• 4 minutes Blackouts in Australia
  • 7 minutes Big Oil Costs Can't Go Much Lower
  • 14 minutes The moves toward 'zero-manning' in oil & gas
  • 27 mins Jan's Electric bike replaces electric cars
  • 16 hours gas lines set 70 houses on fire simultaneously in Massachusetts, live now.
  • 23 hours Tesla Will Fix Its Cars In-House
  • 3 hours Funding Secured: Saudi Wealth Fund to Invest $1 Billion in Tesla's RIval Lucid to build its EV factory
  • 7 mins THE GREAT OIL PRICE PREDICTION CHALLENGE OF 2018
  • 1 day Meeting For Better Peninsula: Kim Jong Un Will Meet Moon Jae In Pyongyang
  • 8 hours Bezos Rips Trump For ‘Dangerous’ Attacks on The Media
  • 18 hours 100% Renewables will Fuel the Growth of Poverty and Homelessness
  • 2 hours Making Safe Nuclear Power from Thorium
  • 1 day Taller Is Better: A Race for Windmills
  • 13 hours Senate cancels postal service hearing
  • 16 hours Germany Should have Gone with Nuclear
  • 1 day Oil Higher As U.S. Iran Sanctions Raise Supply Concerns
There’s Still A Future For Nuclear Power

There’s Still A Future For Nuclear Power

Despite policy changes and the…

Can Millennials Save Tesla?

Can Millennials Save Tesla?

Fee-free trading app Robinhood has…

Zainab Calcuttawala

Zainab Calcuttawala

Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…

More Info

Fitch: European Oil Majors Adjusting To $60 Barrel For The Long Haul

BP logo

Fitch Ratings says Shell, Total, and British Petroleum are adjusting their operations to match the realities of an under-$60-barrel price in the long term, according to a new report by Forbes.

The European oil majors are lowering dividends and spending to minimize break-even points last year.

“The companies all generated neutral-to-positive free cash flows in 2017 [after dividends, before mergers and acquisitions], according to their recently released annual results. Developments in their credit quality will largely depend on their ability to preserve financial flexibility, as oil prices are likely to remain volatile,” the agency noted.

The Brent barrel averaged $55-a-piece last year, allowing the companies’ free capital to range from -$0.50 to $6.60 a unit, depending on the company. The upward shift is a major improvement compared to previous years.

Even when barrel costs stood above $100 – majors’ expenditures would cause the capital spread to vary between -$14 and -$3 per unit. The market crash has forced large corporations to cut excessive spending by refocusing efforts in the downstream and petrochemicals sectors and enforcing scrip dividends.

“This should allow integrated oil companies to generate neutral-to-positive free cash flows through the cycle under our price deck assumptions, which supports their current ratings,” Fitch said. “We doubt that current prices will be sustained. Our base case is that the Brent price will fall from current levels and stabilize in the $50-$60 per barrel range, as U.S. shale production is set to increase further.”

BP expects the Brent barrel to reach a $50 average price in 2018 and reduce further to $35-40 by 2021, before a further nosedive to $30.

Statoil’s chief executive Eldar Sætre told Reuters on Wednesday that oil prices will likely be below $70 per barrel this year, as growing U.S. onshore production as well as rising production from conventional fields will keep a lid on prices.

By Zainab Calcuttawala for 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