percent interest in Saipem during 3Q 2015, the company raised the target reduction of full year capital expenditure to 17 percent, from a prior guidance of 14 percent, and stated that it will optimize investments and carry out “efficiency initiatives” relating to operating costs. Eni, which discovered 1.2 billion barrels of new resources over the past nine months and produced 1.703 million barrels of oil equivalent per day in 3Q 2015, will increase its 2015 production output by approximately 9 percent from 2014, partly due to new field start-ups and projected higher volumes from Libya.Total’s net income fell by 69 percent year on year to $1.079 billion in 3Q 2015, from $3.463 billion in 3Q 2014, and its adjusted operating income fell by 48 percent year on year to $3.204 billion. Cash flow from operations also fell by 22 percent year on year to $5.989 billion, although a cost reduction program implemented by the company is “on track” to exceed its target of $1.2 billion in savings for 2015, according to a statement from Total CEO Patrick Pouyanne in the energy firm’s 3Q results. The company’s hydrocarbon production reached 2.342 million barrels of oil equivalent per day in the quarter and Total expects its production to increase by “at least 9 percent” in 2015, according to a company statement, compared to an initial guidance figure of more than 8 percent.

Shell posted a $7.41 billion loss in 3Q 2015, which was 266 percent lower than the profit of $4.46 billion recorded in 3Q 2014, and its cash flow from operating activities reduced by 12 percent, to $11.22 billion, in the quarter compared to last year’s figure. The company produced 2.880 million barrels of oil equivalent per day during 3Q 2015, which marked a 3 percent year on year increase, although production in the fourth quarter is not expected to fare as well compared to the same period last year. This is due to 50,000 barrels of oil equivalent per day being lost as a result of divestments, 30,000 boepd being lost due to a Malaysia PSC expiry and 40,000 boepd being lost as a result of the impact of curtailment and underground storage reinjection at NAM in the Netherlands. During the quarter, Shell made the decision to cease Alaska drilling activities “for the foreseeable future” after drilling a dry well in the region, and the company stopped the construction of the Carmon Creek oil project in Canada. Shell’s proposed acquisition of BG still “remains on track for completion in early 2016”, according to a statement by Shell’s CEO Ben van Beurden in the energy company’s 3Q financial statement.