FT : Oil price collapse hammers big US energy groups

Shares in some of the world’s biggest energy groups tumbled on Friday as the collapse in oil prices battered the profits of ExxonMobil and Chevron, capping a week in which European rivals announced thousands of job losses and slashed spending by billions of dollars.
As Exxon, the US giant seen as best insulated from the crude price crash, reported its worst quarterly profits since 2009, its main US competitor Chevron suffered a huge $2.2bn loss in exploration and production in the three months to June 30.

For the first time, the biggest and strongest industry operators are feeling the full effect of a plunge in Brent crude since last summer that has led to an estimated 70,000 job losses worldwide and caused some $200bn of spending on major new oil and gas projects to be shelved.
The slide in the oil price, which began around this time last year, accelerated in November when Opec, the producers’ cartel, decided not to cut output in the face of a US supply glut.
After a brief recovery this spring, the oil price decline resumed in July, with Brent crude, the international oil benchmark, posting its biggest monthly fall since December. It now stands at $52.08 a barrel, down from $115 in June last year.
Analysts say the renewed decline was triggered by the surprising resilience of US shale output in the face of lower prices, as well as the nuclear deal with Iran which has raised the prospect of more barrels hitting an oversupplied market.
The US oil benchmark West Texas Intermediate fell by a fifth over July to approach $47 a barrel, its worst monthly decline since Lehman Brothers collapsed.
Saudi Arabia, which effectively leads Opec, is widely believed to be attempting to squeeze out higher-cost production in a battle for market share. Iain Conn, chief executive of Centrica, Britain’s biggest domestic energy supplier, told the Financial Times that he believed prices were likely to stay within a $45 to $70 range.
Rex Tillerson, Exxon’s chief executive, blamed the sharp fall in crude for a 52 per cent year-on-year slide in its second-quarter earnings to $4.2bn and a net loss in its US upstream business, with a robust refining result only partially offsetting the effects of oil’s collapse on revenues.

“Our quarterly results reflect the disparate impacts of the current commodity price environment, but also demonstrate the strength of our sound operations,” Mr Tillerson said.
Chevron’s profits plummeted 90 per cent, hitting their lowest level in more than a decade, as the oil major also suffered the effects of weaker crude. It took impairments of nearly $2bn and other charges of about $670m relating to projects it had suspended.
Shares in the companies fell on Friday, with Exxon and Chevron closing down 4.5 per cent and 5.1 per cent, respectively. ConocoPhillips sank 3.3 per cent.
Royal Dutch Shell and Centrica this week announced that they were shedding more than 12,000 jobs between them. Shell cut capital spending 20 per cent, with its chief Ben van Beurden warning of a “prolonged downturn” ahead.
ExxonMobil earnings fall 52%

Plunge comes despite increased production and improved results in its downstream operations.
Continue reading
Oil companies and traders are now bracing themselves for several years of low prices. WTI for delivery in five years’ time has slipped to less than $60 a barrel, below the level that long-dated contracts dropped to in early 2009, at the height of the global financial crisis.
The rout in oil extended across commodity markets in July, with a key natural resources index posting its largest monthly fall in seven years.
Copper ended the month down 9 per cent, its second biggest monthly drop since 2012. Aluminium hit a new year six-year low of $1,624.5 a tonne on Friday, and was down 5 per cent for the month. Iron ore, the key ingredient in steelmaking, lost 10 per cent.

>>> There's a secret Uber VIP program — here's how you become a part of it

There's a secret Uber VIP program — here's how you become a part of it

There's a little-known perk that regular Uber customers can unlock.

Once you take 100 rides, you become an "Uber VIP."

What are the perks of being a VIP customer?

When you open your app, you see a VIP option along with UberX, UberBlack, and the other Uber features available in your city. When you select it, you'll only be given drivers with 4.8-star ratings and "high quality cars."

Uber VIP isn't an option that's available everywhere — it's only available in certain geographies like New York City, Washington DC, and Denver. It's market-specific nature may be why the company doesn't advertise it like its other features.

