Financial News for Independent Energy Companies, Third Quarter 2009

Release Date: December 9, 2009
Next Release Date: March, 2010

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Notes:

  • The "Financial News for Independent Energy Companies" reviews the financial performance of companies that are typically smaller than the majors and do not have integrated production/refining operations.
  • While the composition of the companies in this report changes over time, the changes are usually incremental, and don't significantly affect comparisons across time periods.
  • All dollar figures and comparisons are in constant third-quarter 2009 dollars.
  • Contact:
    Bob Schmitt
    robert.schmitt@eia.doe.gov
    Fax:(202) 586 9573
Third Quarter 2009 Key Findings
Net Income: $2.9 billion Revenues: $34.3 billion
  • Independent energy companies reported a 64-percent decrease in net income relative to the third quarter of 2008 (Q308), with earnings declines for producers, oil field companies, and refiners.
  • Overall revenue dropped 29 percent from Q308, with declines for each of the three types of companies.
  • Earnings and revenue declines resulted from lower oil and natural gas prices and refining margins.

Net Income for Independent Energy Companies:

  • Net income for independent energy companies plummeted 64 percent in the third quarter of 2009 (Q309) from Q308. Oil and gas producers and refiners reported their lowest third-quarter income in at least the last five years due to lower oil and natural gas prices and refining margins. Costs have not fallen as much percentage-wise as prices, so net income is down more than revenue for each of the three categories of independent energy companies.
  • Producer net income dropped 92 percent to $232 million in Q309. Every producer covered in this report had a decline in net income compared to Q308.
  • Oil field company net income dropped 43 percent from Q308, to $2.7 billion, its lowest third-quarter since 2005. Rig counts fell sharply from Q308, reflecting the decline in prices and producer earnings.
  • Refiner net income dropped 96 percent to $14 million in Q309. Every refiner covered in this reported a decline in net income compared to Q308.

Year-to-Date Net Income for Independent Energy Companies:

  • Year-to-date trends were similar to third quarter trends, with producers, oil field companies, and refiners all reporting earnings declines compared to year-ago levels. Producers reported negative year-to-date income due to losses in the first two quarters.

Revenues for Independent Energy Companies:

  • Overall revenue for the companies in this report dropped $14.2 billion or 29 percent from the year-ago quarter.
  • Oil and gas producer revenue dropped 43 percent from the year-ago quarter, though at $3.0 billion it was close to the third-quarter average over 2004-2007.
  • Oil field company revenue slipped 22 percent from Q308, and was 7 percent below the third-quarter average over 2004-2008.
  • Revenue for oil refiners declined 36 percent but was 4 percent above the third-quarter average over 2004-2008.

Year-to-Date Revenues for Independent Energy Companies:

  • For each of the three categories of independents energy companies, year-to-date revenue dropped substantially from the prior-year quarter. However, year-to-date revenues for oil field companies and refiners were close to their average year-to-date levels in the third quarter over 2004-2008.

Supplemental Figures:

  • U.S. oil and gas rig counts plummeted by 32 percent and 56 percent, respectively, over the year-ago quarter.
  • U.S. and Canadian total rig counts plummeted by 51 percent and 57 percent, respectively, over the year-ago quarter, compared to a drop of 12 percent for the rest of the world.

  • Crude oil prices in Q309 were 42 percent lower than in Q308 and 8 percent less than the average for the third quarter of 2004-2008 (in Q309 dollars).
  • Natural gas prices of Q309 were 64 percent lower than in Q308 and 56 percent lower than the third quarter average for 2004-2008 (measured in Q309 dollars).

  • The gross refining margin for Q309 was 40 percent lower relative to Q308 and 46 percent lower than the third-quarter average for 2004-2008 (in Q309 dollars).

Supplemental Tables:

Table 1. Revenue and Net Income Summaries for Independent Energy Companies (Million Q309 Dollars)
Companies Q308 Q309 Percent
Change		 Year-to-
Date 2008		 Year-to-
Date 2009		 Percent
Change
Revenue
Oil and Gas Producers (15)a 5,266 2,981 -43.4 15,123 8,279 -45.3
Oil Field Companies (17) 27,143 21,055 -22.4 76,339 66,049 -13.5
Refiners (5) 16,126 10,309 -36.1 43,247 25,539 -40.9
    Total Revenue (37) 48,535 34,344 -29.2 134,709 99,867 -25.9
Net Income
Oil and Gas Producers (15) 3,069 232 -92.4 4,289 -2,644 -161.6
Oil Field Companies (17) 4,694 2,656 -43.4 13,609 8,370 -38.5
Refiners (5) 357 14 -96.0 523 -34 -106.4
    Total Income (37) 8,119 2,903 -64.2 18,421 5,693 -69.1
a The number of companies reporting revenue and net income is in parentheses.
Notes: The net income data have been adjusted to exclude the effects of unusual items such as accounting changes. Percentages are calculated from unrounded data.
Sources: Compiled from companies' quarterly reports to stockholders.
Table 2. U.S. Energy Prices and the U.S. Gross Refining Margin (Constant Q309 Dollars)
Q308 Q309 Percent
Change
U.S. Energy Pricesa
Refiner Acquisition Cost of Imported Crude Oil ($/barrel) 113.52 66.37 -41.5
Natural Gas Wellhead Price ($/thousand cubic feet) 8.86 3.17 -64.2
U.S. Gross Refining Margin ($/barrel)b 18.21 10.90 -40.1
a Energy Information Administration, Short-Term Energy Outlook, (December 8, 2009), Table 2.
b Compiled from data in Energy Information Administration, Petroleum Marketing Monthly, DOE/EIA-380 (Washington, DC), Table 1, Table 4 and Table 5; and Energy Information Administration, Monthly Energy Review, DOE/EIA-0035, (Washington, DC) Table 3.2.
Note: The U.S. Gross Refining Margin is the difference between the composite wholesale product price and the composite refiner acquisition cost of crude oil.

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