Connect with us

BUSINESS

ExxonMobil, Chevron to sack 10,000

Published

on

chevron

The international headquarters of ExxonMobil and Chevron, second and third biggest oil companies in Nigeria, are bracing up to sack at least 10, 000 staff in preparation for a prolonged stretch of weak prices.

The plan by the two United States (US) companies are coming up four days after Shell, Nigeria’s number one company in terms of assets and production volume, gave notice of its plan to sack 6,500 members of staff.

Already, ExxonMobil and Chevron yesterday posted their worst quarterly performances in several years and an impeccable industry source said the headquarters of the companies in the US were already bracing of for “right sizing of staff and expenses to absorb the oil price shock.

” Exxon is the world’s biggest oil company in size, assets and production, the source said “and it is likely to do more than Shell in the ongoing process of right sizing.

Shell will cut 6, 500; Chevron will do below that volume and in all, the two US firms will cut at least 10, 000.”

He said the Nigeria’s subsidiaries of the two oil companies “have been notified of the plan, which will surely affect majorly, the non-technical staff in account, marketing, communications, government and public affairs, among others.

” Exxon, according Bloomberg, yesterday reported its lowest profit since 2009 as crude prices fell twice as fast as the world’s largest crude producer by market value could slash expenses.

Chevron also recorded its lowest profit in more than 12 years after the market rout forced $2.6 billion in asset write-downs and related charges.

The companies’ shares fell to multiyear lows. “Chevron was a disaster; Exxon was a disappointment,” Fadel Gheit, an analyst at Oppenheimer & Co. In New York, who rates the shares of both the equivalent of a hold and owns each.

“A rising tide lifts all ships, but when the tide goes down, all ships go down.” Stung by the worst market collapse since the financial crisis of 2008, oil explorers from The Hague to Calgary to Houston are firing staff, scaling back drilling, cancelling rig contracts and reducing share buybacks to conserve cash.

Chevron said the slump convinced it to lower its long-term outlook for crude prices. “This is the beginning, not the end, of the writedown process,” Paul Sankey, an energy analyst at Wolfe Research LLC, said on Bloomberg TV.

“The biggest concern is that we’ll see weaker demand over the second half of the year.” Oil entered its second bear market since mid- 2014 this month as a flood of output from North American shale regions, the Persian Gulf and deepwater fields overwhelmed consumption by refiners and chemical producers.

Exxon and Chevron contributed to the avalanche of supply by increasing second-quarter crude output by 12 per cent and 1.7 per cent, respectively. Exxon expanded oil production in every region where it operates except Australia/Oceania.

All of Chevron’s growth occurred in the U.S. “Oil prices will be under downward pressure until there is evidence the glut is shrinking,” analysts at IHS Energy said in a note to clients.

“This will not happen quickly unless prices fall even further from recent levels,” discouraging new drilling. Exxon shares fell 4.6 per cent to $79.21 in New York, the lowest closing price since June 2012.

Chevron dropped 4.9 per cent to $88.48, the lowest close since December 2010. The companies were the day’s worst performers in the Dow Jones Industrial Average index.

Exxon cut share repurchases for the current quarter in half to $500 million after net income fell to $4.19 billion, or $1 a share, from $8.78 billion, or $2.05, a year earlier, the Irving, Texas- based company said in a statement.

The per-share result was 11 cents lower than the average estimate of 20 analysts in a Bloomberg survey. Exxon reduced spending on major projects like floating crude platforms and gas-export terminals by 20 per cent to $6.746 billion during the quarter, according to the statement. International crude prices fell 42 per cent from the previous year to average $63.50 a barrel.

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published.

BUSINESS

UK inflation hits new 40-year high of 10.1% as food and energy price surge continues

Published

on

U.K. inflation rose to another 40-year high in July as spiraling food and energy prices continued to intensify the country’s historic squeeze on households.

The consumer price index rose 10.1% annually, according to estimates published by the Office for National Statistics on Wednesday, above a Reuters consensus forecast of 9.8% and up from 9.4% in June.

Core inflation, which excludes energy, food, alcohol and tobacco, came in at 6.2% in the year to July 2022, rising from 5.8% in June and ahead of projections of 5.9%.

British 2-year Gilt yields surged on Wednesday morning after the release, adding more than 26 basis points to reach 2.41%, their highest point since November 2008.

Rising food prices made the largest upward contribution to annual inflation rates between June and July, the ONS said in its report.

“Supermarkets have had little choice but to pass on price increases from suppliers, themselves contending with unprecedented inflation in raw material and ingredient input costs,” said Kien Tan, director of retail strategy at PwC.

“This has been particularly acute in labour and utility intensive categories like dairy, with reports of the price of a pint of milk having more than doubled in some stores since the start of the year.”

The ONS repeated that its indicative modelled consumer price inflation estimates “suggest that the CPI rate would last have been higher around 1982, where estimates range from nearly 11% in January down to approximately 6.5% in December.”

The Bank of England has implemented six consecutive hikes to interest rates as it looks to rein in inflation, and earlier this month launched its largest single increase since 1995 while projecting that the U.K. will enter its longest recession since the global financial crisis in the fourth quarter of the year.

The Bank expects inflation to top out at 13.3% in October. Conservative Party leadership candidates Liz Truss and Rishi Sunak, one of whom will succeed Boris Johnson as prime minister on Sept. 5 after a poll of party members, are under increasing pressure to offer radical solutions to the country’s historic cost-of-living crisis.

