Oil majors' US$100 hangover hurts profit as cost cuts fall short

London

THE world's biggest oil companies, set to report their worst quarterly earnings in more than a decade, are finding their cost-cutting efforts have not matched the decline in crude prices over the past two years.

While producers have been deferring projects, eliminating jobs and freezing salaries, the process will take three years to complete, according to Barclays plc's Lydia Rainforth. In the meantime, profits are being hammered.

"A lot of work still needs to be done on costs," Ms Rainforth, a London-based oil sector analyst, said. "It's a reflection of how much costs had piled up and how long a process this is."

For producers from Royal Dutch Shell plc to Chevron Corp, reeling under the threat of credit-rating downgrades, slashing costs is the surest way of protecting balance sheets. Still, reversing course is proving painful after US$100 oil persuaded companies to pump money into expensive areas in search of…