U.S. ENERGY INFORMATION ADMINISTRATION
WASHINGTON DC 20585

FOR IMMEDIATE RELEASE
February 19, 2004

Profits of the major U.S. energy companies were $20.6 billion in 2002, almost 50-percent lower than in 2001, according to data released today by the Energy Information Administration (EIA) in Performance Profiles of Major Energy Producers 2002.

The primary reason for the drop was the $2.2 billion loss recorded by domestic refining and marketing operations, which was a record-low net income level (profit) for the 26-year history of EIA's Financial Reporting System (FRS).

These losses for domestic refining/marketing are notable because 2001 was the second-most profitable year for that segment of the energy market (Figure 1).

The year 2002 was unusual for the FRS companies in that both upstream and downstream petroleum profits (exclusive of asset write-offs and other unusual items) were lower in 2002 compared to year-earlier levels. Net income from oil and gas operations was down by more than $4 billion, a 21-percent drop, largely due to an excess supply of natural gas in the United States in the first half of 2002, which resulted in lower natural gas prices. Refining and marketing operations showed an income drop of $16.8 billion, or 111 percent, in 2002.

Domestic refiner margins for the energy industry were squeezed in 2002 because petroleum product prices declined while crude oil prices increased.

Although net income from the foreign refining/marketing operations of the FRS companies remained positive, both foreign and domestic operations registered steep declines.

Other key findings reported in Performance Profiles of Major Energy Producers 2002 include:

• Oil prices rose through 2002, which somewhat offset the effect of lower natural gas prices on energy company profits. Net income from worldwide oil and gas production declined by 13 percent in 2002, to $27.9 billion.
  
• Operations associated with the "other energy" line of business lost $1.5 billion in 2002 as the collapse of energy trading operations overwhelmed profits from electricity operations. The "other energy" line is mainly electricity supply and trading, natural gas wholesale and retail trading, and associated services such as risk management.

• In contrast to the many losses, net income for the majors' chemical operations more than doubled in 2002 as a result of higher sales volume.

Other topics covered in Performance Profiles of Major Energy Producers 2002 include:

• Involvement of U.S. energy companies in energy production from renewable energy sources and in the developing U.S. liquefied natural gas market.

• Recent developments in the Gulf of Mexico.

• Recent trends in resource development strategies with a special focus on natural gas.

• Role of mergers and acquisitions in the replacement of oil and natural gas reserves.

Performance Profiles of Major Energy Producers 2002 is available electronically on the EIA Website at: http://www.eia.doe.gov/emeu/perfpro/. The report presents data and analyses of the major energy companies' financial performance by lines of business, resource development issues including regional costs of finding and producing oil and gas, and trends in energy industry restructuring.

EIA Program Contact: Greg Filas, 202/586-1347, greg.filas@eia.doe.gov

EIA Press Contact: National Energy Information Center, (202) 586-8800

EIA-2004-02

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