4Q05 earnings up sharply for OGJ200 group

Vintage Petroleum Inc., which ranked at No. 30 previously, is no longer listed. The Tulsa-based producer merged with a subsidiary of Occidental Petroleum Corp. in January.

Also no longer in this group is Spinnaker Exploration Co. During 4Q05 Norsk Hydro ASA acquired Spinnaker Exploration for $2.45 billion.

Another firm that is no longer listed in the compilation is Kestrel Energy Inc. The Lakewood, Colo. company became a private entity late last year.

Blue Ridge Energy Inc. last year changed its name to Bayou City Exploration Inc. and is now ranked No. 109 in the group. In the last OGJ200 Quarterly, the company was not ranked by assets, as its results were not available at press time.

And the 4Q05 results of some of the firms in the group were not available by press time. Some of these firms filed extensions with the US Securities & Exchange Commission to delay their 10-K filings due to required Sarbanes-Oxley controls.

For example, Ultra Petroleum Corp. announced in March that it would file a 15-day automatic extension notification to allow extra time to complete its 2005 financial statements and the work required to complete management’s assessment of internal controls over financial reporting in accordance with Section 404 of Sarbanes-Oxley and the rules of the Public Company Accounting Oversight Board.

Results

The assets of the OGJ200 group increased 20% from the end of 2004, totaling $804.3 billion. Over the same period, the total stockholder equity of these companies gained 19% to end 2005 at $363.3 billion.

Collectively, the capital and exploration expenditures of the OGJ200 group last year increased 33% to $82.6 billion, as money flowed into upstream and downstream oil and gas projects worldwide.

During 4Q05, oil and gas prices as well as refining margins increased from the final 2004 quarter. These are the primary drivers behind the OGFJ200 group’s big earnings gains.

The US wellhead crude oil price averaged $54.46/bbl in the final 2005 quarter, up 28% from a year earlier. Meanwhile, the average wellhead gas price during 4Q05 was $10.18/MMcf, up 72% from the final quarter a year earlier.

The US Gulf Coast cash refining margin was up sharply from a year earlier, with lingering effects of Hurricane Katrina reducing refining capacity in the region. For 4Q05, this margin averaged $14.05/bbl, up from $6.12/bbl in the final 2004 quarter.

Ranked at No. 1, ExxonMobil Corp. again set a quarterly earnings record. During 4Q05, ExxonMobil posted $10.7 billion in net income on nearly $100 billion in revenue. This was a 27% profit gain from a year earlier.

Chevron Corp., ranked at No. 2 by assets, announced quarterly earnings of $4.1 billion, up 20% year-on-year. The company said the gain was due mainly to higher prices for crude oil, natural gas, and refined products, as well as the inclusion of revenues related to former-Unocal Corp. operations.

No. 14-ranked Kerr-McGee Corp.’s 4Q05 net income climbed to $2.2 billion from $133.8 million a year earlier. Kerr-McGee’s average realized oil price for the quarter, including effects of its hedging program, was up 46% from a year earlier, while production volumes were down, still suppressed from hurricane season.

Top 20

The same firms that were ranked in the top 20 positions by assets at the end of the third quarter appear there again for the end of 4Q05.

With $732.7 billion in assets at year-end 2005, the top 20 companies controlled 91% of the group of 111 firms’ assets. The top 20 also were responsible for 93% of the entire group’s net income for 4Q05 and accounted for 84% of the OGJ200 group’s 2005 capital and exploration expenditures.

The market capitalization of these top 20 firms declined in the last 3 months of last year. At yearend, their market cap totaled $852.9 billion, down 11% from the end of the third quarter of 2005.

The only two companies in this group that had an increase in market cap since the end of the third quarter are Murphy Oil Corp. and Burlington Resources Inc.

Burlington Resources’ merger with ConocoPhillips was announced on Dec. 12, 2005, and closed at the end of March. Burlington Resources’ stock price was bolstered by the terms of the merger agreement, in which Burlington stockholders were to receive $46.50 in cash and 0.7214 shares of ConocoPhillips stock for each share of Burlington stock held.

The OGFJ200 also ranks all of the firms by their capital spending. The list of the top 20 companies in terms of their total 2005 capital and exploratory expenditures is similar to the top 20 as ranked by assets.

The only company among the top 20 spenders but not ranked as high by assets is Newfield Exploration Inc., which had total capital expenditures last year of $1.05 billion. Spending by all of these top 20 companies last year totaled $69.1 billion.

Fast growers

Whittier Energy Corp. was the fastest growing company in the OGJ200 group for 4Q05.

The list of fastest growing companies is determined by growth in stockholder equity. For a company to qualify for the list, it must have posted positive net income for the fourth quarters of 2005 and 2004, and it must have increased its earnings in the most recent quarter vs. the year-earlier quarter. Limited partnerships, newly public companies, and subsidiaries are excluded from this list.

Whittier Energy, Houston, grew stockholder equity 408% during 4Q05 and posted a 117% gain in net income.

The second fastest-growing firm for the quarter was Cimarex Energy Co. The Denver-based producer’s stockholder equity surged 270% from the end of the third quarter of last year, while earnings were up 250%. Cimarex’s long-term debt, however, increased to $352 million from nil during the quarter.

There are 11 companies on the fast growers’ list that also were on the list based on results of the third quarter of 2005. Among these are Cimarex, Noble Energy Inc., Chesapeake Energy Corp., and GMX Resources Inc.

The third and fourth fastest growers during 4Q05 were Southwestern Energy Co. and Petrohawk Energy Corp., respectively.

Delta Petroleum Corp., ranked No. 52 by assets, was the eighth fastest grower for the quarter. Delta Petroleum, Denver, posted a 72% surge in stockholder equity, and its earnings grew to $1.6 million from $652,000 in the last quarter of 2004.

Ranked No. 104 by assets, Sabine Royalty Trust was the eleventh fastest grower on the list. With a 56% gain in stockholder equity, Sabine Royalty Trust’s 4Q05 earnings climbed 66% to $16.4 million from the final 2004 quarter.

And Chevron was the seventeenth fastest grower, having increased stockholder equity 39% during 4Q05. Chevron’s long-term debt grew nearly 16% during the quarter to $11.8 billion.

Parallel Petroleum Corp. posted the biggest gain in quarterly earnings among the 20 fastest growers for 4Q05.

With headquarters in Midland, Tex., Parallel Petroleum reported net income of $8.4 million, up from $1.6 million in the 2004 fourth quarter. Higher oil and gas prices as well as increased production volumes bolstered earnings for the company.

For 4Q05, Parallel’s oil and gas sales volumes were up 28% compared with the fourth quarter of 2004. During this period, the company’s unhedged realized oil price gained 23%, while its unhedged natural gas price realization increased 38%.

Rank by Total Assets

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