Shell, ConocoPhillips Cut Costs in Deepwater Business

The next hours could witness more bad news for difficult and expensive projects, as Shell could further cut its capital expenditure for the year, while Halliburton already voiced its intention to reduce future deepwater exploration spending following ConocoPhillips’ example.  

“Our decision to reduce spending in deepwater will further increase our capital flexibility and reduce expenses without impacting our growth targets. This strengthens our ability to achieve cash flow neutrality in 2017 even if lower commodity prices persist” ConocoPhillips wrote late next week. 

Adding to that, Halliburton reported weak results for the trimester. Q2 revenues dropped from $8,051 million in 2014 to $5,919 million, with total operating income plunging by 78%. Things are going worse than the previous trimester too.

‘Primarily as a result of the recent downturn in the energy market and its corresponding impact on the company’s business outlook, Halliburton recorded approximately $258 million, after-tax, or $0.30 per diluted share, in the second quarter of 2015, as compared to $823 million, after-tax, or $0.97 per diluted share, in the first quarter of 2015, in company-wide charges related primarily to severance costs and asset write-offs’ Halliburton wrote on Monday.

Despite saying it remains committed to research and innovation, Halliburton decreased its capital expenditures from $1,375 million in 2014 Q2 to $1,223 million in the trimester ended on June 30.  

Similarly, Shell could soon revise its plan too.  

‘Royal Dutch Shell expects billions of dollars more in savings from its proposed £55bn takeover of BG Group than previously disclosed as it uses the enlarged company’s scale to slash costs in its deepwater oil business and natural gas trading arm’ the Financial Times wrote on Sunday.