• 5 hours U.S. Oil Production To Increase in November As Rig Count Falls
  • 7 hours Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 9 hours Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 11 hours EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 13 hours Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 14 hours Aramco Says No Plans To Shelve IPO
  • 3 days Trump Passes Iran Nuclear Deal Back to Congress
  • 3 days Texas Shutters More Coal-Fired Plants
  • 3 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 3 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 4 days Chevron Quits Australian Deepwater Oil Exploration
  • 4 days Europe Braces For End Of Iran Nuclear Deal
  • 4 days Renewable Energy Startup Powering Native American Protest Camp
  • 4 days Husky Energy Set To Restart Pipeline
  • 4 days Russia, Morocco Sign String Of Energy And Military Deals
  • 4 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 4 days China Set To Continue Crude Oil Buying Spree, IEA Says
  • 4 days India Needs Help To Boost Oil Production
  • 4 days Shell Buys One Of Europe’s Largest EV Charging Networks
  • 5 days Oil Throwback: BP Is Bringing Back The Amoco Brand
  • 5 days Libyan Oil Output Covers 25% Of 2017 Budget Needs
  • 5 days District Judge Rules Dakota Access Can Continue Operating
  • 5 days Surprise Oil Inventory Build Shocks Markets
  • 5 days France’s Biggest Listed Bank To Stop Funding Shale, Oil Sands Projects
  • 5 days Syria’s Kurds Aim To Control Oil-Rich Areas
  • 5 days Chinese Teapots Create $5B JV To Compete With State Firms
  • 6 days Oil M&A Deals Set To Rise
  • 6 days South Sudan Tightens Oil Industry Security
  • 6 days Over 1 Million Bpd Remain Offline In Gulf Of Mexico
  • 6 days Turkmenistan To Spend $93-Billion On Oil And Gas Sector
  • 6 days Indian Hydrocarbon Projects Get $300 Billion Boost Over 10 Years
  • 6 days Record U.S. Crude Exports Squeeze North Sea Oil
  • 6 days Iraq Aims To Reopen Kirkuk-Turkey Oil Pipeline Bypassing Kurdistan
  • 6 days Supply Crunch To Lead To Oil Price Spike By 2020s, Expert Says
  • 7 days Saudi Arabia Ups November Oil Exports To 7-Million Bpd
  • 7 days Niger Delta State Looks To Break Free From Oil
  • 7 days Brazilian Conglomerate To Expand Into Renewables
  • 7 days Kurdish Independence Could Spark Civil War
  • 7 days Chevron, Total Waiting In The Wings As Shell Mulls Majnoon Exit
  • 7 days The Capital Of Coal Is Looking For Other Options
Oil Prices Poised To Rise In Early 2018

Oil Prices Poised To Rise In Early 2018

A consistent fall in comparative…

U.K Gas Supplier Centrica Sees Profits Drop Despite Cold Winter

Bitterly cold weather in Britain and much of the United States may have meant an increase in the consumption of gas to warm homes and businesses, but this increased volume couldn’t help Centrica, the UK energy conglomerate that owns British Gas and Direct Energy, a North American utility.

The cold snap during the first three months of this year increased average British gas consumption by fully 10 percent, while US consumption rose by 1 percent. Yet because of the long, steep drop in the price of crude, the company said it is suffering financially in its oil and gas production sectors.

One result is that Centrica has had to reduce the value of its once plentiful assets in the North Sea, now that operations there are becoming less productive and more expensive. The price of Brent crude from the region has dropped from more than $110 per barrel in June 2014 to the mid-$60 range today.

Related: Who Is Saudi Arabia Really Targeting In Its Price War?

As a result, Centrica warned in a statement on April 27 that increased sales won’t necessarily translate into generous profits. “Improved year-on-year profitability downstream [retail sales] is expected to be more than offset by the impact of lower commodity prices on the upstream [production] business,” it said.

The bad news is only a continuation of 2014. For example, the profits of British Gas, owned by Centrica, plunged by 23 percent to about $670 million, in large part because the utility lost nearly a half-million customers and average bills declined around $150 due to lower consumption during a warm year. Overall, Centrica’s profits were down by fully 35 percent last year.

Related: EU Could End Russian Gas Bullying In One Fell Swoop

Even politics has become part of the mix. Centrica’s statement said its earnings “remain subject to the usual variables of commodity prices, weather and asset performance, and the uncertain outcomes of the UK general election.”

Like many large energy companies, Centrica is working to maintain its financial strength by saving money at a time when earning it is difficult. In its statement, the company said it is likely to meet its goal of cutting capital expenditures by about $12 million this year and an additional 40 percent cut to less than $100 million in 2016.

Related: A Closer Look At The World’s 5 Biggest Oil Companies

Despite these cuts, Centrica said it would invest more than $75 million to hire 350 new employees over the next three years in an effort to improve service for British Gas customers.

Because of heavy losses in 2014, Centrica suggested it may cut its dividend by 30 percent to maintain its credit rating for investors. But the very next month, Moody’s downgraded the rating anyway.

Moody’s chief analyst for Centrica, Helen Francis, said the credit rating service acted “primarily because lower energy prices and generally poorer trading conditions have hurt the company’s profitability and weakened its financial profile to a level that can no longer support [a higher] rating, despite efforts to implement restorative measures.”

By Andy Tully of Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News