Oil & Gas Producers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 5,000 oil and gas producers in the US sell crude petroleum and natural gas from on-shore and off-shore wells to refineries, energy brokers, and other energy companies. Industry revenue is about evenly split between crude petroleum and natural gas.

Oil and Gas Price Volatility

Large decreases in oil and gas prices have repercussions for producers.

Expansion Of Unconvential Sources

The costs and hazards of transporting natural gas over long distances by ship dictate that the US’s primary sources of natural gas be domestic.

Industry size & Structure

A typical oil and gas producer operates from a single location and has annual revenues of $46 million.

    • There are about 5,000 oil and gas exploration and production firms in the US that employ 136,200 workers and generate $230 billion in annual revenue.
    • 81% of firms have fewer than 5 employees and just 4% have more than 100 employees.
    • Large exploration and production firms include: Exxon-Mobil (Integrated), Chevron (Integrated), Apache Corporation, Occidental Petroleum, Devon Energy, and Range Resources.
    • Entry into the business is difficult, as exploration is expensive and a proven track record is essential in attracting capital.
    • In addition, the competition for high quality drilling and services is intense, and preference is given to partners with good prior experiences.
                              Industry Forecast
                              Oil & Gas Producers Industry Growth
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              Nov 25, 2022 - No Agreement to Phase Out Fossil Fuels at COP 27
                              • The 2022 United Nations Climate Change Conference COP27 closed without an agreement on the phasing out of oil, gas, and coal. A number of nations, including China and Saudi Arabia, blocked a key proposal to phase out all fossil fuels, not just coal. While the annual conference ended with a deal to create a fund to help poor countries being battered by climate disasters, many countries voiced concern about COP27’s failure to push mitigation – emission reductions and reducing the use of polluting fossil fuels – further and said some oil-and-gas producing countries were trying to roll back commitments made in the Glasgow Climate Pact that focused on a theme of keeping the 1.5C goal alive – as scientists warn that warming beyond that threshold would see climate change spiral to extremes.
                              • A potential shortage of diesel fuel has driven the price to a record premium over gasoline and crude oil. While the price of gasoline is up about 14% so far in 2022, the price for diesel has risen by about 50%, to $5.35 a gallon, according to energy price data from AAA/OPIS. The gains widened the gap between the two fuels to an all-time high of $1.61, versus 23 cents a year ago. Dwindling stocks, the war in Ukraine, severe weather, and other disruptions to the global energy markets are behind the widening gap, The Wall Street Journal reported in November. Wholesale diesel, delivered into New York harbor, traded at a record premium to crude oil in October, according to the Energy Information Administration, which also reported the country had only 25 days of diesel in reserve, the lowest since 2008.
                              • In a move likely to drive up prices at US gas pumps and encourage more domestic production, the OPEC+ energy cartel in October 2022 agreed to its first large production cut in more than two years. The cut of two million barrels a day represents about 2% of global oil production. OPEC+, led by Saudi Arabia and Russia, said it was acting amid signs of a downturn in the world economy that might cause demand for oil to weaken and prices to fall. The price of Brent crude, the international benchmark, which had eased during the summer, rose more than 1.5% after the meeting, extending the recent gains and bringing prices back to levels last seen in mid-September, The New York Times reported.
                              • The Biden administration has leased fewer acres for oil-and-gas drilling offshore and on federal land than any other administration in its early stages dating back to the end of World War II, an analysis by The Wall Street Journal shows. The Interior Department, which oversees oil leases, leased 126,228 acres for drilling during Biden’s first 19 months in office, the analysis found. No other president since Richard Nixon in 1969-70 leased out fewer than 4.4 million acres at this point in a president’s first term. During his presidential campaign, Biden pledged to stop drilling on federal lands. The low number of acres opened for drilling under his administration shows he is largely keeping his promise, the WSJ found.
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