By the OGJ Online Staff
WASHINGTON, DC, Jan. 14 -- The US Energy Information Administration has reported that profits of major US energy companies set a record as worldwide net income soared to $53.2 billion in 2000, up 133% from net income in 1999.
EIA also reported that worldwide capital expenditures of major US energy companies was a record $109.3 billion in 2000, up 90% from 1999. Mergers and acquisitions accounted for nearly all of the growth in capital expenditures, and most of the activity in 2000 involved transactions between the majors. Excluding the effects of mergers and acquisitions, capital expenditures increased by only 3% between 1999 and 2000.
The agency said more than 80% of the value of mergers and acquisitions in 2000 went for oil and gas production assets. The high level of capital expenditures for previously discovered oil and gas reserves is part of a recent trend among the majors.
"In recent years, the growth in the major energy companies' US reserve base has come increasingly from mergers and acquisitions. By 2000, over 60% of the companies' total additions to reserves were gained in this way, up from an average of slightly over 10% in the 1990 to 1996 period," EIA said.
Nevertheless, the major energy companies' performance with the drillbit in 2000 was among the best in the 27 years spanned by EIA's financial reporting system. Worldwide additions to reserves from exploration and development were 6.6 billion boe in 2000. EIA said only the 6.8 billion boe added in 1997 exceeded this level. It said the majors' worldwide reserve additions exceeded production by 22% in 2000, the second best performance since 1974.
EIA said the companies' profits increased due to higher prices. Net income from worldwide oil and gas production was $40.6 billion in 2000, up 159% from 1999.
The majors' refining and marketing operations also posted strong gains in income in 2000, rising 57% in the US and 56% overseas. Earnings from activities such as electricity or natural gas trading and risk management nearly quadrupled to $2.7 billion.
