Smaller OGJ200 group reports earnings gains, higher outlays

Sept. 4, 2006
Increases in capital spending and commodity prices yielded sharp 2005 earnings gains for the OGJ200 group of companies, while the number of firms qualifying for the group declined.

Increases in capital spending and commodity prices yielded sharp 2005 earnings gains for the OGJ200 group of companies, while the number of firms qualifying for the group declined.

With 138 firms, this year’s compilation contains the fewest number of companies since this special report began in 1983, when the group was limited to the 400 largest US companies.

The companies in the OGJ200 group of publicly traded, US-based oil and gas producers reported a collective 53% surge in earnings during 2005, and capital spending increased 34%.


The OGJ200 list again has shrunk because of consolidation. Although there are five new companies in the group, the number of firms is down from 142 in last year’s report (OGJ, Sept. 19, 2005, p. 24).

As a result of mergers, six of the producing companies that were listed previously no longer appear in the compilation. And three of the companies that qualified for the OGJ200 and are listed in this report had not filed their 2005 results with the US Securities & Exchange Commission in time for their details to be included.

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In addition, four of the firms in last year’s report no longer are listed due to other reasons. Kestrel Energy Inc. and Trek Resources Inc. went private, Oneok Inc. sold its oil and gas assets, and Resource America Inc. spun off its properties.

There are three limited partnerships in the group. Energy Partners Ltd. is the largest and is ranked at No. 47 by assets. The smallest limited partnership is Apache Offshore Investment Partnership at No. 116. There are six royalty trusts and seven subsidiaries in the OGJ200.


Record prices during 2005 bolstered revenues and earnings for most of the companies in the group.

Oil, gas, and petroleum product prices surged on fears of tight supplies amid healthy demand and economic growth. Capacity constraints, more stringent environmental specifications, and maintenance requirements at refineries boosted refining margins, giving additional earning power to the integrated firms in the group.

The price of crude on the New York Mercantile Exchange averaged $56.70/bbl last year, closing at a high of $69.81/bbl on Aug. 30, 2005, immediately following Hurricane Katrina.

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Meanwhile, the natural gas prompt-month futures closing price averaged $9.015/MMbtu last year, with a high of $15.378/MMbtu. Gas futures peaked in December after trending upward throughout the year.

The US West Coast cash refining margin averaged $21.03/bbl last year, according to Muse, Stancil & Co. This compares to a 2004 average of $12.45/bbl. And the US Gulf Coast refining margin last year averaged $12.90/bbl, up 99% from the prior year, and up from $3.23/bbl in 2003.


A surge in drilling during 2005 gave a boost to the OGJ200 firms’ worldwide liquids production and reserves. Gas production and reserves results for the year were mixed.

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The 138 companies drilled 18,009 net wells in the US last year, up 24% from a year earlier. Meanwhile, capital and exploration expenditures grew to $85.9 billion from 2004 spending of $64 billion.

The most recent figures from the American Petroleum Institute show that last year, the total number of exploratory and development wells drilled in the US climbed 15% from a year earlier. Of the 44,755 wells drilled last year, 13,047 were oil wells, while 26,973 were gas wells, and only 9% were exploratory wells.

The OGJ200 looks at each company’s liquids and gas production and reserves worldwide and in the US.

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The group’s liquids production moved up almost 5% worldwide last year and climbed nearly 7% in the US. Liquids reserves for the companies grew 7.2% worldwide and 8.6% in the US.

Gas production in the US by the OGJ200 companies, affected by Gulf of Mexico hurricanes, dipped to 8.36 tcf last year from 8.49 tcf a year earlier. Worldwide, these firms’ annual gas production slid by a smaller margin to a collective 13.87 tcf from 13.96 tcf.

The group’s gas reserves declined 4% worldwide to 157.7 tcf but surged almost 10% in the US to 106.1 tcf.

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Of the top 10 firms in the group as ranked by assets, only two-Chevron Corp. and Apache Corp.-reported an increase in worldwide gas production for 2005. And of the top 10 companies, only Burlington Resources Inc., later acquired by ConocoPhillips, grew its 2005 US gas production from a year earlier.

Top-ranked ExxonMobil Corp. recorded a gain in its total worldwide and US gas reserves, but its worldwide liquids reserves declined 7% last year. The company’s liquids reserves in the US slid nearly 19%.

Financial performance

During 2005, the companies that comprise the OGJ200 far surpassed their financial results of 2004.

The tight market conditions that drove up prices in 2004 persisted last year, including Middle East tensions, limited crude production capacity, and robust demand for petroleum products. In addition, US oil and gas supplies, as well as refining capacity, were reduced following Hurricanes Katrina and Rita.

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With total revenue up more than 28%, the OGJ200 group posted a 53% jump in earnings from a year earlier. The group’s collective net income was $100.6 billion. There are 46 firms that reported net income of more than $100 million last year. But there are 32 companies in the group that recorded a net loss for 2005.

Total assets of the OGJ200 companies climbed 20% from a year earlier to $807.6 billion, while their stockholders’ equity gained over 22%. The group’s 2005 return on assets was 12%, up from 10% a year earlier. Return on stockholder equity climbed to 28%.

Fast growers

The fastest growing company among the OGJ200 firms during 2005 was Whittier Energy Corp., which ranks at No. 82 in the group by assets.

