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Financial Review of the Global Oil and Natural Gas Industry 2015

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Financial Review of the Global Oil and Natural Gas Industry 2015 Financial Review of the Global Oil and Natural Gas Industry: 2018 Markets and Financial Analysis Team May 2019 U.S. Energy Information Administration Independent Statistics & Analysis www.eia.gov Key findings for 2018 • Brent crude oil daily average prices were $71.69 per barrel in 2018—35% higher than 2017 levels • The 116 companies analyzed in this study increased their combined liquids and natural gas production 2% from 2017 to 2018 • Proved reserves additions in 2018 approached their highest levels in the 2009–18 period • Finding plus lifting costs were essentially flat from 2017 to 2018 • The companies reduced debt in 2018 by more than $60 billion, the most for any year in the 2009–18 period • Refiners’ earnings per barrel declined slightly from 2017 to 2018 Note: The 116 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. Markets and Financial Analysis Team | Financial Review 2018 2 May 2019 Upstream Markets and Financial Analysis Team | Financial Review 2018 3 May 2019 Geographic distribution of global oil and natural gas company headquarters, 2018 number of companies 90 80 77 70 60 50 40 30 18 20 10 11 10 0 United States Canada Europe Other Source: U.S. Energy Information Administration, Evaluate Energy Note: Other includes Argentina, Brazil, China, Colombia, Mexico, Thailand, and Russia Markets and Financial Analysis Team | Financial Review 2018 4 May 2019 Global oil and natural gas company proved reserves by region of headquarters, 2018 proved reserves by region of headquarters billion barrels of oil equivalent 140 11 companies 120 100 77 companies 80 10 companies 60 40 18 companies 20 0 United States Canada Europe Other Source: U.S. Energy Information Administration, Evaluate Energy Note: Other includes Argentina, Brazil, China, Colombia, Mexico, Thailand, and Russia Markets and Financial Analysis Team | Financial Review 2018 5 May 2019 Distribution of companies by volume of petroleum liquids produced, 2018 number of companies 60 54 50 40 30 26 20 15 12 9 10 0 less than 50 50–99 100–499 500–999 1,000 or greater 2018 liquids production, thousand barrels per day Source: U.S. Energy Information Administration, Evaluate Energy Markets and Financial Analysis Team | Financial Review 2018 6 May 2019 Production from the oil and natural gas companies oil and natural gas production million barrels of oil equivalent per day 45 liquids 40 35 30 25 natural gas 20 15 10 5 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S. Energy Information Administration, Evaluate Energy Markets and Financial Analysis Team | Financial Review 2018 7 May 2019 Liquids and natural gas production increased from 2017 to 2018 oil and natural gas production year-over-year change 6% 5% 4% liquids 3% natural gas 2% 1% 0% -1% -2% -3% 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S. Energy Information Administration, Evaluate Energy Markets and Financial Analysis Team | Financial Review 2018 8 May 2019 The SEC requires companies to value proved reserves based on an average of the prices on the first day of each month Brent crude oil front-month futures price dollars per barrel 100 90 73.13 76.79 77.3 80 69.65 66.57 61.69 70 84.98 72.39 78.15 72.89 60 63.83 67.64 50 40 Brent 2018 first day of month average = $72.08/b Brent 2017 first day of month average = $54.98/b 30 20 10 0 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Source: U.S. Energy Information Administration, Evaluate Energy, Intercontinental Exchange, Bloomberg L.P. Note: SEC = U.S. Securities and Exchange Commission; b = barrel Markets and Financial Analysis Team | Financial Review 2018 9 May 2019 Global proved reserves increased for the second consecutive year in 2018 proved reserves by region billion barrels of oil equivalent 300 other world and associates 250 Russia, Central Asia, 200 and Asia Pacific 150 Middle East and Africa Europe 100 Latin America Canada 50 United States 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S. Energy Information Administration, Evaluate Energy Markets and Financial Analysis Team | Financial Review 2018 10 May 2019 Proved reserves additions for liquids and natural gas totaled 30 billion barrels of oil equivalent in 2018 proved reserve additions billion barrels of oil equivalent 35 30 total oil and natural gas reserve additions 25 20 extensions and 15 