Riding a surge in crude oil and natural gas prices worldwide, major U.S. energy companies as a group enjoyed record net income in 2000. The 33 companies (the "majors") surveyed by the Energy Information Administration's Financial Reporting System (FRS) posted profits of $53 billion on $911 billion in sales in 2000 (see table), and accounted for 45 percent of U.S. crude oil and natural gas liquids production, 44 percent of natural gas production, and 84 percent of refined products.

Underlying this performance were lower-than-normal petroleum stocks (both globally and in the U.S.) at the beginning of the year, as well as strong natural gas demand and high refinery utilization rates. Natural gas prices tripled during 2000, while the refiner acquisition cost of imported crude oil averaged more than $10 per barrel higher in 2000 than in 1999.

FRS Companies Consolidated Income Statement, 1999 and 2000 (Billion Dollars)
Income Statement Item	1999	2000	Percent Change
Operating Revenues	578.2	910.6	57
Operating Expenses	-546.0	-826.8	51
Operating Income	32.2	83.8	160
Interest Expense	-8.7	-10.6	21
Other Revenue (Expense)	10.2	15.0	47
Income Tax Expense	-10.8	-35.0	223
Income by Line of Business
Petroleuma	24.8	53.5	116
Coal	0.2	(s)	-84
Other Energy	0.7	2.7	286
Nonenergy	2.8	3.5	26
Net Income	22.9	53.2	133
Net Income Excluding Unusual Items	23.7	55.5	134
a The Petroleum line of business includes natural gas operations. (s) = less than 0.05 billion dollars. Notes: Sum of components may not equal total due to independent rounding. Percent changes were calculated from unrounded data. Source: Energy Information Administration.

The majors saw strong profits in all lines of business in 2000. The FRS companies' aggregate net income from worldwide crude oil and natural gas production totaled $41 billion in 2000, an increase of 159 percent over 1999 profits. Downstream, net income from refining and marketing rose 57 percent in U.S. operations and 56 percent in foreign operations. (This outcome, unusual in times of rising prices, was due to constrained supplies and growth in demand, which enabled the majors to pass the price increases along to end-users.)

Earnings from the majors' other businesses likewise rose, contributing over $6 billion to their net income in 2000. The "other energy" line of business -- mostly electricity supply and trading, natural gas wholesale and retail trading, and associated services -- grew rapidly in recent years and added nearly $3 billion to the bottom line in 2000, nearly four times 1999 earnings. The investment base for the majors' other-energy line of business increased eightfold between 1995 and 2000.

Capital spending by the FRS companies reached $109 billion in 2000, a jump of 90 percent over 1999 capital expenditures and an all-time record. Most of the spending growth went for mergers and acquisitions, and most of that involved transactions among FRS companies. Not counting mergers and acquisitions, capital expenditures rose only 3 percent.

The majors' capital spending in 2000 was focused heavily on oil and gas exploration and development. Apart from the merger and acquisition activity, increased U.S. capital spending supported natural gas projects in the Rocky Mountains, oil projects in Alaska's North Slope, and application of advanced technologies in older fields, such as the Permian Basin in Texas. Investment outside the United States supported oil and/or natural gas exploration and development in Canada, South America, and the Asia-Pacific region.

The FRS companies' capital spending on other lines of business also rose. Expenditures on refining jumped from less than $3 billion in 1999 to over $8 billion in 2000. Capital spending on U.S. refining that did not involve mergers and acquisitions rose 19 percent. Capital spending on the other-energy line of business more than tripled from 1999 to 2000, to over $5 billion.

The majors' global additions to crude oil and natural gas reserves from exploration and development (mainly drilling) totaled 6.6 billion barrels of crude oil equivalent in 2000, the second-highest total in the 27 years of FRS data collection. Additions to reserves exceeded worldwide oil and gas production by 22 percent, also the second-best performance since 1974.

Performance Profiles of Major Energy Producers 2000, DOE/EIA-0206(2000); 145 pages, 56 tables, 45 figures. This report is available only on the EIA website.

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File last modified: January 28, 2002