OGJ150 firms post lower 2019 earnings on lower commodity prices

The OGJ150 group of oil and gas producers recorded much subdued financial results in 2019, compared to results in 2018, mainly due to lower commodity prices, and higher impairments.

Net income of the OGJ150 group plummeted, falling by nearly 80% in 2019 to $13.1 billion. Revenues were down 8.2% to $614 billion from $668.63 billion a year ago.

During 2019, the OGJ150 group recorded much lower international liquids reserves but continued to book more liquids reserves in the US. Overall liquids reserves were largely flat compared with the year-ago level.

US liquids production in 2019 increased by 19% compared to a year ago, while international liquids production declined slightly. Overall worldwide liquids production increased by 12.6%.

The group also registered a decline in its US natural gas reserves in 2019, down 3.56%. Gas reserves outside the US also declined, although to a lesser extent of 0.6%. Gas production increased strongly in the US while declining internationally.

To qualify for the OGJ150, oil and gas producers must be US headquartered, publicly traded, and hold oil or gas reserves in the US. Companies appear on the list ranked by total assets but are also ranked by revenues, stockholders’ equity, capital expenditures, earnings, production, reserves, and US net wells drilled.

Comparisons between totals for one year’s OGJ150 with those for another year must consider the company changes that occur. But for any given year, the OGJ list does represent a significant part of US oil and gas industry and therefore accurately reflects trends in industry activity and financial performances.

As always, data for this year’s list reflect the prior year’s operations.

Market snapshot

In 2019, the global demand growth for oil slowed to 800,000 b/d from a growth of 1.15 million b/d seen in 2018. With supply growth of non-OPEC countries far exceeding demand growth, the OPEC+ group continued to enhance production reduction efforts to support the market. The supply and demand fundamentals of the crude oil market experienced an overall easing.

Brent prices increased through the first half of 2019 due to OPEC production cuts and US sanctions on Iran and Venezuela. Prices then started to decline due to heightened concerns about a slowing macroeconomy and weakening oil demand growth amid trade tensions between the US and China. OPEC announced additional production cuts in December 2019, leading to a price increase with Brent prices at $67/bbl at yearend.

The annual average spot price of North Sea Brent crude oil was $64.21/bbl for 2019, representing a decrease of 10% compared with 2018.

Annual average spot price of West Texas Intermediate (WTI) crude oil was $57.03/bbl, representing a decrease of 12.5%. Differentials to Brent had ranged between $4 to $10/bbl in 2019, primarily due to pipeline infrastructure constraints which have restricted flows of inland crude to export outlets on the Gulf Coast.

With lower oil prices, averaged weekly oil rig count declined to 774 in 2019 from 841 in 2018. However, due to increased drilling efficiencies, US crude oil production surged to 12.25 million b/d in 2019 from 10.99 million b/d in 2018.

Gas prices also fell to record lows in 2019, reflecting an oversupplied market due to softer demand in Asia. Major international benchmark indices such as JKM and NBP all recorded sharp declines.

The Henry Hub natural gas price averaged $2.56/MMbtu in 2019, $3.15/MMbtu in 2018, and $2.99/MMbtu in 2017. US dry gas production increased to 33.66 tcf in 2019 from 30.59 tcf in 2020. Increased gas production in the Permian basin resulted in insufficient gas pipeline capacity, leading to depressed natural gas prices in West Texas.

According to Muse, Stancil & Co, refining cash margins in 2019 averaged $16.84/bbl for Middle-West refiners, $14.33/bbl for West Coast refiners, $5.95/bbl for Gulf Coast refiners, and $2.56/bbl for East Coast refiners. In 2018, these refining margins averaged $24.89/bbl, $14.38/bbl, $7.76/bbl, and $2.78/bbl, respectively.

Changes in the group

The OGJ150 group now contains 118 companies. A year ago, there were 113 firms in the compilation. The smallest company on this year’s list, Norris Industries Inc., has yearend 2019 assets of $855,000.

Nine companies listed last year dropped from the list this year for various reasons including mergers and acquisitions, asset sales, and privatization (Table 1).

This year’s list contains 14 new companies that were not on the list in the previous year’s report. They are Empire Petroleum Corp., Alta Mesa Resources Inc., GulfCoast Ultra Deep Royalty Trust, Kosmos Energy Ltd., Amazing Energy Oil and Gas Co., Atlas Growth Partners LP, Carbon Energy Corp., Everflow Eastern Partners LO, Falcon Minerals, Magnolia Oil & Gas Corp., Ovintiv Inc. (Encana), Pedevco Corp., Sundance Energy Inc., and Torchlight Energy Resources Inc.

