Released May 07, 2021 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Big Oil is back. Most of the world's largest integrated super majors reported much stronger financial results compared with the year-earlier quarter. Results were propelled by higher prices and higher demand, though earnings for some were dented by non-recurring events like Winter Storm Uri, which sharply cut into oil and gas production in Texas and Oklahoma in February. Several of these super majors used excess cash to lower debt, increase their dividend or initiate stock buyback programs.
"First-quarter results for the integrated oil super majors in general show an improvement in upstream and chemicals business, typically driven by higher prices and stronger demand, but that was offset by weaker margins and smaller volumes in the refining segment," said Jesus Davis, Industrial Info's research specialist for North American oil and gas production, pipelines and terminals. "Quarterly net earnings fell at Chevron as the downstream business went into free-fall, dragging down upstream performance."
"It's important to remember that last year's first quarter contained only a few weeks of pandemic shutdowns, and in this year's first quarter many countries, including the U.S., made significant progress in their vaccination programs. That is driving an expansion of the U.S. economy, but the pandemic is soaring in India and other developing nations. The European community economy contracted in the first quarter."
"The first quarter was a litmus test for whether the oil supermajors were going to live within their cash flow, pay down debt and increase shareholder returns," Davis said. "For these five super majors, the answers are yes, yes and yes."
Click on the image at right to see a summary of quarterly results for five international oil super majors.
BP Plc
The U.K.-based super major earned $2.6 billion in the first quarter, according to its April 27 release, a sharp improvement over the comparable year-earlier period, when net earnings were $800 million. Earnings soared in the company's gas and low-carbon business, to $2.3 billion in the just-completed quarter compared with $800 million in the first quarter of 2020. Earnings by the company's oil production unit also rose, to $1.6 billion from $900 million in the year-earlier quarter. Liquids production rose while gas production was flat. Oil price realizations increased about 22%, or $10 per barrel, during the first quarter of 2021 compared with the first quarter of 2020. Gas prices were up about 10%.
Having reached its targeted milestone of debt reduction, BP Plc (NYSE:BP) (London, England) said it would begin a stock buy-back program. The company, which is transitioning from an internal oil company to an international energy company, also highlighted progress in its various low- or no-carbon businesses, including offshore wind energy, solar generation and production of blue hydrogen from natural gas.
Royal Dutch Shell Plc
The quarterly turnaround was most dramatic at Royal Dutch Shell Plc (NYSE:RDS.A) (The Hague, Netherlands), where profits, announced on April 29, swung to $5.7 billion in the just-completed period from a loss of $24 million in the first quarter of last year. Results in last year's first quarter were dragged down by about $902 million in asset impairment and currency fluctuations. The company's quarterly results were aided by asset sales totaling $1.4 billion and a derivatives gain of $400 million, though a restructuring charge of about $500 million offset some of those gains. Higher oil prices and improved chemicals margins were partly offset by weaker refining margins. Shell raised its dividend 4% during the first quarter.
Quarterly earnings grew sharply in Shell's integrated gas unit, which includes its liquefied natural gas (LNG) business, rising to $2.5 billion in first-quarter 2021 from $1.8 billion in first-quarter 2020. The upstream business segment swung from a $863 million loss during the first quarter of 2020 to a profit of $1.1 billion in the just-completed period. Quarterly earnings fell in the downstream refining & marketing business, to $650 million from $2.2 billion in the year-earlier quarter. Earnings nearly quadrupled in the chemicals business, to $689 million from $146 million for the comparable year-earlier quarter. The company said its net financial impact from the Texas winter storm was "limited," as positive trading margins were offset by higher operating expenses of $400 million after-tax related to provisions for counterparty credit risk.
Total SE
Paris-based Total SE (NYSE:TOT) on April 29 reported a dramatic gain in net income for the just-completed quarter, to $3.3 billion from $34 million a year earlier. Quarterly earnings rose 180% in the upstream segment. Earnings improved in the integrated gas, renewables and power segment, increasing to $985 million from $913 million in first-quarter 2020. That unit includes Total's LNG business, which recorded a slight gain in earnings in the first quarter of 2021 over the first quarter of 2020. But earnings slipped in the refining and chemicals, and the marketing and services, segments. Brent crude oil prices were $11 per barrel, or 22%, higher in the just-completed period compared with the year-earlier period.
