financial review of the global oil and natural gas …financial review of the global oil and natural...

www.eia.govU.S. Energy Information Administration Independent Statistics & Analysis

Financial Review of the Global Oil and Natural Gas Industry: 2019

Markets and Financial Analysis Team

May 2020

Key findings for 2019• Brent crude oil daily average prices were $64.16 per barrel in 2019—11% lower than 2018

levels

• The 102 companies analyzed in this study increased their combined liquids and natural gas production 2% from 2018 to 2019

• Proved reserves additions in 2019 were about the same as the 2010–18 annual average

• Finding plus lifting costs increased 13% from 2018 to 2019

• Occidental Petroleum’s acquisition of Anadarko Petroleum contributed to the largest reserve acquisition costs incurred for the group of companies since 2016

• Refiners’ earnings per barrel declined slightly from 2018 to 2019

Markets and Financial Analysis Team | Financial Review 2019 May 2020 2

Note: The 102 companies analyzed in this study publish publicly available financial statements. A full list of the companies included and a glossary of terms begin on slide 25.

Upstream


number of companies

Markets and Financial Analysis Team | Financial Review 2019 May 2020

Geographic distribution of global oil and natural gas company headquarters, 2019

Source: U.S. Energy Information Administration, based on Evaluate Energy data of companies with publicly available financial statementsNote: Other includes Argentina, Brazil, Chile, China, Colombia, Mexico, Thailand, and Russia

4

65

169

12

0

10

20

30

40

50

60

70

United States Canada Europe Other

proved reserves by region of headquartersbillion barrels of oil equivalent


Global oil and natural gas company proved reserves by region of headquarters, 2019

5

0

20

40

60

80

100

120

140

United States Canada Europe Other

65 companies

16 companies

12 companies

9 companies

Source: U.S. Energy Information Administration, based on Evaluate Energy data of companies with publicly available financial statementsNote: Other includes Argentina, Brazil, Chile, China, Colombia, Mexico, Thailand, and Russia

number of companies


Distribution of companies by volume of petroleum liquids produced, 2019

Source: U.S. Energy Information Administration, based on Evaluate Energy data of companies with publicly available financial statements

6

37

16

28

912

0

5

10

15

20

25

30

35

40

less than 50 50–99 100–499 500–999 1,000 or greater2019 liquids production, thousand barrels per day

oil and natural gas productionmillion barrels of oil equivalent per day


Production from the oil and natural gas companies


7

0

5

10

15

20

25

30

35

40

45

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

liquids

natural gas

oil and natural gas productionyear-over-year change


Liquids and natural gas production increased from 2018 to 2019


8

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

2011 2012 2013 2014 2015 2016 2017 2018 2019

liquids

natural gas

Brent crude oil front-month futures pricedollars per barrel


The SEC requires companies to value proved reserves based on an average of the prices on the first day of each month

Source: U.S. Energy Information Administration, Intercontinental Exchange, Bloomberg L.P.Note: SEC = U.S. Securities and Exchange Commission; b = barrel

9

54.9162.75

65.07 69.01

72.18

61.28 65.06

60.50 58.6658.89

61.6960.92

0

10

20

30

40

50

60

70

80

Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19

Brent 2019 first day of month average = $62.58/bBrent 2018 first day of month average = $72.08/b

proved reserves by regionbillion barrels of oil equivalent


Global proved reserves totaled 282 billion barrels of oil equivalent at the end of 2019

Source: U.S. Energy Information Administration, based on Evaluate Energy data of companies with publicly available financial statementsNote: Mergers and acquisitions between companies may affect net reserve changes for the year and comparisons between years

10

0

50

100

150

200

250

300

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Russia, Central Asia, and Asia Pacific

Europe

Middle East and Africa

Latin America

Canada

United States

other world and associates


Proved reserves additions for liquids and natural gas totaled 20 billion barrels of oil equivalent in 2019


proved reserve additionsbillion barrels of oil equivalent

11

-15

-10

-5

0

5

10

15

20

25

30

35

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

revisionsimproved recovery

extensions and discoveries

total oil and natural gas reserve additions


After net purchases and production, the companies added 1.7 billion barrels of oil equivalent to proved reserves in 2019

