Major Energy Producer Performance Profiles Reviews Financial And Operating Data For The Calendar Year 2005.DUBLIN -- Research and Markets (http://www.researchandmarkets.com/reports/c50369) has announced the addition of "Major Energy Producer Performance Profiles" to their offering. This 101-page report reviews financial and operating data for the calendar year 2005. Although the focus is on 2005 activities and results, it also discusses important trends prior to that time and emerging issues relevant to U.S. energy company operations. MAJOR FINDINGS: Net Income and Profitability - The Financial Reporting System (FRS FRS abbr. Fellow of the Royal Society FRS, n “flexed rotated side-bent,” an osteopathic abbreviation used to describe vertebral position in cases of spinal dysfunction. ) companies' 2005 net income increased 47% from the 2004 level to $119 billion, the highest net income (in constant dollars) in the history of the FRS survey. Higher prices for crude oil, natural gas, and petroleum products contributed to a 26% increase in operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. . Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. also increased, by 24%, as higher prices stimulated exploration and development activities and pushed costs upward. The larger increase in revenues resulted in a 38% increase in operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. . The FRS companies earned a 28.2% return on stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. (ROE A fictitious surname used for an unknown or anonymous person or for a hypothetical person in an illustration. A lawsuit is generally named for the persons who are parties to it. ) in 2005, surpassing the previous peak of 22.1% in 2004. ROE for the FRS companies averaged seven percentage points higher than that of the Census Bureau's All Manufacturing Companies from 2000 to 2005, reversing an average of two percentage points lower from 1985 to 1999. - Higher crude oil and natural gas wellhead well·head n. 1. The source of a well or stream. 2. A principal source; a fountainhead. 3. The structure built over a well. wellhead Noun 1. prices made oil and natural gas production the most profitable line of business for the FRS companies in 2005, providing $89 billion in net income and a return on net investment in place (ROI (Return On Investment) The monetary benefits derived from having spent money on developing or revising a system. In the IT world, there are more ways to compute ROI than Carter has liver pills (and for those of you who never heard of that expression, it means a lot). ) of 24.5%. Earnings were $29 billion higher (in constant 2005 dollars) than the previous peak in 2004. - Net income for the FRS companies' refining/marketing segment increased 30% from 2004, to $29 billion in 2005. Higher demand for petroleum products pushed prices up by more than the increased cost of crude oil. Domestic refinery operating and energy costs increased (on a per-barrel basis), but by less than the increase in the margin between petroleum product prices and crude oil prices. This resulted in a net refined product margin of $3.51 per barrel in 2005, the highest (in constant 2005 dollars) in the 29-year history of the FRS. The average ROI for domestic and foreign refining/marketing rose to 22.7%, also the highest in the history of the FRS survey. Cash Flow and Uses of Cash: - Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses increased in 2005 to $170 billion, the highest level reported since the FRS began collecting this information in 1986. Encouraged by the high-price environment in 2005, the FRS companies increased the amount of cash raised through disposals of assets by 82% over that raised in 2004, to $36 billion. - The largest use of cash was for capital expenditures (measured as additions to investment in place), which increased by $46 billion from 2004, to $133 billion in 2005. - FRS companies also increased the amount of cash used for non-investment activities in 2005. Dividends to shareholders were the second largest use of cash, increasing nine percent, to $40 billion. The largest increase on a percentage basis in use of cash was to buyback Buyback The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may company stock, which more than doubled to $32 billion in 2005. - The large increase in cash flow also reduced the need for long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. financing. FRS companies increased the amount of cash used to reduce long-term debt by 81% in 2005 to $33 billion. Proceeds from issuing long-term debt also increased, but by a smaller amount. Overall, the ratio of long-term debt to stockholders' equity for FRS companies fell eight percentage points in 2005 to 37.3%, the lowest level since 1983. - The overall uses of cash did not keep pace with increases in sources of cash, resulting in an increase in cash balances and cash equivalents of $14 billion in 2005. Although this was less than the 2004 increase, it was the second-highest annual addition to cash balances in the 20 years the FRS has been collecting cash flow information. E&P Expenditures: - FRS companies report expenditures for