Quote:Royal Dutch Shell Plc (RDSA)’s surprise announcement yesterday that fourth-quarter earnings would fall to the lowest since 2009 showed the rising cost of developing new fields has cut into profit. While Brent oil prices have spent three straight years above $100 a barrel, getting crude out of the ground is only getting more expensive.
“Van Beurden has a tougher long term test ahead than just measuring what lies beneath but how to keep a thorough control on the costs of extracting what lies beneath,” said Neil Shah, an analyst at Edison Investment Research Ltd. “If Shell catches a cold the rest of the oil sector will always wonder if they will catch flu.”
Shell isn’t the only top-five oil company fighting to maintain profitability. Chevron Corp., the second-largest U.S. oil producer, and France’s Total SA have said fourth-quarter profit will drop. As well as higher costs, oil producers are grappling with weak profits from refining oil.
While Brent crude prices more than doubled to $105 a barrel since the start of 2009, the top five oil and gas companies have gained just 16 percent since then, compared with an 87 percent increase in the Dow Jones Industrial Average.
http://www.bloomberg.com...-even-at-100-crude.html
The stark divergence between major oil stocks and the overall frothy markets. Divergence also noted between commodos and the overall frothy global equities since 2011.
Commodos always give a better measure of the economy's engine. The car has raced quite a distance with the driver telling the passengers that the engine is not spluttering, but just humming in a different way...
$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!