Major U.S. energy companies earned $57 billion in 2003, nearly triple their 2002 earnings and the highest net income (in constant 2003 dollars) since 1980. Excluding unusual items, net income rose 78 percent over the previous year.
The major energy companies earned an 18.1-percent return on stockholders’ equity (ROE) in 2003, 4.5 percentage points higher than the ROE of the S&P Industrial companies.
These and related financial facts are found in Performance Profiles of Major Energy Producers 2003 from the Energy Information Administration (EIA). This publication presents financial and operating information from the EIA’s Financial Reporting System (FRS), which contains data provided annually by the major energy companies.
The financial results of the FRS companies were driven for the most part by higher prices in oil and natural gas markets. In 2003, U.S. crude oil prices rose 17 percent, gross margins on petroleum products increased 23 percent, and natural gas wellhead prices jumped 69 percent. Oil and gas production was the most profitable line of business for the FRS companies, providing $44 billion in net income in 2003 and a return on net investment in place (ROI) of 15.3 percent.
For the refining and marketing line of business, 2003 was a substantial turnaround from 2002, which was the least profitable year for refining and marketing in the history of the FRS survey. Refining and marketing ROI was 8.9 percent in 2003, lower than in 2000 and 2001 but much improved from the average ROI of 5.8 percent from 1990 to 1999. Net margins increased to $2.05 per barrel, only the fourth time in the survey that net margins have surpassed $2 per barrel.
Non-energy (chemicals and other industries) was the only line of business showing a decline in net income in 2003.
Two new lines of business were broken out in the FRS survey in 2003, downstream natural gas and electric power. Downstream natural gas contributed $3.6 billion in net income and electric power $1.0 billion.
Cash flow from operations reached $105 billion in 2003, the highest level in the 18 years that the FRS has collected this information. The largest use of cash was for capital expenditures. However, despite increased cash flow, capital expenditures fell almost $21 billion (constant 2003 dollars) to $80 billion. Expenditures for mergers and acquisitions slowed significantly in 2003, falling to $11 billion in 2003 from $35 billion the previous year.
Higher prices encouraged companies to develop their known reserves into producing properties but exploration expenditures were slower to respond. Expenditures for oil and gas exploration by FRS companies fell for the second year in a row, down 21 percent from the 2001 level but still 14 percent higher than the low of 1993.
Development expenditures by FRS companies rose 5 percent in 2003, reaching the highest level since 1982.
FRS Lines of Business in 2003 and Prior Years
2003
Prior Years
• Petroleum
• Downstream natural gas
• Electric power
• Non-energy
• Other energy: coal, nuclear, renewable fuels, and non-conventional energy• Petroleum
• Coal
• Non-energy
• Other energy: electric power, nuclear, renewable fuels, and non-conventional energy
Performance Profiles of Major Energy Producers 2003 has four chapters. Chapter 1 provides details on key financial and operational developments in 2003. Chapter 2 provides a summary of petroleum and natural gas market activity in 2003 as well as information about the FRS companies and their shares of energy production and refining capacity.
Chapter 3 gives more in-depth coverage of financial and operational trends in oil and gas production and refining and marketing. The oil and gas production section includes a review of revenues, production, production costs, and finding costs. The refining and marketing section covers sales, profitability, margins, and costs in domestic and foreign refining and marketing.
Chapter 4 presents several special topics:
- Are the FRS Companies Finding Enough Oil and Gas to Keep Up With Demand?
- The Gulf of Mexico--Is Deep-Shelf Gas the Solution to the Gulf's Declining Natural Gas Reserve Replacement Ratio?
- Are Investment Climates Affecting the Supply of Oil and Gas?
- Are Refining Margins Predictors of Profitability?
Performance Profiles of Major Energy Producers 2003 DOE/EIA-0206(04) is available on the EIA Web site at http://www.eia.doe.gov/emeu/perfpro/
For general information about energy, contact the
National Energy Information Center at 202-586-8800 or infoctr@eia.doe.govIf you are having technical problems with this website, contact the
EIA Webmaster at wmaster@eia.doe.gov or call 202-586-8959
Questions about the report's content should be directed to:
- Gregory Filas, Office of Energy Markets and End Use
greg.filas@@eia.doe.gov
Phone: (202) 586-1347
URL: http://www.eia.doe.gov/emeu/plugs/plmar05.html
File last modified: March 28, 2005