International energy giants make cash out of waste

Discarded Oil EquipmentBP and Shell got excellent prices for resources deemed valueless, exceeding expectations.

In the Deepwater Horizon disaster BP was left with no other option but to discard some of its oil and energy recourses across the planet to bear the colossal costs. Unlike what everyone was foreseeing, BP’s housecleaning came out as a giant success. Almost getting them double the actual value of the assets, BP already has $22 million in its pocket so far. Ready to follow the footsteps, Royal Dutch Shell and ExxonMobil are also planning to dispose of, their assets no longer required, where they already sold nine fields for around $1 billion last year, in the Gulf of Mexico.

Oil giants have by far made sales that are beyond $50 billion since the last 12 months. But do not consider it over. From PFC Energy, Jerry Kepes, communicated that these companies on their record, have properties worth $150 to $200 billion, which they might get rid off without causing any damage to their current popularity. These assets are doing them no good in the stock market anyway.

The huge success has a long story behind it. The characters of the story are the buyers that are there in abundance, and the non-fluctuating oil prices make it easier for them as well as some factors like, scarcity of the staff fit for developing and operating the fields. Yet another important factor is the struggle these majors are going through for the identity crisis. Investors do not deem them anything productive but a burden that’s very heavy to carry. No longer it is believed that the image only, adds any value.

The oil majors such ExxonMobil, Shell, BP, Total (TOT), Chevron (CVX), and ConocoPhillips (COP) over the past five years have only been able to accumulate the annual return of only 5%.Whereas Anadarko Petroleum (APC) and Apache (APA) comparatively smaller companied, performed better in the market with 8.5%.But Africa specialist Tullow Oil, considered even smaller in terms of an oil company made a leap with 38%.crude oil came out as a wonderful investment. It returned 9%

It’s in the air! And energy giants can already feel it. They have started to concentrate on exploration; liquid gas as well as deepwater drilling, to get better returns, no matter stakes are high. And have put trivial businesses aside. With the new CEO, Peter Voser, Shell is making some aggressive moves. It has gone beyond it $8 billion budget for divestments. sale of a 10 percent stake in Australia’s Woodside Petroleum for $3.35 billion and a sale of Texas gas fields to Occidental Petroleum (OXY) for $1.8 billion is one of the examples.

Shell will need a huge sum of money, maybe as much as $50 billion to its newly started projects of Australian gas and the ones in Qatar that will concentrate on conversion of gas to diesel as well as jet fuel. Financial Chief, Simon Henry, clarifies that we only discard the properties that does not have a very promising future or for which other people will have more interest.

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

Facebook Twitter LinkedIn Google+ YouTube