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Oil co's still need to cut supply-Societe Generale's Herrlin

Friday, October 30, 2015 - 04:13

Societe Generale's John Herrlin talks about Exxon Mobil and Chevron results, and the challenges facing the energy sector. Bobbi Rebell reports.

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Both Exxon and Chevron out with results that we're better than estimates today but with oil prices down. Those better than expected results Kane and Mark Parkinson things like cost cuts. And the company's diversification let's get more from John Hurley he covered the companies a rich Societe Generale crazy there. Thank you are for the stocks are up on these numbers investors like them. Tell me more about what's going on. Exxon and children are both integrated oil companies mean they produce oil and gas. And they also refiners and then also make chemicals. And dirt and crude oil companies. And as Sochi will the oil prices being down 50%. And their expiration production. Company profits being down there in mid very high profits post them there we're finding. And in their chemical businesses and that's really what cost and posted beyond earnings both companies have very. Clean quarterly numbers. And in fact Exxon you know really have not changed their business model. Do you think that they should be a lot of there there rivals are are you having much bigger cost cuts. Right sizing you know having job cuts like Chevron announced. What do you think. Exxon historically. Is a long cycle investment company they have over ninety billion barrels. Reserves and resource I'm sorry resources that they can developer on the world and they've always. Look after you own this assistance upon a long term basis so. The fact that they've not had big impairment sore head any changes to their business model. Really reflects. The integrity. Of their integrated business model works in the case of Chevron they've been trying to figure out. Exxon news consumes four million barrels of the world today Chevron spent two and a half insurance that a lot of large scale development projects and Australian deep water Gulf of Mexico. And the former Soviet Union which have acquired a lot of capital. Can cause them to spend aggressively. At a time in which there was secure the services inflation so this is accompanied now. That is right size into the market and lower oil crisis in the spring on this project so Chevron today announced internally lower. Capital spending and also that there are going to essentially. Reduce the workforce by about 10% to. Ten or fifth error. Operational if you will ultimately prevail justice Moore we'll. Looking at the global climate especially big for example like China slowing down and absorbing force Iran. What is you know that sort of the big challenges globally for the sector. Well you've got companies that are producing. A commodity or products. That are commodity days and you've had the price of oil falls 15%. Natural gas in North America is also very weak. Much of the commodity price improvement was predicated on higher demand China and the continent should point out this morning so now the industry house to. Recess to lower demand growth rates and reduced supplies. You're going to see capital budgets for. The upstream or exploration production goes down by about 25% next year after 625%. This year. The market pastoral robes or Koran coming back even the removal of sanctions. And Saudi Arabia still producing flat out. So we need to see supply growth really drop in the US and that all occurred because the shale plays. Will have production decline in the second half of next year are and just quickly what is your take on ace stock. I have them both fiery I think that in general. The integrated stir in the boom times we're lack in their expression production companies the smaller. Stocks because they were more broadly diversified another benefit because they have better balance sheets. Then they help low and do my grandson that's not recognizing the benefits of being diversified. Aaron we'll leave it there thank you so much John thank you. Our thanks to John Hurley who covers the companies over at Societe Generale and Bobbi Rebell this is writers.

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Oil co's still need to cut supply-Societe Generale's Herrlin

Friday, October 30, 2015 - 04:13