Financial Review of the Global Oil and Natural Gas Industry: First-Quarter 2021
Petroleum and Liquid Fuels Markets Team
July 2021
U.S. Energy Information Administration Independent Statistics & Analysis www.eia.gov Key findings for first-quarter 2021 (1Q21) • Brent crude oil daily average prices were 21% higher in 1Q21 than in 1Q20 and averaged $61 per barrel.
• In this study of 91 companies, the combined petroleum liquids production decreased 11.4% in 1Q21 from 1Q20, and natural gas production decreased 4.2% during the same period.
• Several acquisitions and company dissolutions in 2020 reduced the total number of companies in this study from 100 in 3Q20 (the latest quarterly analysis published) to 91 in 1Q21.
• Capital expenditure in 1Q21 was $48 billion, 28% lower than in 1Q20 and the second lowest amount for any quarter since 2016.
Note: The 91 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 20.
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 2 July 2021 Most company headquarters included in our study were located in the United States geographic distribution of global oil and natural gas company headquarters, first-quarter 2021 number of companies 60 54 50
40
30
20 17 10 10 10
0 United States Canada Europe other
Source: Graph by U.S. Energy Information Administration, based on Evaluate Energy data of companies with public financial statements Note: Other includes Argentina, Brazil, Chile, China, Colombia, and Russia.
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 3 July 2021 About 45% of companies we included produced less than 50,000 barrels per day in first-quarter 2021 distribution of companies by volume of petroleum liquids produced, first-quarter 2021 number of companies
45 41 40 35 30
25 21 20 15 12 9 10 8 5 0 less than 50 50–99 100–499 500–999 1,000 or greater thousand barrels per day
Source: Graph by U.S. Energy Information Administration, based on Evaluate Energy data of companies with public financial statements
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 4 July 2021 Production from the oil and natural gas companies remained lower than quarterly average 2019 production in first-quarter 2021 petroleum liquids and natural gas production, 2016–21 million barrels of oil equivalent per day 45 40 petroleum liquids 35 30 25 natural gas 20 15 10 5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2016 2017 2018 2019 2020 2021
Source: Graph by U.S. Energy Information Administration, based on Evaluate Energy data of companies with public financial statements
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 5 July 2021 Petroleum liquids and natural gas production decreased from first- quarter 2020 to first-quarter 2021 petroleum liquids and natural gas production, 2017–20 year-over-year change 8% 6% petroleum liquids natural gas 4% 2% 0% -2% -4% -6% -8% -10% -12% -14% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2017 2018 2019 2020 2021
Source: Graph by U.S. Energy Information Administration, based on Evaluate Energy data of companies with public financial statements
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 6 July 2021 First-quarter 2021crude oil prices were 21% higher than first-quarter 2020, and natural gas prices increased 46% during the same period Brent crude oil front-month futures prices, 2016–21 Henry Hub natural gas front-month futures prices, 2016–21 dollars per barrel (b) dollars per million British thermal units $80 $13.33 $70 $11.67 $60 $10.00 Brent crude oil price $50 $8.33 $40 $6.67 $30 $5.00 Henry Hub natural gas price $20 $3.33 $10 $1.67 $0 $0.00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2016 2017 2018 2019 2020 2021
Source: Graph by U.S. Energy Information Administration, based on Bloomberg
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 7 July 2021 Cash from operations in first-quarter 2021 totaled $79 billion, 19% higher than in first-quarter 2020 cash from operations, 2017–21 billion dollars $160 2017 2018 2019 2020 2021 $140
$120
$100
$80
$60
$40
$20
$0 Q1 Q2 Q3 Q4
Source: Graph by U.S. Energy Information Administration, based on Evaluate Energy data of companies with public financial statements
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 8 July 2021 Capital expenditure in first-quarter 2021 totaled $48 billion, 28% lower than in first-quarter 2020 capital expenditure, 2017–21 billion dollars $120 2017 2018 2019 2020 2021 $100
$80
$60
$40
$20
$0 Q1 Q2 Q3 Q4
Source: Graph by U.S. Energy Information Administration, based on Evaluate Energy data of companies with public financial statements
