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shortonoil
Fission
Joined: Dec 02, 2004
Posts: 2719
Location: VA USA
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 Posted: Mon May 19, 2008 8:25 am Post subject: Companies’ Profit Falling Like a Rock |
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| Quote: | May 19 (Bloomberg) -- Take away Exxon Mobil Corp., Chevron Corp. and ConocoPhillips and profits at U.S. companies are the worst in at least a decade.
Without the $70 billion that oil producers earned in the last two quarters, profits at companies in the Standard & Poor's 500 Index tumbled 26 percent and 30.2 percent, the biggest decreases for any quarter since Bloomberg started compiling data in 1998. Energy companies made up almost half the income growth reported by S&P 500 companies in the first three months of 2008 as oil prices surged past $100 per barrel, the data show. |
Bloomberg
Models of Peak Oil suggests that costs will rise faster than prices, and they are. After housing, airlines, banking and other energy intensive industries, oil producers will be next. They are one of the most energy intensive industries in the world! |
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vision-master
Fusion
Joined: May 18, 2006
Posts: 4739
Location: Minneapolis, MN
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pup55
Expert
Joined: May 26, 2004
Posts: 3804
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| Posted: Mon May 19, 2008 9:21 am Post subject: Re: Oil Companies’ Profit Falling Like a Rock |
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These big integrated oil companies have a lot of problems keeping the whole system together. The biggest problem is that they have to be so giant to keep the whole thing running more or less efficiently that they cannot earn enough money to keep their stockholders from unloading the whole thing and investing in Google.
If the reinvestment economics in this business are not high enough, they won't do the investment. We all know what that means: higher prices, or even worse, people like Saudi who do not have the same cost structure or investment goals will end up dominating the entire supply chain.
So ultimately the pricing situation is going to get even worse. |
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shortonoil
Fission
Joined: Dec 02, 2004
Posts: 2719
Location: VA USA
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| Posted: Mon May 19, 2008 9:50 am Post subject: Re: Oil Companies’ Profit Falling Like a Rock |
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pup55 said:
| Quote: | | If the reinvestment economics in this business are not high enough, they won't do the investment. |
Even though there are record high prices, we are not seeing comparable reinvestment in E&D. Apparently to keep profits high enough to satisfy stockholders, the majors are reducing expenditures. This bodes badly in a world where what oil that remains to be found needs to come from mega-projects. Joe Wildcatter isn’t going to come up with the money for a Thunder Horse, especially with the prevailing credit markets.
This trend of lower oil and gas companies profits will undoubtedly reduce supplies in the near future! PO is beginning to reinforce itself like a positive feed back system. |
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mark
Heavy Crude
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Joined: Sep 01, 2004
Posts: 180
Location: chicago
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| Posted: Mon May 19, 2008 11:07 am Post subject: Re: Oil Companies’ Profit Falling Like a Rock |
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A very misleading headline.
It's not oil company profits that are falling, it's the rest of the S & P 500, excluding oil companies, whose profit is falling. The oil companies are doing fine. Even though cost are rising, so is the price of a barrel of oil.
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RSB
Tar Sands
Joined: May 13, 2008
Posts: 28
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| Posted: Mon May 19, 2008 12:33 pm Post subject: Re: Oil Companies’ Profit Falling Like a Rock |
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| mark wrote: | A very misleading headline.
It's not oil company profits that are falling, it's the rest of the S & P 500, excluding oil companies, whose profit is falling. The oil companies are doing fine. Even though cost are rising, so is the price of a barrel of oil. |
Precisely. The headline is exactly the opposite of what it should be.
Also, what's the energy intensive part of banking? I didn't get that one either... |
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joeltrout
Light Sweet Crude
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Joined: Sep 19, 2007
Posts: 1317
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| Posted: Mon May 19, 2008 12:58 pm Post subject: Re: Oil Companies’ Profit Falling Like a Rock |
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Very misleading title. And we wonder why people think we are wackos.
Oil companies, especially independents and family-owned, are making extremely high profits. Companies that own refining entities are making less but even then their production is generating a lot of return.
Most of the companies in the US operate small fields mostly dotted with stripper wells that do not require a lot of work therefore do not have a lot of expenses like big projects do. Many are making almost pure profit because the fields have been HBP for over 20+ years.
