Oil majors across the world are the brink of collapse as the sharp fall in oil demand and crude prices triggered by coronavirus crisis took their toll on their finances.
The lockdown and travel ban across the world has sent an arrow through the heart of investors who had betted on the industry at the start of the year before the current acrimonious situation.
Combined losses of four largest companies (Royal Dutch Shell, Exxon Mobile Corporation, British Petroleum or BP, Conocophillips, and Seplat Develpemt Corporation) stood at $3.06 billion in the first quarter of 2020.
That compares with a cumulative profit of $7.23 billion the corresponding period of 2018 when an OPEC + output cut helped propel the price of the black gold.
The coronavirus pandemic that resulted in a 30 percent drop in demand for oil has disrupted the expansion plans of companies who are now forced to cut down on dividend.
Brent crude, the international benchmark, fell from about $70 a barrel in early January to an 18-year low below $20 a barrel a few weeks ago.
Read also: Global Oil Demand Begins Long, Painful and Uncertain Recovery But No Cheer Yet For Nigeria
The international benchmark Brent rose 1 per cent to $26.80 a barrel, while US marker West Texas Intermediate climbed 5.5 per cent to $20.00. The WTI price hit a negative territory two ago, as buyers were buying sellers to store their products.
However, President Donald Trump seemed to have succeeded in convincing Saudi Arabia and Russia over an output cut that would start this week. The OPEC + allies have to slash global output by 10 percent, which translates to 10 million barrels a day.
Some groups in the cartel are mulling another 5 percent cut and the US shale oil producers have
The recent earnings report of companies sent a predawn chill down the spine of investors, which stoked sell- fff as they dumped shares of bellwether firms with alacrity.
Exxonmobil, the US oil company posted a loss of $610 million in the first three months of 2020, a sharp reduction from $2.35 billion, its worst results in more than a decade.
Exxonmobil’s throughput sales increased by 4.66 percent to $4.06 billion in the period under review while revenue from was up 2.40 percent t0 $5.28 billion as at March 2020. Capital exploration expenditure increased by 3.62 percent to $7.14 billion in the period under review.
Royal Dutch Shell, the Anglo Dutch company posted a loss of $24 million as at March 2020, as against a profit of $965 million the previous year.
Shell’s cash flow from operating activities excluding working capital movements was $7.4 billion, reflecting lower earnings and higher costof-sales adjustment.
Conocophillips, the American oil major, posted a loss of $1.70 billion as at March 2019, from a profit of $1.80 billion the previous year.
Conocophillips’ cash provided by operating activities was $2.1 billion. Excluding working capital, cash from operations (CFO) was $1.6 billion.
The American oil and gas giant ended the quarter with cash, cash equivalents and restricted cash totaling $4.2 billion and short-ter investments of $3.9 billion, equaling more than $8.0 billion in ending cash and short-term investments.
British Petroleum otherwise known as BP recorded a loss of $628 million as at March 202o, this compares with a profit of $2.09 billion as at March 2019.
Seplat Development Corporation or “Seplat”, the largest indigenous oil and gas firm in Nigeria recorded a loss of $106.55 million as at March 2020, as against $32.66 million the previous year.
As a result of the economic crisis brought on by the coronavirus pandemic, the largest oil companies are cutting capital investment while contemporaneously reducing reward to their owners.
Royal Dutch Shell cut its dividend for the first time since the second world as the coronavirus has caused a supply gap of over 30 million a barrel across the globe.
