Majors hit by low prices and high costs in Q3 2019

Disappointing Q3 figures across the board for the majors could be a short-term trough.

Lower oil prices and higher costs have created a weak trading environment for the global oil majors, factors reflected in Q3 earnings declared at the end of October.  

Worst hit by the unfavourable situation was Exxon Mobil which announced estimated third quarter 2019 earnings of $3.2bn down 49% on the same period in 2018.  The first nine months of 2019 also showed a significant downturn of 42% to $8.65bn from $14.8bn.

Maintenance and climate issues, along with lower upstream earnings resulting from reduced prices also led to BP reporting underlying replacement cost profits for the third quarter of 2019 of $2.3bn, compared to $3.8bn a year earlier. CEO Bob Dudley highlighted strong operating cash flow and underlying earning, but blamed "significant hurricane impacts" along with lower oil and gas prices as key factors in delivering a small quarterly loss of $0.7bn. A $2.6bn divestment-related charge also influenced the numbers.

Shell reported Q3 2019 income attributable to shareholders of $5.88bn just a fraction higher than the $5.83bn in the same quarter 2018 but certainly an improvement on this year's Q2 income of $3bn.However, for the first nine months of this year, revenue was down 16% at $14.88bn against $17.76bn last year.

Once again, the company stated the results reflected lower oil, LNG and gas prices, as well as weaker refining and chemicals margins. However, these were partly offset by significantly stronger contributions from LNG and oil products trading and optimisation as well as higher margins in retail and global commercial.

Chevron reported earnings of $2.6bn for the third quarter 2019, well down on the $4.0bn in Q3 2018. Included in the current quarter was a tax charge of $430m related to a cash repatriation. Sales and other operating revenues in third quarter 2019 were $35bn, compared to $42bn for the same period in 2018.

“Third quarter earnings and cash flow were solid, but down from our very strong results of a year ago,” said Michael Wirth, Chevron’s chairman of the board and CEO. “Lower crude oil and natural gas prices more than offset a 3% increase in net oil-equivalent production from last year's third quarter.” 

French major Total announced a 19% drop in adjusted Q3 net operating income of $3.67bn against $4.54bn in 2018. The nine-month comparative period shows a 12% fall from $12.1bn in 2018 to $10.7bn in 2019. Company Chairman and CEO Patrick Pouyanne’ stated: "The Group continues to achieve solid results despite a third quarter environment compared to a year ago that was marked by an 18% decrease in the Brent price to $62bn."

Following the general financial trend, Phillips 66 announced third-quarter 2019 earnings of $712m, compared with $1.4bn in the second quarter of 2019.

And finally, Fuchs has seen no change in its sales revenue for the first nine months of this year compared to the same period last year. Earnings before interest and tax (EBIT) was down 17% to 246m.  Despite following on from a disappointing Q2, the company claims it is satisfied with the results of the past months. Stefan Fuchs, Chairman of the Executive Board said: "The decline was thus not as significant as we had feared back in July. In this context, we are specifying our outlook for 2019 as a whole and expect sales and EBIT to be at the upper end of the forecast."