The 4Q15 earnings reports of the biggest integrated oil companies have two common elements:

–large profits from refining and marketing.  How so?  Companies aren’t passing on to their customers, either distributors or consumers, the full savings they’re getting from lower crude oil input costs.

Also, to the extent that the integrateds still have gas station networks (gasoline is the most important refined product in the US), they seem to be maintaining huge price differentials between regular and premium.  In my travels, I see spreads as wide as $.75 a gallon at the pump, even though the difference in refining cost between regular and premium is pennies.

So far, consumers seem happy just with the fact that gasoline prices are lower.  As a result, downstream prosperity will likely continue.  But there’s the possibility of backlash if/when they figure out how refining and marketing profits have ballooned.

–big asset writeoffs.  Their size has varied widely from company to company.

The assets in question are oil and natural gas exploration and development projects.  The key variable in whether a project remains economically viable is the assumptions firms make about the long-term price of oil.  The difference between a firm that has a ton of writeoffs vs. one that has few results from a mix of two variables.

-Some may have gone all in on mega-projects in remote or hostile operating environments that hinge on oil staying above, say, $100 a barrel to be viable.  At the moment, this looks very foolish and is doubtless triggering big, if not total, writedowns.

-On the other hand, Company A may maintain that in the long term, the oil price will settle in at, say, $80 a barrel.  Company B may think the right figure is $60 (which would be my guess).  All other things being equal, Company B will make larger writedowns than Company A.

Until we find out what individual company assumptions are, we won’t know how to evaluate the writedowns taking place.  I think the winners will be companies that didn’t bet the farm on $100 a barrel oil and those making the more aggressive writedowns of their other projects.