The latest forecasts suggest the U.K.’s energy price cap could rise to £4,266 ($5,170) annually early next year from its current £1,971, with many households already choosing between heating and eating. The cap is expected to rise to more than £3,000 in October following the next review.

Real wages in the U.K. fell by an annual 3% in the second quarter of 2022, according to ONS data published Tuesday, the sharpest decline on record.

Despite average pay excluding bonuses increasing by 4.7%, the cost of living is far outpacing wage growth and squeezing household incomes.

“Today’s inflation figures serve as a further reminder to many UK households that they are facing a period of considerable financial hardship,” said Dan Howe, head of investment trusts at Janus Henderson.

“Consumers are already grappling with rising energy costs and surging household prices, all compounded by a lack of decisive action at the political level. Amid talks of strikes and energy blackouts, there is no doubt that tough decisions lie ahead of U.K. families.”

Richard Carter, head of fixed interest research at Quilter Cheviot, predicted that the Bank of England will likely respond at its next monetary policy meeting with yet another 50 basis point interest rate hike in a bid to combat inflation, and said there is no doubt that the cost-of-living crisis is going to get worse before it gets better.

“As such, there will no doubt be a lot of pressure on the next Prime Minister to help soften the blow and the Bank of England will continue to have a very difficult job on its hands,” he added.

Continue Reading

BUSINESS

External reserves sustains downward trend, sheds $337m in 2wks

Published

on

Nigeria’s external reserves fell by $337 million in the first two weeks of August, maintaining its declining trend since the middle of last month.

Data from the Central Bank of Nigeria showed that the external reserves fell to $38.882 billion on Thursday August 11th, 2022, from $39.219 billion at the end of July 2022.

This indicates that the external reserves has lost $563 million since July 18, when it commenced the latest downward trend.

Prior to July 18, the external reserves had maintained a 40 days upward trend, rising by $976 million to $39.445 billion from $38.421 billion on June 6th, buoyed by rise in the price of crude oil, which accounts for over 80 per cent of the nation’s foreign exchange  earnings.

However, analysts at Financial Derivatives Company Limited, FDC, attributed the declining fortunes of the reserves since July 18 to increased dollar sales by the Central Bank of Nigeria, CBN, in its bid to stabilise the exchange rate.

While projecting further decline in the external reserves, they however maintained that the increased dollar supply by the apex bank will lead to appreciation of the naira at the official and parallel market.

Making this projection in the FDC Bi-Monthly Economic Bulletin, they said: “The depletion on the reserves was majorly due to CBN’s supply of foreign exchange to stabilise the currency.

“The external reserves is expected to continue its downward trend as the CBN intensifies its efforts to stabilise the currency by supplying foreign exchange to the I & E (Investors and Exporters) window.

“Because of the country’s low oil production levels, high oil prices may have less of an impact on the country’s external reserves.

“A constant depletion of the external reserves is likely to discourage the CBN from supplying foreign exchange in the foreign exchange market. This could further stoke currency depreciation as demand outpaces supply.”

Continue Reading

BUSINESS

Nigeria loses N101bn worth of oil, says OPEC

Published

on

Nigeria’s crude oil production plunged by 2.3 million barrels in July 2022 when compared to what the country produced in the preceding month of June, data from the Organisation of Petroleum Exporting Countries showed on Thursday.

In its latest Monthly Oil Market Report for August 2022, OPEC stated that crude oil production figures based on direct communication indicated that Nigeria’s output dropped by an average of 74,000 barrels per day in July.

This implies that for the 31 days in July, the country lost about 2.3 million barrels of crude oil. The organisation further stated that the average cost of Brent crude, the global benchmark for oil, during the month under review was $105.12/barrel.

By losing 2.3 million barrels in July this year, it means Nigeria’s oil earnings fell by about $241.1m or N101.13bn (at the official exchange rate of N419.37/$) in the month under review.

Data from OPEC showed that Nigeria’s oil production in June 2022 was 1.158 million barrels per day, but this dropped to 1.084 million barrels per day in July.

The country had produced 1.024 million barrels per day in May this year, according to figures released by OPEC on Thursday.

The Federal Government, operators and experts have consistently fingered crude oil theft in the Niger Delta as the major reason for Nigeria’s poor output and its continued failure to meet the monthly oil production quota approved by OPEC.

The Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, blamed the challenges in the oil sector on the high level of insecurity across the country.

This, he said, had continued to discourage investors in the sector, leading to lower production of crude oil and lower earnings for Nigeria despite the increased cost of crude.

He said, “Investors in the oil and gas sector continue to lament the challenges posed by insecurity, oil theft, unstable policies and inappropriate fiscal regimes.

“The downstream sector has continued to be weighed down by the pricing regimes and the regulatory environments which have continued to dim the growth prospects in the sector.”

Meanwhile OPEC stated that crude oil prices dipped in July, as against their costs in June, adding that crude in OPEC Reference Basket fell by $9.17 or 7.8 per cent month-on-month in July to average $108.55/barrel.

“Oil futures prices remained highly volatile in July, amid a sharp drop in liquidity. The ICE Brent front month declined $12.38 or 10.5 per cent in July to average $105.12/barrel and NYMEX WTI declined by $14.96 or 13.1 per cent to average $99.38/barrel,” the global oil cartel stated.

Continue Reading
Advertisement

Latest News

Advertisement

Trending