Industrial and petrochemical companies have begun releasing their fourth quarter earnings reports, and the outlook is dim for many.
Houston-based Anadarko Petroleum Corp. posted a $1.25 billion loss in the fourth quarter, and FuelFix.com reports the company is expected to cut is budget in half in 2016. The $1.25 billion loss is staggering when compared to the $395 million loss it recorded the fourth quarter of 2014. Anadarko CEO Al Walker says the oil explorer’s decision last year not to expand its drilling program while energy prices languished paid off because oil and gas markets haven’t yet recovered.
“We did not expect oil prices to recover in 2015 and believed it could take well into 2016 before markets would stabilize on a sustained basis,” Walker says in a written statement. “Value enhancement drove our capital-allocation philosophy.”
British oil and gas giant BP, meanwhile, reported a $2.2 billion loss in the fourth quarter and is also planning spending cuts and layoffs. BP is planning cut 3,000 downstream jobs by the end of 2017 to cope with the downturn, in addition to the 4,000 oil-production employees and contractors the company is cutting this year. Both BP’s quarterly and annual loss figures included big non-operating charges. The company lost $5.2 billion over all of 2015.
Meanwhile, competitor ExxonMobil’s fourth quarter profits fell 57% and the company reported $16.2 billion in net income for 2015—half of the income reported for 2014—but the oil giant that has historically spent conservatively did not lose money in 2015.
Quarterly profits dropped to $2.78 billion, or 67 cents a share, in the October-December period, down from $6.57 billion, or $1.56 a share, in the same period the year before.
“While our financial results reflect the challenging environment, we remain focused on the business fundamental, including project execution and effective cost management,” ExxonMobil Chairman and CEO Rex Tillerson says in a written statement.
In the chemical industry, Dow Chemical Co. reported better-than-expected fourth quarter earnings after its plastics business gained from the drop in oil prices, Bloomberg reports. Profit from Dow’s plastics business, its largest unit, was a fourth-quarter record as it paid less for the oil it used as a raw material. Chairman and Chief Executive Officer Andrew Liveris says in the statement, that lower energy prices are a “net benefit” and will help Dow overcome “negative investment sentiment in other sectors.”
The company also announced that Liveris will leave the company after the completion of its merger with DuPont Co. Both companies have plants and facilities in Louisiana, including a Dow facility in Plaquemine.
