ExxonMobil, BP, Shell, Chevron and Total: Covid punctures the accounts of Big Oil
The five integrated supermajors, ExxonMobil, BP, Shell, Chevron and Total, recorded a combined record loss of $ 76 billion in 2020
The downturn brought about by the Covid-19 pandemic and the acceleration of the energy transition have created a new reality for the global oil and gas industry, whose production will peak and sooner than expected according to an analysis of Rystad Energy. The five integrated supermajores – ExxonMobil, BP, Shell, Chevron and Total – recorded a combined record loss of $ 76 billion in 2020.
GREATER LOSS DUE TO WRITE-DOWN
Most of this loss , $ 69 billion, can be attributed to asset writedowns and write-offs: the majors have reevaluated their strategy to focus on the energy transition and become less dependent on oil. Their combined oil and gas production decreased by nearly 5%, or 0.9 million barrels of oil equivalent per day, in 2020 from the previous year.
THE IMPACT DUE TO THE OBJECTIVES ON EMISSIONS AND CLEAN ENERGY
Lower emissions targets and cleaner energy demand also had a significant impact on the long-term production prospects for the majors. Rystad Energy expects net production of the majors to be around 17.5 million boepd in 2025 and will peak at around 18 million boepd in 2028.
CHOUDHARY: WE CAN EXPECT A CERTAIN RECOVERY IN THE NEXT FUTURE
“Last year he definitely tested the oil and gas majors like never before. Some recovery can be expected in the near future as demand picks up and the price of oil exceeds $ 60. However, the key to success for the five majors over the next decade will be to strengthen their business in more resilient regions, restructure and scale to meet market needs and pay off their high debt levels, ”said Rahul Choudhary, upstream analyst. by Rystad Energy.
THE LOSSES
The majors' net profit declined sharply last year as low oil prices, OPEC production cuts, plummeting refining margins and weak chemicals margins left no business segments unscathed, the company admitted. energy consulting company. All five majors posted net losses in 2020 with ExxonMobil in first place with $ 22.4 billion, followed by Shell and BP which suffered losses of over $ 20 billion. Total and Chevron fared better than their peers, relatively speaking, as the two companies reported net losses of $ 5 billion to $ 6 billion.
Prior to Covid-19 and the collapse in prices, most companies had assumed an oil price between $ 70 and $ 80 per barrel, which allowed them to pursue several projects at higher costs. After the collapse in prices and with continued uncertainty about future oil demand, companies have reduced their price assumptions between $ 55 and $ 70 per barrel, making high-cost projects unworkable.
SHELL AND BP AT THE TOP OF THE PRODUCTION DECLINE
European majors Shell and BP accounted for the largest annual production drop with around 300,000 boepd each, while ExxonMobil and Total reduced their production by 200,000 boepd and 150,000 boepd respectively. Chevron was the only major to increase its production in 2020, largely due to the $ 13 billion acquisition of Noble Energy that partially offset production cuts.
At the end of the year, total spending cuts amounted to $ 26 billion, or 32% of the guidance initially announced by the five majors. Most of the capital cuts relate to greenfield development projects, as the majors await a recovery in prices and demand before moving forward with new projects.
30 BILLION LESS THAN GREENFIELD INVESTMENTS
Rystad Energy estimates that the five majors approved $ 30 billion fewer greenfield investments in 2020 than the previous year – a 90% drop.
DEBTS INCREASE
US majors ExxonMobil and Chevron posted a record amount of debt during the year, adding $ 19 billion and $ 18 billion to their net debt, respectively. As a result, both majors increased their gear ratio by 10% in 2020. While Chevron's gear ratio remains below 25%, ExxonMobil's gear ratio is now close to 30% and the company expects to avoid any additional debt in the near future. Due to the heavy debt burden, both majors had an S&P credit rating downgraded from AA to AA-.
European majors BP and Shell increased their liquidity by around 50%, thereby reducing their overall net debt for the year. However, all of the majors increased their transmission ratio in 2020, with BP and Shell closing the year with an exchange ratio of more than 30%, concluded Rystad Energy.
Article published on Energia Oltre, here the full version .
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/exxonmobil-bp-shell-chevron-e-total-il-covid-perfora-i-conti-delle-big-oil/ on Sun, 21 Feb 2021 15:09:47 +0000.