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Good news for US. Alaska, global
oil and gas companies, investment
Kay Cashman Petroleum News
On Sept. 18, the U.S. Energy Information Administration published a report analyzing the financial and operating trends of 107 global oil and gas companies from 2013 through the second quarter of 2018.
Based on information from the companies’ filings with the Securities and Exchange Commission, the difference between “free cash” from operations and capital expenditure was $119 billion for the four quarters ending June 30, 2018, the largest fourth-quarter sum during the 2013–18 period, EIA’s markets and financial analysis team said. (See chart in pdf of this issue of Petroleum News.)
Companies reduced debt for the last seven consecutive quarters, contributing to the lowest long-term debt-to-equity ratio since third-quarter 2014, when oil prices started plummeting.
Higher cash flow reduced the ratio of debt repayments to cash flow in second-quarter 2018.
Jeffrey Barron, in charge of compiling the report, told Petroleum News his choice of companies “mainly has to do with data availability. Not all of the foreign companies publish quarterly numbers; only annual. I’m also limited to foreign companies that have listings on U.S. stock exchanges. Ones that are only listed in London or elsewhere, for example, I don’t have access to.”
Seventy-six of the companies were based in the United States; 13 were from Canada; nine from Europe; and nine from other countries. Several, including BP, Chevron, ConocoPhillips, Eni, ExxonMobil, Repsol and Shell, currently have oil and gas assets in Alaska.
Other key findings The report dealt only with Brent oil prices, not Alaska North Slope or West Texas Intermediate, although Brent and ANS prices are often close.
Brent crude was 48 percent higher in second-quarter 2018 than in second-quarter 2017, averaging $75 per barrel, which is the highest it has been since fourth-quarter 2014.
Liquids production increased 2.3 percent in second-quarter 2018 from second-quarter 2017, and natural gas production increased 1.8 percent during the same period.
About two-fifths of the companies had positive free cash flow, and 78 percent reported positive upstream earnings in second-quarter 2018.
Higher interest rates since 2017 did not lead to an increase in interest expenses as a share of operating costs.
ConocoPhillips bullish on North Slope In separate news reports, shares of ConocoPhillips reached a new 52-week high of $75.73 in Sept. 18’s trading session, closing at $75.04. The company’s year-to-date growth rate is around 36.7 percent, outperforming oil and gas industry growth of 34 percent.
According to Zacks Equity Research, ConocoPhillips has a long-term earnings growth expectation of 9 percent, and “looks poised to touch new highs in the coming period.”
Its conventional oil and gas assets, “including properties in Alaska” and the North Sea, require “moderate” capital expenditures to maintain production levels, as “these assets have a lower decline rate,” Zacks said.
ConocoPhillips has raised its 2018 production guidance to 1,225-1,255 thousand barrels of oil equivalent per day from 1,200-1,240 mboed expected earlier.
According to Zacks the company’s third-quarter 2018 production is anticipated within 1,215-1,255 mboed, with “key growth drivers” being upcoming projects such as the GMT-2 (Greater Mooses Tooth 2 development in northeastern National Petroleum Reserve-Alaska), Bohai Phase 2 and Barossa.
Eni fast-tracking Alaska On Aug. 30, Zacks reported on Eni’s purchase of 350,000 acres on the eastern North Slope from Caelus Alaska, noting the Italy-based major with its “vast experience in upstream business … is well placed to explore the new hydrocarbon resources. The company is planning to fast track exploration activities in the acquired reserves to create long-term value for shareholders.”
On Aug. 30 Eni’s stock was ranked No. 3 by Zacks.
On Sept. 6, Motley Fool declared the following five oil companies the five biggest oil stocks in the United States:
* ExxonMobil, market capitalization of $344.6 billion;
* Chevron, $233.7 billion market capitalization;
* ConocoPhillips, $81.9 billion market capitalization;
* EOG Resources $70.8 billion market capitalization;
* Occidental (OXY), $63.2 billion market capitalization.
The first three firms are already invested in Alaska and OXY is reportedly looking seriously at a North Slope investment (see Aug. 5 and Aug. 19 reports in Petroleum News).
While these U.S.-based oil producers have the “largest market values in the sector, they still have ample upside from rising oil prices and their prime position in the country’s fastest-growing oil-producing regions,” Motley Fool said.
- KAY CASHMAN
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