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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, 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

                              Coronavirus Update

                              Apr 22, 2022 - Lease Sales Resume on Federal Land
                              • The Biden Administration in April announced it will resume sales of oil and gas leases on federal lands beginning the end of the month. The move came amid growing pressure to take action to lower gas prices. The sale notice from the Interior Department for leases to drill on spans 144,000 acres of government land — 80% less than what was initially being evaluated for potential leasing. The royalties that oil and gas companies must pay increased to 18.75% from a rate of 12.5%.
                              • To combat high gas prices the Biden Administration in March announced plans to release up to 180 million barrels of oil from the Strategic Petroleum Reserve to counteract the economic impact of Russia’s invasion of Ukraine. The plan is to release one million barrels of oil a day for 180 days, representing roughly 5% of US demand and 1% of global demand, according to The New York Times.
                              • The price of West Texas Intermediate crude topped $108 per barrel in mid-April 2022 and is expected to average $116 per barrel in Q2 2022, according to the US Energy Information Administration (EIA). Prices are rising due to uncertainties in global supplies resulting from Russia’s invasion of Ukraine and subsequent cuts in distribution, and previous reluctance by OPEC+ countries and US producers to increase volume and risk supply outpacing demand if another wave of coronavirus occurred.
                              • The break-even price for the average oil well drilled in shale fields is roughly $45 a barrel. Given the high price of oil, producers are incentivized to ramp up drilling and production. On April 14, 2022, 693 rotary rigs were producing oil and gas, up from 689 the previous week and 439 a year ago, according to Baker Hughes.
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