OGJ100 financial results for 2018 vary across regions

Despite higher Brent oil prices, the OGJ100 list for 2018 reveals that the companies’ financial results vary across regions. Most companies based in Europe posted noteworthy increases in their net earnings, benefiting from higher commodity prices. Canadian firms as a subgroup, however, reported a nearly 60% decline in net earnings due to depressed Western Canadian Select (WCS) prices and foreign exchange losses.

Oil & Gas Journal’s look at the leading 100 oil and gas producing companies based outside the US allows for comparison of the size and results of the entities. For many of the national oil companies in the report, though, no such information on assets, revenues, earnings, or capital expenditures is available. Companies in OGJ100 are grouped by regions according to the location of their corporate headquarters.

Notably, two companies included last year no longer appear in this year’s OGJ100 list. Australian Worldwide Exploration Ltd. was taken over by Japan’s Mitsui & Co in 2018. Petroleum Co. of Trinidad & Tobago Ltd. (Petrotrin) was shut down in 2018.

All financial results in this report are indicated in US dollars. Due to exchange rate variations, the amount of financial results can be substantially affected when translated into US dollars.

Canadian producers

A sample of 21 Canadian companies included in OGJ100 reported a 21% increase in total revenues in 2018 to $122.6 billion. However, the combined net income was $3.94 billion in 2018, down from $9.87 billion for the same group a year earlier.

WCS prices averaged $38.46/bbl in 2018 compared with $38.97/bbl in 2017, as increased production resulted in takeaway capacity constraints. The West Texas Intermediate-WCS differentials were wider in 2018, averaging $6.76/bbl compared with $3.87/bbl in 2017.

In 2018, the Canadian dollar strengthened slightly vs. the US dollar on average, rising to 0.787 from 0.771 in 2017, which resulted in a negative impact on Canadian firms’ revenues and net income in 2018. However, the Canadian dollar on Dec. 31, 2018, compared with Dec. 31, 2017, was weaker relative to the US dollar, which resulted in foreign exchange losses on the translation of US dollar debt.

Cenovus Energy reported a net loss of $2 billion for 2018 compared with net earnings of $2.5 billion in 2017. The marked decrease was mainly because of lower operating earnings, foreign exchange losses, and losses on divestitures. Lower operating earnings in 2018 were caused by a rise in transportation and blending expenses, risk management losses, a decrease in average liquids sales price, and higher royalties.

Crescent Point Energy Corp. reported a net loss of $2 billion in 2018 compared with a net loss of $95 million in 2017, reflecting the increase in impairment expense, the foreign exchange loss on long-term debt and losses on dispositions.

Suncor Energy Inc.’s net income was down in 2018, reaching $2.54 billion vs. $3.43 billion in 2017 as higher operating earnings in 2018 were offset by foreign exchange losses on US dollar denominated debt, and other losses on equity investment.

Combined, the Canadian group’s assets at yearend 2018 decreased 9.5% to $257.55 billion from $284.6 billion at yearend 2017. This was mainly because of a weaker Canadian dollar relative to the US dollar on Dec. 31, 2018. In Canadian dollars, total assets were down 1.6% from a year ago.

Suncor holds the most assets of the group, followed by Canadian Natural Resources Ltd. and Imperial Oil Ltd.

The Canadian group’s collective capital expenditures in 2018 increased slightly to $19 billion from $18.75 billion a year ago.

Worldwide oil reserves of the group increased 13% from a year ago, while gas reserves increased 6%.

European companies

OGJ100 companies based in Europe recorded an 80% increase in collective net income from the year-ago level. Total revenues increased 24%.

Ranked by assets, Royal Dutch Shell PLC is the largest of the European companies in the OGJ100, followed by OAO Gazprom, BP PLC, and Total SA.

Shell’s net income was $23.9 billion in 2018, compared with $13.4 billion in 2017 and $4.77 billion in 2016. BP’s profit for 2018 was $9.58 billion compared with $3.47 billion in 2017 and $115 million in 2016.

The European group’s collective capital spending rose 10% in 2018 from a year ago. BP’s capital spending increased 41% in 2018 to $25 billion. The increase mainly reflected higher inorganic capital expenditure of $6.7 billion in relation to the BHP acquisition. Total’s capital expenditures also increased 31% to $22.18 billion during the year.

Latin America producers

Petroleo Brasileiro SA (Petrobras) reported a net income of $7.4 billion in 2018 compared with a net income of $169 million in 2017 and a net loss of $4.35 billion posted in 2016. The company’s sales revenues increased 8% to $95.58 billion in 2018 from $88.83 billion in 2017, reflecting increases in domestic average price of oil products and export revenues.

Petroleos Mexicanos (Pemex) reported a net loss of $9.2 billion for 2018 compared with a net loss of $14.2 billion in 2017 and a net loss of $9.25 billion in 2016. The decrease in net loss was primarily due to improved price conditions and the higher peso-to-US dollar exchange rate. However, the company’s proved hydrocarbon reserves and production continued to decline during the year.

Asian, Middle East firms

PetroChina Co. Ltd. is again the largest Asia Pacific company in the OGJ100 list by assets, followed by Petronas and CNOOC.

PetroChina’s net income increased to $11 billion in 2018 from $5.46 billion in 2017, thanks to increasing selling prices of oil and gas products and the increase in the sales volume.

Japan Petroleum Exploration Co. Ltd. reported a loss of $277.2 million for the fiscal year ended Mar. 31, 2018, compared with net earnings of $13.8 billion a year earlier. The loss was due to the posting of impairment loss on the asset of JAPEX Montney Ltd. (JML), a Canadian subsidiary of Japex and the posting of cancellation expenses of the pipeline construction plan relating to the PNW LNG Project.

Saudi Aramco released its 2018 financial results earlier this year—the first time in decades. The company made a profit of $111 billion for 2018, compared to $75 billion for 2017.