•  
  •  
  •  
  •  
  •  
  • Untitled Document
    Untitled Document

    US oil and gas in 2013: Increased reserves and rebounding profits

    Ernst & Young LLP

    EY's seventh annual US oil and gas reserves study reveals multiple indicators that the US oil and gas industry is emerging from years of volatility prompted by the global financial crisis and subsequent recession. While there was a slight decrease in capital spending, US oil and gas reserves each increased by 9% in 2013, oil prices remained strong and natural gas prices showed improvement.

    The annual study looks at US exploration and production (E&P) spending and performance data over the past five years for the largest 50 companies based on end-of-year oil and gas reserve estimates.

    "The promising oil and natural gas reserves and profit increases are certainly signs that the industry is enjoying more stability than it has in recent years," said Deborah Byers, the oil and gas leader for Ernst & Young LLP in the US. "While we saw lower capital expenditure numbers in 2013, that is due in part to the advancement in technologies and processes that are making exploration and production less expensive and more efficient."

    Capital expenditures
    Compared to the prior year, total capital expenditures declined 7% in 2013 to $173.5 billion, driven by lower unproved property acquisition costs and lower exploration costs.

    Proved reserve acquisition costs increased to $16.88 per boe in 2013 compared to $10.76 per boe in 2012, representing a 57% increase. The largest transactions in 2013 that drove these results were primarily focused on oil reserves.  

    While exploration costs declined approximately 15% in 2013, the level of spending represented the second highest amount of the five-year study period. Development spending increased every year of the five-year study period and reached $106.7 billion in 2013. All peer groups – independents, large independents and integrated companies – saw an increase in development spending in 2013, but spent less on exploration.

    Revenues and profits
    An 11% increase in revenues and significant decrease in property impairments fueled a 53% increase in after-tax profits for the study companies in 2013 to $33.4 billion. This was a significant change from the previous year's study, which showed a 58% decrease in after-tax profits for 2012 – a dip widely attributed to low natural gas prices.

    An increase in oil production helped push revenues to $199.0 billion in 2013. This increase was also aided by increased prices as revenues per boe of production rose as well. Production costs increased in 2013 mainly due to higher lease operating expenses, and many companies made strong investments in their 2013 operations with a plowback percentage of 125%.

    Oil and gas reserves
    Both oil and gas reserves saw improvement in 2013. End-of-year oil reserves increased in each year of the study and reached 25.4 billion barrels in 2013.  After decreasing in 2012 due to downward reserve revisions caused by depressed natural gas prices, end-of-year gas reserves grew to 178.7 Tcf in 2013. While natural gas prices fared slightly better last year, positively impacting gas reserves, gas production dipped slightly for the first time in the study's five-year period.

    Extensions and discoveries for both oil and gas reserves in 2013 were the highest of the five-year study period. These additions for oil reserves encompassed 4.1 billion barrels in 2013 and contributed to an oil production replacement rate of 222%, excluding purchases and sales. Extensions and discoveries of 29.9 Tcf were reported for gas reserves in 2013, and the gas production replacement rate was 229%, excluding purchases and sales.

    "Large independents accounted for the largest absolute increases in oil and gas reserves in 2013, though the gas reserves still remain below the level we saw in 2011," Byers said.

    More about the study
    The US oil and gas reserves study is a compilation and analysis of certain oil and gas reserve disclosure information reported to the Securities and Exchange Commission. This report presents US upstream sector results for the five-year period from 2009 through 2013 for the largest 50 companies based on 2013 end-of-year oil and gas reserve estimates.

     

     

     

    Related Articles

    White joins ROTH Capital Partners

    08/15/2014

    John White has joined ROTH Capital Partners (ROTH), a full-service investment bank, as senior research analyst covering the resources sector with a special focus on oil and gas.

    US 2014 natural gas output up 5.3% from last year’s record

    08/14/2014

    The US Energy Information Administration has raised its estimate for US natural gas production in 2014 to 5.3% over 2013's record high levels, Reuters says.

    US natural gas production rose 0.7% in July

    08/14/2014 Natural gas production in the US Lower 48 increased by 0.5 billion cubic feet per day (Bcf/d) during the month of July vs. June, according to Bentek Energy, an analytics and forecasting unit of Pla...

    China deciding strategy for doubling crude oil imports

    08/13/2014 China’s government is deciding whether to double the amount of crude oil imported by smaller, independent refineries, in what could prove a key move toward expanding the country’s import market, sa...

    Douglas-Westwood: Australian LNG – A lost cause?

    08/12/2014 Douglas-Westwood, a UK-headquartered provider of energy business strategy, research, and commercial due-diligence services, commented on "Australian LNG – A Lost Cause?" in its latest edi...

    More Oil & Gas Financial Articles

    White joins ROTH Capital Partners

    Fri, Aug 15, 2014

    John White has joined ROTH Capital Partners (ROTH), a full-service investment bank, as senior research analyst covering the resources sector with a special focus on oil and gas.

    US 2014 natural gas output up 5.3% from last year’s record

    Thu, Aug 14, 2014

    The US Energy Information Administration has raised its estimate for US natural gas production in 2014 to 5.3% over 2013's record high levels, Reuters says.

    US natural gas production rose 0.7% in July

    Thu, Aug 14, 2014

    Natural gas production in the US Lower 48 increased by 0.5 billion cubic feet per day (Bcf/d) during the month of July vs. June, according to Bentek Energy, an analytics and forecasting unit of Platts.

    China deciding strategy for doubling crude oil imports

    Wed, Aug 13, 2014

    China’s government is deciding whether to double the amount of crude oil imported by smaller, independent refineries, in what could prove a key move toward expanding the country’s import market, says research and consulting firm GlobalData.

    Douglas-Westwood: Australian LNG – A lost cause?

    Tue, Aug 12, 2014

    Douglas-Westwood, a UK-headquartered provider of energy business strategy, research, and commercial due-diligence services, commented on "Australian LNG – A Lost Cause?" in its latest edition of DW on Aug. 11.

    Most Popular

    Oil & Gas Jobs

    Search More Job Listings >>
    Subscribe to OGFJ