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 9 July 2021 About 76% of companies had positive free cash flow, and 75% of companies reported positive upstream earnings in first-quarter 2021 percentage of companies free cash flow positive and percentage with positive upstream earnings, 2016–21 percentage 100% percentage of companies reporting positive upstream earnings 90% 80% 70% 60% 50% 40% 30% percentage of companies free cash flow positive 20% 10% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2016 2017 2018 2019 2020 2021 Source: Graph by U.S. Energy Information Administration, based on Evaluate Energy data of companies with public financial statements Note: free cash flow=cash from operations minus capital expenditures
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 10 July 2021 Capital expenditures were significantly lower than the five-year average in first-quarter 2021, and companies also repaid debt sources and uses of cash billion dollars
$80 $60
$40 sources of cash $20 $0 -$20 2016–20 first- first-quarter 2021 uses of cash -$40 quarter average -$60 -$80 net cash from capital net asset net share net change in dividends net change in operations expenditures sales issuance debt cash
Source: Graph by U.S. Energy Information Administration, based on Evaluate Energy data of companies with public financial statements
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 11 July 2021 The companies decreased debt by $16 billion in first-quarter 2021, and the long-term debt-to-equity ratio decreased to 54% long-term debt-to-equity ratio, 2016–21 net change in debt, 2016–21 percentage billion dollars 80% $80 70% long-term debt-to-equity ratio, left axis $70 60% $60 50% $50 40% $40 30% $30 20% $20 10% net change in debt, right axis $10 0% $0 -10% -$10 -20% -$20 -30% -$30 -40% -$40 -50% -$50 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2016 2017 2018 2019 2020 2021
Source: Graph by U.S. Energy Information Administration, based on Evaluate Energy data of companies with public financial statements
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 12 July 2021 As of first-quarter 2021, the long-term debt-to-equity ratio for energy companies was 54% and for U.S. manufacturing companies was 64% long-term debt-to-equity ratio, 2016–21 percentage 80% U.S. manufacturing companies 70% 60% 50% 40% energy companies 30% 20% 10% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2016 2017 2018 2019 2020 2021 Source: Graph by U.S. Energy Information Administration, based on Evaluate Energy data of companies with public financial statements and U.S. Census Bureau
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 13 July 2021 The energy companies’ combined market capitalization in first-quarter 2021 increased 42% from first-quarter 2020 combined market capitalization, 2016–21 billion dollars $3,000
$2,500
$2,000
$1,500
$1,000
$500
$0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2016 2017 2018 2019 2020 2021
Source: Graph by U.S. Energy Information Administration, based on Evaluate Energy data of companies with public financial statements
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 14 July 2021 The energy companies’ return on equity was -4% in first-quarter 2021 return on equity and production, 2017–21 percentage 15% four-quarter return on equity 10%
5%
0% petroleum liquids and natural gas production year-over-year change -5%
-10%
-15% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2017 2018 2019 2020 2021
Source: Graph by U.S. Energy Information Administration, based on Evaluate Energy data of companies with public financial statements
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 15 July 2021 The return on equity for energy companies remained lower than U.S. manufacturing company returns four-quarter return on equity, 2017–21 percentage 20% U.S. manufacturing companies 15%
10% energy companies 5%
0%
-5%
-10%
-15% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2017 2018 2019 2020 2021 Source: Graph by U.S. Energy Information Administration, based on Evaluate Energy data of companies with public financial statements and U.S. Census Bureau
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 16 July 2021 Upstream capital expenditures on a per-barrel basis averaged $8/BOE in first- quarter 2021 upstream capital expenditure per BOE produced, 2017–21 dollars per BOE, four-quarter moving average $16 $14 $12 $10 $8 $6 $4 $2 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2017 2018 2019 2020 2021 Source: Graph by U.S. Energy Information Administration, based on Evaluate Energy data of companies with public financial statements Note: BOE=barrel of oil equivalent
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 17 July 2021 Upstream capital expenditures per barrel of oil equivalent were 18% of crude oil prices in first-quarter 2021 ratio of upstream capital expenditure per BOE to Brent price, 2016–21 percentage 70%
60%
50%
40%
30%
20%
10%
0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2016 2017 2018 2019 2020 2021 Source: Graph by U.S. Energy Information Administration, based on Evaluate Energy data of companies with public financial statements Note: BOE=barrel of oil equivalent
