As the latest financial reports were released, two European oil companies, BP and Shell, responded to recent hotspots in the oil and gas industry.
At the recent Q3 performance release conference call, BP's interim CEO Murray Auchinloss said, "We are very satisfied with the company's performance... Therefore, to be honest, mergers and acquisitions are not within our consideration
Shell CEO Wael Sawan stated in an interview with The Wall Street Journal that buying Shell's own stocks is a better investment than mergers and acquisitions.
This is the first public response from BP and Shell executives to the recent large-scale mergers and acquisitions of ExxonMobil and Chevron. Their answer seems to be: unintentionally following the trend.
On October 11th, ExxonMobil announced its acquisition of Pioneer Natural Resources, a US shale oil and gas company, for a total price of $59.5 billion (approximately RMB 434.3 billion). Some industry insiders believe that this major move will trigger a wave of large-scale mergers and acquisitions in the US oil and gas industry.
According to the latest financial report, the performance of BP and Shell in the third quarter decreased year-on-year and increased month on month. Both companies also announced that they will continue to conduct stock repurchases in the fourth quarter, with a scale of $1.5 billion and $3.5 billion, respectively.
This means that the two companies have basically allocated half of their total profits for the third quarter to repurchase stocks.
According to the financial report, BP's quarterly basic replacement cost (RC) profit for the third quarter was $3.29 billion, a year-on-year decrease of 60%, but an increase of 27% compared to the second quarter of this year.
The year-on-year decrease is mainly affected by the decrease in international oil and gas prices. According to data from the US Energy Information Administration (EIA), the average spot prices of WTI and Brent crude oil in the first three quarters of this year were $77.4 per barrel and $82.05 per barrel, respectively, a decrease of approximately 18.5% compared to last year's full year average.
BP stated that factors such as higher refining profit margins, shorter maintenance downtime of refineries, high oil and gas production, and ideal crude oil prices have driven performance growth month on month.
Correspondingly, the "Customers and Products" segment, which includes refining, fuel sales, and electric vehicle charging businesses, saw a significant increase in profits, from $796 million in the second quarter to $2.055 billion, returning to the same period last year. The profit of the upstream business sector 'oil production and operation' increased by about 13% month on month. The profit of the "natural gas and low-carbon energy" business decreased by about 44% month on month.
The natural gas marketing and sales results for the quarter were not ideal, "BP said. Murray Auchinloss stated on an investor conference call that the natural gas markets in Europe and the United States are relatively full of inventory and have a relatively stable market structure, resulting in lower natural gas sales compared to the previous two quarters.
According to data presented by Nanxi, Senior Vice President of the Energy Market Analysis Department of the consulting company Ruizide, at the 5th Chongqing Oil and Gas Forum, as of October, the underground gas storage capacity in Europe this winter has reached 97%.
Shell's performance in the third quarter is similar to that of BP. Shell's financial report shows that its adjusted earnings for the third quarter reached $6.22 billion, a year-on-year decrease of 34% and a month on month increase of approximately 23%.
Shell stated in its report that the decrease in global refining market supply during the quarter led to an increase in refining profit margins, while the transaction price of oil prices, sales of liquefied natural gas (LNG), and crude oil production also drove profit growth. However, the decline in LNG and natural gas trading volume has limited performance growth.
From a segmented perspective, the adjusted earnings of Shell's comprehensive natural gas department and upstream oil and gas exploration and production department increased by 1%, 32%, and 207% month on quarter, respectively. The profit of the refined oil retail and transportation departments, renewable energy and other energy solutions departments decreased by 20% and 129% respectively month on month.
The total profit of the chemical and product departments was 1.38 billion US dollars, an increase of 207% month on month. However, according to Shell's disclosure, its chemical business suffered a loss of $329 million in the quarter based on its breakdown; The product business was profitable with a net profit of $1.71 billion.
Shell spokesperson told Interface News that in response to the challenging market environment and the need to strengthen capital discipline, Shell will continue to optimize its "chemical and product" business portfolio for many years to come.
Recently, Shell is selling its chemical assets in Singapore. The spokesperson stated that Shell has initiated a strategic evaluation of its energy and chemical park assets located in Maoguang Island and Jurong Island in Singapore, and after the evaluation, divestment is now the company's priority focus.
Shell's Singapore website shows that it operates a refinery in Maohiroshima, Singapore, including an ethylene cracking unit (1 million tons/year), a butadiene extraction unit (155000 tons/year), and a circulating chemical unit. Shell operates a chemical park on Jurong Island, producing chemical intermediates.
Another oil and gas giant, ConocoPhillips, reported an adjusted profit of $2.6 billion in the third quarter, an increase of 16.5% compared to the previous quarter and a decrease of 43% compared to the same period last year.
Interface News previously reported that crude oil prices have decreased compared to last year, leading to a general year-on-year decline in the performance of international oil and gas giants.