A VIP trip costs the same as a normal UberBlack ride. Unfortunately, Uber says, there are fewer VIP cars on the road — presumably because the quality is higher, and you're getting only the top-tier drivers — so you may be stuck waiting a bit longer for your car.

Aside from better service, there doesn't seem to be much upside to Uber VIP. It's a loyalty program for its customers that might remind you of Uber's earliest days as a company, when the service was marketed as a way for people to feel like "ballers" when they needed a lift.

>>> Snoop Dogg was stopped by Italian customs for carrying 40 times the legal li

Snoop Dogg was stopped by Italian customs for carrying 40 times the legal limit in cash

MILAN (AP) — Snoop Dogg has had another run-in with European authorities.

Italian financial police said they stopped the rapper at the Lamezia Terme airport in Calabria on Saturday with $422,000 in cash, well above the limit that can legally be transported across EU borders undeclared.

The incident comes less than a week after Snoop Dogg was briefly stopped in Sweden on suspicion of drug use after a concert near Stockholm.

Financial police confirmed a report by the Italian news agency ANSA that half of the cash was impounded under Italian anti-money laundering codes. In such cases, the balance is returned minus any fine set by magistrates.

Travelers within the European Union are required to declare 10,000 euros ($11,000) or more in cash.

Snoop Dogg played in Calabria Friday night, and is scheduled to perform Sunday at the Kendal Calling Festival in England.

Last weekend in Sweden, the rapper was questioned and tested for suspected drug use north of the capital. Authorities said test results would not be available for some time.

(Barron's) - Emerging Market - Greek Relief Is Already Over

Greek Relief Is Already Over
The country already faces a big debt payment in August, and more political fights. Exit from the euro is still a possibility. Plus, more Brazilian trouble.

Emerging Markets

Just when Greece was falling out of the headlines and seemed ready to entertain on its beautiful beaches, risk seems to be rising again.

It’s not clear that Greece’s current austerity plan will provide the groundwork for negotiations on a third bailout of Greek sovereign debt. The next big date is Aug. 20, when Greece is supposed to pay the European Central Bank 3.2 billion euros ($3.5 billion). At the same time European parliaments must tackle loan parameters as the ECB plans to assess Greek banks.

But red flags already are starting to appear: The International Monetary Fund may not open its wallet until European governments offer some form of Greek debt relief. And domestic politics are getting ugly fast as Prime Minister Alexis Tsipras butts heads with fellow Syriza party members. Yet this is precisely when Greece needs to build consumer and investor confidence to boost its economy. The Athens stock market reopens Monday, and the summer isn’t over for the important tourism industry, which accounted for about 20% of Greek jobs last year.

Investors are vacationing elsewhere: The Global X FTSE Greece 20 exchange-traded fund (ticker: GREK) fell roughly 4% in July, and remains down roughly 28% this year. With capital controls and other messes, National Bank of Greece (NBG) shares traded in the U.S. fell 15% in July and are down 50% this year. While the Greek ETF outpaced its emerging markets counterpart in July, it still trails for the year. The iShares MSCI Emerging Markets ETF (EEM), was down roughly 6% in July and year to date.

In the cynic camp is Citi Research, which now sees Grexit as a “base case” global risk along with a slowing China and a Federal Reserve rate hike in the second half of the year. Grexit would damage the credibility of the “euro project” and could force changes in valuation to compensate for higher risks.

But there are reasons to be optimistic. In the worst case, an imminent Grexit could postpone the Fed’s rate hike, and markets would like that. And Grexit is still viewed by many as a low risk. For now, the ECB has stepped in with more emergency liquidity for Greek banks and there are multiple ways for creditors to achieve debt relief, says BlackRock’s Gerardo Rodriguez, who co-manages the BlackRock Emerging Market Allocation fund (BEEAX).

Bottom line: Even if Greece accounts for less than 1% of the market capitalization of the MSCI Emerging Market Index, it matters.

