Tuesday, November 1, 2016

Shell, BP Earnings Benefit From Cost Cuts Amid Weak Oil Prices


Since the global oversupply has driven down oil prices during the last two years, companies have been compelled to cut costs as much as they can to adapt an environment of uncertain prices and take the most advantage of the falling profits. Thanks to these cuts, big companies as BP, Shell, Exxon and Chevron have shown a substantial increase in profits during the third quarter of 2016 after several quarters of reported losses.

This year, companies slashed their budgets in an effort to maintain stability within an uncertain prices environment. As a result of bringing down spending and costs and increased profits, companies are planning new projects to be developed next year. For instance, Shell expects to spend $25 billion in new oil and gas projects.

Beyond all efforts to survive the oil price fall, the real struggle is to stop the crisis by making a global agreement in shortening the oil supply; this is what OPEC members have tried to do but it has taken them more time than the expected, allowing the Arabic producers controlling the market with their overproduction and low prices, affecting the entire industry around the globe.

Hopefully, such OPEC agreement will be reached soon so that the industry is living the end of one of the worst oil crisis the world has faced, in which the most affected are always the employees who have lost their jobs and their families.

http://www.wsj.com/articles/shell-swings-to-profit-as-operating-costs-fall-1477985487 

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