Oilpatch earnings reflect low oil prices

Canada's oilpatch is buckling down to a "lower-for-longer scenario," in the words of one executive, after a fresh round of grim earnings.

The prediction that oil prices will stay low for a long time came from Penn West PetroleumCEO Dave Roberts, who is addressing an accounting scandal as well as the need to adjust expectations in the face of oil prices below $50.

• Who's afraid of $50 oil? (Answer: Canada's oil industry)

"While I think the current macro (environment) is generally unsustainable, we continue to view a recovery to a more normal, longer-term replacement-cost world in my view $85 WTI US as being skewed toward the end of the decade. In other words, a lower-for-longer scenario," Roberts said Thursday in a conference call with analysts.

Earlier this year, oil companies were predicting a bounce back in prices by the end of the year, but now that optimism is fading.

On Friday, West Texas Intermediate crude was trading at $47.75, after OPEC leader Saudi Arabia indicated it would stick to its production targets in the face of the worldwide glut of oil.

Western Canada Select, the Canadian contract, was down again at $32.04 US a barrel, reflecting the difficulty of getting oilsands crude to market.

OPEC secretary-generalAbdullah al-Badri said the Saudis were content to let higher demand eventually push up oil prices, adding that he didn't believe a cutback in production would make a difference in the face of the worldwide glut of oil.

For the second quarter,PennWestreported a loss of $28 million compared to a profit of $143 million in the year ago period. It also further trimmed capital spending for 2015 to $575 million, down from $625 million earmarked last December and $840 million estimate last year.

Other Canadian oil companies also reported grim earnings:

• Imperial Oil second-quarter profit plunged 90 per cent from last year to $120 million or 14 cents a share from $1.2 billion or $1.45 a share. Its second quarter capital spending was $819 million, down from $1.4 billion last year, but productin is an eight-year high of 344,000 barrels a day.
• EnbridgeInc. reported net earnings attributable to shareholders of $577-million in the second quarter of 2015, down from $756-million in the same period last year, helped by a strong U.S. dollar. It took a $440-million goodwill impairment on its natural gas business.
• Canadian Oil Sands, part owner of the Syncrude oilsands operation, lost $128-million or 26 cents a share in the second quarter, down from a profit of $176-million or 36 cents a year ago. Its capital spending was reduced to $422 million for 2015, down from $429 million

Oil giants Exxon Mobile Corp. and Chevron added to the bad news. Exxon reported a profit of $4.19 billion US, or $1 a share, about halft of last year's profit of $8.78 billion, or $2.05 a share. Revenue ws down 33 per centto $74.11 billion after it realized an average U.S. price for oil of $54.06.

Chevron posted net income of $571 million USor 30 cents per share, compared with $5.67 billion, or $2.98 per share, a year ago, itsworst quarterly profit in nearly 13 years..