Rodriguez owns a tiny piece of the Greek market in his fund, which employs quantitative tools to allocate to countries and sectors in emerging market stocks and bonds. But he’s more interested in bottom fishing in fragile neighbor, Turkey, and in Brazil. The iShares country funds in Turkey and Brazil fell about 5% and 13%, respectively, in July.

LAST WEEK STANDARD & POOR’S lowered its outlook on Brazil to negative. The move followed the government’s dramatic cut in its target for the primary budget surplus, a key measure of its ability to pay debts. Then Brazil’s central bank hiked its key policy rate by half a percentage point to 14.25% to tamp down inflation. Rates may stay high through 2016. To add insult: An Associated Press investigation showed Brazil’s water pollution is so bad it poses a threat to next year’s Olympic swimmers.

WSJ : Fed’s Bullard: ‘In Good Shape’ to Raise Rates in September

Fed’s Bullard: ‘In Good Shape’ to Raise Rates in September
St. Louis Fed president says GDP data cleared away worries over outlook

NEW YORK--Federal Reserve Bank of St. Louis President James Bullard said Friday economic data seen since central bankers gathered this week are bolstering the case for raising short-term rates when officials meet in September.

“We are in good shape” for increasing the Fed’s currently near-zero short-term rate target at the Sept. 16-17 central bank gathering, Mr. Bullard said in an interview with The Wall Street Journal. He said officials needed to see how growth data released Thursday shaped up before clearing the way to act.

Mr. Bullard shrugged off a report Friday showing surprising tepid wage gains, saying he isn’t that worried about that situation right now.

The second-quarter gross domestic product data, which showed a 2.3% annualized rise and a revision to activity over the first three months of the year into positive territory from the previously reported decline, affirms the economy is essentially ready to handle a modest boost in borrowing costs, he said.

The negative first quarter was a “pretty serious” issue for the Fed and a clear reason to hold off on rate rises, Mr. Bullard explained. “We had to get that behind us before we could get to the first rate rise. It is behind us and the outlook remains fairly good for the economy.”

Mr. Bullard was the first central bank official to speak publicly since the U.S. central bank’s rate-setting Federal Open Market Committee gathered to deliberate on monetary policy Tuesday and Wednesday.

At the meeting, Fed officials acknowledged having made further progress toward meeting their employment goals—at 5.3% the unemployment rate is close to the top end of the range officials consider the nation’s long-run joblessness trend. But central bankers also noted current inflation remains below their 2% target, amid expectations of a gradual rise back to desired price pressure levels.

The outcome of the Fed’s meeting continued to prepare the way for a rate rise most officials have already said is likely this year. Over the summer a number of officials have pointed to the Fed’s next meeting in September as a likely time to take the first step in pushing short-term rates back to more historically normal levels. Mr. Bullard stressed all Fed actions would be driven by incoming data, but even so, he indicated he is very open to action next time officials meet.

“We are good position to make the first normalization move,” Mr. Bullard said. “My sense is that a 25 basis-point move would essentially be a nonevent in financial markets,” he said, referring to the likely 0.25% increase the first move is expected to be.

Mr. Bullard doesn't currently vote on the FOMC, but he is an influential voice on monetary policy matters. In recent comments ahead of the interview, he had expressed support for raising rates this year and had nodded toward September. He said he would have voted for Wednesday’s holding action. “I would have supported the committee’s decision to wait and get more data and make a decision at the September meeting.”

Complicating the Fed outlook was a report Friday that showed evidence of a much-desired pickup in wage growth may be a mirage. During the second quarter, U.S. labor costs rose by their slowest pace in three decades, gaining a mere 0.2% against an expected rise of 0.6%.

“I though the GDP data was confirmation” of the healthy outlook that lies ahead of the U.S., Mr. Bullard said. “I’m not going to put as much weight on the wage data,” which on a longer-run trend basis is pretty much where he expected it would be given inflation and productivity factors, he said.

