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Financial News for Major Energy Companies, Second Quarter 2010

Second Quarter 2010 Key Findings Net Income: $19.8 billion Revenues: $260.6 billion
  • Nineteen major energy companies companies reported more than a 130-percent increase in net income relative to the second quarter of 2009 (Q209). However, net income during the second quarter of 2010 (Q210) was 21-percent lower than the second-quarter average for 2005-2009.
  • The effects of higher crude oil and natural gas prices, higher foreign oil and worldwide natural gas production, higher U.S. refining margins, and higher U.S. refinery throughput were slightly offset by lower U.S. crude oil production and lower foreign refinery throughput, leading to much higher net income.
  • Upstream capital expenditures by these companies increased despite more than a year of consistently lower-than-average (relative to the 5-year average for the particular quarter) net income. Meanwhile, capital expenditures for refining/marketing decreased, continuing an 18-month trend, after more than a year of exclusively lower-than-average net income.
  • BP recorded a pre-tax special charge of $32.2 billion related to the Gulf of Mexico oil spill. Such a charge is considered an unusual item and excluded in making the quarter-to-quarter and year-to-year comparisons that follow. Inclusion of the special charge would have increased operating expense by $32.2 billion and reduced net income by $20.9 billion. The special charge is equal to BP's expenses incurred through June 30, 2010. BP also announced plans to create an additional fund of $20 billion for future contingencies.
Corporate and Petroleum Net Income for Major Energy Companies: (back to top)

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  • Nineteen major energy companies reported a 137-percent increase in net income relative to second quarter of 2008. However, net income during Q210 represents a 21-percent decrease relative to the second-quarter average for 2005-2009.
  • Overall, the petroleum line of business (which includes both oil and natural gas production and petroleum refining/marketing) in Q210 saw a similar net income increase of 128 percent from the level of Q209, increasing more than $13.2 billion.
  • An $8.4-billion (83 percent) increase in worldwide oil and natural gas production net income was augmented by 4.8-billion in worldwide refining/marketing net income (compared to almost $0 net income in Q209).
  • All lines of business (i.e., domestic and foreign oil and gas production, domestic and foreign refining/marketing, worldwide gas and power, and worldwide chemical operations) generated higher earnings in Q210 than in Q209.
  • Note: corporate net income and the total net income of the lines of business differ because (1) some items in corporate net income are nontraceable, such as interest expense, and are not allocated to lines of business, and (2) the number of companies reporting line-of-business net income varies.


Oil and Gas Operations of Major Energy Companies: (back to top)

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  • Worldwide oil and gas production income increased 83 percent ($8.4 billion) relative to Q209 as an increase in domestic income was magnified by a smaller increase in returns from foreign operations. Similarly, relative to the second quarter average for 2005-2009 of $21.8 billion, Q210 was 15 percent lower.
  • Domestic oil and gas production operations generated 62 percent more income than a year earlier, but 26 percent less than the average for the second quarter of 2005-2009.
  • Six of the nine included companies reported higher earnings than a year ago, noting in their press releases that this resulted from the effects of higher prices received and, in some cases of higher production levels (due to the absence of hurricane effects and bringing new fields on-line), and lower exploration costs.
  • Income from foreign oil and gas production increased 77 percent compared to Q209, but was 6 percent lower than the second quarter average for 2005-2009.
  • All five included companies reporting foreign production financial results reported higher earnings than a year ago. The effects of favorable exchange rates and higher prices received were amplified by the effects of higher production levels, which were due to things such as bringing new fields on-line, according to company press releases.


