Oil firms face more cuts in low price era

The industry is expected to reveal another set of grim earnings for the first quarter when benchmark Brent prices LCOc1 averaged $55 a barrel, almost half the level of a year ago.

Exxon Mobil, Royal Dutch Shell, BP and France’s Total have already responded by cutting 2015 capital spending by 10 to 15 per cent, delaying and scrapping projects and cutting operating costs.

And despite a sense among some industry executives that oil prices may have hit their 2015 lows following a decline in US shale production, more cuts may be needed.

Exxon, the world’s biggest listed oil company, has reduced 2015 capital spending by 12 per cent to $34bn (£22.47bn).

“We’ll see throughout the year whether we stay there (capex) or not, we’re seeing a lot of cost efficiencies,” chief executive Rex Tillerson said.

Analysts at HSBC singled out BP, Chevron, Statoil and Total for having “management aggressively looking to exploit this period to improve long-term returns”.

“Some of the companies now view the current environment not as a threat, but as the best opportunity for a re-set of project economics in well over 10 years,” HSBC said.