Energy companies operating in Routt County face tough earnings reports
October 31, 2013
Steamboat Springs — During the fall, officials for Shell Oil told Routt and Moffat counties that they were going to look toward more productive operations and sell off its Niobrara Shale holdings.
Shell isn't alone among energy companies looking for surer bets amid falling prices and a more difficult production climate.
The Netherlands-based energy giant reported that third-quarter earnings fell more than 30 percent.
The New York Times reports that Shell is struggling to maintain production despite the capital expenditures by CEO Peter Voser, which are winding down.
Shell lost $347 million in exploration and production in the Americas during the past quarter.
The Wall Street Journal previously reported that the firm wrote down the value of its North American shale assets by more than $2 billion after tax during the second quarter.
Peabody Energy, which operates Twentymile Mine in Routt County, earlier in October reported declining earnings for the quarter compared with last year.
Decreased earnings for Peabody's U.S. mining efforts reflected lower pricing that was only partly mitigated by cost containment efforts, according to its third-quarter report.
However, Peabody's report struck a hopeful tone about the future.
"Coal demand has increased 35 million tons through September as a result of rising U.S. coal fleet utilization and gas-to-coal switching," the report stated.
Lower production and higher levels of coal use are drawing down inventories, according to the report, and Peabody projects that higher natural gas prices will help U.S. coal demand rebound.
Revenue per ton of coal in the U.S. still is expected to finish the year 5 to 10 percent below 2012 levels, and "supply rationalization" will continue as high cost mines in the U.S. and China close.