Click here to view A lookat 9 months, third quarter financial results
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Rising crude oil and natural gas prices in 1999 led to significantly higher third quarter profits for a sampling of US and Canadian oil and gas companies, compared with their earnings in third quarter 1998. These companies had seen their revenues dive in the earlier period, as prices headed toward a low at yearend 1998.
Demand for petroleum increased in 1999, due in part to higher demand in countries in Asia and elsewhere that saw their depressed economies begin to recover.
Results
For the first 9 months of 1999, revenues were up for a group of 104 companies, but profits were off slightly from the same period a year earlier. Total revenues for the firms sampled were up 6.8% for the period, while combined profits dipped 1.9% compared with the same period in 1998.
Third quarter profits for this group were up 62.4% from a year earlier, and revenues jumped 23.8%.
Of the companies sampled, only 24 had higher profits for the first 3 quarters of 1999 compared with the same period in 1998, while a rise in earnings for the third quarter was posted by 42 of the companies.
Changes in revenues were more positive. For the 9 months, 77 companies saw their revenues rise over 1998 levels, and for the third quarter, 90 of the firms surveyed logged revenues that were higher than they had been a year earlier.
Demand, prices
World crude oil demand had risen enough to boost prices by the third quarter of last year. World crude oil demand for the quarter exceeded supply by 1.3 million b/d. In 1998, third quarter demand trailed supply by 600,000 b/d.
According to the International Energy Agency, estimated worldwide oil demand averaged 74.9 million b/d for the first 3 quarters of 1999, up from 73.9 million b/d for the same period in 1998.
US refined products demand for the first 9 months of 1999 was up 2.1% year to year, at 19.25 million b/d. US natural gas demand edged up 0.7% to 16.049 tcf for the first three quarters of 1999.
The recovery of crude oil prices in 1999 came in time to boost third quarter revenues vs. the same period in 1998.
The worldwide price of export crude oil averaged $19.95/bbl for the third quarter of 1999, up 41.3% from $11.72/bbl, the average for the third quarter of 1998. In the US, the third quarter 1999 average price for West Texas Intermediate crude oil was $19.83/bbl, up from an average of $13.08/bbl a year earlier.
On the New York Mercantile Exchange, the natural gas futures price averaged $2.59/MMbtu for the third quarter of 1999 vs. $2.01/MMbtu for the same quarter in 1998. The average spot price for natural gas was $2.50/ MMbtu compared with $1.91/MMbtu in 1998.
Company results
For the first 9 months of 1999, the 19 integrated companies sampled were not as profitable as during the same period in 1998. Profits for this group dropped 16.5%, while revenues were up 5% compared to 1998.
But third quarter profits were significantly higher year to year. Third quarter earnings increased 22.1% to $5.15 billion vs. $4.22 billion in 1998. Revenues grew at a nearly equal pace, up 21.7% to $105.1 billion from $86.3 billion a year earlier.
Because of the oil price rebound in 1999, the 56 large independent companies sampled were able to erase their collective loss of a year ago and saw third quarter revenues jump 36.6%. Eighteen of these companies had larger profits than year-ago levels, and 22 turned losses into profits.
For the first 9 months of 1999, these large independents turned a combined loss of $474.2 million into a profit of $1.49 billion.
The group of 23 small independents did not fare well. Profits for the first 9 months of 1999 plunged 86% vs. 1998. Only three of these had greater earnings than in the first three quarters of 1998, and three others turned losses into profits.
Third quarter results for the small independents were not much better. Eleven of these companies posted losses. Combined profits fell 85.1% from a year ago, to $2.95 billion from $19.75 billion. Revenues for this group fell 12.8%.
Collectively, the six nonintegrated refiners in the sample had a better first 9 months than in 1998, with profits up 5.8% at $539.2 million and revenues up 12.2% at $33.2 million.
Third quarter results for these refiners were mixed. While revenues were higher by 33% over third quarter 1998, earnings were down 15.8%. The Gulf Coast refining margin, as calculated by Ernst & Young Wright Killen, averaged $1.12/bbl for third quarter 1999, the same as for the third quarter of 1998.
