Big Oil’s winners and losers emerge as crude prices surge

LONDON: Crude prices rose to three-year highs, operating costs were down and profit was growing by double or triple digits, but investors still found plenty to complain about in Big Oil’s second quarter earnings.

The past week’s financial reports showed a surprising variation in the strength of the world’s largest energy companies. Some were perfectly poised to rocket out of the worst industry downturn in a generation by boosting production just as oil prices soared.

Others failed to lift off and fell back to Earth with a bump.

Surging oil prices lifted everybody, with BP Plc’s fourfold profit increase leading the pack.

Companies cut costs in the downturn and have largely kept them in check, giving them an extra benefit as crude rises. After years of borrowing to pay shareholders, most of the world’s biggest non-state energy firms generated enough cash to cover dividends and investments.

“We’ve turned around and retooled the company over seven years,” BP chief executive officer Bob Dudley said in a Bloomberg television interview. “It shows more confidence than we’ve had in a long time.”

It was evident that each company was at a different point in its investment cycle, and the market reacted accordingly.

Total SA showed the best timing, positioning itself to reap the rewards of earlier investments by increasing its production forecast just as oil prices rise.

BP couldn’t match Total’s output boost, but confidently asserted that it had the financial strength to both increase dividends and chase growth with its biggest deal in decades.

Chevron Corp.’s profit fell short, but it successfully wooed holders by resurrecting buybacks after a three-year hiatus.

Royal Dutch Shell Plc also missed estimates, but its focus on paying down debt meant a slower-than-anticipated start to share repurchases. — Bloomberg