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 4,600 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.

Tapping Domestic Shale Deposits

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 $50 million.

    • There are about 4,600 oil and gas exploration and production firms in the US that employ 116,800 workers and generate $230 billion in annual revenue.
    • 81% of firms have fewer than 10 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, 2024 - Producer Prices Plunged in 2023
                              • The producer price index (PPI) for oil and gas extraction firms, which measures prices before reaching consumers, plunged nearly 30% in December compared to a year ago, according to the US Bureau of Labor Statistics, wiping out most of the gains accrued since mid-2021. Industry employment grew 1.5% in December compared to a year ago with oil and gas jobs on the rise. Meanwhile, average wages at oil and gas extraction firms rose 3.3% over the same period to $44.56 per hour in December, BLS employment data shows.
                              • Rivals Diamondback Energy and Endeavor Energy Resources have agreed to merge as higher oil prices and the accelerating land grab in the Permian Basin spur consolidation in the energy sector, The Wall Street Journal reports. Diamondback beat out other suitors, including ConocoPhillips, in striking a $26-billion deal for Endeavor, according to WSJ. The merger follows deals by oil giants Exxon Mobil (for Pioneer Natural Resources) and Chevron (Hess) reached late last year which ignited a flurry of activity in the sector. Diamondback’s tie-up with Endeavor will elevate the combined company to top-tier status in the US's largest oil patch, with crude production likely eclipsing 400,000 barrels per day, per WSJ. 2023 was a big year for mergers and acquisitions in the oil and gas industry with more than $250 billion worth of deals struck, according to analysts, the highest annual total since 2014, according to Investor’s Business Daily.
                              • Average US retail gasoline and diesel prices are forecast to decrease this year and again in 2025, according to the US Energy Information Administration’s January 2024 Short-Term Energy Outlook (STEO). The latest STEO forecast is for motor gasoline (regular) to fall from an annual average of $3.52 per gallon in 2023 to $3.36 this year and $3.24 in 2025. Likewise, on-highway diesel prices are forecast to fall from $4.21 last year to $3.92 and $3.85 in 2024 and 2025, respectively. The EIA credits increased inventories, new refinery capacity, and a slight reduction in motor fuel consumption for the decline in prices. Additional refinery capacity came online last year, raising US operable refinery capacity from 18.06 million barrels per day (b/d) in January 2023 to 18.31 million b/d in December 2023.
                              • More than 190 countries at the United Nations climate conference – known as COP28 – in December signed on to a deal calling for “transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner,” The Wall Street Journal reports. The agreement states the shift to clean energy for the global economy should accelerate this decade with the aim of net-zero greenhouse gas emissions by 2050, according to WSJ. It's the first time a U.N. climate agreement has called for governments to cut back on all fossil fuels and demonstrates a new determination by governments worldwide to cut fossil fuel consumption. Its supporters say it should accelerate the flow of private investment into clean energies and away from fossil-fuel production. The deal does not set a strict timeline for transitioning and endorses carbon capture and storage technology, giving the oil and gas industry some leeway to comply.
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