Oil industry trend shows earnings and prices fall.
ConocoPhillips has reported a fourth-quarter 2014 net loss of $39m, compared with 2013 earnings of $2.5bn. Excluding special items, adjusted earnings for the 2014 period were just $0.7bn, against $1.7bn for the previous year.
Full-year 2014 earnings were down from last year's $9.2bn to $6.9bn. The company blamed lower realized prices, higher operating costs and depreciation expenses from higher volumes for the reduced numbers. However, this was partially offset by increased production and the producer was keen to point out that it had met its stated performance targets. However, it warned that another cautious year is ahead for 2015, with investment being reduced to $11.5bn from a previously stated $13.5bn.
Exxon Mobil announced estimated full-year 2014 earnings of $32.5bn, almost identical to 2013. Q4 earnings were $6.6bn, down 21% from $8.4bn year-on-year. Lower commodity prices in upstream market, combined with higher-than-expected costs for planned maintenance in the company's downstream operations were partially offset by improved margins for the Chemicals division.
Chevron also reported weaker earnings of $3.5bn for the Q4 2014, almost $1.5bn lower than the previous year. However, foreign currency effects helped increased Q4 earnings to $432m, more than double the increase seen in 2013. Full-year 2014 earnings were also lower at $19.2bn compared with $21.4bn in 2013.
“Our 2014 earnings were down from the previous year, largely due to the sharp decline in crude oil prices,” said Chevron Chairman and CEO John Watson. “Improved downstream results and higher gains on asset sales related to our divestment program partially offset the effect of lower crude prices.”
Low oil prices impacted similarly on BP's results, with the company taking a $3.6bn post-tax net charge for non-operating items in the quarter, mainly relating to impairments of upstream assets. Underlying replacement cost profit for the fourth quarter was $2.2bn compared with $2.8bn for the same period in 2013. Full year profits were $12.1bn compared with $13.4bn reported in the previous year.
According to Bob Dudley, BP's Group Chief Executive, the company has “now entered a new and challenging phase of low oil prices through the near and medium term. Our focus must now be on resetting BP: managing and rebalancing our capital programme and cost base for the new reality of lower prices while always maintaining safe, reliable and efficient operations.”
Shell was one of the few majors to buck the trend, with earnings on a current cost of supplies (CCS) basis of $4.2bn compared with $2.2bn for the same quarter a year ago. Full year 2014 CCS earnings were $19bn, from $16.7bn in 2013.
Compared with the fourth quarter 2013, CCS earnings excluding identified items benefited from improved downstream results reflecting steps taken by the company to improve financial performance and maximising benefits from the industry environment.
Phillips 66 has also sounded a bright note, announcing fourth-quarter 2014 adjusted earnings of $36.2m up from $29.4m in Q3 2014. The figures include one month’s financial results of the recently acquired Bayway and Ferndale rail rack facilities. Adjusted EBITDA were $42.6m in the fourth quarter, a positive uplift from $35m in Q3 2014.
A bouyant Greg Garland, Phillips 66 Partners Chairman and CEO, stated: “During our first full year of operation, we completed more than $1bn of acquisitions and delivered on our commitment to strong distribution growth. Our recently announced quarterly distribution represents a 51% increase compared with the distribution one year ago.”