A Review of the Nigerian Energy Industry

Shell, Chevron shares sag as Nigeria production shutdown looms

12 January 2012, Sweetcrude, NEW YORK — Shares of Royal Dutch Shell and Chevron Corporation weighed on energy stocks on Wednesday, as a potential shutdown of oil production looms in Nigeria and dropping natural gas futures sparked selling.

Royal Dutch Shell fell nearly 4% as the worst performer in the NYSE Arca Oil Index of major oil producers.

The California, United States-based Chevron’s shares pulled back 2.3% to $105.30 after the oil company warned of quarterly financial weakness, saying it expects fourth-quarter earnings to come in “significantly below” its third-quarter results.

Nigeria’s oil workers are threatening to shut down the companies’ crude production, which has so far continued uninterrupted despite a national strike over the doubling of previously subsidised petrol prices, Reuters reports.

Shell spokesman Jonathan French told MarketWatch the oil major has no comment on the strike and that oil exports from Nigeria have been unaffected. In the third quarter, Shell reported production of 290,000 barrels of oil equivalent a day from Nigeria.

The downward path in Shell and Chevron stocks came as natural-gas prices fell hard for a second straight day. Gas sank about 5.8% to $2.80 per million British thermal units during the session.

Crude-oil futures dropped 0.2% to $102.06 a barrel, weighing on energy stocks, after the Energy Information Administration said U.S. petroleum supplies rose by 5 million barrels. Analysts surveyed by Platts estimated a drop of 1 million barrels.

Also setting a somber tone for energy stocks, the Dow Jones Industrial Average fell by 13 points. Within the 30-stock index components, Chevron dropped 1.2% as one of the worst performers.

Independent energy producers fell even harder, with Cabot Oil & Gas off by 11%, Southwestern Energy down 8% and Range Resourceslower by 6.3%.

Among the broad indexes tracking the sector, the NYSE Arca Natural Gas Index fell 3.3%, the Philadelphia Oil Service Index dropped 1.3% and the NYSE Arca Oil Index lost 1.1%.

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