Mr. Bullard also said he remains confident inflation will start pushing back to the Fed’s 2% target as the impact of weak oil prices and the strong dollar fades. He is confident inflation will be back to desired levels in 2016.

WSJ : As Fed Rate Rise Nears, Traders Obsess Over Data

As Fed Rate Rise Nears, Traders Obsess Over Data
Dollar and government bonds swing on latest economic data suggesting Fed may hold on rates

In the race to predict the timing of the Federal Reserve’s anticipated interest-rate rise, traders are digging ever deeper into the slew of economic data points released each day.

On Friday, it was the turn of an often-overlooked report on wage growth to hit center stage. The Labor Department on Friday released data showing wage growth in the second quarter was the lowest since records began in 1982.

The report, which is often watched by the Fed as a sign of inflationary pressure in the economy, fueled doubts among some investors and traders that the Fed will increase the short-term benchmark interest rate in September as many economists predict. Some traders speculated that December, and possibly even early 2016, is increasingly becoming a more likely moment for the Fed to move.


Both bond yields and the dollar fell sharply on the report, illustrating investors’ intense preoccupation with the timing of the first rate increase in nearly a decade. Friday’s moves also foreshadow the heightened volatility that many traders anticipate as the September meeting nears.


Friday’s rally in Treasurys pushed the yield on the 10-year Treasury note to its biggest monthly decline since January. The yield on the two-year note, among the most sensitive to changes in the outlook for Fed policy, also tumbled. Bond yields fall when prices rise.

Many market watchers agree that when the Fed does raise rates from near-zero levels, it will move slowly, which should cap moves across stock, bond and currency markets. But big prices swings are still likely, analysts say, as investors track economic data to position themselves for a September, December or even 2016 rate increase.

“The markets are justifiably sensitive right now, especially when relevant economic data come in at extreme levels, and the market is already 50-50 on the Fed hiking interest rates in September,” said Shahab Jalinoos, currency research analyst at Credit Suisse.

The Fed has been monitoring the employment market closely. After its most recent two-day policy meeting that ended Wednesday, the central bank acknowledged that it is still on track to raise rates this year due to gains in the U.S. labor market.

The U.S. employment-cost index, a measure of workers’ wages and benefits also known as ECI, rose a seasonally adjusted 0.2% in the second quarter from the first quarter. That fell below Wall Street expectations for a 0.6% increase.

Steven Englander, head of developed-market currencies strategy at Citigroup said the ECI was a “huge shock.” He added: “People are now thinking this number will give the Fed pause.”

In the moments immediately after the report’s release, the dollar sank as much as 1.7% against the euro before paring most of the losses later in the day. In late New York trading on Friday, one euro bought $1.0984, compared with $1.0933 late Thursday.

Despite Friday’s selloff, the dollar rose 1.4% against the euro for the month of July.

While the U.S. economy picked up speed in the second quarter after a soft patch, Fed officials and investors are grappling with how to interpret sluggish global economic growth and subdued inflation. Commodities in recent days have resumed falling. And Chinese stocks in July posted their biggest monthly selloff in six years, heightening concerns over the slowdown of the world’s second-largest economy.

The prospect of higher rates has lured fund managers to the dollar, sparking a rally in the greenback last year that sputtered early in 2015 amid a soft patch in the U.S. economy. Since then, the dollar has gyrated on economic indicators and remarks by Fed officials.

The yield on the benchmark 10-year Treasury note on Friday fell to a three-week low of 2.207% from 2.268% Thursday. The yield on the two-year note slid to 0.676% from a one-month peak of 0.731% on Thursday.

The labor cost report “is a red light for the Fed,” said Jonathan Lewis, chief investment officer at Samson Capital Advisors LLC, which has $7.4 billion in assets under management. “This economic recovery is not strong enough to generate consistently positive economic data, let alone consistent upward pressure on wages.”

Mr. Lewis said he is skeptical the Fed can raise rates in September and added that Friday’s report is “a green light for investors to move out of cash and into bonds.”

