OIL woes are taking their toll. With prices staying at around $50, oil majors are taking hit - all around. Unhealthy Q3 earning results and billions of dollars in asset write downs are indicative of the state of the industry. Saudi Arabia, the OPEC kingpin, is evaluating steps to balance budget. Riyadh is looking to raise domestic energy prices, said Oil Minister Ali Al-Naimi last week, confirming the kingdom could cut fuel subsidies - often blamed for waste and surging domestic fuel consumption. UAE has already taken a step in this direction and has brought fuel prices in line with the global market prices. The depleting oil revenues of other important producers such as Venezuela and Mexico is already a cause of real concern to their respective governments. The issue with most remains, how to meet the growing public expenses and aspirations. Oil majors are no different. They are also faced with headwinds. Belt tightening is the order of the day. Exxon Mobil Corp, the world's largest publicly traded oil company, said on Friday its third-quarter profit fell 47 percent. Revenue of the Irving, Texas based company fell to $67.34 billion - from $107.49 billion a year ago. It posted profit of $4.24 billion, or $1.01 per share, compared with $8.07 billion, or $1.89 per share in the same quarter a year earlier. Earlier this year, Exxon had announced it would cut its 2015 capital expenditures by about $4.5 billion to $34 billion. Chevron Corp. on Friday announced it could cut 6,000 to 7,000 jobs and pare its capital spending by 25% next year. Profits of the company too tumbled in the third quarter. For the quarter ended Sept. 30, Chevron reported earnings of $2.04 billion, or $1.09 a share, down from $5.6 billion, or $2.95 a share, a year earlier. Revenue fell 37% to $34.32 billion. The company eked out a $59 million profit in its exploration and production segment, down from $4.65 billion a year earlier. Its US segment swung to a loss of $603 million from a profit of $929 million a year earlier. Chevron, the second-biggest US oil company also underlined it expects capital spending of $25 billion to $28 billion in 2016, down 25% from this year's budget. In 2017 and 2018 too, it expects to cut spending further, to around $20 billion to $24 billion. In the meantime, Marathon Oil Corp. became the first major shale producer to cut its quarterly dividend, reducing it by 76 percent in an effort to prop up cash holdings. Marathon's Dec. 10 payout to investors will drop to 5 cents a share from 21 cents, the company said. Royal Dutch Shell PLC too is reporting a third-quarter net loss of $7.42 billion, its biggest decline in at least 16 years, after Europe's largest energy group abandoned projects and lowered its oil-price expectations, resulting in one-time charges of more than $8 billion. Its adjusted earnings came in at $1.8 billion, compared with $5.3 billion for the same quarter a year ago, a decrease of 70 percent. The accounting included a large $8.2 billion write-off due to a downward revision of its oil and gas price outlook and also a decision to halt projects in Alaska and Canada. In the meantime, French oil major Total is also reporting a 23 percent drop in third-quarter adjusted net income from the same quarter last year. Eni SpA too has swung to a net loss in the third quarter. It is now reporting a 75 percent drop in adjusted operating profit for the third quarter to 752 million euros, while its adjusted operating profit for the first nine months of the year came in at 3.1 billion euros, down 67 percent compared to same period in 2014. The net loss in the three months to end-September was €952 million ($1.05 billion) compared with a net profit of €1.71 billion in the same period last year. Revenue declined by almost a third to €18.81 billion. The gas and power division wiped out most of that profit as it reported a quarterly loss of almost €500 million, largely due to the difference between what Eni prepaid for natural gas in past years and the lower price during the most recent quarter. Cost cuts and a reduction in its dividend announced in March have helped Eni weather the two-thirds drop in the profitability of its oil and gas business so far this year, but the oil and gas unit is no longer able to offset the struggling other businesses on its own. In a further move to confront the new reality of depressed oil prices, Eni has also agreed to sell 12.5 percent of its troubled oil services unit Saipem to an Italian state-run investment fund. The sale, plus Saipem's repayment of debt, will bring Eni €5.4 billion. The proceeds of which will be used for its exploration and production business and to shore up its balance sheet. This is despite the fact that Eni's success in exploration over the past year offered a bright spot in the company's third quarter results. Production of oil and natural gas rose 8.1% on the quarter, slightly above analysts' forecasts. Eni's top recent discovery has been a massive natural gas field off the Egyptian coast. The British oil giant BP is in no different situation. It is slashing costs as it prepares for a long-term low oil price environment. The company is now planning for around $60 per barrel price for Brent crude until at least 2017. It also plans a further $3-5 billion worth of asset sales next year. BP has also reduced its full-year capital expenditure (capex) for the third time this year to close to $19 billion, down from previous plans under $20 billion. This spending will fall to $17-19 billion a year through to 2017, according to the oil major. The oil-price rout has wiped almost $500 billion since the end of last year from the Bloomberg World Oil & Gas Index, which tracks energy stocks globally including Shell, Exxon Mobil Corp. and Chevron Corp. This is a starkly different - yet disturbing - energy world!