Whittier, based in Houston, tops the fast growers’ list with a 408% increase in stockholder equity and a 276% boost in earnings. In addition, the company remained debt-free at the end of 2005.

Last year, Whittier acquired Rimco Production Co. Inc. As a result of this transaction, Whittier acquired working interests in about 116 active wells and one unit in 18 producing fields mostly along the US Gulf Coast in Texas, Louisiana, and Alabama. The acquisition also meant an additional 24.6 bcf of gas equivalent of proved reserves and about 8.4 Mcfd of gas equivalent of production for the company.

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The list of the top 20 fast growers ranks firms by growth in stockholder’s equity. For a company to qualify for this list, it must have recorded positive net income in both 2005 and 2004, and it must have posted an increase in earnings during 2005. Limited partnerships, newly public companies, and subsidiaries are excluded from the list.

Ranked No. 24 by assets, Cimarex Energy Co. is the second-fastest growing company. Last year, Cimarex posted earnings of $328.3 million, a 114% increase from 2004. Stockholder equity grew 270%, and the company’s long-term debt grew to $352.4 million from nothing a year earlier.

FieldPoint Petroleum Corp. is the third-fastest grower in the group. Based in Cedar Park, Tex., FieldPoint reported that last year its stockholder’s equity grew 192% and earnings doubled to $1 million.

FieldPoint attributes a 32% gain in revenue to its 2004 acquisitions that allowed for increased drilling last year. Higher oil and gas prices also helped boost revenues.

Pioneer Oil & Gas, which also appeared on the fast-growers list a year ago, is the fourth company on the current list. Pioneer’s earnings last year soared to $4.1 million from $492,000.

Other firms on the fast-growers list for at least the second year in a row are Ultra Petroleum Corp., Chesapeake Energy Corp., Gulfport Energy Corp., Whiting Petroleum, and XTO Energy Inc. This is the fourth year in a row in which Ultra has been on the list of fast growers.

Arena Resources Inc., which is new to the OGJ200 group, ranks fifth on the fast growers list. Ranked No. 88 by assets, this Tulsa-based company grew its stockholder equity 182% last year, while its earnings climbed to $9.5 million from $2.5 million.

Top 20 companies

The companies that rank in the top 20 by assets are little changed from the previous edition of the OGJ200. The top eight firms retained the same rankings from year to year.

With Unocal Corp. no longer listed as a result of its merger with Chevron, one company moved into the top 20. Noble Energy Inc., which was ranked at No. 24 previously, is now No. 16.

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Collectively, the top 20 firms posted 2005 financial results similar to those of the entire OGJ200 group. The top 20 group’s capital expenditures grew by a smaller margin, though, up 30%. And their number of net wells drilled-10,529-climbed 16%.

The top 20 firms account for 91% of the entire group’s assets, down slightly from 92% of total OGJ200 assets at the end of 2004.

The market capitalization of the top 20 firms by assets totaled $852.9 billion at the end of last year. This is up from $708 billion a year earlier, as all of these companies’ stock values climbed.

Top 20 in earnings, spending

The OGJ200 ranks the companies by parameters other than assets, too, including earnings, capital spending, production, and reserves.

By far ExxonMobil was the top earner, with 2005 net income of $36.1 billion. Chevron posted the second-highest earnings of $14.1 billion.

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No. 4 by assets, El Paso Corp. is the eighteenth highest in net income. And Pogo Producing Co., which is ranked No. 21 by assets, is the sixteenth biggest earner. Pogo’s 2005 net income was $750.7 million.

With $13.8 billion in outlays, ExxonMobil also led the OGJ200 group in capital and exploration expenditures during 2005. ConocoPhillips was second, with $11.6 billion in expenditures. Chevron, Devon Energy Corp., and Apache Corp. round out the top five spenders.

Whiting Petroleum, ranked No. 28 by assets, recorded the nineteenth highest capital expenditures. Whiting’s outlays during 2005 totaled $1.1 billion.

Production, reserves leaders

The companies that rank in the top 20 by assets also dominated the list of firms that lead in worldwide liquids and gas production.

There are three exceptions among the top liquids producers and only one exception among the top gas producers.

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The exceptions in worldwide liquids production include Plains Exploration & Production Co., which was the fifteenth company with 18.7 million bbl of liquids production. Plains ranks at No. 26 by assets. Pogo Producing and No. 25-ranked Forest Oil Corp. were also among the leading firms in worldwide liquids production.

Among the worldwide gas production leaders is Newfield Exploration Co., which ranks at No. 22 by assets. Newfield was the nineteenth-largest gas producer last year among the OGJ200 companies, with 183.4 bcf of production.

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In the OGJ200 group, ExxonMobil was the leading producer of liquids worldwide during 2005, as well as the top gas producer both worldwide and in the US. Occidental Petroleum Corp. was the leading liquids producer in the US, though, followed by Chevron and Conoco- Phillips.

Among the leading worldwide liquids reserves holders is Encore Acquisition Co. This Fort Worth-based firm ranks at No. 33 in assets but was nineteenth in worldwide liquids reserves. And No. 50 Ultra Petroleum held the twentieth largest worldwide gas reserves among the OGJ200 companies.

Click here to download a .PDF of the OGJ 200.