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Output challenge denies Big Oil best of Q3 bonanza

Exxon Shell Chevron BP Mean est EPS Q3 ($) 1.96 1.13 2.85 1.29 Est % change on year -8 0 -22 -21 Price % chg past 90 days 4.6 -2.7 2.1 3.3 Market cap ($ billions) 415 220 215 132

Source: ThomsonReuters Starmine

Norwegian group Statoil's results on Friday reinforced the trend as it flagged a major fourth-quarter maintenance outage. Investors may be belatedly adjusting their expectations towards a forecasting-beating quarter for the top companies, in the upstream at least, after two smaller U.S. players, Occidental and Conoco, turned in better than expected quarterly figures on Thursday. And many of the output challenges of the quarter were transient ones - down to outages in the U.S. Gulf, North Sea and elsewhere. However, there is gathering concern among investors that the industry is running ever faster to stand ever more still. ``The majors are spending quite heavily to extend the duration of their portfolio, both with long lived development projects in LNG and oil sands and through more aggressive global deepwater exploration programs. ''They have yet to convince the market that this capex will reignite growth, and who says we should be convinced?`` asks Tudor Pickering Holt & Co analysts Robert Kessler and Brandon Mei in their preview note. On Friday oil was down to around $108 a barrel and heading for its second weekly drop, pressured by expectations U.S. economic growth would be unable to bolster the demand outlook and by Europe's debt crisis. Among individual top companies, analysts will be looking for an update from Exxon Mobil on its plans for Canada, where it has just announced a new acquisition, while Royal Dutch/Shell will be quizzed on why its long-promised new project volumes have still not materialised in the third quarter. Chevron was hit hard by the upstream outages and will have missed out on much of the improved refining margins. The closure of its Richmond refinery after a fire there was the main cause of the supply squeeze. BP's conference calls will be dominated by its twin travails: The uncertain future for its investments in Russia and looming U.S. oil spill litigation. Total will be a major beneficiary of the refining margin upturn, which spread to Europe as well, but the focus of attention will be on a wave of project final investment decisions (FIDs) coming up in the months ahead.