Weighed down by lower crude oil prices, weak refinery margin and renewed militant attack on facilities in the Niger Delta, some International Oil Companies (IOCs) as well as indigenous firms have suffered a loss of over N2.26 trillion in the first half of 2016.
For instance, International Oil Companies like Shell, Exxon Mobil Corporation, and Chevron Corporation, suffered a loss of over $7.1 billion, representing about 70 per cent of its earnings as crude oil prices continued to decline.
On the other hand, Indigenous oil companies like Oando Plc and Seplat Petroleum Development Company are not only contending with low oil prices, but also with production shut-in, which brought about a loss of N43 billion in the first half of the year.
Specifically, Royal Dutch Shell reported the lowest quarterly earnings in 11 years, and missed estimates by more than $1 billion as a mix of lower energy prices, weaker refining margins. Second quarter 2016 Current Cost of Supplies (CCS) earnings attributable to shareholders excluding identified items were $1 billion compared with $3.8 billion for the second quarter 2015, a decrease of 72 per cent, which is $2.8 billion.
The company’s second quarter 2016 basic CCS earnings per share excluding identified items, also decreased by 78 per cent compared to second quarter 2015.Besides, Chevron posted a loss of $1.5 billion or 78 cents per share, in the second quarter, compared with a profit of $571 million or 30 cents per share, in the year-earlier period.
The company’s cash flow from operations in the first half of 2016 sank more than 60 per cent year over year to $3.7 billion.Similarly, Exxon Mobil Corporation estimated second quarter 2016 earnings also dropped from the $4.2 billion it recorded in the same period of last year to $1.7 billion.
The company said the results reflect sharply lower commodity prices, weaker refining margins and continued strength in the chemical segment.Seplat Petroleum, a leading Nigerian indigenous oil and gas company listed on both the Nigerian Stock Exchange and London Stock
Exchange, recorded a net loss of $61 million (N19 billion) on gross revenue of $143 million for the first six months of 2016.
Oando Plc, Nigeria’s leading indigenous energy group listed on both the Nigerian and Johannesburg Stock Exchange recorded Loss-After-Tax of N27 billion in first half of the year.The company’s gross profit also decreased from N37.1 billion it recorded in the same period of last year to N19 billion during the period under review.
Oando also blamed its poor performance on low oil prices, devaluation of the naira and operating challenges in the Niger Delta that resulted in a 25 per cent reduction in daily production.
Group Chief Executive, Oando Plc, Wale Tinubu, said that the first half of the year has attested to the deplorable state of security in the oil and gas environment in Nigeria, having experienced a 25 per cent decline in production volumes arising from the increased disruptions from militant activities.
We are pleased to have received $210 million into our downstream group representing 70 per cent of our asset disposal plans and also concluded the restructuring of our debt through the N108 billion medium term note. Now that the dollar liquidity position in the country has improved, we have limited the risk of exchange rate volatility by converting a substantial portion of our dollar denominated obligations to naira, thereby matching our dollar liabilities to our dollar generating businesses.”
Seplat’s Chief Executive Officer, Austin Avuru, said the company has faced several challenges in the first half of the year due to the shut-in and suspension of oil exports at the Forcados terminal since mid-February.He explained that the first half results have been heavily impacted by events outside of the company’s control at third party operated infrastructure.
We expect the second half to see a resumption of exports via the Forcados terminal and concurrently a regular off take schedule established via the Warri refinery jetty, which in turn will also help ensure gas sales into the domestic market are de- constrained.”
Speaking on the company’s performance, Chief Executive Officer of Royal Dutch Shell, Ben van Beurden said lower oil prices continue to be a significant challenge across the business, particularly in the upstream. Chairman and Chief Executive Officer, ExxonMobil, Rex Tillerson, said while the company’s financial results reflect a volatile industry environment, ExxonMobil remains focused on business fundamentals, cost discipline and advancing selective new investments across the value chain to extend our competitive advantage.
He said during the second quarter, upstream earnings were $294 million. Production volumes were essentially unchanged at four million oil-equivalent barrels per day. “Liquids production growth from recent start-ups more than offset the impact of field decline and downtime events, notably in Canada and Nigeria”.