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Tuesday, October 24, 2006

BP News No Good For Exxon (BP)(XOM)(CVX)

BP's results for Q3 had two pieces of bad news. One was evident long ago, at least to anyone who can read a newspaper. Oil prices are dropping. Crude hit $80 this summer and now stands below $60. Results down the road are going to be tougher for BP and its large brethren like Exxon and Chevron.

The news that is not quite as obvious is that the large oil and gas operators "face increasingly unfavorable terms from host countries." In other word, dislodging the black gold from the hands of the locals is becoming more difficult and more expensive.

Falling oil prices may not be the only thing that companies like Exxon have to worry about.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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