Consolidation within the energy industry has again abbreviated the OGJ200 list of publicly traded US oil and gas producers. The list now comprises only 176 firms.
Last year's compilation (OGJ, Oct. 1, 2001, p. 76) revealed that the number of companies qualifying for the list shrunk to 197; that was the first time the count had receded from 200.
Twelve companies that appeared in the OGJ200 last year no longer appear on the list due to mergers and acquisitions. In addition, three other companies have been removed because they sold their US producing properties or became privately owned entities.
A key change from previous editions of the OGJ200 is that this year's compilation includes only companies with headquarters in the US. In the past, companies that had a significant percentage of their operations located in the US were included. This change has resulted in the exclusion of BP PLC, Shell Oil Co., Chieftain International Inc., Ivanhoe Energy Inc., and Nexen Inc. The 2001 financial and operating results of these companies are included in the OGJ100 (see article in this issue).
The elimination of these five companies from the OGJ200 skews any comparison of this year's compilation with last year's. However, while total assets, revenue, and net income of the group are down from last year's OGJ200, capital and exploration expenditures and the number of net wells drilled increased during 2001.
Flush with cash from strong results in 2000-when oil and gas prices were higher-producers poured money into projects last year. Then demand subsided in the second half of the year, dragging down oil and gas realizations.
Lower profits
The top 12 companies in this year's list recorded lower profits for 2001 as compared with a year earlier. The next 6, however, posted improved results vs. 2000.
Total 2001 net income for the current OGJ200 group was $31.7 billion, whereas last year's group reported profits of $73.1 billion for 2000. In addition to the fact that the previous group included more companies, market conditions were more favorable.
The OGJ200 ranks companies by assets, regardless of whether they employ full-cost or successful-efforts accounting methods. As noted above, comparisons of one year's OGJ200 to another year's must take into account any changes among the companies therein; nonetheless, the list represents a substantial part of the US oil and gas industry.
Total assets for the group are only slightly reduced from the previous OGJ200, down 2% to $491.7 billion. The top 5 companies account for 61% of this total.
Total revenue for this year's group is 19% lower than the 2000 revenue of last year's group, as oil prices fell and natural gas prices increased over the course of 2001.
Worldwide demand for oil this year is expected to increase by 200,000 b/d compared with an increase of 160,000 b/d last year, according to the International Energy Agency. While demand remains weak, the Organization of Petroleum Exporting Countries will struggle with output restraint until the economy rebounds and brings demand along with it.
The US wellhead price of crude oil fell 18% last year, averaging $21.91/ bbl. Meanwhile, the US wellhead price of natural gas averaged $4.12/ Mcf, up from its 2000 average of $3.69/Mcf.
The world export price of oil last year averaged $23.15/bbl, down from $27.51/bbl a year earlier.
Sluggish demand in the fourth quarter of 2001 drove down the world export price to average $17.68/bbl during November.
IEA expects total non-OPEC supply to increase by 1.2 million b/d this year, while the US Energy Information Administration forecasts that US production of oil will increase by 64,000 b/d this year to average 5.9 million b/d.
Natural gas demand in the US shrunk 4.9% last year, according to the most recent EIA estimates. EIA expects that gas demand in the US will increase 3% this year.
While US production of dry gas increased 2.4% last year, the current EIA projection is that US gas production will decline 2.3% this year.
Drilling activity
With natural gas prices up, drilling activity increased sharply last year in the US. Total US exploratory and development well completions numbered 36,812 last year. This compares with 31,437 wells completed in 2000, according to the most recent American Petroleum Institute estimates.
The Baker Hughes US annual average rig count increased last year to 1,156 from 918 a year earlier and 625 in 1999.
Meanwhile, the 2001 Canadian rig count was little changed at 342 vs. 344 a year earlier.
The international rig count, which excludes the US and Canada, climbed to 745 last year from 652. In 1999, the international rig count averaged 588, down from 755 the year before.
This year's OGJ200 companies drilled 14,666 US net wells in 2001. This is a 12% drop from the number of net wells drilled 1 year earlier.
Capital and exploration expenditures last year by the current OGJ200 companies jumped 16%, totaling $70 billion. A year earlier, the group increased such spending 20%.
Group operations
Although spending continued to rise, the group's operating results continued to mostly decline. Worldwide production and reserves of liquids and natural gas were mixed, but US operating results were lower across the board. Again, when making comparisons with last year's OGJ200, one must take into account the exclusion of some large non-US based operators from this year's compilation.
Total worldwide production of liquids-which includes crude oil, condensate, and natural gas liquids-by the OGJ200 companies declined 2% last year to 3 billion bbl.
Worldwide reserves of liquids, meanwhile, were 0.3% lower than a year earlier, settling at 37.8 billion bbl. The group's 2001 worldwide natural gas production increased 1%, while gas reserves grew 4%.
The group's production of liquids in the US tumbled 19% last year in spite of the surge in the number of US net wells drilled. Liquids output totaled 1.2 billion bbl, and the group's US liquids reserves declined 28% to total 14 billion bbl.
Totaling 9.9 tcf, the OGJ200 companies' natural gas production in the US declined 14%. The group reported US gas reserves of 100.8 tcf, a reduction of 15%.
Group financial performance
Fifty of the 176 companies in this year's compilation recorded a net loss for 2001, vs. 35 a year earlier.
The number of companies in the group that posted a profit exceeding $100 million in 2001 is 30, down from 32 a year ago.
Four companies reported net losses of more than $100 million for the period. For each of the previous 2 years, only 1 company in each group reported such a loss, but dismal 1998 results plunged 23 of the OGJ200 companies into such heavy losses.
Lower profits considerably reduced return on stockholder equity from the anomalous 40% return that last year's group posted. A 57% drop in 2001 profits diminished the group's return on stockholder equity to 17%.
