Diversification, Higher Efficiency Keys to Companies' Survival
The geopolitical tensions and the hydrocarbon prices plunge are pushing companies to pursue diversification and higher efficiency. This trend comes in handy for international companies with a strongly diversified portfolio and for service providers with strong engineering expertise.
These are the evidences of the last full-year results published in the last hours by oil and gas companies.
GAS NATURAL FENOSA PULLED BY INTERNATIONAL BUSINESS
‘Gas Natural Fenosa posted a net profit of 1.46 billion euros, a 1.2% year-on-year increase, through international business and despite the impact of regulations in Spain’ reads a note released by the Barcelona-headquartered company.
Gas Natural Fenosa reported that its international business saw its EBITDA boosted by 3.7%.
‘Consolidated EBITDA for the period was 4.85 billion euros, a 0.1% increase, thanks to the good performance of its international business, where EBITDA increased by 3.7% and now represents 44.7% of the total.’
SAIPEM DECREASES NET DEBT FOR FIRST TIME SINCE 2011
The international businesses were central also to Saipem’s performance. The ENI’s subsidiary registered a 8.7% increase in revenues to €12,873 million. New contracts passed from 10,062 in 2013 to 17,971 million in 2014.
‘Saipem’s strong and diverse backlog has improved our resilience and we still see significant new opportunities to pursue in line with our commercial strategy. Given this backdrop, we believe 2015 will be another challenging year, but we are confident Saipem is well positioned to continue on its path of recovery’ the company wrote on Tuesday.
It also presented its guidance, with 2015 revenues expected to be almost constant, while EBIT should register an increase in the 10-33% range.
“The business will continue to face industry headwinds as we move through 2015. The tough market environment may affect the timing of resolution of ongoing negotiations on legacy contracts, the scope of existing projects and the timing of future contract awards” Umberto Vergine, Saipem CEO, commented.
BP ENERGY OUTLOOK 2035: LNG, ASIA
Consistently with Saipem’s position, the BP Energy Outlook 2035 sees changes ahead.
“After three years of high and deceptively steady oil prices, the fall of recent months is a stark reminder that the norm in energy markets is one of continuous change,” said Spencer Dale, BP’s group chief economist, presenting the report launched on Tuesday.
According to the report, global demand for energy should grow by 37% from 2013 to 2035. Gas demand should rise fast on Asian increasing needs.
‘Half the increased demand will be met by rising conventional gas production, primarily in Russia and the Middle East, and about a half from shale gas. By 2035, North America, which currently accounts for almost all global shale gas supply, will still produce around three quarters of the total’ reads the note, adding the LNG business will grow.
The analysis also suggests that international portfolios will be key to companies’ survival.
‘Increased oil and gas supplies in the US and lower demand in the US and Europe due to improving energy efficiency and lower growth will combine with continuing strong economic growth in Asia to shift the energy flows increasingly from west to east.’
WOOD GROUP REGISTERS LOWER CONTRIBUTION FROM UPSTREAM
Coherently, Western companies are expected to soon go on the market and rebalance their portfolios. Another evidence of the changes came from London, where Wood Group presented its results.
While announcing a convincing performance both in revenue (+7.8% on 2013) and EBITDA terms (+3.1% on 2013), the company also remarked a focus on cost reductions, and a lower contribution from the Upstream business for its Wood Group Engineering division.
On the other hand, Wood Group PSN division, which is the largest provider of brownfield services, reported a EBITA growth of 30.4%.
“We will remain a reimbursable, asset light business with a balance of opex and capex activities, a broad range of longer term contracts and significant customer and geographic diversification” Ian Marchant, Wood Group’s Chairman, commented in a communiqué released on Tuesday.