Nigerian members of staff of Chevron and Shell are among the 8,000 pencilled in for sack by the two oil companies worldwide as falling oil prices take a toll on the firms’ profitability. A report yesterday by New York Times said that Chevron would lay off 7,000 staff in addition to the 1,500 it announced early this year.
Shell, according to Reuters, plans to sack 1,000 more staff different from the 6,500 it announced in the first quarter. Although the two multi-nationals did not give a breakdown of how many staff in their Nigerian operations will be affected, Chevron said on its website that Nigeria is “an important part of Chevron’s business globally,” while Shell, which is also the biggest oil firm in Nigeria in terms of assets and production, “produces substantial volume of its global output from Nigeria.
New Telegraph also learnt at the weekend that Eni and Total had “joined Shell to slash their workforces.” “A substantial number of staff in the operations of Shell and Chevron in Nigeria will be swept by this gale of sack,” an industry source said. Shell and Chevron, he added, are “courageous enough to announce the number of staff to be affected, but the truth is that all the IOCs are toeing the line of downsizing and they have all begun this with the termination of contracts with some of their contract staff,” he added.
Like Chevron and Shell, other international oil companies (IOCs) at the weekend posted unprecedented losses in the third quarter, which is the worst since the downturn started. The trio of Chevron, Shell and Eni, with heavy assets and production in Nigeria, posted $12 billion losses in three months as their outlooks dimmed.
While Chevron’s losses hit $3.6 billion, Shell posted $7.4 billion loss after heavy write-offs and Italian major, Eni, reported $1 billion loss. Exxon Mobil, the largest American oil company, reported a loss of $3.9 billion for the third quarter. It posted $4.2 billion compared with $8.1 billion a year earlier. ConocoPhillips recorded $1.1 billion loss as France’s Total also had a sharp drop in profit.
Shell’s Chief Executive, Ben van Beurden, who gave the third quarter report, said at the weekend that net profit, excluding identified items, collapsed to $1.8 billion from $5.85 billion a year ago. Shell, which Reuters says has the lowest cash flow breakeven point at around $66 a barrel, said it would axe 1,000 additional jobs after the 6,500 job cuts announced earlier this year. Shell posted a thirdquarter loss of $7.4 billion, according to Beurden, hit by a massive $8.2 billion charge after halting its exploration in Alaska’s Arctic sea and a costly oil sands project in Canada.
Shell’s Chief Executive, Ben van Beurden, who gave the third quarter report, said at the weekend that net profit, excluding identified items, collapsed to $1.8 billion from $5.85 billion a year ago. Shell posted a thirdquarter loss of $7.4 billion, according to Beurden, hit by a massive $8.2 billion charge after halting its exploration in Alaska’s Arctic sea and a costly oil sands project in Canada.
About half of Shell’s charges reflected a downward revision of the longterm oil and gas price outlook, he said. Like Shell, other world’s top oil companies, with presence in Nigeria, Africa’s biggest crude exporter, have struggled to cope with the halving of oil prices since June 2014 by cutting spending repeatedly, cutting thousands of jobs and scrapping projects.
Chevron’s performance was even more disappointing; with net income of $2 billion compared with $5.6 billion last year, although it was the best quarter so far in what has been the toughest year for the American oil business in over a decade. The poor results came as no surprise, given that oil prices have plummeted to under $50 a barrel from over $100 in 2014.
Chevron also reported big losses in the United States and it announced at the weekend that it intended to cut up to 7,000 jobs, or roughly 10 per cent of its work force, in the coming months.a reduction of 1,500 employees announced earlier in the year.
“Despite the challenging environment, the corporation continues to deliver on its investment and operating commitments,” Jeff Woodbury, Exxon Mobil’s vice -president for investor relations, said in a conference call. “Third-quarter results reflect cyclical strength in our downstream and chemical segments and highlight the resilience of our integrated business model.”
Exxon Mobil, the largest American oil company, reported a profit for the third quarter of $4.2 billion compared with $8.1 billion a year earlier. The plunge came with a 37 per cent drop in revenue, in large part because of a three per cent decline in United States production, including a nine per cent drop in natural gas output.
Brian Youngberg, an Edward Jones analyst, said Exxon Mobil had a good quarter, adding: “We believe earnings were better than anticipated at least partially due to a lower effective tax rate given its higher reliance on international results given the U.S. operations were collectively barely profitable overall.” “The oil sector is slipping into the red after years of fat profits as the steep slump in oil prices shows little sign of ending, with this quarter shaping up to be the worst since the downturn started,” Reuters added in the report.
The lower-for-longer outlook for oil prices took its heaviest toll yet in the third quarter as oil companies again reported a dramatic drop in income. Some saw results swing into the loss column, and the industry had billions of dollars in impairment charges.
“This down cycle poses significant challenges,” Jeff Sheets, ConocoPhillips’ chief financial officer, told investors on a conference call after the company posted a loss. Eni posted a net loss of $1 billion and France’s Total had a sharp drop in profit, though its results were stronger than expected. ConocoPhillips reported a quarterly loss of $1.1 billion and lowered its 2015 spending target seven per cent. “The sector is rapidly moving into the red,” Jefferies oil and gas equities analyst Jason Gammel said.
“It is slowly going to claw its way back into the black through cost-reduction efforts, but that will take time. It will depend on price movements, but it will take time to get all these cost savings through the system.” Even after cost efficiencies and spending cuts, European oil companies on average will require an oil price of around $78 a barrel in 2016 to cover spending and dividend payments, according to Jefferies estimates before the latest results. Companies are also tapping the debt market, benefiting from a relatively low debt ratio that will allow them to cover spending and dividend payments that, except for Eni, have remained unchanged.
Culled from: http://newtelegraphonline.com/oil-rout-chevron-shell-set-to-sack-8000/
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