The Energy Information Administration (EIA) issues "Financial News for Independent Energy Companies" several weeks after the close of each quarter to report on the financial performance of independent energy companies, which are typically smaller than the majors and do not have integrated production/refining operations. The report covers 50 companies in three segments: independent oil and natural gas producers, oil field service companies, and refiner/marketers.
According to the latest report, earnings for these independent energy companies grew 91 percent in the third quarter of 2004 (Q304) over earnings in the third quarter of 2003 (Q303), as crude oil prices, natural gas prices, and the gross refining margin all increased.
For the ninth consecutive quarter, the world oil price increased relative to the year-earlier level, rising from $27.37 per barrel in Q303 to $38.64 per barrel in Q304, a 41-percent increase.
Contributing to higer oil prices were hurricanes, 4-percent growth in the U.S. economy, slightly lower stock levels in the countries of the Organization for Economic Cooperation and Development, and a 4-percent increase in world oil demand. These factors were somewhat offset by a 5-percent increase in world supply and slightly higher U.S. stocks.
The average U.S. natural gas wellhead price increased 11 percent between Q303 and Q304. Hurricane activity led to natural gas production losses in the Gulf of Mexico, boosting U.S. natural gas prices at the end of the quarter according to the EIA's November Short-Term Energy Outlook (STEO).
Undercutting higher natural gas prices was a 1-percent decrease in U.S. demand for Q304 relative to Q303, according to the December STEO. The growth in natural gas prices was also diminished by increased U.S. natural gas working storage.
Net income of the independent oil and gas producers included in the report rose 8 percent between Q303 and Q304, from $491 million to $531, as revenues grew 38 percent, from $2.1 billion to $2.9 billion. Hurricanes in the Gulf of Mexico reduced production of oil and natural gas and raised the price of natural gas.
Net income of U.S. oil field service companies included in the report jumped 241 percent, from $314 million in Q303 to $1.1 billion in Q304. Revenues rose 13 percent, from $14.4 billion to $16.2 billion.
Revenue and Net Income Summaries for Independent Energy Companies
(Millions of Dollars)
Q303
Q304
Percent
ChangeYTD
2003YTD
2004Percent
Change
Revenue Oil and Gas Producers (20) 2,097
2,888
37.7
6,384
8,107
27.0
Oil Field Companies (25) 14,373
16,214
12.8
40,113
48,002
19.7
Refiners (5) 4,790
6,453
34.7
13,206
17,313
31.1
Total Revenue (50) 21,260
25,554
20.2
59,703
73,422
23.0
Net Income Oil and Gas Producers (20) 491
531
8.3
1,249
1,457
16.6
Oil Field Companies (25) 314
1,073
241.2
1,279
2,215
73.2
Refiners (5) 171
260
52.2
230
557
142.8
Total Net Income (50) 976
1,864
91.0
2,758
4,229
53.4
Note: The number of companies included in each category is in parentheses.
Source: Energy Information Administration, compiled from companies’ quarterly reports to stockholders.
Earnings were strengthened by a 7-percent increase in the worldwide rig count. Higher rig counts and the resulting higher demand for rig services raised day rates on equipment and margins on overall operations, thereby increasing companies' profits. Hurricanes in the Gulf of Mexico reduced earnings for some companies.
The rig count growth rate for the United States was higher at 13 percent, rising from 1,088 in Q303 to 1,229 in Q304. The oil rig count grew 10 percent and the natural gas rig count grew 14 percent. The natural gas rig count increased for seven consecutive quarters relative to the year-earlier level.
Earnings of the independent refiners included in the report increased 52 percent from $171 million in Q303 to $260 million in Q304. Refining margins grew because the $12.96 increase in refined product prices more than offset the $11.27 rise in the price of crude oil."Financial News for Independent Energy Companies” is available on the EIA Web site at http://www.eia.doe.gov/emeu/perfpro/news_i/index.html.
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File last modified: January 27, 2005