* Seven of 10 majors to have reported Q3 results registered
losses
* Shell posts $7.4 bln loss after heavy write-offs
* Italian major Eni reports $1 bln loss
* Sector challenged by lower-for-longer oil price outlook
(New throughout, adds Conoco, Marathon Oil (N:MRO) results, comments)
By Ron Bousso, Karolin Schaps and Anna Driver
LONDON/HOUSTON, Oct 29 (Reuters) - The oil sector is
slipping into the red after years of fat profits as the steep
slump in oil prices shows little sign of ending, with this
quarter shaping up to be the worst since the downturn started.
The world's top oil companies have struggled to cope with
the halving of oil prices since June 2014. They have cut
spending repeatedly, made thousands of job cuts and scrapped
projects.
The lower-for-longer outlook for oil prices took its
heaviest toll yet in the third quarter as oil companies again
reported a dramatic drop in income. Some saw results swing into
the loss column, and the industry had billions of dollars in
impairment charges.
"This downcycle poses significant challenges," Jeff Sheets,
ConocoPhillips' COP.N chief financial officer, told investors
on a conference call after the company posted a loss.
With 10 of the top 20 European and North American oil and
gas producers having reported third-quarter results, seven have
posted losses.
These include Royal Dutch Shell RDSa.L , Italy's Eni
ENI.MI and in North America Occidental Petroleum Corp (N:OXY) OXY.N ,
Anadarko Petroleum Corp (N:APC) APC.N , Hess Corp (N:HES) HES.N , Suncor
SU.TO and ConocoPhillips (N:COP).
Shell posted a third-quarter loss of $7.4 billion on
Thursday, hit by a massive $8.2 billion charge after halting its
exploration in Alaska's Arctic sea and a costly oil sands
project in Canada. ID:nL8N12T1JT
DOWNWARD REVISION
About half of Shell's charges reflected a downward revision
of the long-term oil and gas price outlook, Chief Executive Ben
van Beurden said. Net profit excluding identified items
collapsed to $1.8 billion from $5.85 billion a year ago.
Eni posted a net loss of $1 billion and France's Total
TOTF.PA had a sharp drop in profit, though its results were
stronger than expected. ID:nL8N12T1JP ID:nP6N0QQ01Z
ConocoPhillips, the largest U.S. independent oil and gas
company, reported a quarterly loss of $1.1 billion and lowered
its 2015 spending target 7 percent. urn:newsml:reuters.com:*:nL3N12T4I5
Smaller companies also showed signs of pain. Marathon Oil
Corp MRO.N slashed its quarterly dividend 76 percent to
preserve cash as it tries to weather the slump. urn:newsml:reuters.com:*:nL3N12T5KU
"The sector is rapidly moving into the red," Jefferies oil
and gas equities analyst Jason Gammel said.
"It is slowly going to claw its way back into the black
through cost-reduction efforts, but that will take time. It will
depend on price movements, but it will take time to get all
these cost savings through the system."
Even after cost efficiencies and spending cuts, European oil
companies on average will require an oil price of around $78 a
barrel in 2016 to cover spending and dividend payments,
according to Jefferies estimates before the latest results.
Analysts polled by Reuters expect Brent crude LCOc1 to
average a much lower $58.60 a barrel in 2016. urn:newsml:reuters.com:*:nL5N11Z18Y
Shell, which Jefferies says has the lowest cashflow
breakeven point at around $66 a barrel, said it would axe 1,000
additional jobs after the 6,500 job cuts announced earlier this
year.
MORE DEBT
Companies are also tapping the debt market, benefiting from
a relatively low debt ratio that will allow them to cover
spending and dividend payments that, except for Eni, have
remained unchanged.
Britain's BP BP.L increased its debt ratio to 20 percent
from 15 percent a year ago after agreeing in July to pay $20
billion in fines relating to the 2010 Gulf of Mexico oil spill.
Europe's majors have reduced 2015 spending programmes about
15 percent to near $107 billion, and more cuts are seen next
year. urn:newsml:reuters.com:*:nL8N12T33H
On Tuesday Norway's Statoil STL.OL posted worse than
expected third-quarter core earnings and said it would slash
capital expenditure further. ID:nL8N12S0GO
Results have been bolstered somewhat by gains in refining
and trading segments, as lower prices lifted global fuel demand,
though this boost is expected to fade with the seasonal winter
drop in demand.
BP, like Total, posted a sharp fall in profits but beat
analyst expectations, citing efficiencies, higher oil production
and strong refining results. ID:nL8N12R0XQ
Shell and Eni shares were down 1.4 percent and 1.8 percent
respectively at 1422 GMT, with Total up by 0.4 percent. The
European oil and gas index .SXEP was largely flat.
In New York, shares of ConocoPhillips rose nearly 1 percent,
or 44 cents, to $53.78 in midday trading. Chevron Corp (N:CVX) CVX.N
and Exxon Mobil Corp (N:XOM) XOM.N will report on Friday.
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Shell's profits hit by big Arctic, Canadian write-offs
urn:newsml:reuters.com:*:nL8N12T1JT
Eni lifts production targets after falling to Q3 loss
urn:newsml:reuters.com:*:nL8N12T1JP
Total beats forecast, raises production target urn:newsml:reuters.com:*:nP6N0QQ01Z
FACTBOX: Oil majors' spending cuts urn:newsml:reuters.com:*:nL8N12T33H
Statoil posts worse than expected profit, cuts spending
urn:newsml:reuters.com:*:nL8N12S0GO
BREAKINGVIEWS-Shell throws kitchen sink at low oil
urn:newsml:reuters.com:*:nL8N12T2TH
Graphic: Oil majors' stock performance vs oil price http://link.reuters.com/fud33w
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