Supermajors suffer from self-inflicted wounds as well as falling oil prices

FLORENCE is a city more associated with oil on paintings and salads than the stuff that comes out of the ground. Yet every February GE, an engineering conglomerate that makes machinery in the city, gathers oil executives there to discuss the industry. This year there was more than a touch of mea culpa in the air. The oil and gas industry is in need of its own renaissance, admitted Harry Brekelmans, head of technology at Royal Dutch Shell, an Anglo-Dutch oil major.

A spate of gloomy year-end earnings reports underscored how bad things already were in the final quarter of 2015, in the good old days when oil prices averaged $44 a barrel (on February 2nd they hovered around $30 a barrel). Britains BP reported an unexpected loss of $6.5 billion in 2015, one of its worst on record. That followed news of a fourth-quarter loss by Chevron, an American counterpart. Exxon Mobil, Americas biggest oil major, made a relatively healthy $16.2 billion in 2015, but that was still half the prior years profit (like Chevron it is losing money drilling for oil in America). Shells profits also dived. In Florence an executive quipped that the industry had turned into a giant non-profit.

http://www.economist.com/news/business/21690045-supermajors-suffer-self-inflicted-wounds-well-falling-oil-prices-dark-ages?cid1=cust/ednew/n/bl/n/2016024n/owned/n/n/nwl/n/n/AP/n