Look at the results of the Majors released so far and you could be forgiven for thinking that they are pretty impressive. After all, reported net income for a group of integrated companies that have reported by now are up a hefty 70% compared to the dark days of Q1 2009.
But look a little deeper and you will see that while the growth rates appear robust, the absolute earnings don’t come anywhere near the levels of 2008. Net Income for the group that have reported so far (including ExxonMobil, BP, Shell, ENI, ConocoPhillips, Repsol-YPF and Hess) rose by 69% to $24.5 bln in the first quarter of 2010, compared with $14.5 bln in the previous year but failed to reach the $38.9 bln of earnings of first quarter 2008.
A similar pattern emerges for the upstream. E&P earnings for the group doubled in the first quarter but as you can see from the graph above were still down by about a third compared with the heady days of early 2008. All companies in the group managed to generate hefty increases in their E&P earnings with BP seeing a $3.8 bln hike to $8.2 bln during the first quarter. E&P capital spending was virtually flat compared with the previous year and was 14% down on 2008. Not perhaps signs of a confident industry.
The really bad news is the continued decline in refining and marketing earnings which fell 40% overall for the group during the quarter. Only Repsol managed to grow its downstream earnings during the quarter. Perhaps not surprisingly, we can see that capital spending in the refining and marketing sector continues to dwindle.
Meanwhile, crude oil production is flat for these companies overall. Hess managed a a 12% growth in output over the quarter and Repsol was up 5% but BP and Shell grew their crude production by a modest 1% while Exxon, ENI and Conoco all saw their liquids output slide.
The trend in natural gas output was a little more buoyant with gas production for the group as a whole up 5% (compared with a flat profile in Q1 ’09 vs the ’08), mainly due to higher production from Shell and ExxonMobil.