Conglin Xu
Senior Editor-Economics
Laura Bell
Statistics Editor
Net income for the OGJ150 group plummeted 17.48% in 2014 to $73.98 billion. This was the worst performance in dollar terms for annual profits for the OGJ group since 2010.
This year's financial results illustrate the substantial oil price decline that took place during second-half 2014 as well as significant impairments and charges incurred during the year. The results were partly mitigated by increased production and higher natural gas prices.
As capital spending and drilling efforts of the OGJ150 companies continued to increase last year, the group's oil and gas production and reserves, particularly in the US, showed robust growth.
To qualify for the OGJ150, oil and gas producers must be headquartered in the US, publicly traded, and hold oil or gas reserves in the US. Companies appear on the list ranked by total assets but are also ranked by revenues, stockholders' equity, capital expenditures, earnings, production, reserves, and US net wells drilled. In this year's report, the spin-off of California Resources Corp. from Occidental Petroleum Corp. impairs year-over-year comparability of some top 20 lists.
There are 143 companies that qualified for this edition of the OGJ150. Last year's group contained 139 firms. As always, data for this year's list reflect the prior year's operations.
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Prices, refining margins
For the full-year 2014, West Texas Intermediate and Brent prices averaged $93.26/bbl and $99.02/bbl, respectively, compared with $97.90/bbl and $108.64/bbl in 2013. During second-half 2014, the average WTI and Brent prices fell to $88.37/bbl and $92.35/bbl, respectively, from $100.76/bbl and $108.77/bbl in the same period in 2013.
The drop in crude oil prices was mainly due to weakening global demand combined with robust supply from rising US production, decreasing supply disruptions, and members of the Organization of Petroleum Exporting Countries maintaining production levels.
Front-month gas futures on the New York Mercantile Exchange averaged $4.26/MMbtu in 2014 compared with $3.73/MMbtu in 2013.
Full-year 2014 refining cash margins averaged $19.43/bbl for Midwest refiners, $15.04/bbl for the West Coast, $8.50/bbl for the Gulf Coast, and $3.99/bbl for the East Coast, according to Muse, Stancil & Co. During 2013, these averaged refining margins were $24.96/bbl, $15.85/bbl, $7.42/bbl, and $2.22/bbl, respectively. Refining margins in northwestern Europe and Southeast Asia in 2014 averaged $3.05/bbl and $2.17/bbl, respectively, compared with $3.15/bbl and $1.97/bbl a year ago.
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Changes to the group
Seven companies appear in the OGJ150 for the first time. The highest-ranking of these, California Resources, sits at No. 21 with yearend 2014 assets totaling $12.49 billion. The company, previously an Oxy subsidiary, began regular trading on the New York Stock Exchange as a stand-alone company in December 2014. The spin-off actually explains why Oxy fell in some of the top 20 categories and California Resources made some of the top 20 tables.
Other newcomers include Memorial Resources Development Corp., Sanchez Energy Corp., RSP Permian Inc., Eclipse Resources Corp., Bonanza Creek Energy Inc., and Glori Energy Inc.
Eleven companies that were previously included in the OGJ150 no long appear. Alamo Energy Corp., Gasco Energy Inc., Sun River Energy Inc., and Texas Vanguard Oil Co. terminated their registration to the US Securities & Exchange Commission. Baron Energy Inc., Glen Rose Petroleum Corp., John D. Oil & Gas Co., and Savoy Energy Corp. dropped off the list due to no filings in a long time. EPL Oil & Gas Inc. merged with Energy XXII, which is incorporated in Bermuda. GeoMet Inc. and Highmount Exploration & Production LLC sold off their US producing properties.
Freeport McMoRan Copper & Gold Inc. changed its name and now appears in the list as Freeport-McMoRan Inc.
Forest Oil Corp., which merged with Sabine Oil & Gas Corp., and Pyramid Oil Co., which merged with Yuma Energy Inc., are no longer listed separately.
The 2014 OGJ150 contains 10 limited partnerships. The largest of these is BreitBurn Energy Partners LP with assets of $7.6 billion. The smallest, Apache Offshore LP, had assets of $13.5 million.
There are five royalty trusts in the compilation and six subsidiaries of non-US energy companies or of companies operating mainly in other sectors.