Among the new companies, Ovintiv, formerly EnCana, ranked highest (No.9) by 2019 yearend assets.

Seven companies on this year’s list are publicly traded limited partnerships (LPs). The largest LP this year is Black Stone Minerals LP, with 2019 yearend assets of $1.55 billion. The smallest LP on the list, Apache Offshore Investment Partners, had assets of $9 million.

Group financial performance

Assets for the OGJ150 group totaled $1,248.5 billion at the end of 2019, up from $1,185.8 billion at the end of 2018 for the same group.

The OGJ150 group’s collective revenues in 2019 were $614 billion, down 8.16% from a year ago.

Due to lower commodity prices, the OGJ150 group reported a combined net income of $13.11 billion for 2019, down 78% from a combined net income of $60.68 billion for 2018.

Meantime, the top 20 companies by assets reported a combined net income of $21.6 billion for 2019, down from $58 billion a year ago. In parallel, the companies ranked below No.20 by assets reported a collective net loss of $8.5 billion in 2019, compared to combined earnings of $2.64 billion in 2018.

Fifty-nine (50%) of the companies in the OGJ150 group posted a profit in 2019, compared with 80 such companies in 2018. There were 21 companies posting net income of over $100 million in 2019, compared to 42 such companies in 2018.

The other half of the companies (59) posted a net loss for 2019, compared to 33 such companies in 2018. In particular, 30 companies had losses exceeding $100 million, compared to only 10 such companies in 2018.

Total stockholders’ equity of the group decreased slightly by 0.84% from a year ago to $633.46 billion in 2019. Capital spending of the group grew by 0.08% to $116.52 billion.

Return on assets for the OGJ150 group decreased to 1.05% in 2019 from 5.12% in 2018. Return on assets for the OGJ150 group was 2.8% for 2017 and a negative 3.4% in 2016.

Return on revenues for the OGJ150 group decreased to 2.14% in 2019 from 9.08% in 2018. Return on revenues was 6.1% for 2017 and a negative 8.6% for 2016.

Group operations

The OGJ150 group’s worldwide liquids production increased to 3.85 billion bbl in 2019, up 12.63% from 2018’s 3.42 billion bbl. US liquids production grew 19.1% to 2.7 billion bbl, while international liquids production decreased slightly by 0.4%.

At yearend 2019, the group’s worldwide liquids reserves decreased slightly to 44.4 billion bbl from 44.6 billion bbl a year ago. International liquids reserves declined by 6.44% to 14.4 billion bbl, while liquids reserves in the US increased 2.82% to 30 billion bbl. US liquids reserves accounted for 67.5% of the group’s total liquids reserves.

The group’s worldwide natural gas production increased 4.64% to 18.22 tcf during 2019. Natural gas production in the US increased by 7.17% to 13.25 tcf, while international gas production declined by 1.5% to 4.97 bcf.

The group’s natural gas reserves in the US decreased 3.56% in 2019 to 167.59 tcf. International gas reserves declined by 0.63% during the year to 53.7 tcf. On a worldwide basis, the group booked a decline in gas reserves of 2.86% to 221.3 tcf.

The group’s total US net wells drilled increased to 8,936 in 2019 from 8,596 in 2018.

Top 20 companies by assets

ExxonMobil holds the top spot, reporting $362.6 billion in assets at yearend 2019, up from the $346.2 billion at yearend 2018.

Chevron, No.2 on the list, reported a decrease of $16 billion in its total assets, from $253 billion at yearend 2018 to $237 billion at yearend 2019, due to divestments.

Occidental Petroleum overtook ConocoPhillips on the list and moved to No.3 from No.4 last year. In 2019, Occidental Petroleum acquired Anadarko Petroleum in a transaction valued at $55 billion. Occidental Petroleum’s total assets at the end of 2019 were $109.3 billion, up from $43.85 billion at the end of 2018. ConocoPhillips is now ranked at No.4 with 2019 yearend assets of $70.5 billion.

Ovintiv Inc. joined the list for the first time and ranked at No.9 with 2019 yearend assets of $21.5 billion.

The top 20 companies had total assets of $1,087.8 billion at yearend 2019, representing 87% of the entire group’s assets. This compares to $1,018.59 billion for the top 20 a year ago.

