www.eia.gov U.S. Energy Information Administration Independent Statistics & Analysis
Financial Review: Third-quarter 2015
Markets and Financial Analysis Team
December 8, 2015
Key findings for third-quarter 2015
2
• Crude oil prices decreased 19% from the second
quarter, 51% lower than third-quarter 2014.
• Impairment charges increased, contributing to
continued declines in profits.
• Capital expenditure per barrel produced was the lowest
for this set of companies since at least 2010.
• Fourth-quarter crude oil prices remain low compared to
year-ago levels, which could continue to pressure
profits, cash flow, and investment.
Geographic distribution of global oil and natural gas companies,
third-quarter 2015
3
number of companies
Source: U.S. Energy Information Administration, Evaluate Energy
66
18
11
4
0
10
20
30
40
50
60
70
United States Canada Europe Emerging marketcountries
Distribution of global companies by production of petroleum
liquids, third-quarter 2015
4
number of companies
Source: U.S. Energy Information Administration, Evaluate Energy
48
14
22
7 8
0
10
20
30
40
50
60
less than 50 50-99 100-499 500-999 greater than 1,000
thousand barrels per day
Oil and natural gas production for the combined companies
5
million barrels of oil equivalent per day
Source: U.S. Energy Information Administration, Evaluate Energy
Note: liquids include crude oil and hydrocarbon gas liquids
0
5
10
15
20
25
30
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2010 2011 2012 2013 2014 2015
petroleum liquids production
natural gas production
Third-quarter 2015 production levels of petroleum and natural
gas were 7% and 2%, respectively, above third-quarter 2014
6
year-over-year change
Source: U.S. Energy Information Administration, Evaluate Energy
Note: liquids include crude oil and hydrocarbon gas liquids.
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2011 2012 2013 2014 2015
petroleum liquids production year-over-year change
natural gas production year-over-year change
Operating cash flow in third-quarter 2015 increased $7 billion
since the second quarter, totaling $93 billion
7
cash from operations
billion 2015$
Source: U.S. Energy Information Administration, Evaluate Energy
0
20
40
60
80
100
120
140
160
Q1 Q2 Q3 Q4
2011 2012 2013 2014 2015
Capital expenditure decreased $11 billion since second-quarter
2015, totaling $80 billion
8
capital expenditure
billion 2015$
Source: U.S. Energy Information Administration, Evaluate Energy
0
20
40
60
80
100
120
140
160
Q1 Q2 Q3 Q4
2011 2012 2013 2014 2015
Cash from operations was larger than capital spending for the
first time in a year
9
billion 2015$; Brent in 2015$/barrel
Source: U.S. Energy Information Administration, Evaluate Energy, Bloomberg
0
20
40
60
80
100
120
140
160
180
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2010 2011 2012 2013 2014 2015
cash from operations
capital expenditure
Brent crude oil price
The difference between cash flow and capital expenditure was
the largest since at least 2010
10
billion 2015$
Source: U.S. Energy Information Administration, Evaluate Energy
300
325
350
375
400
425
450
475
500
525
550
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2011 2012 2013 2014 2015
=
annualized cash from operations
annualized capital expenditure
Rolling a four-quarter sum eliminates the seasonality
in the measures on the previous slide. So while third-
quarter cash flow was higher than capital expenditure,
it remains considerably lower on an annualized basis.
Sources of cash from asset sales, debt, and equity markets over
the past four quarters was the lowest since 2012
11
billion 2015$
Source: U.S. Energy Information Administration, Evaluate Energy
Note: free cash flow=cash from operations minus capital expenditure
-75
-50
-25
0
25
50
75
100
125
150
175
200
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2011 2012 2013 2014 2015
annualized net proceeds from asset sales, net
debt, and net equity issuance
annualized free cash flow
Negative free cash flow means operating cash flow
was less than capital expenditure. A company
must draw on cash balances or raise sources of
cash from elsewhere, such as selling assets,
raising equity, or increasing debt.
Cash balances declined more than $8 billion for the four
quarters ending September 30, 2015
12
billion 2015$
Source: U.S. Energy Information Administration, Evaluate Energy
-40
-20
0
20
40
60
80
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2011 2012 2013 2014 2015
annualized change in cash balance
Net hedging assets, which tend to increase in value when prices
decline, increased $4.5 billion since second-quarter 2015
13
billion 2015$ 2015$/barrel
Source: U.S. Energy Information Administration, Evaluate Energy, Bloomberg
-20
0
20
40
60
80
100
120
140
-5
0
5
10
15
20
25
30
35
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2010 2011 2012 2013 2014 2015
net hedging assets (left axis)
Brent crude oil price (right axis)
The total value of asset write-downs increased to $57 billion,
almost twice the amount in second-quarter 2015
14
billion 2015$
Source: U.S. Energy Information Administration, Evaluate Energy
0
10
20
30
40
50
60
70
80
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2010 2011 2012 2013 2014 2015
quarterly asset write-downs (impairment charges)
Asset impairments occur when a company lowers the
estimated value of a property to reflect current market value,
which may result from loss of production potential or
declining oil prices.