Exxon, Chevron, etc... are not all the oil companies. There are thousands of oil companies in the US.
joeltrout |
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Aaron
800 lb Gorilla
Joined: Apr 15, 2004
Posts: 6473
Location: Houston
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| Posted: Mon May 19, 2008 1:04 pm Post subject: Re: Oil Companies’ Profit Falling Like a Rock |
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| RSB wrote: | | mark wrote: | A very misleading headline.
It's not oil company profits that are falling, it's the rest of the S & P 500, excluding oil companies, whose profit is falling. The oil companies are doing fine. Even though cost are rising, so is the price of a barrel of oil. |
Precisely. The headline is exactly the opposite of what it should be.
Also, what's the energy intensive part of banking? I didn't get that one either... |
Now why would somebody go and do a thing like that?
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"When you understand why you dismiss all the other possible gods, you will understand why I dismiss yours." - Stephen F Roberts.
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anagami
Light Sweet Crude
Joined: Jul 26, 2006
Posts: 1761
Location: Sudavasa Abodes
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Pops
Moderator
Joined: Apr 03, 2004
Posts: 6943
Location: My Grandkids' Farm
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| Posted: Mon May 19, 2008 5:28 pm Post subject: Re: Oil Companies’ Profit Falling Like a Rock |
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| shortonoil wrote: | | Even though there are record high prices, we are not seeing comparable reinvestment in E&D. |
Saw the CEO of Exxon on the tube the other day who answered a similar question thus:
"There really isn't anywhere available to look..."
That is paraphrased of course.
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TheDude
Expert
Joined: Apr 06, 2006
Posts: 3615
Location: 3 miles NW of Champoeg, Republic of Cascadia
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| Posted: Mon May 19, 2008 6:27 pm Post subject: Re: Oil Companies’ Profit Falling Like a Rock |
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| joeltrout wrote: | | Many are making almost pure profit because the fields have been HBP for over 20+ years. |
Que? The fields have high blood pressure? 
Cripes, that was a fun read.  Bet there'll be a roccman post waiting for me after I hit the Submit button...
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The Dude Is Not In: Leave A Message After The Beep. |
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joeltrout
Light Sweet Crude
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Joined: Sep 19, 2007
Posts: 1317
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| Posted: Mon May 19, 2008 6:32 pm Post subject: Re: Oil Companies’ Profit Falling Like a Rock |
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| TheDude wrote: | | joeltrout wrote: | | Many are making almost pure profit because the fields have been HBP for over 20+ years. |
Que? The fields have high blood pressure?
Cripes, that was a fun read. Bet there'll be a roccman post waiting for me after I hit the Submit button... |
Not high blood pressure. Just no exploration costs/risk. All that is needed is maintenance which is much cheaper than exploratory operations; ie leasing, seismic, drilling, completion equipment, etc...
The LA Basin has tons of stripper wells that only produce around 10 barrels a day. At $127/ bbl that isnt bad especially when no real work has been done in 20+ years on many of these old, forgotten wells.
joeltrout |
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shortonoil
Fission
Joined: Dec 02, 2004
Posts: 2719
Location: VA USA
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| Posted: Mon May 19, 2008 9:50 pm Post subject: Re: Companies’ Profit Falling Like a Rock |
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LOL: That title was suppose to be “Oil Companies Profits Rising, Margins Falling Like a Rock
Rising, Margins got lost - sorry!
Bloomberg
| Quote: | | The cost to find and develop a barrel of oil quadrupled to $18 last year from $4 in 2000. |
| Quote: | | Earnings at energy producers are lagging behind the rise in oil prices as a result. |
| Quote: | | Energy companies globally are spending a record $369 billion on exploration and production in 2008, Lehman Brothers Holdings Inc. estimates. |
On a nominal dollar bases this is a record; on a gross revenue bases from $120/barrel it is the lowest on record, at $10.38/barrel. This is a trend that has been going on for some time!
| Quote: | | The industry’s new reach is shifting the economics of energy extraction. According to a recent study, discovery and development costs, a key indicator for the industry, tripled from 1999 to 2006, to nearly $15 a barrel. |
NYTimes
In real terms there is less spending on E&D than ever, and this is a trend that has been going on for some time!
Science Daily
Guess that will teach me not to post after missing most of a nights sleep! |
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