Revenues continue slide, losses less severe
DON STOWERS, EDITOR - OGFJ
LAURA BELL, STATISTICS EDITOR - OIL & GAS JOURNAL
FIRST QUARTER revenues continued to spiral downward, but net losses appear to be recovering a bit due to rising commodity prices early this year. As a group, the companies covered in the OGJ150 Quarterly Report are still operating in the red, but net losses were not as severe as they were in the fourth quarter.
Still, this is the worst financial downturn in the US petroleum industry in decades. If a recovery is on the horizon, it's not yet apparent to most producers in the OGJ150 group of companies. Even super-majors and large independents have not been immune to the industry-wide crisis, but the small-cap and mid-size companies have been hardest hit with many having no choice but to sell core assets or to seek reorganization under Chapter 11 bankruptcy proceedings. Some industry watchers have said that a new wave of bankruptcy filings is likely later this year if oil prices remain under $50 a barrel.
Total revenues for the group fell to $100.2 billion in the first quarter of 2016 compared to the same quarter in 2015, down 31% from $145.2 billion in 1Q15. Revenues dropped 20% from $124 billion in the 4Q15.
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, 38% in the fourth quarter, and now 31% in the 1Q16.
Net income remained in the negative category. The first quarter of 2016 saw combined net losses for the group of companies at just under $19 billion compared with net losses of $15.2 billion in the same quarter of 2015, representing a 25% further decline. However, this was a significant improvement (68%) over the 4Q15, which reported $58.5 billion in net losses for the entire group.
That said, the last time the OGJ150 group had a positive income 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.
By press time for this issue, only 109 of the 140 publicly traded companies included in OGJ150 Quarterly Report had reported their financial results to the US Securities Exchange Commission. Of these companies, only 12 reported a positive net income: Exxon Mobil Corp.; Occidental Petroleum; Kinder Morgan CO2 Co. LP; Freeport McMoran Inc.; Legacy Reserves LP; Wexpro; VOC Energy Trust; Dorchester Minerals LP; Cross Timbers Royalty Trust; San Juan Basin Royalty Trust; Sabine Royalty Trust; and Permian Basin Royalty Trust.
ExxonMobil accounted for 68% of the 12 companies' combined net income of just under $2.6 billion.
In all, 89% 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, five companies reported net losses of $1.0 billion or more.
Devon Energy reported a net loss of $3.5 billion (rounded up) compared to a net loss of $4.5 billion in the previous quarter and $3.9 billion in the 3Q15.
ConocoPhillips reported a net loss of $1.5 billion (rounded up) compared to a net loss of $3.4 billion in the previous quarter and $1.1 billion in the 3Q15.
Linn Energy LLC reported a net loss of $1.3 billion (rounded down) compared to a net loss of $2.5 billion in the previous quarter and $1.6 billion in the 3Q15.
Southwestern Energy reported a net loss of $1.1 billion (rounded down) compared to a net loss of $2.1 billion in the previous quarter and $1.7 billion in the 3Q15.
Concho Resources reported a net loss of $1.0 billion (rounded down) compared to a net loss of just $788,000 in the previous quarter and net income of $180 million (rounded up) in the 3Q15.
Seven companies that reported net losses of $2 billion or more in the 4Q15 performed significantly better in the first quarter.
Apache Corp. reported a net loss of $561 million, a big improvement over the $7.7 billion loss in the 4Q15 and $5.6 billion in the 3Q15.
Occidental Petroleum reported a net income of $78 million, up substantially over the $5.2 billion net loss in the 4Q15 and $2.6 billion net loss in the 3Q15.
Freeport McMoran reported a net income of $397 million, a big difference from the $4.1 billion net loss in the 4Q15 and $3.7 billion net loss in the 3Q15.
California Resources Corp. reported a net loss of $50 million compared to a net loss of $3.3 billion in the 4Q15 and a net loss of $104 million in the 3Q15.
Ultra Petroleum reported a net loss of $22 million (rounded up) compared to a net loss of $3.2 billion in the 4Q15 (including a $3.1 billion write-down in the company's carrying value of its natural gas and oil properties) and a net loss of $3.1 million in the 3Q15.
Chesapeake Energy reported a net loss of $921 million, down considerably from a net loss of $2.2 billion in the 4Q15 and a net loss of $4.6 billion in the 3Q15.
Noble Energy reported a net loss of $287 million compared to a net loss of $2.0 billion in the 4Q15 and $283 million in the 3Q15.
As mentioned, 31 companies on the OGJ150 report 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. A number of them are attempting to restructure debt, and some have filed for bankruptcy protection.
YTD CAPITAL SPENDING
Year-to-date capital spending in the first quarter of this year stood at approximately $24.1 billion, down 50% from the $47.7 billion at the same point in 2015. This compares with a year over year spending cut of about 29% in the previous quarter. So capital spending continues to plummet in the upstream oil and gas sector. The severity of these 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 seems to be stabilizing somewhat. Asset value for the group declined by only 1% from the 4Q15 to 1Q16 - from $1.228 trillion to $1.218 trillion. From the 1Q15 to 1Q16, total asset value fell 15% -from $1.422 trillion.
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 $143.7 billion (21%) year over year from the first quarter of 2015. That compares with a 23% drop in equity (year over year) from the previous quarter. So the decline seems to be slowing somewhat. This is reinforced by the slight drop in stockholders' equity from the 4Q15 to the 1Q16 - just 1%.
The top 10 companies, according to stockholders' equity are: ExxonMobil ($178.5 billion); Chevron Corp. ($151.5 billion); ConocoPhillips ($39.4 billion); Occidental Petroleum ($23.8 billion); Hess Corp. ($21.6 billion); Marathon Oil ($19.4 billion); Anadarko Petroleum ($14.7 billion); EOG Resources ($12.4 billion); Devon Energy ($10.5 billion); and Noble Energy ($10.1 billion).
MARKET CAPITALIZATION
The top 10 companies in assets (market capitalization) as of March 31, 2016, are: ExxonMobil ($346.6 billion); Chevron Corp. ($180 billion); Occidental Petroleum ($52.3 billion); ConocoPhillips ($49.9 billion); EOG Resources ($39.9 billion); Anadarko Petroleum ($24.7 billion); Pioneer Natural Resources ($23 billion); Apache Corp. ($17.6 billion); Hess Corp. ($16.7 billion); and Devon Energy ($14.4 billion).
There were no "fastest-growing companies" to report for this quarter.
Click here to download the pdf of the OGJ150 Quarterly "1st Quarter ending Mar. 31, 2015"