WRAPUP 1-Oil companies struggle to increase output
LONDON/HOUSTON, Nov 1 (Reuters) - The world's top oil and gas companies are struggling to improve output and failing to capture the full value of a resilient price for crude oil while weak gas prices in the United States take their toll.
Third-quarter results from Exxon Mobil, Royal Dutch Shell and other top international players released over the past few days mostly beat expectations thanks to a shortage of the fuels and other crude-oil based products they make.
That widened the gap between fuel prices and crude oil, lifting margins in the downstream part of the business.
But underlying profits were lower because of maintenance issues and delays bringing on new production of oil and gas - the primary products that drive profitability for the long term.
With the ``easier'' oil and gas assets now tightly controlled by well-endowed countries in the Middle East and elsewhere, the private sector is spending more and more in deeper water and harsher environments like the Arctic, on ``tight'' oil and gas resources that are tricky to extract, and on costly Liquefied Natural Gas (LNG) projects.
``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 programmes,'' said Tudor Pickering Holt & Co analysts Robert Kessler and Brandon Mei in a note before the results season.
``They have yet to convince the market that this capex will reignite growth, and who says we should be convinced?''
World No. 1 Exxon's oil and gas output fell by a greater-than-expected 7.5 percent in the quarter.
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