Royal Dutch Shell follows suit, net profit plunges even below BP
The oil & gas industry is looking down at huge losses in the present & for the future. Royal Dutch Shell & BP, two of the strongest players have reported plummeting of profits by almost three quarters. Shell reportedly has suffered a 73% reduction in its profits, two days after BP announced quite the same story, its profit going down by ~50%. Also, as expected, Shell cut its workforce by about 5000 in addition to reducing operating costs.
The results might be hard to bear for these companies but the oil demand scenario over the last few months has been pathetic. It has influenced oil & gas companies as the oil prices have been on a continuous decline. Crude oil declined the most in a month yesterday as an Energy Department report showed that U.S. gasoline stockpiles climbed 1.62 million barrels last week.
Peter Voser, Shell’s chief executive says that, “We see some indications that energy demand and pricing are improving, but the outlook remains uncertain, and we are not expecting a quick recovery”, is this some news or is he just stating the fact? Anyways, maybe a CEO can’t say more than this & that too if he’s been on the seat for just over two months. Voser took over the CEO post in July 2009 & he needs to act immediately. The options he has are pretty few. Maybe he needs to forego the plans he has to expand production to add 1 million barrels a day to capacity by the end of 2012. If this happens then maybe by 2012 he’ll be surrounded by oil barrels and no customers. This is where the diversity of a company’s business lines comes handy but I am afraid, oil companies generally have pretty few options.
The situation is such that every company in the industry is keeping a hawk-eye watch on results for each company. Exxon Mobil & Chevron Corp.’s results are next, watch out !!