Big Oil: The Ups and Downs of Production and Profit
November 6, 2009
As they say, it's all over but the shouting. With France's Total (NYSE: TOT) having reported its results for the third quarter of 2009, all of the members of Big Oil have told us about their results for the period.
While several of the companies exceeded expectations, all fell short of last year's comparable quarter, when commodities prices hit record levels and then began their descent. For instance, ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX), the two biggest U.S. operators, both exceeded expectations. Across the pond, BP (NYSE: BP) was surprisingly strong, while Royal Dutch Shell (NYSE: RDS-A) also topped expected results.
Focus on Total's third quarter metrics, and you'll notice that its income fell 56%, to $2.75 billion from a year ago, but did manage a 14% sequential improvement.
For the quarter, Total's production increased 1% to 2.24 million barrels of oil equivalent per day and 3% sequentially. In that respect, the company benefited from the ramp-up of Akpo in Nigeria and Tahiti in the U.S. Gulf of Mexico. It also made hay from several start-ups, including Tyrihans in Norway and Angola's Tombua Landana, along with the Qatargas II Train B during the quarter.
As you know, the primary difficulty in the quarter, as with all producers, was the slide in crude prices year on year. Indeed, crude prices were 40% lower than in the third quarter of 2008. That being the case, Total's adjusted upstream profit declined by 48%.
Unfortunately, the downstream segment was even more of a test for the company. Throughput declined 10% year over year. That, coupled with the European refining margins having declined by 85%, resulted in an adjusted net operating income (ANOI) decline of 84%. And finally, ANOI for the chemicals sector slid by 39% year on year, while more than doubling the results of the prior quarter.
Total fought some tough battles this quarter and had some solid operational successes. However, among the European majors my feeling is that investment
funds are better deployed in
BP, a company for which life has become one success after another.
