Although it contains a record-low number of companies, this year’s OGJ200, covering financial and operational results for 2004, reflects record-high earnings.
Click here to view the OGJ 200 in PDF.
For companies on the current list of publicly traded, US-based oil and gas producers, earnings in 2004 were up 46% from a year earlier. In nominal dollars, the revenue total was the highest since Oil & Gas Journal began compiling the assets-ranked group of companies, the first of which appeared as the OGJ400 in 1983.
The current OGJ200 posted a total of $757 billion in revenue last year, breaking past a high of $666 billion by the OGJ400 of 1983. This year’s group consists of only 143 companies. Adjusted to 2004 dollars, the total for the 1983 OGJ400 was $1.3 trillion.
Industry consolidation has steadily shrunk the OGJ list. The OGJ400 became the OGJ300 in 1991 and the OGJ200 in 1994. The OGJ200 has not included 200 companies for several years.
Changes
Last year’s OGJ200 listed 146 firms (OGJ, Sept. 13, 2004, p. 28). Some of the oil and gas producers that no longer appear in the compilation were involved in consolidation, while others either are no longer publicly traded or have liquidated their US producing properties (see table, this page).
Eight companies in the OGJ200 are new to the list this year, and one firm, Empiric Energy Inc., had not filed its 2004 results with the US Securities and Exchange Commission when the list was compiled. Empiric Energy is included in the count of 143 companies, but its financial results, production, and reserves do not appear in the rankings.
Twenty-seven of the OGJ200 firms recorded 2004 net losses. This compares with 34 companies in the previous edition of this report. Only one of the 2004 losses exceeded $100 million.
The number of companies with earnings exceeding $100 million last year climbed by 12 to 39.
Market forces
High oil, gas, and petroleum product prices were the forces behind the much-improved financial results of the group.
The spot price of natural gas in the US last year averaged $5.49/Mcf, up from $4.88/Mcf a year earlier and $2.95/Mcf in 2002. Meanwhile, the wellhead price of crude in the US last year averaged $36.77/bbl, up from $27.56/bbl a year earlier and $22.51/bbl in 2002.
Strong demand for and diminished inventories of products pressured gasoline and distillate prices. Distillate last year averaged $1.545/gal vs. $1.355/gal in 2003 and $1.129/gal in 2002. The average pump price of regular unleaded gasoline including taxes in the US jumped to $1.923/gal in 2004 from $1.638/gal in 2003.
With growth spurts in North America, China, and other Asian countries, worldwide demand for petroleum products in 2004 averaged 82.1 million b/d, according to the International Energy Agency. This was up from 79.2 million b/d in 2003 and 77.7 million b/d in 2002.
Drilling activity has risen, and new production has come on stream, with 2004 supply growth mostly in the former Soviet Union, Latin America, and Africa.
The Baker Hughes Inc. rig count indicates that, worldwide, the number of active rotary rigs last year averaged 2,395 vs. 2,174 in 2003 and 1,829 in 2002. The rig count showed the largest increase last year in Latin America, up 19% from 2003.
The latest figures from the American Petroleum Institute indicate that the total number of US exploratory and development wells drilled last year was up 11% from 2003, which in turn was up 19% from the number of wells drilled during 2002. Of the 36,469 wells drilled last year in the US, 64% were gas wells, and 25% were oil wells.
Production, reserves
The current group of OGJ200 companies drilled 15,310 net wells last year. In 2003, the previous OGJ200 group drilled 12% fewer wells.
This year’s group also surpassed last year’s in capital and exploration expenditures by 17%, with 2004 outlays totaling $67 billion. Despite the activity and investment increases, production and reserves were little changed last year, with the exception of natural gas reserves.
The OGJ200 breaks each company’s liquids and natural gas production and reserves worldwide and in the US.
OGJ200 liquids production climbed 4% last year worldwide and declined 0.6% in the US. The group’s liquids reserves declined 3% worldwide and 2% in the US.
Gas production for the group weakened in the US and worldwide, hurt by the late-2004 disruption to Gulf of Mexico production by Hurricane Ivan.
Development of unconventional gas resources in the US, especially coalbed methane, helped boost gas reserves 10% in the US and 7% worldwide.
Financial performance
As a group, the OGJ200 companies posted much stronger results for 2004 than they did a year earlier. Most of the firms realized year-on-year revenue and profit gains in a tight oil market, as demand for gasoline and distillate strained inventories, worldwide crude production capacity was scarce, and fears of shortage pushed up prices.
Net income for the group totaled $67.7 billion, whereas a year earlier the OGJ200 group posted collective earnings of $46.5 billion. And the group’s 2004 revenues were up 25%.
Yearend 2004 assets were $695.3 billion collectively, up 15% from the previous OGJ200 group at the end of 2003. At the same time, stockholder equity gained 22%.
At 10%, the group’s return on total assets exceeded that of a year earlier by one percentage point. Meanwhile, return on stockholder equity was 22%, up from 20% a year earlier.
Fast growers
With stockholder equity increasing more than a factor of eight, Petrohawk Energy Corp. is the fastest-growing company in this year’s OGJ200. In addition, the firm’s ranking by assets shot to No. 57 from No. 95 a year ago.
