LAURA BELL, STATISTICS EDITOR - OIL & GAS JOURNAL

FOURTH QUARTER revenues continued their downward spiral and net losses continued to mount as the US petroleum industry saw its worst financial returns in the past 30 years. The OGJ150 group of companies has been hit hard by the oil price downturn. Total revenues for the group was down 38% in the fourth quarter of 2015 compared with the same quarter in 2014, and they dropped 15% in the fourth quarter compared to the prior quarter.

This extends a downward trend that saw revenues for the group drop 39% in the first quarter of 2015, 35% in the second quarter, 39% in the third quarter, and now 38% in the fourth quarter of last year. Net losses for the group were $15.2 billion in the first quarter, $28.5 billion in the second quarter, $47.3 billion in the third quarter, and $58.5 for the 4Q15.

The last time the OGJ150 group had a positive showing 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. In short, 2015 was a year the industry would like to forget. However, with oil prices hovering at barely above $40/bbl in mid-April, a quick recovery doesn't seem to be in the offing. Still, $40 is an improvement over the sub-$30/bbl price three months ago (January) when we looked at 3Q15 financials.

By press time for this issue, only 109 of the 140 publicly traded companies included in the OGJ150 Quarterly Report had reported their financial results to the US Securities Exchange Commission. Of these companies, only 21 reported a positive net income, and of those, five are trusts - VOC Energy Trust, Cross Timbers Royalty Trust, San Juan Basin Royalty Trust, Sabine Royalty Trust, and Permian Basin Royalty Trust.

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In all, 81% of the 109 companies reported a net loss for the quarter. Some of those losses were substantial, as you'll see in this report. For example, 11 companies reported net losses of $2.0 billion or more:

Apache Corp. reported a net loss of $7.7 billion compared to a loss of $5.6 billion in the 3Q15;
Occidental Petroleum reported a net loss of $5.2 billion compared to a loss of $2.6 billion in the 3Q15;
Devon Energy reported a net loss of $4.5 billion compared to a loss of $3.9 billion in 3Q15;
Freeport McMoran reported a net loss of $4.1 billion compared to a loss of $3.7 billion in 3Q15;
ConocoPhillips reported a net loss of $3.4 billion compared to a loss of $1.1 billion in 3Q15;
California Resources Corp. reported a net loss of $3.3 billion compared to a loss of $104 million in 3Q15;
Ultra Petroleum reported a net loss of $3.2 billion, including a non-cash ceiling test write-down of $3.1 billion in the company's carrying value of its natural gas and oil properties stemming from low natural gas and oil prices, compared to a loss of $3.1 million in 3Q15;
Linn Energy reported a net loss of $2.5 billion compared to a loss of $1.6 billion in 3Q15;
Chesapeake Energy reported a net loss of $2.2 billion compared to a loss of $4.6 billion in 3Q15;
Southwestern Energy reported a net loss of $2.1 billion compared to a loss of $1.7 billion in 3Q15; and
Noble Energy reported a net loss of $2.0 billion compared to a loss of $283 million in 3Q15.

As mentioned, 31 companies on the OGJ150 failed to report their earnings to the SEC by press time for this issue. Several of those companies have been delisted from their stock exchange or have received notification of pending delisting. Many of the companies in this report are attempting to restructure debt, and some have filed for bankruptcy protection.

One company dropped off the list from the previous quarter. Houston-based Eagle Rock Energy Partners LP merged with Vanguard Natural Resources LLC for an estimated $474 million. Vanguard Natural Resources also assumed about $140 million in debt from Eagle Rock, which became a wholly-owned indirect subsidiary.

TOTAL REVENUES FOR GROUP

Total revenues for the entire group plummeted by $74.2 billion (38%) in the fourth quarter compared to the same quarter in 2014. Revenues fell by $21.5 billion (15%) just from the third quarter of 2015.

In the fourth quarter of 2014, collective net income for the group of companies was $2.5 billion. In the fourth quarter of 2015, the group reported a net loss of $58.5 billion - a $60.2 billion drop. In 3Q15, the companies reported a $47.3 billion net loss compared with the $58.5 billion loss in the third quarter - an $11.2 billion decline.

YTD CAPITAL SPENDING

Year-to-date capital spending in the fourth quarter of 2015 stood at approximately $157.3 billion compared to $221.1 billion for the same quarter in 2014 - down about $63.8 billion or 29%. By comparison, spending in the previous quarter declined by 24%, so the severity of spending cuts continues to hammer the oilfield services and equipment sectors and other industry vendors as well as workers.

Total asset value for the OGJ150 group of companies has also declined. In 4Q15, asset value fell by $249.4 billion (about 17%) compared to total asset value in the same quarter of 2014. This represents an even steeper decline than the year-over-year for the previous quarter - a 12% drop. Total asset value fell by $95.3 billion (8%) from the third to the fourth quarter of 2015.

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STOCKHOLDERS' EQUITY

In another measure of the effect of low oil prices on producers and investors, stockholders' equity for the collective group of companies fell by $159.8 billion year over year from the fourth quarter of 2014. That represents a 23% drop. By comparison, stockholders' equity for the OGJ150 group declined by $114.6 billion (16%) the last quarter compared to the same quarter in the prior year. In other words, the decline worsened in the fourth quarter.

Compared to the previous quarter, stockholders' equity was down by $64.0 billion, an 11% decline.

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LARGEST IN NET INCOME

The top 20 companies ranked according to net income had a bad quarter. Net income fell by $11.3 billion to a mere $5.9 billion year over year. That's a 66% plunge. Not only that, two companies - Exxon Mobil Corp. and Pioneer Natural Resources Co. account for more than $4.8 billion, or about 81% of the total. That leaves $1.1 billion for the other 18 companies on the top 20 list.

Compared to the previous quarter, net income for the group declined by $1.8 billion - a 24% drop in a single quarter.

Conspicuous by their absence from the list of top 20 companies by net income are such industry giants as Chevron, ConocoPhillips, Anadarko Petroleum, Occidental Petroleum, Hess Corp., Marathon Oil, Devon Energy, EOG Resources, Noble Energy, Apache Corp., Chesapeake Energy, Continental Resources, and many other large independents.

LARGEST IN TOTAL REVENUE

Total revenue for the top 20 companies continues to decline, although by smaller percentages than net income. The year-over-year drop from 4Q14 to 4Q15 was $67.4 billion, or 37%. Compared to the third quarter, revenues fell by $19.8 billion, or 15%.

In the fourth quarter, total revenue for the top 20 companies was $115.3 billion, which amounted to 93% of the revenues for the entire OGJ150 group.

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MARKET CAPITALIZATION

The top five companies in market capitalization are: ExxonMobil ($324 billion); Chevron ($169.4 billion); ConocoPhillips ($57.7 billion); Occidental Petroleum ($51.6 billion); and EOG Resources ($38.9 billion).

There were no "fastest-growing companies" to report for this quarter.

Click here to download the pdf of the OGJ150 Quarterly "4th Quarter ending Dec. 31, 2015"

4Q15 continues year-long decline

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