The odds of a rate increase by the Fed at the September policy meeting were 38% Friday, compared with 48% Thursday and 40.5% a week ago, according to traders. The odds for a rate increase at the December meeting were 68.4 % Friday, compared with 80.5% Thursday and 71.7% a week ago.

The calculations are based on implied yields from fed-funds futures which are used by investors and traders to place bets on central-bank policy.

Federal Reserve Bank of St. Louis President James Bullard played down the ECI report, saying that the Fed is in “good shape” for increasing the rate target at the Sept. 16-17 meeting. Mr. Bullard doesn’t currently hold a vote on the Fed’s policy-making committee.

The Dow Jones Industrial Average shed 56.12 points, or 0.3%, to 17689.86, on Friday, dragged down by a decline in shares of big oil companies that reported weak earnings. The move lower was muted by Friday’s wage report and the prospect of ultralow rates for longer.

The nonfarm payrolls report due next Friday is expected to show 215,000 new jobs were added in July, in line with the recent trend of strong employment growth. Some traders played down the importance of the wage report, saying that the two job reports ahead of the September Fed meeting will weigh more heavily.

Daniel Mulholland, senior U.S. Treasury trader at Crédit Agricole in New York, said the door remains open for the Fed to raise rates in September amid solid jobs growth. Fed Chairwoman Janet Yellen “has previously told us that wage growth is not a pre-condition for rate hikes,” said Mr. Mulholland. “The Fed has told us they will be data dependent and there are two more payroll reports prior to” the Fed’s next policy meeting in September, he said.

“Data dependency is a nice option for the Fed, but it makes the market more prone to overshooting in either direction after each major data release,’’ said Zhiwei Ren, managing director and portfolio manager at Penn Mutual Asset Management Inc., which has $20 billion assets under management.

Rolls-Royce Activist ValueAct Said Lured by Air-Engine Services


BN 08/01 01:20 Rolls-Royce Activist ValueAct Said Lured by Air-Engine Services
Rolls-Royce Activist ValueAct Said Lured by Air-Engine Services
2015-08-01 01:42:54.656 GMT


By Benjamin Katz and Beth Jinks
(Bloomberg) -- ValueAct Capital Management, activist fund
that amassed 5.4% of Rolls-Royce, sees substantial profit growth
potential led by aircraft-engine servicing, people familiar with
initial discussions say.

* New CEO Warren East positioning to grow aftermarket revenue
through its long-term TotalCare jet engine maintenance
contracts

To contact the reporters on this story:
Benjamin Katz in London at +44-20-3525-9670 or
bkatz38@bloomberg.net;
Beth Jinks in San Francisco at +1-415-617-7141 or
bjinks1@bloomberg.net
To contact the editors responsible for this story:
Jeffrey McCracken at +1-212-617-8517 or
jmccracken3@bloomberg.net
Elizabeth Wollman, Peter J. Brennan

Essilor Studying Potential Acquisitions, CEO Tells Investor


Essilor Studying Potential Acquisitions, CEO Tells Investor
2015-08-01 09:52:33.509 GMT


By Tara Patel
(Bloomberg) -- Essilor International SA will complete a
number of small and medium-sized operations around the world
this year, CEO Hubert Sagnieres tells Investor in an interview.

* Co. has identified larger targets that could be of interest
in the future: Sagnieres
* Co. has financial means for development: CEO
* NOTE: Essilor, Hoya Said to Weigh Bids for Lens Maker
Rodenstock NSN NO84GY6JIJUW<GO>


For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>

To contact the reporter on this story:
Tara Patel in Paris at +33-1-5365-5058 or
tpatel2@bloomberg.net

(Barron's) GKN Is a Bargain in Fragile Euro Stock Market

GKN Is a Bargain in Fragile Euro Stock Market

Dow Jones Global Indexes|Global Stock Markets
European equities last week remained at the mercy of global events.


