Two oil giants use different weapons against oil slump | Business News

Two oil giants use different weapons against oil slump

31 Oct 2015 | Author: | No comments yet »

Bank of America Traders Made Money Every Day of Third Quarter.

ExxonMobil and Chevron, the two largest US oil and gas groups, yesterday reported big falls in third-quarter profits because of plunging crude prices, although their earnings exceeded analysts’ expectations.Bank of America Corp. traders posted trading revenue on every business day of the third quarter, the first three-month period without a daily loss since the start of 2014, even as total trading revenue declined.The plummeting price of oil has ripped into the once booming US energy industry so dramatically that the oil sector has laid off 87,000 people so far this year. On 74 percent of those days, Bank of America generated more than $25 million, the Charlotte, North Carolina-based lender said Friday in its quarterly regulatory filing.

Chevron became the latest company to dismiss workers on Friday, announcing that it would lose between 6,000 and 7,000 jobs – the second four-figure round of dismissals at the company since July. Global markets, the bank’s trading operations run by Chief Operating Officer Thomas Montag, reported third-quarter profit more than doubled to $1 billion from a year earlier because of lower litigation costs.

The company is cutting investment by a fourth. “With the lower investment, we anticipate reducing our employee workforce by 6,000-7,000,” the chairman and CEO, John Watson, said in a statement. Chevron plans to cut capital and exploratory spending next year by one-fourth, with further cuts in 2017 and 2018 depending on the oil industry’s condition then. But the impact of a slowing Chinese economy could be even worse as it spreads to other economies, he said. “We saw a big round of layoffs at the beginning of the year; entering into round two may signal that conditions haven’t improved and further consolidation is necessary.

Chevron and undoubtedly other companies are facing similar conditions where their workforce conditions aren’t consonant with their business level,” he said. “I think Chevron is a sign that this is going to last longer than optimists had hoped. Vice president of investor relations Jeffrey Woodbury told analysts that Exxon has “continuously … right-sized our global function organization” and has the same number of employees today that it had in 1999, before its merger with Mobil. Watson said prices will eventually rise as production slows in response to low prices, but he said it was hard to know when that will happen. “In the long run the industry can’t survive on $45 oil.

When oil prices rise, Youngberg said, oil companies going through the current downturn will be more cautious about hiring and undertaking big projects. California-based Chevron said third-quarter income plunged to $2.04 billion, or $1.09 per share, down from $5.6 billion, or $2.95 per share, a year ago.

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