A Review of the Nigerian Energy Industry

Shell income up, ExxonMobil profits down

26 April 2012, Sweetcrude, HOUSTON – US oil giant, ExxonMobil Corporation, said its first-quarter profits dropped by 10.8% while supermajor Shell saw its net income rise by 16% within the same period.

In a quarter in a which ExxonMobil witnessed a 5% production drop largely due to declines outside the United States, Shell said it earned $7.28 billion profits, up 16% on the $6.29 billion recorded over the same period in 2011.

ExxonMobil’s net profit slipped to $9.5 billion from $10.65 billion in the year-ago quarter, according to Reuters. Output fell to 4.55 million barrels of oil equivalent per day,

According to the company, the drop in volumes was offset by higher prices, which added about $980 million in profits during the quarter, the company said.

ExxonMobil’s profits from refining and marketing rose, but its chemicals business suffered from weaker margins and maintenance at some plants.

The company said in March its output would be down about 3% this year from 2011, but several large projects due on line would put it on pace to increase production 1% to 2% on average each year through 2016.

Basking in the euphoria of his company’s performance, Peter Voser, Shell chief executive officer, said in an announcement that the company’s earnings had increased through a combination of improved operating performance, increased upstream volumes and strong oil prices.

While the fundamentals of energy demand were robust, energy prices were volatile as a result of economic and political events, he said.

“Shell sold $2.4 billion of upstream and downstream positions during the quarter, enhancing our financial flexibility and capital efficiency, and unlocking new growth potential,” he said.

Of these, $2.1 billion were from the upstream division, including its 40% participating interest in the BS-4 oil and gas exploration block in the Santos basin offshore Brazil .

The company also agreed to sell a combined 32.5% participating interest in the Prelude Floating LNG project to Inpex, Kogas and CPC under separate agreements.

Shell expects to receive divestment proceeds of about $500 million later this year.

“Asset sales for 2012 are likely to be over $4 billion, compared with our earlier guidance of $2-3 billion ,” Voser said.

But with the sales came acquisitions, with the company spending $600 million on some 7.7 million hectares of new acreage positions, including some offshore Canada , Malaysia , Tanzania , the UK and South Africa . Onshore positions were added in Albania , Argentina , Canada , China and the United States .

Production had also started at the Anadarko-operated Caesar/Tonga project in the Gulf of Mexico while Woodside’s Pluto LNG project, in which Shell has an equivalent interest in 21% of production, reached ready for start-up status.

Voser said the two projects were expected to add a total of 40,000 barrels of oil equivalent and 900,000 tonnes per year of LNG capacity to the company’s portfolio.

“The resumption of measured, affordable dividend growth we have confirmed today reflects the improving financial position of the company and delivery of our strategy,” he said.

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  • Last anonymous: what a stnrage comment! You write, “I believe the oil companies are doing exactly what other multinational companies anywhere would do – taking advantage of lax laws in a region with some of the poorest black Africans anywhere. What profit-generating company would not do the same.”In other words, you seem to think that the profit-motive legitimates a company disobeying the law/creating an environmental catastrophe wherever they can.Multi-national companies should behave in the same manner in countries with lax-law enforcement as they do in more tightly regulated societies. There is indeed a burden of responsibility in those tightly regulated societies to ensure that this happens. Any other stance is complicity, rendering any fight against global poverty/environmental destruction futile.