Oil supermajor Shell is ‘reshaping’ for the future as it and others reap the benefits of the ‘lower forever’ mindset on oil price.
The Anglo-Dutch energy giant was stung last year by plunged crude prices and impairments.
But the firm’s finances could be kicked into shape after the latest accounts show a surge in profits.
Shell boss Chief executive Ben van Beurden put this down to adaption to a $50 barrel pricetag.
Revenue for the year so far amounted to £109.9billion compared to £81.7billion for the same period last year.
This in turn boosted income before tax to £4.5billion for the first six months of 2017, compared to last years £243million.
Shell said this was down to higher contributions from its upstream business and integrated gas, with higher realised prices and increased production from new
fields.
CCS earnings attributable to shareholders reflected downstream contributions which were boosted by improved operational performance and stronger chemicals and refining industry conditions.
Mr van Beurden said cash generation was “resilient” at at average oil price of $50 a barrel.
And he said the company was focused on being “disciplined” with its capital expenditure.
However he also revealed that the company has axed 13% of it’s global workforce in the last 18 months and warned that the cost-cutting is “not done”.
The firm has already stripped out $11billion a year in operational costs, while the merger with BG Group has seen the worldwide headcount reduce from from 98,000 at the time of the combination to 85,000 today.
It comes amid a portfolio realignment, which has seen $25billion of divestments made – including the landmark £3million sell off of a package of North Sea assets to smaller rival Chrysaor.
Mr van Beurden said: “We now have 13% less employees than we did at the beginning of 2016.
“To be clear we are not done. Costs must continue to come down and then of course stay down.”
Also seeing an uplift in its finances is French supermajor Total.
The firm saw an adjusted net income of £3.8billion for the half year, a 32% increase on the same period last year.
The half year results show a pre-tax net income of £4.2billion compared to £3.3billion this time last year.
Chief executive Patrick Pouyanne said that in a volatile oil price environment the company had delivered an “excellent” set of quarterly results, with a 3% growth in production.
Norwegian operator Statoil also saw positive signs in the half yearly report.
Total income for the period Jan to Jun 2017 amounted to £23.24billion compared to £16billion last year.
Income before tax was boosted to £5.6billion compared to £1.9billion in the same period last year.
Statoil chief executive Eldar Sætre said the company had seen “strong cash flows” and reduction in net debt,.
He added: “We expect to deliver around 5% production growth this year, and at the same time realise an additional one billion dollars in efficiencies.
“Together with the supplier industry, we continue to make strong progress on project development and execution. Gina Krog has started production, and we are progressing Johan Sverdrup and other important projects like Aasta Hansteen, Mariner, Oseberg Vestflanken, Peregrino II, Dudgeon and Hywind.”
Canada’s Suncor Energy, the oil sands specialist, posted half year gross revenues and other income of £9.22billion, compared to last years half year figure of £6.96billion
Net earnings before tax for the first six months of 2017 amounted to £1.04billion compared to the same period last year when the company filed a £291million loss.
Cash flow provided by operating activities, which includes changes in non-cash working capital, was £98million.
ConocoPhillips posted to date gross revenues of £10.1billion compared to £6.5billion.
The American multinational’s loss before income taxes increased to £3.4million compared to £2.9billion.
It comes amid a major transformation programme that the company is going through.
Ryan Lance, chairman and chief executive officer said: “In just six months we’ve exceeded the three-year plan we laid out in late 2016.
“We’ve reset our portfolio through strategic dispositions that generated substantial proceeds, allowing us to accelerate key financial and operational priorities.”
“We are on track to far surpass our initial debt reduction and shareholder payout targets, while accelerating strong underlying financial and operational performance.
“We remain focused on lowering our breakeven price for the business, generating free cash flow and delivering strong per-share growth with improving returns through the price cycles.
“This is the right approach for value creation in the upstream sector, especially at a time of uncertainty in the commodity markets.”
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