Q2 2011 release roundup

The numbers are in from the supermajors and the world’s largest oilfield services companies, and they’re big.
Several firms have booked record profits following a period of sustained high oil prices. This has benefitted service companies, who have seen renewed confidence in high margins prompt a spate of new megaprojects and oilfield investment.

However, the Arab Spring has taken its toll on some companies, with Baker Hughes and Total with notable impairments to their profits for the period.

A major theme arising from results is that, despite bumper profits, many companies undershot analysts’ expectations. Investors are increasingly impatient at the undervaluing of assets – particularly on the upstream side – within vertically integrated supermajors.

ConocoPhillips saw profits drop 18% year-on-year following a change of corporate strategy that has seen billions in sell-offs in exchange for renewed focus on North American assets and the return of $3.1 billion to shareholders by way of a buy-back. The company wowed the market this month by announcing it would be hiving off its upstream business to focus on E&P. The move is estimated to create $100 billion of value for shareholders.

BP is now under pressure to consider something similar following results that underwhelmed leading investors. Analysts estimate the company’s assets are worth twice its current market value.

The big five may be about to get smaller, smarter and more specialised.

Shell looks to buck this trend, having reported strong growth, improved margins and excellent potential across a range of titanic upstream projects from Qatar to Western Australia. ExxonMobil stays top dog, and the firm’s huge investments into North American shale gas make a ConocoPhillips-style breakup less desirable.

Oilfield service companies have posted excellent results on the back of strong regional margins. Saudi Arabia and Iraq in particular have proved competitive but lucrative. Schlumbeerger powers ahead having successfully absorbed Smith International, while Baker Hughes and Jacobs Engineering have rebounded spectacularly from a low-margin second quarter in 2010.

In case you didn’t catch them through last week, here is ArabianOilandGas.com’s list of the big firms that have published their results for Q2 2011:

IOCS

1. ExxonMobil

2. Shell

3. Chevron

4. BP

5. Total

6. ConocoPhillips

7. Statoil

SERVICE COMPANIES

1. Schlumberger

2. Baker Hughes