The top 20 by assets received revenues of $566.9 billion in 2019, down nearly 8% from $615.36 billion in 2018. Collectively, these firms posted 2019 net income of $21.6 billion, down from combined earnings of 58 billion in 2018.

The top 20 companies by assets produced 23.2% more liquids in the US in 2019, totaling 2 billion bbl. Their international liquids production decreased 1.62% to 1.12 billion bbl. Their natural gas production increased 10.6% in the US and decreased 1.57% internationally year-over-year.

The top 20’s liquids reserves climbed 7.3% in the US and declined by 7.18% internationally. Their natural gas reserves in 2019 decreased both domestically and internationally, by 5.76% and 0.72%, respectively.

Capital and exploratory expenditures in 2019 by the top 20 totaled $93 billion, up from $87.3 billion in 2018. Capital expenditures of the top 20 amounted to nearly 80% of the OGJ150 total. This ratio was 75% a year earlier.

 The top 20 companies by assets drilled 6,138 net wells in 2019, 902 more than in 2018 and accounting for 69% of wells drilled by the whole OGJ150 group. This is up from 61% in 2016. Companies outside the top 20 drilled 2,798 net wells in 2019, 560 less than a year ago.

Earning leaders

ExxonMobil, ConocoPhillips, Chevron, EOG Resources, and Murphy top this year’s list of net income leaders.

ExxonMobil recorded a profit of $14.34 billion in 2019, down from a net income of $20.84 billion in 2018. Upstream earnings were $14.44 billion, up $363 million from 2018. The 2019 results included a $3.7 billion gain from the Norway non-operated divestment. Downstream earnings of $2.32 billion decreased by $3.68 billion from 2018, due to the impact of lower North American crude differentials.

ConocoPhillips moved to No.2 in this year’s list. The company’s net income increased to $7.2 billion in 2019 from $6.25 billion in 2018. The 2019 results included a $2.1 billion after-tax gain associated with the completion of the sale of two ConocoPhillips UK subsidiaries.

Chevron, moving to No.3 from No.2 last year, recorded earnings of $2.92 billion for 2019, down from $14.82 billion for 2018. US upstream recorded a loss of $5.09 billion in 2019, compared with earnings of $3.28 billion in 2018. The decrease in earnings was largely due to $8.17 billion in 2019 impairment charges primarily associated with Appalachia shale and Big Foot. International upstream earnings were $7.67 billion in 2019, compared with $10.04 billion in 2018. Downstream earnings also decreased due to lower margins.

Murphy Oil Corp. moved to No.5 on the list from No.21 a year ago. The company reported earnings of $1.15 billion for 2019, up from $411 million for 2018. The results were favorably impacted by higher revenues due to higher volumes, lower losses on crude contracts, and lower impairment losses, which were partially offset by lower oil prices.

Top 20 in capital spending, drilling

With $25.63 billion of capital outlays in 2019, ExxonMobil again leads the OGJ150 group in capital expenditures. This compares to $21 billion a year earlier.

Chevron is No.2 on the list with 2019 capital expenditures of $14.11 billion, compared to $13.79 billion for 2018. Chevron is followed by ConocoPhillips, Occidental, and EOG Resources.

Concho Resources moved to No.6 from No.13 a year ago, with capital expenditures up by $580 million.

Diamondback Energy Inc.’s capital expenditures increased by $1.2 billion in 2019 to $2.7 billion, advancing to No.9 on the list.

EQT Corp. moved to No.17 from No.10 last year, with capital expenditures down by nearly $1.4 billion.

The collective outlays of the top 20 capital spending leaders were $92.95 billion, compared with the previous top 20’s spending of $92.37 billion in 2018.

Thanks to increased drilling efficiencies, the top 20 companies in number of US net wells drilled reported 6,267 wells for 2019, up from 5,690 wells in 2018, despite lower commodity prices.

With a count of 760 wells, EOG Resources again led the group in the number of net wells drilled in the US during 2019. Chevron drilled 695 net wells in the US in 2019 compared to 525 a year earlier and comes in second in the year’s list. ExxonMobil, ranked No. 3, drilled 629 net wells in the US last year, up from 393 wells drilled in 2018. Occidental Petroleum drilled 447 net wells, up from 281 a year earlier. Concho Resources drilled 309 wells in 2019, up from 205 in 2018.

Liquids reserves, production leaders

As they did a year ago, ExxonMobil, Chevron, and ConocoPhillips top the OGJ150 group in worldwide oil production and reserves. Occidental Petroleum is No.4 in terms of worldwide liquids production and reserves.

