The big oil companies They are focusing on new fields that can be profitable even if prices fall to around $30 a barrel, taking advantage of a third year of increased demand to adjust their portfolios at a time of uncertainty about the future of the sector.
The shift to fields with more favorable breakeven points follows deeper and more frequent cycles in the last decade, and also reflects executives’ belief that high prices may not last. “After three major oil price crashes in 15 years, it is generally accepted that another one is likely,” said Alex Beeker, director of corporate research at energy consultancy Wood Mackenzieto Reuters.
Uncertainty and the demand for profitability on the part of investors explain why managers focus on the purchase of production of Petroleum low cost and the flexibility to adjust pumping in response to price swings.
Exxon Mobile and Chevron They spent more last year on paying their shareholders than on new projects, a sign of the sector’s desire to regain the favor of investors.
According to S&PGlobalthe energy sector represented only 4.4% of the total weighting of the S&P 500 index of the largest publicly traded US companies as of January 30, compared to almost three times as much a decade ago.
Exxon, Chevron and Western Petroleum They recently closed acquisitions of companies for 125 billion dollars to pump oil at a price of between 25 and 30 dollars per barrel. While in Europe, Shell and Equinor They look for projects with a profitability threshold of the same value, while the French TotalEnergies It aims for its production costs to be less than $25.
These low costs represent approximately half of the profitability threshold of oil projects from a decade ago and around 40% of the current one. Brent reference price. “Efficiency gains are made in every cycle of downturn,” says Peter McNally, global head of sector analysis at Third Bridgeenergy research company.
The cost imperative has led companies to carry out wholesale restructuring of their portfolios and concentrate operations in fewer areas. They have also cut jobs and outsourced operations to lower-cost countries.
In Africa, Canada and some regions of state Joined high-cost legacy production has been abandoned. Shell and Exxon sold their century-old production in California and, together with TotalEnergies, are trying to abandon or reduce their presence in Nigeria. Chevron has left Indonesia and BP has sold assets in Canada, Alaska and the North Sea.
New production tends to be in very prolific deepwater fields, where platforms become money-making machines once paid for, or in shale, where a collection of small, easy-to-exploit wells allows volumes to be adjusted based on the energy prices.
Oil companies need high-profit projects to be able to pay large dividends to their shareholders, which last year amounted to $111 billion. The payments absorbed more than half of the companies’ cash flow.
Source: Ambito
