By Andrew Callus
LONDON, Aug 1 Some of the western world's top
oil companies this week abandoned output targets, missed profit
forecasts and promised a tight rein on spending after turning in
disappointing quarterly results.
Thursday's slew of industry results saw Royal Dutch Shell
and Exxon Mobil disappoint market analysts. The
pair are two of the industry's top three investor-controlled
companies in the world. The
third, Chevron, is due to report on Friday.
Shell did what several of its peers did some time ago -
abandon a promise to increase production growth so that it can
meet its financial targets for cash flow growth and spending.
The earnings reports follow a profit miss from industry
number four BP on Tuesday.
Only Total, Europe's No. 3 behind Shell and BP,
impressed investors with its first quarterly rise in production
in three years.
"It's a difficult time for the big integrateds. They are not
seeing production growth, refining margins are deteriorating and
costs are going up. That's not a good combination," said
Brian Youngberg, oil analyst with Edward Jones in St Louis.
In contrast, smaller U.S. producers, which tend to have more
of their operations in the United States and relatively more
exposure to shale deposits, reported surging output. That is
largely thanks to the drilling method known as hydraulic
fracking that has unlocked oil and gas from shale deposits.
SHALE OUTPUT SURGES FOR SMALLER PRODUCERS
Among the smaller U.S. firms, ConocoPhillips
reported a better-than-expected profit and raised its full-year
It said its output from the Eagle Ford shale field in Texas
almost doubled to 121,000 BOE per day. Conoco's combined oil and
gas production in the Eagle Ford shale field, the Bakken shale
field in North Dakota, and Permian Basin in Texas rose 47
percent in the second quarter.
Apache Corp, which reported a higher quarterly
profit that matched Wall Street's expectations, sold its Gulf of
Mexico shelf assets last month to focus more on onshore
production. It said its North American onshore liquids
production rose 42 percent to 175,000 barrels per day in the
"We expect Apache to have an improved asset mix that will
drive more predictable production growth and strong returns,"
Chief Executive Steve Farris said in a statement.
Chesapeake Energy Corp's new Chief Executive Doug
Lawler said the company was reviewing its partnerships and
assets as the second largest U.S. natural gas provider tries to
simplify its structure and improve financial discipline.
The company, which experienced a severe liquidity crunch in
2012 after spending heavily for years to acquire drilling
acreage, reported a better-than-expected quarterly profit as it
produced more crude oil than Wall Street targeted. Its shares
rose 7 percent to the highest level in more than a year.