ExxonMobil’s worldwide liquids reserves decreased to 13.1 billion bbl from 14 billion bbl a year ago, due to significant negative revisions. ExxonMobil’s worldwide liquids production increased to 740 million bbl in 2019 from 698 million bbl in 2018.

Occidental Petroleum reported a 35% increase in its worldwide liquids reserves to 2.7 billion bbl, overtaking EOG at No.4 on the list. Occidental purchased proved reserves of 1.3 billion boe primarily as part of the acquisition of Anadarko, including proved reserves in the Permian Delaware basin, the Denver Julesburg basin, and the Gulf of Mexico.

Devon Energy’s liquids reserves declined to 487 million bbl at yearend 2019 from 1.13 billion at yearend 2018. During 2019, Devon completed its transition to a US oil company by selling its Canadian business and announcing the sale of its Barnett shale assets.

Ovintiv Inc. moved to No.16 with liquids reserves of 632.6 million bbl.

ExxonMobil’s liquids reserves in the US declined 3.6% in 2019 to 3.08 billion bbl, topping the group again followed, by EOG Resources, Chevron, ConocoPhillips and Occidental Petroleum.

With 264 million bbl of output, Chevron produced the most liquids in the US during 2019, up 17% from 2018. The production increase was largely due to shale and tight properties in the Permian basin in Texas and New Mexico. Chevron is followed by EOG, Occidental, ConocoPhillips, and ExxonMobil.

Leaders in gas reserves, production

The company with the most worldwide natural gas reserves in 2019 is ExxonMobil, followed by Chevron, EQT Production, Cabot Oil & Gas Corp., Range Resources Corp., and Antero Resources.

ExxonMobil’s worldwide natural gas reserves decreased to 32,924 bcf at the end of 2019 from 36,350 bcf at the end of 2018, due to significant downward revisions to gas reserves and fewer discoveries.

Chevon’s worldwide gas reserves also decreased to 26,587 bcf at yearend 2019 from 28,733 bcf at yearend 2018, mainly due to portfolio optimizations and low-price realizations in various fields of the Midland and Delaware basins and divestments in the Appalachian basin. The company also sold its natural gas assets in Colombia.

Cabot Oil & Gas Corp., ranked No.5 in the list last year, is No.4 this year. The company’s proved gas reserves increased continuously from 9,353 bcf in 2017 to 11,604 bcf in 2018, and then to 12,903 bcf in 2019. All its gas reserves are in the Appalachian basin of the US.

Devon Energy reported gas reserves of 4,761 bcf at the end of 2018 and ranked No.12 on last year’s list. By yearend 2019, Devon Energy had 1,621 bcf of gas reserves left, reflecting significant divestments.

ExxonMobil leads the group in US gas reserves, followed by EQT, Cabot Oil & Gas, Range Resources Corp., and Antero Resources.

Following ExxonMobil in worldwide gas production are Chevron, EQT Corp., Cabot Oil & Gas, Antero Resources, and ConocoPhillips.

First in US gas production for 2019 among the OGJ150 firms is EQT Corp., followed by ExxonMobil, Cabot Oil & Gas, Antero Resources, and Chesapeake Energy.

Fast-growing companies

Ranking of the fastest growing companies is based on growth in stockholders’ equity. Other qualifications are that companies must have positive net income for 2019 and 2018 and have an increase in net income in 2019. Subsidiary companies, newly public companies, and limited partnerships are not included.

Nine of the OGJ150 companies met the qualifications to be included on the list of fastest-growing companies. Last year, there were 20 companies on the list.

Montage Resources Corp., formed through a combination of Eclipse Resources and Blue Ridge Mountain Resources, led the list this year. Its stockholder’s equity moved up 45% to $997 million, and its net income increased to $31.7 million in 2019 from $18.83 million in 2018. In August 2020, Southwestern Energy entered an agreement to acquire Montage Resources.

SilverBow Resources Inc., an independent E&P company with assets in the Eagle Ford shale in South Texas, ranked second. Its stockholder’s equity moved up 44% and net income increased 53.7% during 2019.

The highest-ranking company by assets on this year’s list of fast growers is ConocoPhillips, which reported an increase in stockholder equity of 9.3% and an increase in net income of 15% in 2019. 

Historical spreadsheets of data presented here are available for purchase from Oil & Gas Journal Research Center. Visit www.ogjresearch.com, and click the tab “Survey datasets” then click the “Past survey datasets” section.