Source: U.S. Energy Information Administration, based on Evaluate Energy data of companies with publicly available financial statementsNote: Mergers and acquisitions between companies may affect net reserve changes for the year and comparisons between years

change in proved reserves from 2018 to 2019billion barrels of oil equivalent

12

0

5

10

15

20

25

30

Extensions anddiscoveries, revisions,

improved recovery

Purchases Sales Production End 2019

Russia, Central Asia, and Asia Pacific

EuropeMiddle East and Africa

Latin AmericaCanada

United States

other world and associates

net +1.7 billion barrels of oil equivalent

0%

20%

40%

60%

80%

100%

120%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

proved reserve replacement ratio


Excluding revisions, the companies replaced 80% of their production through organic proved reserve additions

Source: U.S. Energy Information Administration, based on Evaluate Energy data of companies with publicly available financial statementsNote: Excludes proved reserve revisions. Organic proved reserves additions include those added through extensions and discoveries and improved recovery.

13

The proved reserve replacement ratio measures the amount of proved reserves a company added compared with the amount it produced that year. A proved reserve replacement ratio higher than 100% means it discovered more proved reserves that year than it produced, adding to its resource base and future potential production. Including revisions, the energy companies had a reserve replacement ratio of 91% in 2019.

upstream costs incurredbillion dollars


Total upstream costs incurred increased in 2019, largely driven by Occidental Petroleum’s acquisition of Anadarko Petroleum in 2019

Source: U.S. Energy Information Administration, based on Evaluate Energy data of companies with publicly available financial statementsNote: Percentages are shares of total upstream costs. Percentages may not sum to 100% because of rounding

14

53%66%

72% 63% 74%

77%58% 63% 66% 63%

12%

15%

16%13% 14%

14%

10% 12%11% 11%

24%13%

8%8% 5%

5%

8%13% 9%

17%

11% 6%

5%

16%7%

4%

23% 12% 14%10%

0

100

200

300

400

500

600

700

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

proved reserve acquisitionunproved reserve acquisitionexplorationdevelopment

exploration and development costs incurredbillion dollars


Most of the increase in exploration and development spending from 2018 to 2019 was in Latin America

15

32% 34% 32% 28% 34%31% 29% 35% 38% 37%

20%24%

26% 27%25%

25%

27%28% 26% 25%

21% 12%11% 13% 12%

13%

13%10% 9% 13%

9% 9%9% 8% 9%

10%

10%8% 7%

6%

5% 6%5%

6% 6%

7%

7%8% 6%

8%

8% 8%8%

9% 7%

6%

7%7% 7%

6%

6% 8%

8%8% 8%

8%

7%4%

6%5%

0

100

200

300

400

500

600

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

United StatesRussia, Central Asia, Asia Pacific

Latin AmericaMiddle East and Africa

other world and associatesCanadaEuropeAssociate company spending represents affiliates in which a company owns an equity stake. The

costs incurred report does not provide a geographic breakdown of associate company spending.

Source: U.S. Energy Information Administration, based on Evaluate Energy data of companies with publicly available financial statementsNote: Percentages are shares of global exploration and development costs incurred. Percentages may not sum to 100% because of rounding. Includes costs incurred from unproved reserves acquisition

dollars per barrel of oil equivalent


Finding plus lifting costs increased 13% from 2018 to 2019

Source: U.S. Energy Information Administration, based on Evaluate Energy data of companies with publicly available financial statementsNote: Excludes proved reserve revisions

16

0

10

20

30

40

50

60

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

finding costs

lifting costs

cash flow itemsbillion dollars


Capital expenditure and cash from operations decreased $4 billion and $56 billion, respectively, from 2018 to 2019


17

0

100

200

300

400

500

600

700

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

cash from operations

capital expenditure

cash flow itemsbillion dollars


Other uses of cash in 2019 included debt reduction, share repurchases, and property acquisition


18

-150

-100

-50

0

50

100

150

200

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

net proceeds from asset salesnet share issuancenet change in debt

return on equity


The return on equity for energy companies and U.S. manufacturing decreased to 6% and 13%, respectively, in 2019

Source: U.S. Energy Information Administration, based on Evaluate Energy data of companies with publicly available financial statements and U.S. Census Bureau

19

-15%

-10%

-5%

0%

5%

10%

15%

20%

2011 2012 2013 2014 2015 2016 2017 2018 2019

energy companies

U.S. manufacturing

long-term debt-to-equity ratio


The long-term debt-to-equity ratio increased to 54% for the energy companies and to 61% for U.S. manufacturing companies

Source: U.S. Energy Information Administration, based on Evaluate Energy data of companies with publicly available financial statements and U.S. Census Bureau

20

0%

10%

20%

30%

40%

50%

60%

70%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

energy companies

U.S. manufacturing

As of 2019, companies began complying with a new accounting regulation to recognize all leases with a term of more than 12 months on their balance sheets (IFRS 16), causing a one-time increase in their debt-to-equity ratios.

