EIA Reports

U.S. DEPARTMENT OF ENERGY
WASHINGTON DC 20585

FOR IMMEDIATE RELEASE
JANUARY 22, 2003

Major U.S. Energy Companies' Additions to Oil and Natural Gas Reserves in 2001
at Highest Level in at Least 28 Years

The growth in the majors’ reserve base reflected the growth in their commitment to drilling and discovery.  Worldwide exploration and development expenditures, excluding the effects of mergers and acquisitions, were up 35 percent between 2000 and 2001, to $50.2 billion.  All regions except South America showed an increase in expenditures (Figure 1).

Onshore locales in the United States, including Alaska, registered the largest increase in expenditures.  Natural gas was the favored target, as the major energy companies’ gas well completions onshore increased 77 percent in 2001 compared with completions in 2000, but oil well completions were up only 4 percent. Outside the United States, Canada registered the largest increase in the majors’ exploration and development spending.

Mergers, acquisitions, and sales of proven oil and gas reserve properties, on balance, added another 3.1 billion barrels (oil equivalent) to the major energy companies’ worldwide oil and natural gas reserve base in 2001.  All told, the majors’ worldwide reserve additions, from all sources, were nearly double their worldwide oil and natural gas production in 2001.

Mergers and acquisitions were, as in the previous year, prominent in the major energy companies’ overall capital expenditures in 2001 (Figure 2). Capital expenditures totaled an all-time high of $110.4 billion in 2001, up 1 percent from expenditures in 2000. Mergers and acquisitions accounted for $46.7 billion of capital expenditures.

About a third of the merger and acquisition activity in 2001, based on dollar value, involved acquisitions of major energy companies by other major energy companies. Other large transactions clustered around acquisitions of upstream Canadian companies, mainly for their natural gas reserves, and gas-rich U.S. companies.  Excluding the effects of mergers and acquisitions, the majors’ capital expenditures increased by 26 percent between 2000 and 2001. 

Other key findings reported in Performance Profiles of Major Energy Producers 2001 include:

• Total net income of the major energy companies amounted to $37.7 billion in 2001, down 29 percent from the record high net income of 2000. However, a large amount of asset write-offs and other unusual items had a sizable impact on reported financial results. Excluding unusual items, the majors’ net income in 2001 was $51.2 billion, 8 percent below the level of 2000.

• Although the major energy companies’ worldwide oil production was up 8 percent and natural gas production was up 6 percent, and their average natural gas price for the year was 11 percent higher, these developments could not offset the effects of lower oil prices.  Excluding unusual items, the majors’ net income from worldwide upstream operations in 2001 was $36.7 billion, a 9-percent decline in net income from the prior year.