"Oil profits slump as higher spending fails to lift output."

Bloomberg: “Investors are shunning the world’s biggest oil companies as drilling costs surge, major projects are delayed and energy prices stagnate.”
“Crude and natural gas producers from Royal Dutch Shell Plc (RDSA) to ConocoPhillips began issuing profit warnings three weeks ago as they tallied the extent of fourth-quarter disappointments. Shareholders have punished the stocks, making the energy sector the worst performer in the MSCI World Indexthis year, in anticipation of bleak earnings disclosures later this week.
Shell, the second-largest oil company by market value, will report its lowest fourth-quarter profit since 2009 after The Hague-based explorer was socked with cost overruns on some of its most important new fields. BG Group Plc (BG/) tumbled the most in 25 years on Jan. 27 after slashing its 2014 production target because of turmoil in Egypt and project delays elsewhere.
“Investors have lost interest in the big energy companies,” said Fadel Gheit, an analyst with Oppenheimer & Co. in New York. “They offer little or no growth.”
The bad news may start tomorrow as Shell, Exxon Mobil Corp., ConocoPhillips and Occidental Petroleum Corp. announce fourth-quarter results. Chevron discloses profit the next day, followed by BP Plc (BP/)and BG next week.
….The problem for the oil majors is two-fold: costs are rising and oil prices aren’t, while the complexity of developing the most recent oil and gas discoveries is preventing drillers from reaching production targets. Brent crude prices, the benchmark for more than half the world’s oil, slipped 0.3 percent last year, the first time that prices failed to gain since the global financial crisis in 2008. Prices may slip below $90 a barrel by 2020, future contracts show.
The biggest producers haven’t kept up with gains in oil prices for the past few years. While Brent crude prices have more than doubled to $105 a barrel since the start of 2009, the top five oil and gas companies have gained just 13 percent since then, compared with an 81 percent increase in the Dow Jones Industrial Average.
….“Investors are getting angry and don’t want oil companies to invest,” Tiscareno said. “But if they don’t invest, they won’t be able to pay dividends in the future.”