Larger OGJ150 group records robust 2011 financial, operating results

Sept. 3, 2012
The OGJ150 group of US-based oil and gas producers reported much stronger financial and mostly improved operating results for 2011 compared with a year earlier.

Marilyn Radler
Senior Editor-Economics

Laura Bell
Statistics Editor

The OGJ150 group of US-based oil and gas producers reported much stronger financial and mostly improved operating results for 2011 compared with a year earlier. Higher oil prices and production volumes drove the boosted results in spite of economic weakness in the US and Europe.

The price of crude surged from 2010, with the US wellhead price up 28% to average $95.73/bbl last year. Brent crude futures climbed also, with the front-month closing price averaging $110.97/bbl vs. a 2010 average of $80.38/bbl.

US natural gas prices, however, faltered. The average US wellhead price for gas last year was $3.95/Mcf, down from its 2010 average of $4.48/Mcf.

This year's OGJ150 group includes 145 companies, up from 137 in last year's compilation (OGJ, Oct. 3, 2011, p. 26).

To qualify for the OGJ150, oil and gas producers must have their headquarters in the US, be publicly traded, and hold oil or gas reserves in the US. Companies appear on the list ranked by total assets but also are ranked by revenues, stockholders' equity, capital expenditures, earnings, production, reserves, and US net wells drilled.

The 145 firms in the group posted combined 2011 earnings of $114.3 billion, up 25% from their combined 2010 net income. The group's combined 2011 revenues climbed by the same percentage to reach $1.2 trillion.

Changes within the group

This year's group includes 14 companies that are new to the compilation. Also, eight firms that appeared a year ago are no longer included for various reasons.

Encore Energy Partners LP, which is one of the eight, merged into Vanguard Natural Resources LLC. NGAS Resources Inc. was acquired by Magnum Hunter Resources Corp. during 2011.

Williams Cos. Inc. no longer appears in the group, as the company spun off its oil and gas segment into WPX Energy Inc., which is ranked at No. 16 by assets. Meanwhile, Petrohawk Energy Corp. merged into BHP Billiton Ltd. of Australia, and Brigham Exploration Co. merged with Norway's Statoil.

Among the other companies no longer listed are HKN Inc., which liquidated its oil and gas properties, and Platinum Energy Resources Inc., which became a private entity last year.

Linn Energy LLC, VOC Energy Trust, HighMount Exploration & Production Co., and Baron Energy Inc. are among the companies that are new to the group this year.

Oil, gas volumes

Collectively, the OGJ150 companies reported increases in their US oil and gas production and reserves from a year earlier. The group's total US net drilled wells climbed by 21% from 2010 to reach 19,108.9.

Driven by development of unconventional resources, their combined US liquids production edged up by 10%, while their US gas production increased by 11% from a year earlier. The group's liquids reserves in the US climbed by 13%, and their US gas reserves grew by 5% from 2010.

The group's combined worldwide results, which include their US results as well, were not as strong. Collectively, the companies' global liquids reserves climbed by 8%, while their worldwide liquids production slipped by nearly 1% from 2010.

The collective worldwide gas production of the OGJ150 companies increased by 6%, and the group's total gas reserves grew by nearly 3% from a year earlier.

Financial performance

While the OGJ150 oil and gas producers together reported improved financial results for 2011, there are 51 companies in the group that incurred a net loss for the year. For seven of these producers, the loss exceeded $100 million.

Among the companies with positive net income for 2011, there are 45 that posted earnings in excess of $100 million.

ExxonMobil Corp., which ranks first in assets in the OGJ150, also ranks first in revenue, net income, capital spending, and stockholders' equity for 2011. The company reported that it earned $42.2 billion last year on revenues of $486.4 billion.

The highest-ranking company in terms of assets to report a 2011 net loss is No. 6 Anadarko Petroleum Corp., which incurred a $2.6 billion loss. Anadarko's $14 billion in annual revenue was offset by its $16.8 billion in costs and expenses during the year, including $3.9 billion in costs related to the settlement of the 2010 Deepwater Horizon disaster.

Capital and exploratory spending by the group of 145 companies climbed by 29% during 2011, totaling $180.4 billion.

Fast growers

Callon Petroleum Co., ranked No. 82, is the fastest-growing company in the OGJ150. Based in Natchez, Miss., Callon reported that its stockholders' equity in 2011 surged to $199 million from $15.8 million a year earlier. At the same time, annual net income climbed to $104 million from 2010 earnings of $8 million.

The company noted that a $67 million income tax benefit is included in its 2011 earnings, primarily related to the reversal of a valuation allowance previously recorded in 2008 against deferred tax assets.

Also, Callon completed a public offering of 10.1 million shares during February 2011, for which the company received $73.8 million in net proceeds. About 47% of the proceeds were used to reduce the company`s long-term debt, with the remaining proceeds available primarily to fund its acquisition and development activities in the Permian basin.

The list of the 20 fastest-growing companies ranks the producers by growth in stockholders' equity. To qualify for this list, a company in the OGJ150 must have posted positive net income for both 2011 and 2010 and must have recorded an increase in net income in the most recent year. Excluded from this list are limited partnerships, newly formed public companies, and subsidiaries.

No. 106 American Eagle Energy Corp. is the second fastest-growing company in the group. The Littleton, Colo., company reported a 438% increase in stockholders' equity and a 54% increase in 2011 earnings. American Eagle Energy is the successor organization resulting from the 2011 merger of Eternal Energy Corp. and American Eagle Energy Inc.