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 18 July 2021 Crude oil prices increased year over year through second-quarter 2021, indicating increases in cash from operations and capital expenditure cash flow items and Brent prices, 2016–21 year-over-year change 120% 100% 80% cash from operations Brent crude oil price 60% 40% 20% 0% -20% -40% capital expenditure -60% -80% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2018 2019 2020 2021202 Source: Graph by U.S. Energy Information Administration, based on Evaluate Energy data of companies with public financial statements and Bloomberg
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 19 July 2021 Appendix: List of companies Abraxas Petroleum Corporation Carrizo Oil & Gas, Inc EP Energy Corporation Kosmos Energy Ltd Obsidian Energy Ltd. Roan Resources Inc. Triangle Petroleum Corporation Aker BP ASA Cenovus Energy Inc. Equinor ASA Laredo Petroleum Inc. Occidental Petroleum Corporation Rosehill Operating Company, LLC Unit Corporation Amplify Energy Corp. Centennial Resource Development, Inc. Erin Energy Corporation Legacy Reserves Inc. OMV Group Rosneft Vaalco Energy Inc Anadarko Petroleum Corp. Chesapeake Energy Corp. Extraction Oil & Gas, Inc. Lilis Energy Inc. Ovintiv Inc. Royal Dutch Shell Vermilion Energy Inc. Antero Resources Corporation Chevron Corporation ExxonMobil Linn Energy Paramount Resources Ltd. Royale Energy Inc. W & T Offshore APA Corporation Cimarex Energy Co. FieldPoint Petroleum Corporation Lonestar Resources US, Inc. Parex Resources Inc. RSP Permian Inc Whitecap Resources Inc. Approach Resources Inc Clayton Williams Energy, Inc. Frontera Energy Corporation Lukoil PJSC Parsley Energy Inc. Sabine Oil & Gas Corporation Whiting Petroleum Corporation ARC Resources Ltd. Concho Resources Inc Galp Energia Lundin Energy AB PDC Energy, Inc. SandRidge Energy, Inc. WPX Energy, Inc. Bankers Petroleum Ltd ConocoPhillips Gastar Exploration Inc. Magnolia Oil & Gas Corporation PEDEVCO Corp. Seven Generations Energy Ltd. YPF Sociedad Anonima Battalion Oil Corporation Contango Oil and Gas Company Gazprom Neft PJSC Marathon Oil Corp. Pengrowth Energy Corporation Sherritt International Corp Yuma Energy, Inc. Baytex Energy Corp. Continental Resources, Inc. GeoPark Limited Matador Resources Company Penn Virginia Corporation Sinopec Yuma Energy, Inc. (Pre Davis) Berry Corporation Crescent Point Energy Corp Gran Tierra Energy Inc. Maverick Natural Resources, LLC Petrobras (IFRS US$ Current) SM Energy Company Black Stone Minerals LP Denbury Inc. Grizzly Energy LLC Mesquite Energy, Inc. PetroChina SRC Energy Inc Bonanza Creek Energy Inc Devon Energy Corporation Harvest Natural Resources Inc. Mid-Con Energy Partners, LP PetroQuest Energy, Inc Stone Energy Corporation BP Plc. Diamondback Energy Inc. Hess Corporation Midstates Petroleum Company, Inc. PHX Minerals Inc. Suncor Energy Inc. Brazos Valley Longhorn, L.L.C. Earthstone Energy Inc. HighPoint Resources Corporation Montage Resources Corporation Pioneer Natural Resources Company T-Rex Oil, Inc. Cabot Oil & Gas Corporation Ecopetrol Houston American Energy Corp Murphy Oil Corporation QEP Resources Inc Talos Energy Inc. California Resources Corporation Energen Corp Husky Energy Inc. Newfield Exploration Company Range Resources Corporation Tatneft Callon Petroleum Enerplus Corporation International Petroleum CorporationNoble Energy Inc. Repsol TotalEnergies SE Camber Energy, Inc. ENI Jagged Peak Energy Inc. Northern Oil & Gas, Inc Resolute Energy Corporation TransAtlantic Petroleum Ltd. Canadian Natural Resources Limited EOG Resources Jones Energy, Inc. Oasis Petroleum Inc. Ring Energy Inc TransGlobe Energy Corporation Source: U.S. Energy Information Administration, Evaluate Energy Note: Some companies merged, closed, or delisted before 2021. A total of 91 companies existed in first-quarter 2021.
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 20 July 2021 Background • This analysis focuses on the financial and operating trends of 91 global oil and natural gas companies (called the energy companies).
• The data come from the public financial statements each company publishes, which a data service (Evaluate Energy) aggregates for ease of data analysis.
• We kept an energy company’s data in the analysis if it was acquired by another company in the group after first-quarter 2016.
• We collected U.S. manufacturing industry data from the U.S. Census Bureau’s Quarterly Financial Report.
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 21 July 2021 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 issuances or repurchases, and debt issuances 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 all of a company’s outstanding, publicly traded shares.
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 22 July 2021 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.
Petroleum and Liquid Fuels Markets Team | Financial Review First-Quarter 2021 23 July 2021