Downstream


distillation capacitymillion barrels per day


Global refining distillation capacity increased slightly from 2018 to 2019

22

0

10

20

30

40

50

60

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

United States and Canada

global refiners

Europe

Latin America

Russia

Asia Pacific

Source: U.S. Energy Information Administration, based on Evaluate Energy data of companies with publicly available financial statementsNote: A global refiner is a company with refining assets in different regions

capacity utilization


Capacity utilization for all companies was 86% in 2019, but refinery problems in Mexico contributed to low Latin American utilization

23

50%55%60%65%70%75%80%85%90%95%

100%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


global refiners

Europe

Latin America

Russia

Asia Pacific

=

Source: U.S. Energy Information Administration, based on Evaluate Energy data of companies with publicly available financial statementsNote: A global refiner is a company with refining assets in different regions. Because of acquisition accounting between the merger of Marathon Petroleum and Andeavor in 2018, the reported annual refinery runs number is lower than the sum of each company’s quarterly refinery runs. This accounting method artificially decreased capacity utilization in the United States and Canada for 2018

earnings per barrel processeddollars per barrel


Earnings per barrel processed declined for most refiners from 2018 to 2019

24

-25-20-15-10

-505

1015202530

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


global refiners Europe Latin America

RussiaAsia Pacific

Source: U.S. Energy Information Administration, based on Evaluate Energy data of companies with publicly available financial statementsNote: A global refiner is a company with refining assets in different regions


Appendix: List of companies in the upstream analysis

Source: U.S. Energy Information Administration, based on Evaluate Energy data of companies with publicly available financial statementsNote: Some companies merged, split, or delisted before 2019. A total of 102 companies existed in 2019.

25

Abraxas Petroleum Corporation Cenovus Energy Inc. Equinor ASA Linn Energy Pemex SinopecAker BP ASA Centennial Resource Development, Inc. Erin Energy Corporation Lonestar Resources US, Inc. Pengrowth Energy Corporation SM Energy CompanyAmplify Energy Corp. Chesapeake Energy Corp. Extraction Oil & Gas, Inc. Lukoil (IFRS) Penn Virginia Corporation Sonde Resources Corp.Anadarko Petroleum Corp. Chevron Corporation ExxonMobil Magnolia Oil & Gas Corporation Petrobras (IFRS US$ Current) SRC Energy IncAntero Resources Corporation Cimarex Energy Co. FieldPoint Petroleum Corporation Marathon Oil Corp. PetroChina Stone Energy CorporationApache Corporation Clayton Williams Energy, Inc. Forest Oil Corporation Mariner Energy Petrominerales Ltd. Suncor Energy Inc.Apco Oil and Gas International Inc CNOOC Ltd Frontera Energy Corporation Matador Resources Company PetroQuest Energy, Inc Talos Energy Inc.Approach Resources Inc Concho Resources Inc Galp Energia Maverick Natural Resources, LLC Pioneer Natural Resources Company TNK-BP International LtdAthlon Energy Inc. ConocoPhillips Gastar Exploration Inc. Mid-Con Energy Partners, LP PTT TotalATP Oil & Gas Corp. Contango Oil and Gas Company Gazprom Neft Montage Resources Corporation QEP Resources Inc TransAtlantic Petroleum Ltd.Bankers Petroleum Ltd Continental Resources, Inc. GeoPark Limited Murphy Oil Corporation Range Resources Corporation TransGlobe Energy CorporationBattalion Oil Corporation Crescent Point Energy Corp Gran Tierra Energy Inc. Newfield Exploration Company Repsol T-Rex Oil, Inc.Baytex Energy Corp. Denbury Resources Inc. Grizzly Energy LLC Nexen Inc. Ring Energy Inc Triangle Petroleum CorporationBerry Petroleum Corporation Devon Energy Corporation Harvest Natural Resources Inc. Noble Energy Roan Resources Inc. Unit CorpBG Group Diamondback Energy Inc. Hess Corporation Northern Oil & Gas, Inc Rosehill Resources Inc. Vaalco Energy IncBlack Stone Minerals LP Earthstone Energy Inc. HighPoint Resources Corporation Oasis Petroleum Inc. Rosetta Resources Inc. W & T OffshoreBlue Ridge Mountain Resources, Inc. Ecopetrol Houston American Energy Corp Occidental Petroleum Corporation Rosneft Whitecap Resources Inc.Bonanza Creek Energy Inc Endeavour International Corp Husky Energy Inc. OMV Group Royal Dutch Shell Whiting Petroleum CorporationBP Plc. Energen Corp International Petroleum Corporation Ovintiv Inc. Royale Energy Inc. WPX Energy, Inc.Brazos Valley Longhorn, L.L.C. Energy XXI Gulf Coast, Inc. Jagged Peak Energy Inc. Panhandle Oil & Gas Inc. RSP Permian Inc YPF Sociedad AnonimaCalifornia Resources Corporation Enerplus Corporation Kodiak Oil & Gas Corp. Paramount Resources Ltd. Sabine Oil & Gas Corporation Yuma Energy, Inc.Callon Petroleum ENI Kosmos Energy Ltd Parex Resources Inc. Sanchez Energy Corp Yuma Energy, Inc. (Pre Davis)Camber Energy, Inc. EOG Resources Laredo Petroleum Inc. Parsley Energy Inc. SandRidge Energy, Inc.Canadian Natural Resources Limited EP Energy Corporation Legacy Reserves Inc. PDC Energy, Inc. Seven Generations Energy Ltd.Carrizo Oil & Gas, Inc EPL Oil & Gas Inc Lilis Energy Inc. PEDEVCO Corp. Sherritt International Corp