discoveries 10 improved recovery 5 revisions 0 -5 -10 -15 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S. Energy Information Administration, Evaluate Energy Markets and Financial Analysis Team | Financial Review 2018 11 May 2019 After net purchases and production, the companies added 10.3 billion barrels of oil equivalent to proved reserves in 2018 change in proved reserves from 2017 to 2018 billion barrels of oil equivalent 40 35 30 other world and associates Russia, Central Asia, and Asia Pacific 25 Middle East and Africa Europe 20 Latin America 15 Canada net +10.3 billion barrels United States of oil equivalent 10 5 0 Extensions and Purchases Sales Production End 2018 discoveries, revisions, improved recovery Source: U.S. Energy Information Administration, Evaluate Energy Markets and Financial Analysis Team | Financial Review 2018 12 May 2019 Excluding revisions, the companies replaced nearly every barrel of production through organic proved reserve additions proved reserve replacement ratio 120% 100% 80% 60% The proved reserve replacement ratio measures the amount of proved reserves a company 40% 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 20% had a reserve replacement ratio of 139% in 2018. 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S. Energy Information Administration, Evaluate Energy Note: Excludes proved reserve revisions. Organic proved reserves additions include those added through extensions and discoveries and improved recovery. Markets and Financial Analysis Team | Financial Review 2018 13 May 2019 Total upstream costs incurred increased in 2018, the first increase since 2013 upstream costs incurred billion dollars 700 proved reserve acquisition unproved reserve acquisition 600 exploration 16% development 7% 5% 8% 5% 500 8% 6% 14% 11% 13% 13% 16% 400 4% 24% 5% 15% 14% 14% 12% 5% 23% 9% 300 4% 12% 13% 11% 18% 8% 12% 74% 10% 200 72% 63% 66% 77% 53% 66% 100 74% 58% 63% 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S. Energy Information Administration, Evaluate Energy Note: Percentages are shares of total upstream costs. Percentages may not sum to 100% because of rounding. Markets and Financial Analysis Team | Financial Review 2018 14 May 2019 Most of the increase in exploration and development spending from 2017 to 2018 was in the United States exploration and development costs incurred billion dollars 600 Associate 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. Europe Canada 8% 8% other world and associates 500 8% 9% 7% Middle East and Africa 8% 6% Latin America 8% 6% 6% 5% 9% Russia, Central Asia, Asia Pacific 400 8% 8% 8% 9% United States 5% 6% 12% 8% 9% 9% 13% 6% 6% 11% 7% 4% 300 7% 9% 12% 10% 7% 21% 7% 8% 6% 8% 25% 13% 7% 7% 7% 26% 27% 7% 8% 200 13% 24% 10% 10% 9% 20% 25% 13% 14% 28% 26% 27% 100 26% 34% 34% 32% 28% 32% 31% 35% 38% 24% 29% 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S. Energy Information Administration, Evaluate Energy Note: 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. Markets and Financial Analysis Team | Financial Review 2018 15 May 2019 Finding plus lifting costs were essentially flat from 2017 to 2018 dollars per barrel of oil equivalent 60 50 40 30 lifting 20 costs finding 10 costs 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S. Energy Information Administration, Evaluate Energy Note: Excludes proved reserve revisions Markets and Financial Analysis Team | Financial Review 2018 16 May 2019 Capital expenditure and cash from operations increased $47 billion and $116 billion, respectively, from 2017 to 2018 cash flow items billion dollars 700 cash from operations 600 500 capital expenditure 400 300 200 100 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S. Energy Information Administration, Evaluate Energy Markets and Financial Analysis Team | Financial Review 2018 17 May 2019 The companies reduced debt by more than $60 billion in 2018, the most in the 2009–18 period cash flow items billion dollars 200 net proceeds from asset sales 150 net share issuance net change in debt 100 50 0 -50 -100 -150 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S. Energy Information Administration, Evaluate Energy Markets and Financial Analysis Team | Financial Review 2018 18 May 2019 The return on equity for energy companies increased to 10% and to 14% for U.S. manufacturing companies return on equity 20% U.S. manufacturing 15% 10% energy companies 5% 0% -5% -10% -15% 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: U.S.
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