Editorial: A Quarterly Thrashing & Honest Mercantilism

"For the merchant, even honesty is a financial speculation." Charles Baudelaire (1821 – 1867)

As the world’s oil companies announced their figures for the first quarter of 2015, a common theme was evident across the sector: rout.

Oil service companies have been amongst the hardest hit by cutbacks engendered by the softening oil prices. The sector’s largest service providers - Schlumberger and Halliburton both recorded first quarter revenue losses of nine per cent year-on-year, and have respectively announced the axing of 17 and ten per cent of their staff headcount since 2014.

A drop in the US rig count of more than 50 per cent since November 2014 has been blamed for that slump, a reduction of activity that has been prompted by a retrenchment of oil companies on all levels, particularly the supermajors.

Of the "Big Five", all have seen significant curtailment of profit in this first tranche of 2015, with two of the three European-based energy giants faring particularly badly. Despite restructuring and its highest production rates in a decade, Total posted a Q1 dive in net profits of 20 per cent, down from $3.34 billion to $2.66 billion for the same period last year. In London, BP reported a 19 per cent plunge to $2.6 billion.

The exposure of both of these corporations in the upstream industry has meant that the traditional offset of the low-price environment granted by refining, distribution and marketing has not been a safety net.

Although the price of oil has risen by 30 per cent since lows in March, OPEC production levels are unlikely to decrease in the near future, and brimful world oil inventories mean the oil glut is far from evaporation point.

With the Summer months approaching, the annual stock market scrimmage of "Speculation Season" may be the saving irrigation of a wilting oil and gas landscape. Honestly….

Tim Haðdar is the Editor In Chief at Oil & Gas IQ. Reach Him At Twitter Or OGIQ

LEARN MORE ABOUT THE OIL AND GAS INDUSTRY:

• The Top 10 Oil & Gas Companies in the World
• Oil & Gas Industry: An Introduction
• Oil and Gas Production - An Introduction