Downstream profits increase earnings: Surging downstream profits drove earnings well above expectations, going some way to offsetting the 60-70% slide in upstream earnings, with all the Majors reporting losses in North America.Net debt and gearing either fell, stabilised or increased modestly quarter-on-quarter, as the impact of aggressive action on costs, spend and buy-backs over the last six months began to kick in, supported by asset sales and strong downstream cash flow.

Paradoxically, the group delivered the best production performance seen for many quarters. This was due, in part, to the impact of low oil prices but underlying volumes were also up for all the Majors.There were also further signs of cost deflation starting to filter through.

Progress in driving down costs but more needed: Cost-cutting was the hottest topic in last week's results calls. But, despite efforts so far, more is required. We estimate the Majors need a weighted average Brent price of US$77/bbl for upstream portfolios to be cash flow neutral in 2015.

Project deferrals announced by Majors: Delays to international project sanctions remain an important factor in driving down investment as operators seek to renegotiate costs and review development plans.

Independents fully exposed to price downturn: Most independents are facing the harsh reality of the price drop and we believe further cuts across the sector are likely as the year unfolds.

On the bright side, operational momentum was strong during Q1. North America once again provided the production growth momentum, despite being a drag on earnings, though the rate of production growth is likely to slow during 2015 as low oil prices take effect.
Source: Wood Mackenzie