Petrohawk Energy, formerly known at Beta Oil & Gas Inc., recorded 2004 earnings of $8.1 million. In 2003, the Houston company posted net income of $968,000. The dramatic rise follows key acquisitions for the company in addition to higher commodity prices.
The list of fast-growing companies ranks firms based on growth in stockholder equity. For a company to appear on this list, it must have posted positive net income in both 2004 and 2003, and it must have had an increase in net income last year. Excluded from this list are limited partnerships, newly public companies, and subsidiaries. The list also is limited to the top 20 fast growers.
The second-fastest grower during 2004 was No. 73-ranked Delta Petroleum Corp., which was followed by No. 104-ranked Hallador Petroleum Co.
The fourth company among the fast growers is Whiting Petroleum Corp., which also appeared on this list in the previous edition of the OGJ200. Whiting Petroleum, ranked No. 40 by assets, last year more than doubled its stockholder equity and more than tripled its earnings from 2003. The Denver firm’s long-term debt grew to $325 million from $188 million during the same time frame, though.
Other fastest growers that also made the list a year ago are No. 31 Range Resources Corp., No. 80 Edge Petroleum Corp., and No. 15 Chesapeake Energy Corp. Also making back-to-back appearances among the top 20 fast growers are Ultra Petroleum, XTO Energy Inc., and Trek Resources Inc., which topped the fastest-growers list a year ago.
The highest-ranking firm by assets to qualify for the fastest-growers table is Kerr-McGee Corp. at No. 12. Kerr-McGee is the seventh-fastest grower, having doubled its stockholder equity and recorded an 85% climb in annual earnings.
Top 20 firms
The list of the top 20 firms as ranked by total yearend 2004 assets is little changed from that of the previous edition of the OGJ200.
El Paso Corp. reenters the rankings this year at No. 4. It was absent last year because it filed its annual report after deadline for the OGJ200. Leaving the top 20 is Questar Corp., which slid to No. 22 from No. 20 a year ago.
The top 20 firms as ranked by assets hold 91% of the total assets of the OGJ200 group. And just the top three firms control 55% of the OGJ200 group’s assets and were responsible for 69% of the group’s 2004 earnings.
ExxonMobil Corp. remains the No. 1 company, with assets of $195 billion, and is followed by No. 2 Chevron Corp. with $93.2 billion in assets and No. 3 ConocoPhillips with $92.9 billion in yearend 2004 assets. A year ago, Conoco-Phillips was second in assets, and ChevronTexaco Corp. was third.
Unocal Corp., which Chevron acquired last month, ended 2004 with $13.1 billion in assets, up from yearend 2003 assets of $11.8 billion. The combination of Unocal and Chevron will increase Chevron’s proved reserves more than 15% (OGJ, Aug. 22, 2005, p. 32).
The 2004 performance of the top 20 firms was slightly muted in comparison with the results of the entire OGJ200 group. Total assets of the top 20 firms grew 13% from a year earlier, and earnings were up 43%.
The number of net wells drilled in 2004 by the top 20 firms was 9,113. A year earlier, the top 20 OGJ200 firms drilled 8,688 net wells.
Top 20 in earnings, spending
The OGJ200 also ranks the companies by net income and capital spending. The lists of the top earners and spenders during 2004 differ somewhat from the ranking by assets.
Ranked at No. 30 by assets, Vintage Petroleum Inc. is No. 18 in net income, posting 2004 earnings of $332.6 million. And No. 24 Noble Energy Inc. recorded the 19th highest earnings of the OGJ200 group at $328.7 million.
The remaining 18 firms among the earnings leaders were also included in the list of the top 20 companies ranked by assets. No. 20 Murphy Oil Co. recorded the 12th strongest earnings at $701 million. And Apache Corp., No. 11 by assets, was the No. 6 earner, with 2004 net income of $1.7 billion.
Apache also ranks No. 6 in capital and exploratory spending, with outlays totaling $2.5 billion last year. ExxonMobil was the spending leader, followed by ConocoPhillips and then Chevron. Devon Energy and Anadarko Petroleum round out the top five spenders for 2004.
Reserves leaders
ExxonMobil, ConocoPhillips, and Chevron led the US-based companies in liquids reserves in the US and worldwide in 2004, but the lists of the firms with the greatest reserves are more varied than any other top 20 lists in the OGJ200.
For example, Plains Exploration & Production Co., No. 26 by assets, is No. 10 by US liquids reserves. In worldwide liquids reserves, Plains Exploration & Production ranks No. 14.
No. 38 by assets, Encore Acquisition Co. is No. 15 in US liquids reserves and No. 20 in worldwide liquids reserves. And Berry Petroleum and Denbury Resources Inc., No. 64 and No. 43 by assets respectively, also rank among the top 20 firms in US liquids reserves.
In US gas reserves, ExxonMobil tops the list, followed by ConocoPhillips, Anadarko Petroleum, and Burlington Resources Inc. Chevron is No. 10 in gas reserves in the US but No. 2 worldwide.
Equitable Supply, Pittsburgh, is No. 15 in US gas reserves, No. 19 in worldwide gas reserves, and No. 32 in assets. Ranked No. 56 in terms of assets, Ultra Petroleum holds all of its 1.4 tcf of gas reserves in the US and is No. 18 on the list of leading US gas reserves holders.✦