Oil companies shoulder pain of downturn with lower output

Thu Nov 24, 2016 2:03am EST
 
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By Ron Bousso

LONDON (Reuters) - The world's listed oil companies have slashed oil output by 2.4 percent so far this year during one of the industry's worst downturns as OPEC battles to agree on its first production cut since 2008.

The aggregated production of 109 listed companies that produce more than a third of the world's oil fell in the third quarter of 2016 by 838,000 barrels per day from a year earlier to 33.88 million bpd, data provided by Morgan Stanley showed.

By comparison, the Organization of the Petroleum Exporting Countries produced 33.64 million bpd in October. OPEC has struggled to agree on a joint production freeze or cut to support oil prices before its Nov. 30 meeting in Vienna.

In the second quarter of 2016, the companies reduced production by nearly 930,000 bpd, according to Morgan Stanley.

The firms include national oil champions of China, Russia and Brazil, international producers such as Exxon Mobil (XOM.N: Quote) and Royal Dutch Shell (RDSa.L: Quote), as well as U.S. shale oil producers like EOG Resources EOG.N and Occidental Petroleum (OXY.N: Quote).

The drop in oil companies' output is particularly compelling given the increase in 2015, when third-quarter production rose by some 1.9 million bpd.

"Clearly, we have seen a large swing in the year-on-year trend in production, from strong growth as recent as a year ago, now to steep decline. This is the outcome of the strong cutbacks in investment," Morgan Stanley equity analyst Martijn Rats said.

Capital expenditure for the companies combined more than halved from $136 billion in the third quarter of 2014 to $58 billion in the same period this year, according to Rats.   Continued...

 
A worker checks the valve of an oil pipe at the Lukoil company owned Imilorskoye oil field outside the Siberian city of Kogalym, Russia, January 25, 2016.    REUTERS/Sergei Karpukhin/File Photo