Past investment contributed to increased current production,
while low prices contributed to negative profitability
15
Source: U.S. Energy Information Administration, Evaluate Energy
-10%
-5%
0%
5%
10%
15%
20%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2011 2012 2013 2014 2015
petroleum liquids and natural gas production year-over-year change
four-quarter return on equity
Higher production and falling capital expenditure led to the
lowest average spending per barrel since at least 2010
16
2015$/barrel of oil equivalent
Source: U.S. Energy Information Administration, Evaluate Energy, Bloomberg
0
5
10
15
20
25
30
35
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2011 2012 2013 2014 2015
upstream capital expenditure per barrel of oil equivalent
produced, four-quarter moving average
Crude oil prices remain low compared to year-ago levels, which
could continue to pressure cash flow and investment
17
year-over-year change
Source: U.S. Energy Information Administration, Evaluate Energy, Bloomberg
-60%
-40%
-20%
0%
20%
40%
60%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2011 2012 2013 2014 2015
cash from operations year-
over-year change
capital expenditure year-over-
year change
Brent crude oil price year-over-year change
through December 7, 2015
Appendix: List of companies
18
.
Source: U.S. Energy Information Administration, Evaluate Energy
Note: Some companies listed merged or split before 2015. A total of 99 companies existed in third-quarter 2015
Anadarko Petroleum Corp. California Resources Corporation Det Norske Forest Oil Corporation Lundin Petroleum Parsley Energy Inc. Rosetta Resources Inc. Thunderbird Resources Equity Inc.
Apache Corporation Callon Petroleum Devon Energy Corporation Gazprom Neft Magnum Hunter Resources PDC Energy Royal Dutch Shell Total
Approach Resources Inc Canacol Energy Ltd. Diamondback Energy Inc. Goodrich Petroleum Corp Marathon Oil Corp. Penn Virginia RSP Permian Inc TransAtlantic Petroleum Ltd.
Athlon Energy Inc. Canadian Natural Resources Limited Dong Energy Gran Tierra Energy Inc. Mariner Energy Penn West Petroleum Ltd. Sabine Oil & Gas Corporation TransGlobe Energy Corporation
ATP Oil & Gas Corp. Carrizo Oil & Gas, Inc Ecopetrol Gulfport Energy Corporation Matador Resources Company Petrobras (IFRS US$ Current) Sanchez Energy Corp Triangle Petroleum Corporation
Bankers Petroleum Ltd Cenovus Energy Inc. Encana Corporation Halcon Resources Corporation MDU Resources Group PetroChina SandRidge Energy Unit Corp
Baytex Energy Corp. Chesapeake Energy Corp. Endeavour International Corp Hess Corp Memorial Production Partners LP Petrolifera Petroleum Ltd. Sherritt International Corp Vaalco Energy Inc
Berry Petroleum Co. Chevron Corporation Energen Corp Husky Energy Inc. Murphy Oil Corporation PetroMagdalena Energy Corp. SM Energy Company Vermilion Energy Inc.
BG Group Cimarex Energy Co. Energy XXI Imperial Oil Limited Newfield Exploration Company Petrominerales Ltd. Sonde Resources Corp. W & T Offshore
Bill Barrett Corporation Clayton Williams Energy Enerplus Corporation Ithaca Energy Inc. Noble Energy PetroQuest Energy, Inc Statoil ASA Whiting Petroleum Corporation
Black Hills Corp Comstock Resources ENI Jones Energy, Inc. Northern Oil & Gas, Inc Pioneer Natural Resources Company Stone Energy WPX Energy
BP Plc. Concho Resources Inc EOG Resources Kodiak Oil & Gas Corp. Oasis Petroleum Inc. QEP Resources Inc Suncor Energy Inc. XTO
BPZ Resources Inc ConocoPhillips EP Energy Corporation Kosmos Energy Occidental Petroleum Corporation Range Resources Corp Swift Energy Co
Breitburn Energy Partners Continental Resources EPL Oil & Gas Inc Laredo Petroleum OMV Repsol Synergy Resources Corporation
Brigham Exploration Company Denbury Resources Inc. ExxonMobil Linn Energy Pacific Exploration and Production Corporation Resolute Energy Corporation Talisman Energy Inc.
Background
19
• This analysis focuses on the financial and operating
trends of 99 global oil and natural gas companies
(called the energy companies).
• The data come from the public financial statements
each company submits to the U.S. Securities and
Exchange Commission, which a data service (Evaluate
Energy) aggregates for ease of data analysis.
• For consistency, a company’s assets that were acquired
by another company in the group after first-quarter 2010
were kept in the prior year data.
Brief description of terms
20
• Cash from operations is a measure of income.
• Capital expenditure represents cash used for property,
plant, and equipment.
• Financing activities measure inflows/outflows in debt or
equity markets including dividends, share issuance or
repurchases, and debt issuance or repayments.
• Return on equity is a measure of the profit a company
earns on money shareholders have invested.
• Market capitalization is the total value of all of a
company’s publicly traded shares outstanding.
Brief description of terms
21
• Net income (earnings) represents profit 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 loss of production potential
or declining oil prices.
• The term upstream refers to crude oil exploration,
production, and other operations prior to refining. The
term downstream refers to refinery operations, product
sales, and marketing at the wholesale and retail level.