The oil majors are posting their best quarterly figures in years, an indication that they are adapting to the new price environment. After several years of spending cuts and rising debt, the largest integrated oil companies have turned a corner.
The North Sea is seeing a revival, thanks to lower production costs, new investment, a slight uptick in output, and newfound optimism. But it's unclear if the region's reversal of fortunes will last.
There is still a long way to go before Mexican production can grow in a meaningful way, but several years since the landmark liberalization of the country’s energy sector, the situation is finally moving in the right direction.
Oil majors may not be entirely out of the woods yet, but first-quarter performances suggest that they are on the upswing after nearly three years of mostly red ink.
Production in UK waters has struggled to compete against cheap oil in the Middle East, lower risk and short-cycle U.S. shale, and even expensive offshore oil fields in relatively less explored places like South America, West Africa or the Eastern Mediterranean.
Third quarter earnings figures for the oil majors reveal a mixed picture for the industry: Companies are dealing with more debt, weaker refining margins, and deeper spending cuts, but they are also experiencing increased optimism that the worst might be over.
The oil majors are living off of yesterday’s discoveries, and choosing to pay shareholders at the expense of future growth.
For Britain’s oil sector, the possibility of a “Brexit” has not raised alarm bells as of yet, but there could be higher costs for the industry if Britain breaks up with Europe.
If oil prices do not rebound substantially, the oil majors will not be able to keep up such high levels of spending and still offer shareholders such generous dividends.
The Governor of Alaska has proposed changes to how the state collects revenue, a recognition that the state’s best oil days are likely in the past.