This still exceeds the 13.4% return on stockholder equity the OGJ200 group posted based on 1999 results, and the 2.3% return based on 1998 financial performance.
Fourteen companies in this group had negative stockholder equity, with liabilities exceeding assets. This is up from 12 last year.
Return on assets and return on revenues were also greatly reduced from a year earlier. The group's total return on assets was 6.5%, down from 14.5%, while return on revenues was 6.2%. This compares with an 11.7% return based on 2000 performance.
Changes in the group
Other than the aforementioned removal of the non-US based companies from the list, there are few changes among this year's OGJ200 firms.
All of the organizations in the current OGJ200 group are repeat performers. In past editions of this special report there have been companies making their initial appearance on the list for various reasons, e.g., they become publicly traded entities.
There remain 3 publicly traded limited partnerships on the list. The largest of these is Energy Partners Ltd. with $243 million in total assets, and the smallest is Apache Offshore Investment Partnership with $9 million in total assets.
Five of the companies in the compilation are royalty trusts. This compares with six last year and seven on the three prior lists.
The top 100 companies combine for 99.6% of total assets of the entire group. In the previous OGJ200, the top 100 combined for 99.3% of the total.
Signaling an increasing concentration of assets among the highest-ranked companies, the smallest asset value in the top 100 decreased to $94 million from $129 million a year ago and $140 million the year before that.
Top 20 companies
Most companies in the top 20 moved up a couple of spots from last year as the positions previously occupied by BP and Shell became available.
Williams Cos. Inc. made the biggest move in the top 20 companies. Williams's 2001 acquisition of Barrett Resources Inc. propelled the company to No. 16 from No. 47. Barrett ranked No. 32 in last year's OGJ200.
The merger of Chevron Corp. and Texaco Inc. resulted in total assets greater than the sum of their separate figures for yearend 2000. With total assets of $78 billion, ChevronTexaco Corp. is situated at No. 2, the same position occupied by Chevron a year ago.
ExxonMobil Corp. continues to hold the top spot, reporting $143 billion in assets for yearend 2001.
Phillips Petroleum Co. now ranks at No. 3, and Conoco Inc., by increasing assets to $28 billion from $18 billion a year earlier, has moved to No. 4 from No. 8.
The next four firms ranked by assets are Occidental Petroleum Corp., Anadarko Petroleum Corp., Marathon Oil Corp., and Amerada Hess Corp.
The No. 9 company is Devon Energy Corp., which moves up from No. 16 a year ago. Devon's total assets last year soared 92% to $13 billion.
Kerr-McGee Corp. and Burlington Resources Inc. each rank three places higher at No. 10 and No. 11. respectively.
Unocal Corp. remains at No. 12 and Apache Corp. moves up two places to No. 13. The next two firms, El Paso Corp. and Dominion Exploration & Production, move up three positions. Ocean Energy Inc., at No. 17, moves up from No. 22 a year ago.
EOG Resources Inc., Pioneer Natural Resources Co., and Murphy Oil Corp. round out the top 20 companies in the group.
The top 20 firms as ranked by assets comprise by far the majority share of the totals in all categories of financial and operating performance covered in this report. Their assets-at $438 billion-represent 89% of total assets for the group of 176 firms.
Total revenues of the top 20 fell 18% from last year's top 20 company revenues. At $487 billion, this accounts for 96% of revenues for the entire group.
With $29 billion in net income, the top 20 took 91% of the OGJ200 profits. Stockholder equity for this set of companies increased 5% from a year earlier.
Worldwide capital and exploration expenditures for the top 20 totaled $56 billion, an increase of 12% from 2000. This accounts for 80% of all such expenditures in the OGJ200 during 2001.
The number of net wells drilled by the top 20 companies also reflects this influx of investment. Up 30%, net wells drilled last year by the top 20 companies totaled 9,231. This total accounts for 63% of net wells drilled by all firms in this year's OGJ200 group.
On a worldwide basis, production of liquids and natural gas by the top 20 companies was little changed. However, production volumes in the US declined precipitously-as they did for the entire group.
Reserves growth mostly followed the same pattern, except for worldwide reserves of natural gas. During 2001, total natural gas reserves held by the top 20 companies increased 10%. At the same time, these companies' worldwide liquids reserves increased less than 1%.
The market capitalization of the top 20 as of Dec. 31, 2001, was $353 billion. Market cap of last year's top 20 based on share prices as of year-end 2000 was $536 billion, and this excluded any values for BP and Shell. As was the case last year, the market cap figures used for El Paso and Dominion were those of their parent companies.
Fastest-growing companies
Previously ranked No. 159, GMX Resources Inc. is this year's No. 119 and tops the list of fastest-growing companies. The Oklahoma City-based firm's stockholder equity increased twelvefold last year, and its long-term debt was eliminated.
The OGJ200 list of fastest-growing companies ranks firms based on growth in stockholder equity. For a company to appear on the list, it must have recorded positive net income in both 2001 and 2000, and it must have increased its net income last year. Excluded from this list are limited partnerships, newly public companies, and subsidiaries.
Posting a 139% boost in stockholder equity last year, Aspen Exploration Corp. is the second fastest grower. Aspen Exploration recorded 2001 net income of $2.5 million, five times that of a year earlier. The Denver-based company is ranked at No. 155 on the overall OGJ200 list.
Four companies that qualified for the fastest growers' list also appeared on the list last year. XTO Energy Inc., previously listed as Cross Timbers Oil Co., increased stockholder equity 65%, while its net income more than doubled, although long-term debt jumped 11%.
The remaining repeat-performers on the list of fastest-growing companies are Pontotoc Production Co., Royale Energy Inc., and Houston Exploration Co.