LAURA BELL, STATISTICS EDITOR - OIL & GAS JOURNAL
TOTAL REVENUE for the OGJ150 group of companies has finally come out of the tailspin it has been in for nearly two years. Net income, although still in red, is starting to see significant improvement as well.
Barring another precipitous drop in commodity prices, which is not expected at this time, it may be safe to say that the worst industry downturn since the 1980s has bottomed out. Still, recovery seems to be spotty with some industry sectors performing better than others. For example, operators and players in the Delaware-Permian appear to be outperforming most other unconventional resource plays in North America. If you're unfortunate enough to be operating in the Fayetteville or Haynesville shales, you may have to wait a while longer.
About 180 companies have filed for bankruptcy in the United States since the start of the year, and there will no doubt be more before year's end. However, a wise man once said that a bankruptcy is not a funeral, and many of these companies are reorganizing and will come back stronger than ever.
Total revenue for the group grew by 17%, or $17.1 billion, in the second quarter of 2016 compared to the previous quarter. This reverses a trend that saw revenues decline 39% in the first quarter of 2015, 35% in the second quarter, 39% in the third quarter, 38% in the fourth quarter, and 31% in the first quarter of 2016.
That's the good news. Compared to the same quarter in 2015, however, revenue was down 26% ($42 billion). Total revenue stood at $117.3 billion for the quarter.
Net income remained in negative numbers. The 2Q16 saw combined a net loss for the group at $17.1 billion compared with $18.3 billion in the prior quarter and $28.5 billion in the 2Q15. Second quarter income figures represented a 10% improvement over the first quarter, and a 40% improvement over the same period in 2015.
The last time the OGJ150 group of companies had a positive net income was the fourth quarter of 2014 when the companies had a positive net income of $2.5 billion on total revenues of $198.1 billion.
By press time for this issue, only 110 of the 136 publicly traded companies included in the OGJ150 Quarterly Report had reported their financial results to the US Securities Exchange Commission. Of these companies, only 20 reported a positive net income for the second quarter:
Exxon Mobil Corp., Murphy Oil Corp., Linn Energy LLC, Energen Corp., Kinder Morgan CO2 Co. LP, Ultra Petroleum, Comstock Resources Inc., Wexpro, Midstates Petroleum Co. Inc., PrimeEnergy Corp., Triangle Petroleum Corp., Evolution Petroleum Corp., VOC Energy Trust, Dorchester Minerals LP, Reserve Petroleum Co., Spindletop Oil & Gas Co., Cross Timbers Royalty Trust, San Juan Basin Royalty Trust, Sabine Royalty Trust, and Permian Basin Royalty Trust.
ExxonMobil, with a net income of nearly $1.7 billion for the quarter, accounted for 55% of the total net income for the entire group. The other 19 companies with a net positive income averaged just over $40.5 million - still better than 117 companies that reported losses.
In all, 81% of the 110 companies reported a net loss for the quarter. Some of those losses were substantial, as you will see in this report. For example, five companies reported net losses of $1.0 billion or more:
Chesapeake Energy Corp. reported a net loss of $1.8 billion (rounded up) compared to a net loss of $921 million in the previous quarter.
Devon Energy Corp. reported a net loss of $1.6 billion (rounded up) compared to a net loss of $3.5 billion in the 1Q16.
Chevron Corp. reported a net loss of $1.5 billion (rounded up) compared to a net loss of $707 million in the prior quarter.
ConocoPhillips reported a net loss of $1.1 billion (rounded up) compared to a net loss of $1.5 billion in the 1Q16.
Freeport McMoRan Inc. reported a net loss of $1.1 billion (rounded up) compared to a positive net income of $397 million in the previous quarter.
The following companies showed substantial improvement in the net income category from the 1Q16:
Devon went from a net loss of $3.5 billion in the first quarter of 2016 to a net loss of $1.6 billion in the second quarter - an improvement of $1.9 billion.
Linn Energy saw a net loss of over $1.3 billion in the first quarter to a net income of more than $208 million in the second - a nearly $1.6 billion improvement.
Concho Resources lost more than $1 billion in the first quarter, but whittled that down to about $266 million in the second quarter - an improvement of almost $755 million.
QEP Resources went from a $864 million loss in the first quarter to a net loss of $197,000 in the second - an improvement of $667 million.
Southwestern Energy lost $1.1 billion in the first quarter but only $593 million in the second - a $539 million improvement.
ConocoPhillips reported a $1.5 billion loss in the first quarter, but lost $1.1 billion in the following quarter - approximately a $400 million improvement.
Anadarko Petroleum lost $998 million in the first quarter, but only $611 million in the second - an improvement of $387 million.
Apache Corp. reported a $561 million loss in the first quarter, but only $200 million in the second - a $361 million improvement.
Energen Corp. lost $203 million in the first quarter, but reported a net income of $37 million in the second - an improvement of about $240 million.
Marathon Oil Corp. reported a $407 million loss in the first quarter but lost only $170 million in the second quarter - a $237 million improvement.
YTD CAPITAL SPENDING
Year-to-date capital spending in the second quarter of this year stood at approximately $50 billion, down 42% from the $87.3 billion at the same point in 2015. This compares with about a 50% spending cut, year over year, in the previous quarter. So there is a slight uptick in spending in the upstream oil and gas sector.
TOTAL ASSET VALUE
Total asset value for the OGJ150 group of companies seems to be levelling off. Asset value for the group declined by less than 1% - from $1.218 trillion in the first quarter to $1.212 trillion in the second. It stood at $1.401 trillion in the 2Q15.
STOCKHOLDERS' EQUITY
In another measure that may indicate economic recovery is approaching, stockholders' equity rose slightly in the second quarter to $545.8 billion, an increase of about $3.2 billion from the first quarter. Although this represents less than 1% growth, at least it is not negative. However, producers still have a long way to go. At this point in 2015, well into the industry downturn, stockholders' equity stood at $667.5 billion. So we have seen an 18% decline year over year.
The top 10 companies, as ranked by stockholders' equity, are: ExxonMobil ($176.9 billion); Chevron Corp. ($148.3 billion); ConocoPhillips ($37.8 billion); Occidental Petroleum Corp. ($23.1 billion); Hess Corp. ($21.2 billion); Marathon Oil ($19.2 billion); Anadarko Petroleum ($14.7 billion); EOG Resources Corp. ($12.1 billion); Pioneer Natural Resources Co. ($10.4 billion); and Noble Energy Inc. ($9.7 billion).
Several new companies joined the OGJ150 group of companies this quarter. Antero Resources Corp. entered at the No. 14 spot with $13.6 billion in total assets. Rice Energy holds the No. 34 spot with $4.4 billion in assets, and Parsley Energy Inc. joined the group at No. 38 with $3.3 billion in total assets.
There were no "fastest-growing companies" to report for this quarter.
Click here to download the PDF of the OGJ150 Quarterly "2nd Quarter ending June 30, 2016"