PFC 50 third quarter ranking topped by deepwater operators, Russian oil firms

Oil and gas companies operating in the world's deep water as well as Russian oil majors ascended to the higher tiers of the third quarter ranking of the world's largest energy companies.

By OGJ editors

HOUSTON, Oct. 16 -- Oil and gas companies operating in the world's deep water as well as Russian oil majors ascended to the higher tiers of the third quarter ranking of the world's largest energy companies.

The most recent Energy 50 ranking, which was released this month by Petroleum Finance Co. (PFC), Washington, DC, is a quarterly assessment based on the energy companies' market capitalization.

PFC noted that despite recent loftier oil and natural gas prices, however, many of the top 50 firms' share prices were "off sharply" during the third quarter. "Share prices were driven down in part by weakness in equity markets overall, and in part by investor caution towards a sector that has been volatile over the past year," PFC said. Nonetheless, a number of the companies on the list did fair better on their year-over-year share prices, particularly the Russian oil firms.

Deepwater operators
PFC, based on roughly 140 projects that were modeled, said it expects global deepwater production to reach 8-9 boe/d sometime during 2007-08.

Near to medium-term gains in deepwater production, PFC said, will come from the Gulf of Mexico, Brazil, and Norway, while Angola and Nigeria will begin to make "material contributions later on this decade.

"While the supermajors and other top tier companies. . .stand out in the deepwater in terms of scale, volume, and exploration leadership, there are a number of other companies (many of whom do not rank in the PFC 50) with material deepwater positions and competitive metrics in key regions," PFC said.

Newcomers, outgoers
Two of the newcomers to the Energy 50 during this third quarter ranking—Russia's OAO Sibneft and India's Oil & Natural Gas Corp. (ONGC)—led the list in share price performance, PFC noted. Meanwhile, "Four fifths of the PFC 50 firms recorded share price drops in the third quarter, partly reflecting weakness in equity markets overall?," PFC said, adding that the total market capitalization of the top 50 firms declined by $300 billion from last quarter.

"Sibneft is the most recent Russian oil company to enter the ranking, while ONGC marks the arrival of the first Indian company in the PFC 50," PFC said.

Houston-based El Paso Corp. is the latest of the energy merchant firms to drop out from the PFC 50 rankings, PFC noted. "Accusations of withholding natural gas from the California market in late 2000 and early 2001, looming credit downgrades, and the overall distress in the energy merchant sector have driven El Paso's share price to a new low," PFC said.

Firms in the energy merchant sector had started their decent from the PFC 50 listings earlier this year (OGJ Online, July 24, 2002).

M&A activity
Topping third quarter merger and acquisition activity, Petroleo Brasileiro SA (Petrobras) announced an agreement in late July to acquire a controlling interest (58.6%) in Argentina's Perez Companc SA from the Perez Companc family and its foundation, for $1.18 billion (OGJ Online, July 23, 2002), PFC noted. "The acquisition is part of Petrobras's growth and regional diversification strategy, giving Petrobras a stronger upstream position in Argentina and Venezuela, as well as almost doubling Petrobras's refining capacity in Argentia and boosting its retail network," PFC said.

In other M&A action, Conoco Inc. and Phillips Petroleum Co. completed their merger, forming ConocoPhillips, at the end of August, PFC said. That transaction placed the company in the No. 9 spot.

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