Home' Trinidad and Tobago Guardian : February 11th 2016 Contents BG8 ENERGY
BUSINESS GUARDIAN www.guardian.co.tt FEBRUARY 11 • 2016
Weatherford International Plc plans to lay off an
additional 6,000 workers, about 15 percent of its
workforce, over the first half of this year to cope with
the worst crude market downturn in 30 years.
The latest round of cuts brings to 20,000 the num-
ber of people who have been or will be let go by the
world s fourth-largest oilfield services supplier as oil
prices tumbled by more than two thirds.
"We have geared the company, and will increasingly
do so, for a prolonged period of very low activity,"
chief executive officer Bernard Duroc-Danner said
Wednesday in an earnings statement. "We are ready
for as protracted a downcycle as markets will dic-
The oil industry has slashed more than 250,000
jobs and trimmed more than US$100 billion in spend-
ing in the last year, with more cuts expected this
year. The service providers, who are now embarking
on their fourth round of layoffs, were the first to feel
the pain and have so far contributed the largest chunk
of job cuts.
Schlumberger Ltd, the world s largest oil services
provider, said last month it cut another 10,000 jobs
in the fourth quarter, while its closest rival Halliburton
Co. let go of nearly 4,000 additional workers.
Weatherford s fourth-quarter net loss widened to
US$1.2 billion, or US$1.54 a share, from US$475 mil-
lion, or 61 cents, a year earlier, the Baar, Switzer-
land-based company said. Excluding certain items,
the company posted a 13-cent loss, better than the
19-cent average of 33 analyst estimates compiled by
Over the past decade, Weatherford has missed
analyst estimates 20 times, settled a corruption probe
and spent more than US$150 million in professional
fees to fix errors in its accounting. And in September,
it abandoned plans to raise US$1 billion for an acqui-
sition just hours after announcing them.
Wednesday s results revealed an accomplishment
that investors had long been waiting for: the US$129
million in free cash flow from operations in 2015
made it the first year since 2010 that Weatherford
made more money than it spent.
The cash flow figure "feels ok", although a full cash
flow statement and balance sheet was still lacking,
Brad Handler, an analyst at Jefferies, wrote Wednesday
in a note to investors.
The company, which has 21 buy ratings from ana-
lysts, 10 holds and 2 sells, has fallen 25 per cent so
far this year. Bloomberg
The International Monetary
Fund said on Tuesday it
stands ready to help sub-
Saharan Africa s oil exporters
cope with plunging crude
prices and growing fiscal
pressures but has not received any new fund-
ing requests from the region.
Nigeria and Angola instead have turned
to the World Bank for assistance, even though
the IMF is typically viewed as the world s
go-to crisis lender.
Facing an estimated US$15 billion budget
deficit in 2016, Nigeria s finance ministry
has said it is looking to borrow as much as
US$5 billion. It has held discussions with the
World Bank, African Development Bank and
China s Export-Import Bank due to their
"concessionary rates of interest."
The World Bank is discussing potential
financing for Nigeria and Angola through a
program to support structural changes in an
emerging market country s economy and
The two sub-saharan African countries
are the latest in what may become a long
line of oil-exporting countries to seek financial
assistance to help stem growing deficits as
falling crude prices crush revenues. The IMF
and World Bank are already talking to Azer-
baijan about a US$4 billion financing pack-
On Tuesday, US crude fell back below
US$30 a barrel, half its price in June 2015
and down from about US$100 two years ago.
"The sharp decline in oil prices represents
a formidable shock on the oil exporting coun-
tries of sub-Saharan Africa, especially in
view of their strong reliance on oil receipts
for fiscal and external revenues," an IMF
spokeswoman said in a statement.
The IMF noted that despite rising deficits,
several of these countries still have adequate
foreign exchange reserves and low levels of
overall debt. This would suggest that a bal-
ance-of-payments crisis is not imminent.
When IMF managing director Christine
Lagarde visited Nigeria in January to meet
new President Muhammadu Buhari, she
insisted that she was not there to negotiate
a loan program. .
"With the exception of Chad, which already
had a program in place with the IMF prior
to the oil price shock, we have not received
any new request for financial assistance from
sub-Saharan African oil exporters," the IMF
spokeswoman added. "We indeed stand ready
to assist the authorities, should such a request
Although wealthier Gulf oil producers are
expected to fare better due to deeper reserves,
the IMF issued a warning last week to Bahrain
that it, too should cut deficits now reaching
15 per cent of economic output, which have
weakened investor sentiment.
Nigerian state petroleum company
lost US$1.3 billion in 2015
Nigeria s state oil company lost 267 billion
naira (US$1.3 billion) in 2015, even as it tried
to pump more oil to counter slashed world
prices, the Nigerian National Petroleum
Corp said Thursday.
The corporation s monthly report posted
at its website shows the biggest losses
recorded at its headquarters, by three refiner-
ies and a subsidiary that sources and dis-
tributes refined products. Nigeria is Africa s
biggest oil producer but imports most refined
products because its refineries are ineffi-
Petroleum production averaged 1.6 million
barrels a day last year with swings from a
million barrels a day in February to 2.5 million
barrels a day in October. Oil used to account
for 70 per cent of government income, back
when it cost US$130 a barrel in 2013 not
today s US$30.
It comes as the government is looking
for loans to help fund a budget deficit of
at least US$10 billion.
According to the report, profits came from
the Nigerian Gas Co, 34.9 billion naira
(US$175 million) and from oil and gas explo-
ration and production, 16.9 billion naira
(US$85 million) in 2015.
Losses from souring oil and gas loans at the largest US banks
are probably manageable, even if fuel prices remain low, accord-
ing to Moody s Investors Service.
At the six biggest banks, funded exposures to the industry
amount to 2.3 per cent of total loans, Moody s said Friday in
a report. Morgan Stanley is at the high end, with about 5.0
per cent of its funded loans to the sector, and JPMorgan Chase
& Co is at the low end, with 1.5 per cent, the analysts wrote.
Trading exposures are smaller and likely to have cash or secu-
rities as collateral, or they ve been hedged, according to the
"The recent earnings results of the US global investment
banks reveal that their direct energy-loan exposures are man-
ageable and do not present a significant concentration risk,"
Still, the firms may have to add to reserves for loan losses
if the price of oil stays low, Moody s said. While much of the
banks capital isn t threatened by energy losses, Citigroup Inc s
total funded and unfunded commitments account for about
40 percent of its common equity tier 1 capital, the most of
the group, the analysts said. Wells Fargo & Co which doesn t
disclose unfunded commitments by industry, wasn t included
in that calculation, Moody s said.
Bank of America Corp s reserves appear "somewhat low,"
the analysts wrote, adding that it may be due to a more con-
servative grading system or more collateral backing the loans,
they said. Bloomberg
Moody's: Oil, gas loans not likely to choke big US banks
IMF says ready to lend to African
oil producers; no requests yet
6,000 more jobs
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