By Arif Hudaverdi Yaman and Ovunc Kutlu
ANKARA
International oil companies' stock values have suffered since the first slump of oil prices in July, while crude oil prices hit the lowest point in the last four years last week.
Brent crude oil price, the leading global benchmark for oil trading, has reached its lowest point last Wednesday, when it fell to $81.78 per barrel.
With the falling oil prices, the share value of international oil companies are also in decline, with their revenues, profit margins, and future projects also at risk, according to experts.
"Oil companies' stock values tend to track oil prices," said Thomas Pugh, a commodities economist at Capital Economics, a London-based independent research company.
"Lower oil prices lead to lower oil revenues," he added.
The share values of major international oil companies, like Total, ENI, Statoil, Shell and Chevron, have faced dramatic losses in the New York Stock Exchange with the fall of oil prices.
The stocks of French oil giant Total S.A.' decreased from $72.85 to $64.50 in July and fell further to $58.03 last Thursday.
American energy company Chevron's stock prices lost 9.5 percent in value, from $130.94 dipping to $118.53 between July and early September.
During that period, British Petroleum faced a 21 percent fall in shares, from $52.90 decreasing to $41.88, while Royal Dutch Shell lost 16.3 percent of its stock value, from $82.90 falling to $69.44 last Thursday.
"Anytime you see oil prices fall drastically, you will see a reduction in the stock prices of international oil companies," said Dominic Haywood, a crude oil analyst for London-based energy market consultancy Energy Aspects.
Future investments and projects
According to experts, the international oil companies can deal with short-term decline in oil prices; however if the prices continue to fall for an extended period of time, their projects might be affected negatively.
"A temporary decline in stock prices is something that the international oil companies are prepared for," said Haywood.
However, a prolonged fall in oil prices may create a bigger impact for the companies, he stated, adding "Falling oil prices cause falling revenues, which means oil companies are going to have less cash available to fund projects."
Norwegian Statoil, who has taken one of the biggest hits with 29 percent fall in its share value between July and early November, and has suspended two of its drilling rigs on the Norwegian continental shelf last week.
Pugh stated that if oil prices continue falling, capital expenditure of oil companies would decrease and their future projects might take a hit.
www.aa.com.tr/en