No sooner had they been lifted by hopes of a solution to Greece’s financial problems than fresh concerns over the strength of the Chinese economy knocked them down again.
The Stoxx Europe 600 index fell more than 2% on Monday after Chinese equities suffered their biggest one-day fall since early 2007. It steadied midweek, though European investors remained on tenterhooks, and the index ended the week up 0.5%.
Tim Gregory, head of global equities at London’s Psigma Investment Management, says the recent performance of individual stocks has little to do with fundamentals or management skills.
Apart from China, European stocks are currently hostage to other international factors: Greek concerns continue to rumble in the background and the prospect of near-term U.S. interest-rate hikes are also keeping investors on their toes. The Federal Reserve’s latest policy statement didn’t give a clear indication of when rates may rise.
“As a fund manager you don’t know whether to roll with the stocks that have been doing well, or shift into the ones that have taken a beating and currently look undervalued,” says Gregory, whose firm manages $4 billion in assets.


Oil companies, basic materials, and industrial businesses are currently among the worst-performing sectors. While their low valuations may tempt following recent declines, their relatively weak earnings performance suggests they may not perform well in the short term, but solid, well-run firms could do better over a longer period.
Meanwhile, sectors that have had a good run lately–such as telecom, health-care, and consumer stocks–may not have much upside left and will need to post strong earnings to justify higher ratings.
Part of the problem is that it’s too soon to be sure of how deep China’s woes may be. “[Is] what we saw recently in the Chinese stock market a bit of a sideshow to actual economic developments in China, or is it going to have a serious effect on spending?” Gregory asks.
Of biggest concern would be a material slowdown in the Chinese automotive sector where demand has helped drive a strong performance for automotive-related companies until recently. “The European car industry has been doing much better, but significant additional growth has come from China,” he notes.
Against that difficult backdrop, Gregory says there are still bargains available for a stock picker.


One such company is British aerospace- and auto-parts maker GKN (ticker: GKN.UK), which last week buoyed investors with its deal to buy Dutch company Fokker Technologies Group for 706 million euros ($779.98 million). Fokker is an aerospace specialist that manufactures aircraft systems and provides aircraft-support services.
The move boosts GKN’s airframe component activity and opens access to the aircraft wiring business. It also increases the company’s exposure to China’s expanding aerospace market. GKN expects the deal to enhance earnings as early as this year.
“It’s a very good deal,” Gregory says. “Buying a euro-based company in sterling is much cheaper now for a British company than it would have been even a few months ago,” he says. At just over 10 times earnings, the price was good and the purchase proves that GKN is financially strong and on the right strategic path. GKN on Tuesday posted first-half sales of £3.62 billion ($5.63 billion) while earnings-per-share on continuing operations were 9.8 pence. Its stock rose 7.3% on the day the deal was announced.
The shares closed on Friday at 319 pence, up 7% on the week but still well below the 386 pence they reached in February. Gregory reckons they could soon be trading above 360 pence again following the Fokker deal.
Despite slowing growth in the Chinese auto sector, Gregory says businesses involved in new product launches there are likely to fare best. “GKN management believes it is in a strong position in that respect. I talked to a Chinese fund manager this week who was of the opinion that the auto market was slow because consumers are waiting on a number of new products due in early 2016,” he says.
The company’s real strength is in aerospace where GKN has bulked up through mergers and acquisitions. Recent deals include its purchase of Volvo’s (VOLVB.Sweden) aircraft-engines business three years ago, and Airbus’s (AIR.France) manufacturing operations in Filton, England.
Both deals have fed into growing demand for aircraft parts as competing commercial aircraft makers Boeing (BA) and Airbus have boosted production.
Panmure Gordon analyst Sanjay Jha last week upgraded GKN to Buy with a 375 pence target price, about 18% above last week’s level. GKN’s Land Systems unit, which supplies engineered power management products and systems to the agricultural and other sectors, has fared particularly well.
“The acquisition of Fokker will also be seen favorably by the market as it fills a strategic hole in GKN’s aerospace strategy,” he says.
DIGBY LARNER, who is based in Paris, is a Wall Street Journal news editor for Europe, the Middle East, and Africa

E-mail: editors@barrons.com

WSJ : Exxon’s M&A Edge Over Chevron Amid Low Oil Prices

Exxon’s M&A Edge Over Chevron Amid Low Oil Prices
Pioneer Natural Resources and Hess could be targets

“We remain focused on what we control.”

