Mood music

Lower oil prices have been eating into oil and gas companies’ profits for a number of quarters now, and investors and analysts are focusing on how successful the firms are in bringing down costs and adapting to the tougher market environment. But a lot of attention is being paid to any changes in the tone and mood of company executives during the earnings season, for cues on how they might tweak their firms’ strategies. Take BP and Shell, for example.

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The darkest hour is just before the dawn

The first quarter may prove to have been the darkest hour for global mergers and acquisitions (M&A) activity, with the total reported deal value falling by more than 70pc compared with October-December, according to UK consultancy EY. “Uncertainty about where oil prices will land after their months-long slide has dramatically disrupted the global market for oil and gas M&A activity”, says EY global oil and gas transaction leader Andy Brogan.

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Dividing interests

With stakes so high in Norway’s giant Johan Sverdrup oil field project — $170bn of anticipated future revenues, up to 3bn bl of oil equivalent of total resources, $15bn of capital expenditure (capex) for phase one alone, three licence areas and five stakeholders — there was always plenty of scope for disagreement between discovery and first oil in 2019.

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Posted in Oil