Appendix: List of companies in the downstream analysis

Source: U.S. Energy Information Administration, based on Evaluate Energy data of companies with publicly available financial statementsNote: Some companies merged, split, or delisted before 2019. A total of 35 companies existed in 2018.

26

Alon USA Energy Gazprom Neft Neste Corporation Royal Dutch ShellAndeavor Grupa Lotos OMV SinopecBlue Dolphin Energy Co HollyFrontier Corporation Par Pacific Holdings, Inc. Suncor Energy Inc.BP Plc. Husky Energy Inc. PBF Energy Inc TNK-BP International LtdChevron Corporation Imperial Oil Limited Pemex TotalConocoPhillips INA Group Petrobras (IFRS US$ Current) TUPRASCVR Energy, Inc. Indian Oil Corporation Limited PetroChina Valero Energy CorporationDelek US Holdings Lukoil (IFRS) Phillips 66 Western Refining Inc.ENI Marathon Oil Corp. PKN OrlenExxonMobil Marathon Petroleum Corporation RepsolGalp Energia MOL Rosneft

Background• The upstream analysis focuses on the financial and operating trends of 102 global oil

and natural gas companies (called the companies or the energy companies), and the downstream analysis focuses on 35 companies

• The data come from the public financial statements each company publishes, which a data service (Evaluate Energy) aggregates for ease of data analysis

• For consistency, an energy company’s assets that were acquired by another company in the group in 2010 or later were kept in the data for the previous years

• Several charts show comparisons between energy companies and the U.S. manufacturing industry. The data were collected from the U.S. Census Bureau’s Quarterly Financial Report

27Markets and Financial Analysis Team | Financial Review 2019 May 2020

Brief description of terms• Cash from operations is a measure of income from the company’s regular business

activities

• Capital expenditure represents cash used to purchase property, plant, and equipment

• Financing activities measure inflows and outflows in debt or equity markets, including dividends, share issuance or repurchases, and debt issuance or repayments

• Return on equity is a measure of the profit a company earns on money that shareholders have invested

• Market capitalization is the total value of a company’s outstanding, publicly traded shares


Brief description of terms• Net income represents profits after taxes and depreciation

• Asset impairments occur when a company lowers the estimated value of a property to reflect current market value, which may result from the loss of production potential or a decline in oil prices

• Upstream activities refers to crude oil exploration, production, and other operations that occur before refining

• Downstream activities refers to refinery operations, product sales, and marketing at the wholesale and retail levels


financial review of the global oil and natural gas …financial review of the global oil and natural...

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