Oil majors BP (LON: BP) and Royal Dutch Shell (LON:RDSA) were together clear on one thing yesterday–that nothing will get much better in the foreseeable future. Both UK-listed businesses laid out their plans to cut spending to curb rising debt as they stated results, warning investors not to expect a strong rebound in oil prices next year. 

Oil prices in the low $50s per barrel in 2017 have been anticipated by both businesses, making it clear that they are not expecting a return to the peaks of the past. But it isn’t clear to what extent either business is considering a long-term change in strategy for success. 

BP’s Chief Financial Officer Brian Gilvary announced a 48 percent drop in the group’s third-quarter earnings, affected by lower refining margins at the group’s downstream business as well as losses in upstream exploration and production. Its underlying replacement cost profit was $933 million, up 30 percent from the prior quarter but down from $1.8 billion last year.

The company’s net debt was up by more than a quarter at $32.4 billion compared with a year ago, giving it a gearing ratio of 25.9 percent.

“We see some firming in (oil) prices next year but nothing significantly north of what we see now,” said Mr Gilvary. He said BP’s capital investment would fall to about $16 billion this year, down from an earlier forecast of $17 billion to $19 billion, and would remain broadly stable at $15 billion to $17 billion in 2017. 

The Deepwater Horizon oil spill six years ago still haunts BP, highlighting the ramifications of environmental, social and governance (ESG) issues in the longer-term. The group paid out a further $2.3 billion during the third quarter. There have been estimates that sums for years to come could lead to as much as $62 billion in fines, compensation and clean-up costs. 

According to a recent report in the Financial Times, BP is looking at making its first major investment in renewables for five years by the end of this year by expanding its U.S. wind power business. 

“The U.S. production tax credit for wind power will be reduced at the end of the year, and BP is looking at making a commitment before then to benefit from the higher rate. The investment could mean expanding its U.S. wind farms or upgrading its turbines to higher capacity equipment,” said the FT report. 

The Anglo-Dutch company Royal Dutch Shell meanwhile, reporting third-quarter results said yesterday that profit adjusted for one-time items and inventory changes rose 17 per cent from a year earlier to $2.79 billion. Cash flow from operations rose to $8.5 billion, more than trebling the second-quarter figure.

It argued that its $43 billion takeover of BG Group, completed in February, was beginning to reap results. “BG is already contributing positively to the bottom line,” said Simon Henry, Shell’s Chief Financial Officer.

While investors continue to query the wisdom of the BG deal - the biggest oil and gas deal for a decade – Shell CEO Ben van Beurden said integration was “essentially done” well ahead of schedule. 

The deal is said to be increasing the combined group’s production by 25 percent while cutting $9 billion of operating costs from the companies’ joint expenditure in 2014. But paying for it is also leaving its mark. 

Shell reported: “Gearing at the end of the third quarter 2016 was 29.2 percent versus 12.7 percent at the end of the third quarter 2015. This increase mainly reflects the impact of the acquisition of BG.” The company’s net debt from a year ago has tripled to almost $78 billion at the end September.

Both oil majors have been borrowing money to maintain payment of dividends – while, along with investors, they keep watching the oil price closely.

Dina Medland is an independent writer, editor and commentator with a strong focus on issues around corporate governance, ethics, the workings of the boardroom and sustainable business. She is on the team of contributors to @ForbesEurope and is an ex-Financial Times staff member who has been a regular contributor in recent years. Further details about her background and a portfolio of work – including her commercially sponsored blog ‘Board Talk’ are available on her website