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

                              Feb 27, 2023 - Record Profit Slows Shift to Renewables
                              • Hefty profits fueled by last year’s soaring energy prices are causing global energy producers to dial back their shift to low-carbon energy and increase spending on oil and gas production, The Wall Street Journal reports. BP reported a profit in the fourth quarter of $4.8 billion and $27.7 billion for the year, bringing the combined profits reported so far for 2022 by the biggest Western oil companies -- including Exxon Mobil, Chevron and Shell -- to more than $159 billion, according to WSJ. BP’s chief executive explained the company’s shift from aggressively moving away from fossil fuels to increasing spending on oil and gas production as “responding to what society wants.” BP now aims to reduce fossil-fuel production by 2030 by around 25% from 2019 levels vs its previous aim to cut that output by 40% during the same period.
                              • Global demand for oil is expected to increase this year driven by stronger-than-expected economic growth in the US, Europe and China’s reopening, The Wall Street Journal reports. The Organization of the Petroleum Exporting Countries (OPEC) in its February monthly report increased its prediction for global oil demand growth this year by 100,000 barrels a day. The cartel raised its prediction for global economic growth in 2023 to 2.6%, from a previous forecast of 2.5% citing strong consumer spending and signs that inflation is easing. OPEC also raised its 2023 China growth forecast to 5.2% from 4.8%. Meanwhile, the oil producers group lowered its forecast for Russian oil production this year by 50,000 barrels a day to 10.13 million barrels a day.
                              • In the latest move by a major oil and gas company into renewable fuels, Shell in February acquired a European biogas producer for $2 billion, Offshore Technology reports. Denmark’s Nature Energy Biogas A/S produces renewable biomethane that can replace conventional natural gas in heavy road and marine transport, industry, and heating. Nature Energy is Europe’s biggest producer of biomethane from organic waste, according to OT. Shell’s acquisition followed that of rival BP which bought US biogas producer Archaea Energy in December. Shell, BP, and other big oil producing companies are shifting more resources to lower-carbon energy, in a bet on growing consumer demand for renewable fuel. By 2050, Shell aims to be a net-zero emissions energy business.
                              • The commissioner of the US Consumer Product Safety Commission (CPSC) in January said the agency was considering new regulations on gas stoves, including a ban, amid rising concern about harmful indoor air pollutants emitted by the appliances, Time reports. Natural gas stoves, found in about 40% of US homes, emit air pollutants such as nitrogen dioxide, carbon monoxide, and fine particulate matter at levels the US Environmental Protection Agency and World Health Organization have said are unsafe. However, swift backlash from Republican legislators, including Sen. Joe Manchin (D-W.Va.), caused the CPSC commission to walk back his comments that the agency is considering banning the household appliances.
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