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Financial performance
Assets for the OGJ150 group totaled $1.5 trillion at yearend 2014, an increase of 4.07% from yearend 2013, reflecting continued capital investment and development. Revenues for 2014 were $920.5 billion, up $6 billion from a year earlier.
Combined stockholder equity gained 1.61% to $718.29 billion. Thirteen firms posted negative stockholder equity at the end of last year, as their liabilities exceeded assets.
As previously mentioned, the group's collective net income was $73.98 billion, down 17.48%. The number of companies in the group that posted a net loss is 55 compared with 54 in last year's compilation. Sixteen of the firms recorded net loss in excess of $100 million, up from 12 in last year's OGJ150.
The highest-ranking company that reported a net loss for 2014 is Anadarko Petroleum Corp., which posted a $1.56 billion loss that included charges of $4 billion associated with the settlement of the Tronox Adversary Proceeding. This compares with earnings of $941 million in 2013.
With reduced revenues and higher costs and expenses, Apache reported a net loss of $5 billion for 2014 compared with earnings of $2.28 billion in 2013. Apache recorded aftertax, noncash charges of $5.2 billion for fourth-quarter 2014.
Oxy, California Resources, and Linn Energy also reported impairments in billions of dollars during 2014.
There are 48 firms in the group with net income of more than $100 million. In last year's group, there were 38 such companies.
The group's 2014 return on assets was 4.9%, down from 6.2% a year earlier. Return on stockholders' equity declined to 10.3% in 2014 from 12.7% in 2013.
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Group operations
Capital and exploration expenditures of the group increased 9.31% to $226.36 billion during 2014. Up 5.4% from 2013, the number of US net wells drilled by the group last year totaled 18,296.
The average number of active rigs in the US climbed 5.7% to 1,862 last year, according to Baker Hughes Inc. At the same time, the rig count in Canada increased 7% to 380 and the worldwide number of active rigs excluding US and Canada rose 3% to 1,337.
As the capital spending and drilling efforts of the OGJ150 companies continued to increase last year, their production and reserves totals moved upward. The OGJ150 group's worldwide liquids production increased 8.41% in 2014 to 3.32 billion bbl. The group's US liquids production totaled 1.97 billion bbl, up 16.73% from a year earlier. Total worldwide liquids reserves were up 5.06% in 2014 to 42.73 billion bbl. The group's combined US liquids reserves increased 9.85% to 25.53 billion bbl.
Group worldwide gas production moved up 0.54% to 17 tcf. US natural gas production for the group was up 3.95% to 12.36 tcf. Worldwide natural gas reserves for the OGJ150 group increased 4.11% to 231.4 tcf in 2014. Group natural gas reserves in the US grew 8.56% to 172.92 billion tcf.
OGJ150's worldwide liquids reserves to production ratio was 12.9 years in 2014 compared with 13.3 years in 2013. The OGJ150 liquids reserves-to-production ratio in the US was 12.9 years in 2014 compared with 13.7 years in 2013.
The group's US natural gas reserves to production ratio increased to 14 years in 2014 from 13.4 years in 2013. The worldwide ratio was 13.5 years compared to 13.1 years a year earlier.
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Top 20 companies by assets
The top 20 companies as ranked by yearend 2014 assets posted collective assets of $1,255 billion, up 1.87% from a year earlier. The assets of the 20 firms, led by ExxonMobil, Chevron, and ConocoPhillips, represent 83.5% of the assets of all OGJ150 companies.
EOG Resources Inc.'s assets of $34.7 billion at yearend 2014 represent a 13.7% increase over yearend 2013. Noble Energy also registered a 14.8% increase in assets to $22.55 billion.
Southwestern Energy Co., ranked at No. 24 previously, climbed to No. 18, with asset portfolio expanded through acquisitions in West Virginia and southwest Pennsylvania. The company's total proved reserves were up 54% compared with 2013 levels.
Whiting Petroleum Corp. moved to No. 19 by assets from No. 22 a year ago. With the acquisition of Kodiak Oil & Gas, Whiting became the largest Bakken and Three Forks-area producer in the Williston basin.
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Earnings leaders
The top three companies as ranked by assets-ExxonMobil, Chevron, and ConocoPhillips-also reported the highest 2014 earnings in the OGJ150 group.
With 2014 net income of $33.6 billion, ExxonMobil again leads the OGJ150 group. ExxonMobil's 2013 earnings were $33.45 billion.