Exxon Mobil
Quarterly net earnings at Irving, Texas-based Exxon Mobil Corporation (NYSE:XOM) swung dramatically, to $2.7 billion from a loss of $610 million in the year-earlier quarter. Upstream earnings nearly quadrupled, to $2.55 billion from $536 million. The chemicals business reported a $1.42 billion profit in the quarter. Refining & Marketing lost $390 million in the just-completed quarter. The company reported quarterly earnings April 30.
For more on Exxon Mobil Corporation's earnings, including the role management sees for carbon capture and storage, see May 3, 2021, article -- ExxonMobil Pinpoints Houston Ship Channel for Massive Carbon Capture and Storage Hub.
Chevron
Chevron Corporation (NYSE:CVX) (San Ramon, California) was the only supermajor to report decreased quarterly earnings compared with the year-earlier period. Earnings fell to $1.7 billion from $3.6 billion in the year-ago period. The company reported results April 30.
Earnings fell 24% in the company's upstream business -- to $2.35 billion from $2.92 billion -- while earnings at the refining & marketing (R&M) segment went into free-fall, sinking to $5 million from $1.1 billion in the first quarter of 2020. R&M earnings fell sharply both in the U.S. and overseas. Non-recurring items totaled $351 million in the just-finished quarter.
Mike Wirth, Chevron's chairman and chief executive officer, explained the quarterly earnings this way: "Earnings strengthened primarily due to higher oil prices as the economy recovers....Results were down from a year ago due in part to ongoing downstream margin and volume effects resulting from the pandemic and the impacts of Winter Storm Uri."
"We maintained capital discipline with capital spending down 43% from last year," Wirth continued. "We realized cost efficiencies from last year's restructuring and the integration of Noble Energy. The board approved a 4% dividend increase shortly before the company announced earnings."
Wirth also noted the steps Chevron took to position itself for a lower-carbon future: It announced plans with partners to develop carbon-negative bioenergy and commercially viable, large-scale businesses in hydrogen. Chevron also invested in developing new technologies for geothermal power, floating offshore wind turbines and green ammonia.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
"First-quarter results for the integrated oil super majors in general show an improvement in upstream and chemicals business, typically driven by higher prices and stronger demand, but that was offset by weaker margins and smaller volumes in the refining segment," said Jesus Davis, Industrial Info's research specialist for North American oil and gas production, pipelines and terminals. "Quarterly net earnings fell at Chevron as the downstream business went into free-fall, dragging down upstream performance."
"It's important to remember that last year's first quarter contained only a few weeks of pandemic shutdowns, and in this year's first quarter many countries, including the U.S., made significant progress in their vaccination programs. That is driving an expansion of the U.S. economy, but the pandemic is soaring in India and other developing nations. The European community economy contracted in the first quarter."
"The first quarter was a litmus test for whether the oil supermajors were going to live within their cash flow, pay down debt and increase shareholder returns," Davis said. "For these five super majors, the answers are yes, yes and yes."
BP Plc
The U.K.-based super major earned $2.6 billion in the first quarter, according to its April 27 release, a sharp improvement over the comparable year-earlier period, when net earnings were $800 million. Earnings soared in the company's gas and low-carbon business, to $2.3 billion in the just-completed quarter compared with $800 million in the first quarter of 2020. Earnings by the company's oil production unit also rose, to $1.6 billion from $900 million in the year-earlier quarter. Liquids production rose while gas production was flat. Oil price realizations increased about 22%, or $10 per barrel, during the first quarter of 2021 compared with the first quarter of 2020. Gas prices were up about 10%.
Having reached its targeted milestone of debt reduction, BP Plc (NYSE:BP) (London, England) said it would begin a stock buy-back program. The company, which is transitioning from an internal oil company to an international energy company, also highlighted progress in its various low- or no-carbon businesses, including offshore wind energy, solar generation and production of blue hydrogen from natural gas.
