USA Verdict

2020, the black year of the oil companies

The fall of a giant. Founded in 1870 by John D. Rockefeller, under the initial name of Standard Oil, ExxonMobil continues to plummet. The major american, who was the head of stock market values in 1975, behind IBM, has just been ejected from the Dow Jones, the stock index in new york city. Ten years earlier, the company posted a world record of funding, with over $ 45 billion ; it has lost 40 % of its market value during the single year 2020. To limit the damage, ExxonMobil has spent a depreciation record of about 20 billion dollars by the end of the year. In Exchange, his value is worth less than a tenth of that of Apple, and the price of its share is now lower than that of Tesla.

ExxonMobil is without doubt the most striking example of the fall of the majors of the oil, resulting in one of the para-oil companies. Since 2014, the price of crude has been divided by more than two. After a more down to less than $ 20 at the end of April 2020, a barrel of Brent has painfully raised his head and rating, today, around 50 dollars. The pandemic due to the Covid-19 marked a sort of coup de grace. Since then, all the majors tighten the screws. They devalue the value of their oil facilities, because of their profitability decline and that the future is dark. The world goes slowly to the end of oil. Natural gas probably has still some beautiful days in front of him, because it pollutes less than coal and, as such, is useful in the energy transition. But the conventional oil as well as oil and shale gas are promised to the decline.

“The quarter is the most difficult of the last few decades “

Hit by the fall in consumption, all the majors have proceeded as ExxonMobil. They have reduced their investments in the exploration and production of oil, and cut into the value of their assets : $ 22 billion for Shell, $ 17.5 billion for BP, while Total has reduced the value of its investments in the oil sands (an expensive oil to produce) of $ 8 billion in Canada. The majors also cut back in their workforce. ExxonMobil has announced the elimination of 14,000 jobs, or approximately 15 % of the total, by the end of 2021, and Shell is expected to reduce its workforce by 9,000 employees. A few weeks ago, Total was revealing the opening of a plan of voluntary departure, which could be, according to the unions, 700 jobs.

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The para-oil companies, of course dependent on the price of oil and the health of the majors, accuse the coup. In July, Schlumberger, the giant oil services, announced the elimination of 21,000 jobs in the world (which is partly in France), or a quarter of its workforce. “This has probably been the quarter the most difficult of the last few decades “, explained then Olivier Le Peuch, the boss of Schlumberger. The period is also black for the para-oil companies, French. Vallourec has lost 75% of its market value since the beginning of the year, and its turnover fell by 32 % in the third quarter of 2020. In response, the manufacturer of seamless tubes will remove 1 050 jobs in addition to 900 already announced in the first half. CGG, a world leader in the exploration of sub-soil, has lost 72 % of its market value, while TechnipFMC has a little limited the damage (to 58 %).

Orsted, the example that the whole area looks

All is not lost for the majors. First, the end expected of the health crisis, reactivate economic activity. The price is expected to mechanically increase, driven by demand and the fall in current investment — less new deposits, it is less oil available in the future, thus a resource the price goes up. But the real hope lies elsewhere. One after the other, the majors will turn green by switching to renewable energy. The Danish Orsted is the example that the whole industry is watching closely : the former major Danish has abandoned the black gold in 2018 to devote himself exclusively to the energies so-called ” green “, in particular wind turbines. In 2020, in the full collapse of the oil market, the action of Orsted has gained 60 % !

His success arouses the envy and gives one ideas. Total, under the leadership of its boss Patrick Pouyanné, is investing in mass in renewable energy, a path followed also by BP, among others. The French-based multinational intends to double its budget dedicated to clean energy by 2030, from 10% to 20% of its investments. In 2025, the tanker should, if it reaches its objectives, have the equivalent of a twenty EPR in green energy (solar and wind). ExxonMobil could be inspired. The former glory of Wall Street under the eyes, a model to follow : a few weeks ago, the staff created by Rockefeller has been overtaken in the market by NextEra Energy. A company that appears to be the biggest producer of renewable energy in the world, but has planted its first wind turbine in… 1998.

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