Chevron and ConocoPhillips reported 2014 earnings of $19.3 billion and $6.9 billion, respectively, down 10.6% and 24.6% from a year ago, largely due to the sharp decline in crude oil prices.
Also slammed by low oil prices and with the absence of large gains on asset sales seen a year ago, Hess reported a 54% plunge in earnings to $2.3 billion last year.
Meanwhile, some midsized independents focused mainly on North American shale plays displayed stable earnings in 2014, thanks to significant increase in light oil production.
For the full year 2014, EOG's crude oil and condensate production increased 31% over last year, driven by 33% growth in the US. The company's net income in 2014 was $2.9 billion, up from $2.2 billion a year ago.
Six of the firms in the top 20 by net income list are not ranked in the top 20 by assets. These include Kinder Morgan Inc., Noble Energy, Newfield Exploration Co., QEP Resources Inc., SM Energy Co., and Range Resources Corp.
There are five companies qualified for the list of top 20 earners that did not qualify a year ago. These are Devon Energy Corp., Pioneer Natural Resources Co., Newfield, QEP, and Range Resources.
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Production, reserves leaders
ExxonMobil leads the OGJ150 companies in worldwide liquids production and reserves, worldwide gas production and reserves, as well as in US gas production and reserves.
Following ExxonMobil in worldwide liquids production are Chevron, ConocoPhillips, Oxy, and Anadarko. The worldwide liquids reserves holders in the OGJ150 group that follow ExxonMobil are Chevron, ConocoPhillips, Oxy, Marathon Oil Corp., and then EOG.
ConocoPhillips tops the group in US liquids production and reserves. EOG ranks at No. 3 in both categories with reported US liquids production of 132 million bbl and US liquids reserves of 1.6 billion bbl, up from 100 million bbl and 1.25 billion bbl a year ago.
Following ExxonMobil in US gas production are Chesapeake, Anadarko, Southwestern, and ConocoPhillips. Second in US gas reserves for 2014 among the OGJ150 firms is Chesapeake, followed by Southwestern, EQT Corp., ConocoPhillips, and Anadarko.
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Top 20 in spending, drilling
Capital and exploratory expenditures in 2014 by the top 20 totaled $176.23 billion, up from $170.63 billion in 2013 and $169.16 billion in 2012. Expenditures of the top 20 amounted to 77.8% of the OGJ150 total.
Chevron, ExxonMobil, and ConocoPhillips were the leading three companies in capex spending last year, followed by Apache, Anadarko, Oxy, and EOG.
Chevron's spending was $35.4 billion, down 6.8% from 2013 outlays. ExxonMobil decreased its 2014 outlays by $1 billion to $34.6 billion, while ConocoPhillips boosted it spending last year by 10% to $17 billion.
Anadarko increased its capital spending by 23% to $9.5 billion last year from a year ago.
With a count of 1,125 wells, Chevron leads the OGJ150 group in the number of net wells drilled in the US during 2014. The second company on the list is California Resources with 986 wells, followed by EOG, Anadarko, Apache, and ExxonMobil.
Linn Energy LLC ranks at No. 7 and drilled 699 net wells in the US last year, up from 306 a year ago.
Oxy, if without the spinoff of California Resources, would have had 1,465 net wells drilled in the US last year, up from 1,289 wells drilled for 2013. The joining of California Resources actually has shrunk the top 20 list by drilling.
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Fast growers
The list of fastest-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 2013 and 2014, 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 is limited to the top 20 fast growers.
Exco Resources Inc., ranked No. 55 in total assets, leads the list this year. With headquarters in Dallas, Exco reported stockholders' equity of $510 million last year compared with $147.9 million in 2013. Earnings climbed to $120.67 million in 2014 from $22.2 million in 2013.
Abraxas Petroleum Corp., the second fastest grower and No. 91 in total assets, posted an increase in stock equity of 138.8% to $207.49 million and net income increased 63.7% to $63.27 million from a year ago.
Three of the current fast growers were also on the list in the previous edition of the OGJ150, which was based on 2013 results. These are Oasis Petroleum Inc., Callon Petroleum Co., and Continental Resources Inc.
The long-term debt positions of the firms on the list were mixed. Nine of the companies increased long-term debt while six decreased long-term debt.