2Q revenues drop 35%, income plummets
DON STOWERS, EDITOR - OGFJ
LAURA BELL, STATISTICS EDITOR - OIL & GAS JOURNAL
MOST REASONABLE people would be hard pressed to find something good about the current downturn in the oil and gas industry. At this point, company executives are trying to adjust their strategies to the reality of sub-$50 oil and stay afloat in what may be an extended period of low prices. Although a few have made the adjustment, most have not.
Of the 129 publicly traded US companies reporting on this quarter's OGJ150 report, only 20 reported a positive net income. That's right - 85% reported a net loss. That's a pill that is very hard to swallow for an industry that is traditionally characterized by positive cash flow and profitability.
Let's look at the numbers.
Total revenues for the group of companies was down $83.2 billion, or 35%, in the second quarter of 2015 compared to the same quarter of 2014. However, revenues actually increased by $14.1 billion - about 10% - from the first quarter of this year.
Collective net income for the 129 companies fell by an astonishing $52.1 billion, from a positive $23.6 billion to a negative $28.5 billion compared to the second quarter of 2014. The net income figure was a negative $15.7 billion in the first quarter of 2015. It fell a further $13.3 billion to negative $28.5 billion in the 2Q15 - an 88% slide.
The number of reporting companies grew by five from 124 in 1Q2015 to 129 in the second quarter. Thirteen companies on the OGJ150 failed to report their earnings to the US Securities Exchange Commission by press time for this issue. Several of those companies have filed for Chapter 11 bankruptcy protection, and several others are reported to be considering doing so.
Year-to-date capital spending in the second quarter stood at approximately $87.3 billion compared to $103.6 billion in the same quarter of 2014, about a 16% drop. By comparison, spending in the first quarter of 2015 was down only by 4% compared to the 1Q2014. This is obviously not good news for oilfield service companies and other industry vendors.
Total asset value for the OGJ150 group of companies declined by $71.4 billion - about 5% - in the second quarter compared to the same quarter in 2014. It decreased by $20.4 billion - about 2% - over the past three months alone.
Stockholders' equity for the collective companies plummeted by more than $50.2 billion - about 7% - in the second quarter compared to the same quarter in 2014. Since the first quarter of this year, stockholders' equity has fallen by over $18.8 billion - about 3%.
LARGEST IN NET INCOME
The top 20 companies ranked according to net income had another terrible quarter financially. First, in the entire list, only 20 companies reported a positive net income. Even Exxon Mobil Corp., the largest company on the list by far, reported a 54% drop in net income from the 2Q2014 to the 2Q2015. Chevron Corp., the second largest company on the list reported an incredible 90% reduction in net income over the same period.
Taken as a group, the top 20 companies according to net income reported an $18.4 billion year over year decline in net income to just $5.6 billion in the second quarter - a 77% drop. They were down by $3.3 billion (38%) just since the first quarter this year.
The Top 20 in net income list changed dramatically in the second quarter. Some of the industry giants such as ConocoPhillips, Apache Corp., Devon Energy, Marathon Oil Corp., Hess Corp., Chesapeake Energy, Noble Energy, Linn Energy, Freeport McMoRan, and Murphy Oil were not on the list. All report negative net income for the quarter. In all, only five of the companies on the top 20 list in net income returned to the list in the second quarter - ExxonMobil, Chevron, Kinder Morgan CO2 Co., San Juan Basin Royalty Trust, and Continental Resources.
Income as a whole was down significantly for everyone on the list. Here are the 15 new companies on the list and how much they reported in net income for the quarter: No. 4 Occidental Petroleum ($176 million); EV Energy Partners LP ($164 million); Anadarko Petroleum ($108 million); Sabine Royalty Trust ($9.5 million); EOG Resources ($5.3 million); Dorchester Minerals LP ($3.8 million); Permian Basin Royalty Trust ($3.5 million); Evolution Petroleum Corp. ($3.3 million); VOC Energy Trust ($2.7 million); Cross Timbers Royalty Trust ($1.7 million); Ring Energy ($534,000); Avalon Oil & Gas ($139,000); Spindletop Oil & Gas ($48,000); Apache Offshore Investment Partnership ($45,000); and Reserve Petroleum Co. ($31,000).
LARGEST IN TOTAL REVENUE
The Top 20 companies in total revenue showed a dramatic year-over-year drop from the 2Q2014 to the 2Q2015 - down by $79.2 billion to just $149.7 billion in total revenue. That represents a 35% decline. However, revenues were actually up compared to the first quarter of the year, rising by nearly $14.2 billion, representing an 11% increase.
Three companies dropped off the Top 20 list in total revenues - Linn Energy LLC, WPX Energy, and EQT Production. Newcomers to the list include California Resources Corp., QEP Resources Inc., and Freeport McMoRan Inc.
ExxonMobil led the group in total revenue with $74.1 billion for the quarter. XOM was followed by Chevron at $40.4 billion in revenues, ConocoPhillips at $8.7 billion, Occidental Petroleum at $3.5 billion, Devon Energy at $3.4 billion), Chesapeake Energy at $3.0 billion, Anadarko Petroleum at $2.6 billion, EOG Resources at $2.5 billion), Apache Corp. at $2.0 billion, and Hess Corp. at $1.9 billion.
BIG SPENDERS
Everyone wants to know who the big spenders are. Year-to-date collective spending by the top 20 companies in the second quarter of 2015 fell by 17% from the same quarter in 2014 to slightly more than $70 billion. This compares to just over $84 billion a year earlier.
Top spenders, in order, are: Chevron Corp. ($15.2 billion); ExxonMobil ($14.3 billion); ConocoPhillips ($5.7 billion); Anadarko ($3.4 billion); Devon ($3.1 billion); Occidental ($3.1 billion); Apache ($3.0 billion); EOG ($2.6 billion); Hess ($2.4 billion); and Marathon Oil ($2.3 billion).
The next 10 includes: Chesapeake ($2.2 billion); Continental Resources ($2.0 billion); Noble Energy ($1.9 billion); Whiting Petroleum ($1.7 billion); Concho Resources ($1.5 billion); Murphy Oil ($1.4 billion); Pioneer Natural Resources ($1.1 billion); SM Energy ($974,000); Southwestern Energy ($974,000); and Newfield Exploration ($916,000).
FASTEST-GROWING COMPANY
We have only one "fastest-growing" company to honor this quarter - Houston-based Evolution Petroleum Corp., which recorded a 0.9% increase in its stockholders' equity. The company trades on the AMX under the ticker symbol "EPM" and has a current market cap of about $220 million. Founded in 2003, EPM is ranked No. 102 on the OGJ150 report. The president and CEO of the company is Robert S. Herlin.