No. 71 Gulfport Energy Corp. is the third fastest-growing company in this year's OGJ 150 group, followed by No. 28 Continental Resources Inc. and No. 78 GeoResources Inc.

Top 20 by assets

The list of firms that comprise the top 20 by assets in the OGJ150 is little-changed from a year ago. No. 20 Linn Energy is the only producer that was not among the top 20 as ranked by yearend assets a year ago.

ExxonMobil, with $331 billion in assets at yearend 2011, remains No. 1 in the group. Also unchanged from a year ago are the next three companies: Chevron Corp., ConocoPhillips, and Occidental Petroleum Corp.

Reporting $52 billion in assets, Houston independent Apache Corp., which held the No. 7 spot a year ago, is now ranked No. 5. Apache announced that on Dec. 30, 2011, it completed its $1.75 billion acquisition of ExxonMobil's Mobil North Sea LLC assets, which included Beryl field and related properties.

The total assets of the top 20 companies at the end of last year were $1.15 trillion, accounting for 87% of the assets of all 145 OGJ150 firms.

The top 20 also account for 96% of the entire group's revenues and 61% of the group's US net drilled wells in 2011. Their US liquids production, totaling 947.4 million bbl, accounts for 78% of the entire OGJ150 group's total US liquids output for the year.

The combined market capitalization of the top 20 firms jumped from a year earlier. As of Dec. 31, 2011, these companies' combined value of all shares outstanding totaled $1 trillion. This compares with $810 billion in market cap calculated at yearend 2010 for the top 20 companies in the previous OGJ150.

Earnings leaders

With $42.2 billion in net income last year, ExxonMobil leads the OGJ150 companies in earnings by a wide margin. Upstream earnings were $34.4 billion, up 43% from 2010 with stronger natural gas production and slightly lower liquids production, and return on average capital employed was 26.5% for the year, the supermajor reported. The company's downstream earnings climbed 25% from 2010 to $4.46 billion.

Chevron was second with 2011 earnings of $27 billion, followed by ConocoPhillips with $12.5 billion in net income.

There are four companies that qualified for the list of the top 20 earners that did not qualify a year ago. These are EOG Resources Inc., with $1.1 billion in earnings, as well as Denbury Resources Inc., which reported 2011 net income of $573 million. Also, Concho Resources posted earnings of $548 million last year vs. $204 million a year earlier, and Whiting Petroleum Corp. reported a 46% climb in earnings to $492 million.

Top 20 in spending, drilling

The 20 OGJ150 companies with the largest capital and exploratory expenditures during 2011 recorded combined outlays of $145.5 billion.

ExxonMobil led the group with $33 billion in capital spending last year. This figure excludes such costs for equity companies and was a 14% increase from a year earlier. Chevron, second in capital spending, boosted its outlays last year by 35% to $26.5 billion.

Third in capital spending was ConocoPhillips with a total of $13.3 billion in outlays, followed by Devon Energy Corp., which reported $7.5 billion in 2011 capital and exploratory spending, and Oxy with $7.5 billion in capital spending.

Chesapeake Energy's capital spending during 2011 was the sixth highest among the OGJ150 companies, and the Oklahoma City-based producer was first in the group for its 1,282 US net wells drilled during the year. This compares with the company's 2010 net wells drilled of 1,149, which led the group a year ago.

Also unchanged from last year, Anadarko was second in terms of wells drilled with a count of 1,257.1.

ExxonMobil is third, though, with 1,097 US net wells drilled during 2011. This compares with the company's No. 7 ranking in this list a year ago, as it reported that during 2010, its US net wells drilled numbered 625.

New to the list of the top 20 companies in number of US net wells drilled is Energen Corp., which reported 397.9 wells for the year. This is up from 219.4 during 2010.

The total US net wells drilled by these 20 firms that drilled the most during 2011 was 13,871. This is up 26% from the top 20 in drilling in last year's OGJ150.

Production, reserves leaders

Reporting 676 million bbl in worldwide liquids production during 2011, Chevron leads the OGJ150 group in global output of crude oil, condensate, and NGL for the year. And with 170 million bbl of output last year, Chevron also leads the group in terms of liquids production in the US.

In terms of worldwide liquids reserves, ExxonMobil leads the group with 10.113 billion bbl, followed by Chevron with 6.455 billion bbl.

Third in global liquids reserves is ConocoPhillips, which reported 3.8 billion bbl of crude, condensate, and NGL reserves at the end of 2011, but the company ranks first in the group for US liquids reserves. ConocoPhillps' US reserves of liquids total 2 billion bbl.

Oxy is second among the group in terms of US liquids reserves, reporting a yearend 2011 total of 1.75 billion bbl.

ExxonMobil, which boosted its US gas production and reserves with its 2010 acquisition of XTO Energy Inc., holds the top spot in all gas production and reserves rankings. At the end of 2011, the company's worldwide gas reserves totaled 45 tcf, with 26 tcf in the US.

Second in US gas reserves is Chesapeake Energy Corp., which reported a yearend 2011 total of 15.5 tcf. This volume also places Chesapeake at No. 4 worldwide in gas reserves. The company reported 545 million bbl of US liquids reserves at yearend 2011.

The independent producer, which has faced financial, governance, and legal questions, expects to close $7 billion in asset sales during this quarter (OGJ Online, Aug. 13, 2012).

Chesapeake has cut its proved, undeveloped reserves in the Haynesville and Barnett shale formations, saying those reserves are unprofitable to produce given current gas prices. Chesapeake said its reserves as of June 30 were 17.4 tcf of gas equivalent, down 7% from a year earlier.

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