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Independents see revenue, profits climb Oilfield service companies have even higher revenue increase in ’04 first quarter, up 28% compared to 23% for independents Ray Tyson Petroleum News Houston Correspondent
Independent upstream energy companies, lifted by higher oil prices and demand for services, saw their 2004 first-quarter revenues soar an average 22.5 percent and profits jump 9.2 percent compared to the same quarter last year, according to research on 46 companies conducted by the U.S. Energy Information Administration.
The 26 oilfield service companies surveyed by EIA experienced the largest increase in revenues, climbing an average 28 percent to $17.251 billion in the 2004 first quarter from $13.481 billion in the 2003 first quarter. Net income was up 6 percent to $629 million from $593 million in the year-ago period.
Exploration and exploration independents, based on an EIA review of 20 companies, saw their revenues jump 17.1 percent to $2.769 billion in the 2004 first quarter from $2.365 billion in the 2003 first quarter. Net income was up 12.4 percent to $508 million from $452 million in the year-ago period.
On improved margins, revenues for five independent refining companies tracked by EIA increased 18.7 percent to $5.029 billion in the 2004 first quarter from $4.237 billion in the 2003 first quarter. Net income rose a hefty 47.1 percent to $102 million from $69 million in the year-ago period. Prices, refining margins driving increase EIA attributed the year-over-year increase in revenues and profits for all 51 of the companies it reviewed largely to a 3 percent increase in both crude oil prices and gross refining margins.
The 2004 first quarter represented the seventh consecutive quarter in which crude oil prices increased relative to their year-earlier levels, following six consecutive quarters of falling or unchanged prices.
EIA noted that pressure was exerted on crude oil prices by the U.S. economy’s 5 percent growth, low stock levels in the countries of the Organization for Economic Cooperation and Development and a 1 percent increase in world demand. The effects of these factors were somewhat offset by a 5 percent increase in world supply, the agency said. U.S. natural gas price down However, EIA also noted that the average U.S. natural gas wellhead price decreased 6 percent between the 2003 and 2004 first quarters, in part due to an 8 percent increase in working storage levels.
Moreover, new gas supply was essentially unchanged while demand in the United States fell almost 2 percent. The 2004 first quarter was the first quarter that natural gas prices decreased relative to a year earlier, following five consecutive quarters of rising prices.
EIA said that revenues and profits for oilfield service companies in particular increased along with higher drilling rig counts, which rose 14 percent worldwide in the 2004 first quarter compared to the year-ago period.
“Higher rig counts and the resulting higher demand for rig services directly increased the demand for the equipment and services supplied by oil field companies,” EIA said, adding that the increase in demand raised day rates on equipment and margins on overall operations.
The U.S. rig count alone grew at an even higher rate of 24 percent, rising from 901 in the 2003 first quarter to 1,119 in the 2004 first quarter.
“Decomposing the total U.S. rig count into its natural gas and oil components shows that virtually all of that growth has been due to increases in the number of natural gas rigs,” EIA said.
The number of rigs drilling for natural gas in the U.S. increased 29 percent from 743 in the 2003 first quarter to 961 in the 2004 first quarter. The oil rig count increased just 2 percent over the same period. This marked the fifth consecutive quarter in which rig counts for both fuels increased relative to their year-earlier levels, EIA said.
The overall rig count growth over the same period for both Canada and the world outside North America was 7 percent, according to EIA.
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