Royal Dutch Shell Plc
The quarterly turnaround was most dramatic at Royal Dutch Shell Plc (NYSE:RDS.A) (The Hague, Netherlands), where profits, announced on April 29, swung to $5.7 billion in the just-completed period from a loss of $24 million in the first quarter of last year. Results in last year's first quarter were dragged down by about $902 million in asset impairment and currency fluctuations. The company's quarterly results were aided by asset sales totaling $1.4 billion and a derivatives gain of $400 million, though a restructuring charge of about $500 million offset some of those gains. Higher oil prices and improved chemicals margins were partly offset by weaker refining margins. Shell raised its dividend 4% during the first quarter.
Quarterly earnings grew sharply in Shell's integrated gas unit, which includes its liquefied natural gas (LNG) business, rising to $2.5 billion in first-quarter 2021 from $1.8 billion in first-quarter 2020. The upstream business segment swung from a $863 million loss during the first quarter of 2020 to a profit of $1.1 billion in the just-completed period. Quarterly earnings fell in the downstream refining & marketing business, to $650 million from $2.2 billion in the year-earlier quarter. Earnings nearly quadrupled in the chemicals business, to $689 million from $146 million for the comparable year-earlier quarter. The company said its net financial impact from the Texas winter storm was "limited," as positive trading margins were offset by higher operating expenses of $400 million after-tax related to provisions for counterparty credit risk.
Total SE
Paris-based Total SE (NYSE:TOT) on April 29 reported a dramatic gain in net income for the just-completed quarter, to $3.3 billion from $34 million a year earlier. Quarterly earnings rose 180% in the upstream segment. Earnings improved in the integrated gas, renewables and power segment, increasing to $985 million from $913 million in first-quarter 2020. That unit includes Total's LNG business, which recorded a slight gain in earnings in the first quarter of 2021 over the first quarter of 2020. But earnings slipped in the refining and chemicals, and the marketing and services, segments. Brent crude oil prices were $11 per barrel, or 22%, higher in the just-completed period compared with the year-earlier period.
Exxon Mobil
Quarterly net earnings at Irving, Texas-based Exxon Mobil Corporation (NYSE:XOM) swung dramatically, to $2.7 billion from a loss of $610 million in the year-earlier quarter. Upstream earnings nearly quadrupled, to $2.55 billion from $536 million. The chemicals business reported a $1.42 billion profit in the quarter. Refining & Marketing lost $390 million in the just-completed quarter. The company reported quarterly earnings April 30.
For more on Exxon Mobil Corporation's earnings, including the role management sees for carbon capture and storage, see May 3, 2021, article -- ExxonMobil Pinpoints Houston Ship Channel for Massive Carbon Capture and Storage Hub.
Chevron
Chevron Corporation (NYSE:CVX) (San Ramon, California) was the only supermajor to report decreased quarterly earnings compared with the year-earlier period. Earnings fell to $1.7 billion from $3.6 billion in the year-ago period. The company reported results April 30.
Earnings fell 24% in the company's upstream business -- to $2.35 billion from $2.92 billion -- while earnings at the refining & marketing (R&M) segment went into free-fall, sinking to $5 million from $1.1 billion in the first quarter of 2020. R&M earnings fell sharply both in the U.S. and overseas. Non-recurring items totaled $351 million in the just-finished quarter.
Mike Wirth, Chevron's chairman and chief executive officer, explained the quarterly earnings this way: "Earnings strengthened primarily due to higher oil prices as the economy recovers....Results were down from a year ago due in part to ongoing downstream margin and volume effects resulting from the pandemic and the impacts of Winter Storm Uri."
"We maintained capital discipline with capital spending down 43% from last year," Wirth continued. "We realized cost efficiencies from last year's restructuring and the integration of Noble Energy. The board approved a 4% dividend increase shortly before the company announced earnings."
Wirth also noted the steps Chevron took to position itself for a lower-carbon future: It announced plans with partners to develop carbon-negative bioenergy and commercially viable, large-scale businesses in hydrogen. Chevron also invested in developing new technologies for geothermal power, floating offshore wind turbines and green ammonia.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