Refining/Marketing Operations of Major Energy Companies: (back to top)

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  • Income from worldwide refining/marketing operations increased from almost nothing in Q209 to $4.8 billion as an extremely large increase in domestic returns was augmented by a 137-percent increase ($836 million) in income from foreign operations. However, relative to the second quarter average for 2005-2009, earnings from worldwide refining/marketing operations were 35 percent lower.
  • Domestic refining/marketing operations generated earnings of $3.6 billion, compared to a loss of $400 million in Q209, but still was 38 percent less than the average for the second quarter of 2005-2009.
  • Nine of the twelve included companies reported higher earnings than a year ago, with all three of those reporting lower earnings also reporting losses. Higher refining and retailing margins, and lower costs contributed to higher earnings despite lower product sales according to company press releases.
  • Income from foreign refining/marketing increased 137 percent compared to Q209, reaching $1.4 billion, but was 26 percent lower than the second quarter average for 2005-2009.
  • All five of the included companies reported higher earnings (or a smaller loss in the case of 1 company) than a year ago despite lower throughput. However, derivatives and foreign exchange gains in addition to higher margins all put upward pressure on earnings, according to company press releases.


Capital Expenditures for Oil and Gas, and Refining/Marketing Operations of Major Energy Companies: (back to top)

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  • Worldwide upstream capital expenditures by these companies increased 16 percent despite more than a year of consistently lower-than-average (relative to the 5-year average for the particular quarter) net income. Relative to the second-quarter average for 2005-2009, capital expenditures for Q210 were 19 percent higher.
  • The majors' investment in their U.S. oil and gas production operations increased 51 percent relative to Q209, and was 40 percent higher than the second quarter average for the last five years (i.e., 2005-2009).
  • Capital expenditures in foreign oil and gas production operations increased 22 percent in Q210 compared to Q209. Further, the value for Q210 was 37 percent higher than the second quarter average for 2005-2009.
  • Meanwhile, capital expenditures for refining/marketing decreased 39 percent in Q210 (compared to Q209), continuing an 18-month trend, after more than a year of exclusively lower-than-average net income (based on the 5-year average for the relevant quarter). Compared to the second quarter average for 2005-2009, capital expenditures in Q210 were 30 percent lower.


Gas and Power and Chemical Operations of Major Energy Companies: (back to top)

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  • Net income from the majors' gas and power operations increased 9 percent relative to Q209, but was 9 percent lower than the second quarter average for 2005-2009.
  • Four of the six companies reporting earnings generated higher earnings. Improved market conditions in general, and higher sales prices and margins in particular, offset higher operating costs according to company press releases.
  • Worldwide chemical operations generated 194 percent higher earnings for the majors in Q210 than in Q209, but only was 51 percent higher than the second quarter average for 2005-2009.
  • Three of the four companies reporting chemical results reported higher earnings. These companies attributed higher earnings to lower costs, higher margins, and higher sales in company press releases.


Supplemental Figures: (back to top)

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  • Crude oil prices in Q210 were 28 percent higher than in Q209 and 3 percent higher than the average for the second quarter of 2005-2009 (in Q210 dollars).
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  • U.S. crude and NGL production decreased 1 percent compared to Q209 due to the effects of natural field declines and asset divestitures offsetting the effects of new fields starting operations and the absence of hurricane effects, which significantly reduced production in Q209. However, the level of Q210 was 1 percent higher than the second quarter average for 2005-2009.
  • Foreign crude oil and NGL production increased 1 percent compared to Q209 largely due to newly operational fields, which offset natural field declines. The level of Q210 was slightly higher (2 percent) than the second quarter average for 2005-2009.




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  • Natural gas prices of Q210 were 18 percent higher than in Q209, but 41 percent lower than the second quarter average for 2005-2009 (measured in Q210 dollars).
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  • U.S. gas production by the majors was essentially unchanged, increasing by 0.3 percent, relative to a year earlier, but was 7 percent higher than the average for the second quarter of 2005-2009.
  • Foreign gas production by the majors increased 10 percent relative to a year earlier and was 13 percent higher than the second-quarter average for 2005-2009, overwhelmingly due to new projects and increased European demand.