Exxon Mobil ended a typically dry quarterly results presentation Friday by summing up not only its own culture but also the mantra of all the majors amid a slump in the key variable they can’t manage: oil prices.

Investors run the risk of cash distributions—Big Oil’s big selling point—being squeezed. The flip side, at least for Exxon, is the rising probability of big acquisitions.

With both Exxon’s and Chevron’s earnings misses capping off a week of results from the majors, trust is fraying. Exhibit A: trailing dividend yields. At over 3.5%, Exxon’s is the highest since the 1999 merger with Mobil.

This is striking when you consider Exxon’s rock solid dividend record and credit rating. And indeed, Exxon looks safer than peers. Chevron yields 4.8%, while Royal Dutch Shell and BP are both at about 6.5%.

The problem is cash flow. Over the six years to 2008, the big four had an aggregate $130.7 billion left over after deducting capital expenditure and dividends from operating cash flow, according to S&P Capital IQ. Net debt to capitalization fell to 2% from 14%.

In the following six years, aggregate operating cash flow was actually $60 billion higher. But a jump in spending left just $12 billion after investment and dividends. Leverage rose to 14%. In the 12 months through June, investment and dividends outpaced operating cash flow by $29 billion.

The most notable casualty so far: share buybacks. These have gone to zero for Chevron, Shell and BP; even Exxon has cut its projected third-quarter amount to just $500 million—demonstrating the pro-cyclicality of buybacks. Remarkably, refiner Valero Energy, which reported blowout results this week, could end up spending more on buybacks this quarter than Exxon.

Exxon is, at least, still raising its dividend. The same can’t be said for Chevron. The company is at pains to emphasize its commitment to dividends, but the second quarter’s payment per share was flat on the previous quarter and a year before.

Chevron’s big problem is that, being close to completing several megaprojects, spending hasn’t fallen quickly enough. Its 2017 targets for production and covering its dividend from cash flow, outlined in March, are predicated on $70 oil. Absent that, Chevron is leaving open the option of disposals to defend the dividend—but that, in turn, could put the production target at risk. Chevron’s disposals in the trailing four quarters of roughly $9 billion were highest in the group.

Exxon is in relatively better shape. It is starting to see production come through already from earlier investments, with output rising 3.6%, year over year, in the second quarter.

The timing still isn’t great: Falling energy prices wiped more than 10 times the amount off Exxon’s upstream earnings in the quarter than higher production added back. And growth prospects beyond 2017 are murkier, especially with sanctions constraining progress in Russia.

This is where Exxon can actually take advantage of low oil prices. While its stock is down 19% in the past year, the U.S. exploration and production sector has fallen 47%.

Exxon insists it takes a global approach when looking at acquisition opportunities. But the U.S., with its large resource base and lower political risk, is a natural hunting ground. Pressed by Paul Sankey of Wolfe Research on Friday’s call, Exxon conceded the Permian shale basin—where it has an existing position—has a “very diverse” ownership structure. And fragmented markets are made for consolidation by majors. Meanwhile, on Chevron’s call, upstream chief Jay Johnson noted a very competitive U.S. oil-field services market meant even E&P firms smaller than the majors could drive down costs—an attractive proposition in straitened times. Indeed, Exxon said its U.S. onshore business has achieved 30% cost reductions from their 2014 peak.

Potential U.S. targets, by Mr. Sankey’s reckoning, include Pioneer Natural Resources and Hess. Without a rebound in oil prices, it looks like Chevron may be selling even more assets. Exxon, though, looks more likely to go shopping.