Robert J. BeckHigher oil and natural gas prices in first quarter 1997 boosted the profits for a sampling of North American oil and gas companies.
Associate Managing Editor-EconomicsLaura Bell
Statistics Editor
Revenues and profits were up significantly from a year earlier (see table, opposite page).
Slightly higher world demand for petroleum also helped to boost earnings, although in the U.S. demand for petroleum products and natural gas slipped from the level a year earlier.
Total profits for the 139 companies that the Oil & Gas Journal surveyed were up 15.4% in the first quarter compared with the same period in 1996. The increase in earnings was due, in part, to an 11.2% increase in total revenues.
Profitability gains
Of the 139 companies sampled, 108 posted higher first quarter earnings this year than in the same period last year.
Another 25 companies showed lower profits than in first quarter 1996, and only six companies posted losses for the quarter. Of the latter group, two of the companies showed a reduced loss compared with 1996.
Higher crude oil and natural gas prices were the primary reason for the higher revenues and company profits in the first quarter of this year. Increased oil demand worldwide also contributed to the improved earnings. In the U.S., petroleum product and natural gas demand were down marginally from a year earlier.
The worldwide price for export crude oil averaged $20.73/bbl for the first three months of 1997 and was up 15% from first quarter 1996.
In the U.S. the first quarter average price for West Texas Intermediate crude oil was $21.99/bbl, up 17.8% from the same period in 1996.
The average spot price for natural gas was $2.80/Mcf compared with $2.30/Mcf in first quarter 1996. However, by the end of the first quarter, prices of both crude oil and natural gas had weakened and dropped below year-ago levels.
Supply, demand numbers
According to estimates from the International Energy Agency, first quarter worldwide demand for oil averaged 73.9 million b/d, up 1% from the 73.2 million b/d in the same period of 1996.
In the U.S., demand for petroleum products averaged 18.246 million b/d, down marginally from 18.297 million b/d in first quarter 1996. Gas consumption also slipped slightly, to 6.929 tcf from 7.086 tcf in first quarter 1996.
Slightly warmer weather than a year earlier reduced U.S. demand in first quarter 1997.
Independents set pace
The sharpest gain in earnings was by the independent companies.
For first quarter 1997, the small independent group of 36 companies posted an increase of 302% in net earnings, with revenues up 74.5%. Of the small independents, 26 companies had higher profits, while six posted lower profits, and four recorded losses.
Larger independent companies showed earnings up 32.8% over the first quarter a year earlier. Revenues moved up 36.1% in the first quarter.
For this group of 76 companies, 64 had increased profits, while 11 posted declines in earnings, and one had a loss.
The 23 integrated companies in the sample posted first quarter earnings up 11.5% from the same period in 1996. Revenues for this group increased 7.3%.
Profits moved up for 17 of the companies while six had lower earnings, None of the integrated companies had a loss in the first quarter this year and only one in the first quarter of 1996.
The survey also included four companies that are exclusively refiners and not involved in exploration and production. For this group, profits in the 1997 first quarter were down 71.9% even though revenues increased 19.5%. One company had increased profits, two companies showed lower profits, and one posted a loss.
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