exploration, unproved property acquisition, development, proved property acquisition, and production (E&P) for the oil and natural gas production segment. FRS companies were hesitant hes·i·tant adj. Inclined or tending to hesitate. hes  i·tant·ly adv. to increase investments in response to higher cash flow in 2003 and 2004, but in 2005 the increase in E&P expenditures exceeded the increase in cash flow from operations by $10 billion. E&P expenditures increased $39 billion (in constant 2005 dollars) over their 2004 level to $131 billion in 2005. Expenditures for unproved and proved property acquisition accounted for 55% of the increase in E&P expenditures, as several large acquisitions occurred. - Worldwide expenditures for oil and natural gas exploration (not including expenditures for unproved property) by FRS companies increased 21% (in constant 2005 dollars) to $10 billion in 2005, but remained well below the levels of the early 1980s. Development expenditures rose 27% from 2004 to $50 billion in 2005, the highest level in the history of the FRS survey. Refining/Marketing Capital Expenditures: - Capital expenditures by the FRS companies for refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar and marketing increased 49% from their 2004 level to $21 billion in 2005, mostly as the result of mergers and acquisitions. Several companies reported refining/marketing capital expenditures to meet more stringent specifications for petroleum products and to enhance their capability to process heavier crude oil and produce more light products. Expenditures were also required to repair damage from hurricanes. Oil Production and Reserves: - The FRS companies' worldwide production of oil (crude oil and natural gas liquids [NGL NGL - A dialect of IGL. ] combined) and natural gas both declined by more than three percent in 2005. U.S. offshore production fell substantially, attributable largely to Hurricanes Katrina and Rita. U.S. production of oil by FRS companies declined seven percent in 2005 and U.S. natural gas production fell five percent. Foreign production by FRS companies also declined, by about one percent for both oil and natural gas. - FRS companies' reserve additions through drilling (i.e., excluding purchases and sales of reserves) increased significantly from their low level in 2004, to 5.5 billion barrels in 2005. Reserve revisions of oil rebounded from a large negative position in 2004 to become net positive in 2005. - The FRS companies' reserve replacement rate for natural gas (averaged over three years) has risen steadily for the past several years, reaching 123% in 2003-2005 period. Conversely con·verse 1 intr.v. con·versed, con·vers·ing, con·vers·es 1. To engage in a spoken exchange of thoughts, ideas, or feelings; talk. See Synonyms at speak. 2. , the reserve replacement rate for oil fell substantially in the 2002-2004 period and declined slightly more in the 2003-2005 period to 63%. - In 2005, the FRS companies accounted for 45% of total U.S. crude oil and NGL production and 43% of U.S. natural gas production, both having declined slowly over the past several years. FRS companies had 49% of U.S. crude oil and NGL proved reserves proved reserves The quantity of minerals expected to be recoverable under current economic and operating conditions. The amount of proved reserves is important in valuing the stock of a company with significant holdings in natural resources. in 2005 as well as 49% of U.S. natural gas reserves. While this was the first year that the FRS share of oil reserves Oil reserves refer to portions of oil in place that are claimed to be recoverable under economic constraints. Oil in the ground is not a "reserve" unless it is claimed to be economically recoverable, since as the oil is extracted, the cost of recovery increases incrementally fell below 50%, the FRS share of natural gas reserves has increased the past two years. Finding and Lifting Costs: Average worldwide finding costs for FRS companies increased 17% in the 2003-2005 period relative to the 2002-2004 period, to $10.73 per barrel of oil equivalent The barrel of oil equivalent (bboe, sometimes BOE) is a unit of energy based on the approximate energy released by burning one barrel of crude oil. The US Internal Revenue Service defines it as equal to 5.8 × 106 BTU [1]. 5. (boe), as high demand for drilling rigs and personnel put upward pressure on costs. Finding costs in the U.S. offshore increased by 55%, due in large part to lower reserve replacement in the 2003-2005 period relative to the 2002-2004 period, which was partly attributable to damage and delays from hurricanes in 2005. Finding costs declined seven percent in the U.S. onshore on·shore adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. region, but rose 42% in foreign regions. Lifting (production) costs increased in every FRS region except one, to an average of $6.87 per boe in 2005. Finding and lifting costs combined increased to $16.89 per boe in 2003-2005, the highest since the 1985-1987 period (in constant dollars). For more information, visit http://www.researchandmarkets.com/reports/c50369 |
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