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  • The gross refining margin for Q210 was 20 percent higher relative to Q209, but also 28 percent lower than the second-quarter average for 2005-2009 (in Q210 dollars).
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  • Domestic refinery throughput was 3 percent higher than in Q209, but was essentially the same (-0.1 percent) as the average for the second quarter over 2005-2009, despite the closure of Sunoco's Eagle Point refinery.
  • Foreign refinery throughput decreased 6 percent relative to Q209 and was 10 percent lower than the second quarter average for 2005-2009 due to planned and unplanned outages (e.g., turnarounds).




Supplemental Tables:     (back to top)

Table 1. Corporate Revenue and Net Incomea, Net Income by Lines of Business and Functional Petroleum Segments, and Operating Information for Major Energy Companies
(Number of companies reporting given in parentheses) Financial Data Q209 Q210 Percent Changeb First Half 2009 First Half 2010 Percent Changeb
(Millions of Q210 Dollars) (%) (Millions of Q210 Dollars) (%) Corporate Revenue (19)c 220,629 260,552 18.1 410,615 529,358 28.9 Net Income (19) 8,377 19,823 136.6 5,074 36,851 626.3 Worldwide Net Income Petroleum (20) 10,302 23,519 128.3 11,795 45,239 283.5 Oil and Natural Gas Production (15) 10,083 18,457 83.0 7,995 40,447 405.9 Refining/Marketing (12) 219 5,050 2,210.7 3,800 4,779 25.8 Natural Gas and Power (6) 569 619 8.8 1,152 1,500 30.2 Chemicals (5) 550 1,619 194.4 1,101 3,018 174.1 Domestic Net Income Oil and Natural Gas Production  (9) 3,213 5,201 61.9 1,768 12,201 590.1 Refining/Marketing  (12) -393 3,597 1,015.4 1,930 3,150 63.2 Foreign Net Income Oil and Natural Gas Production (5) 5,406 9,570 77.0 10,766 19,858 84.5 Refining/Marketing  (5) 611 1,447 136.7 1,870 1,623 -13.2 Worldwide Capital Expenditures U.S. Oil and Natural Gas Production (7) 4,624 6,980 50.9 10,485 11,843 12.9 Foreign Oil and Natural Gas Production (4) 8,201 10,032 22.3 17,353 18,735 8.0 Worldwided Oil and Natural Gas Production (12) 18,306 21,205 15.8 38,436 39,878 3.8 Worldwide Refining/Marketing  (11) 4,087 2,477 -39.4 7,895 5,118 -35.2 Operating Data Oil Production (Thousands of Barrels/Day) (%) (Thousands of Barrels/Day) (%) Domestic (13) 2,817 2,783 -1.2 2,817 2,854 1.3 Foreign (10) 5,007 5,047 0.8 5,007 5,096 1.8 Natural Gas Production (Million Cubic Feet/Day) (%) (Million Cubic Feet/Day) (%) Domestic (15)

19,666 19,724 0.3 19,769 19,670 -0.5 Foreign (10) 17,239 19,046 10.5 18,249 19,717 8.0 Refinery Throughput (Thousands of Barrels/Day)d (%) (Thousands of Barrels/Day)d (%) Domestic (12) 10,888 11,192 2.8 10,888 10,721 -1.5 Foreign (5) 5,568 5,260 -5.5 5,568 5,274 -5.3 a Net income excludes unusual items. Because consolidated net income includes corporate nontraceables and eliminations, it is not equal to the sum of the lines of business net income.
b Percent changes are calculated from unrounded data.
c The number of companies reporting net income from petroleum operations is greater than the number reporting corporate revenue and corporate net income because the U.S. operations of BP are included in the results of the U.S. lines of business, but not in the foreign or corporate results because the companies are foreign based. The reporting practices of Royal Dutch Shell changed effective Q309, precluding continued inclusion of the company in this compilation and necessitating the removal of its historical data to maintain comparability between periods. Similarly, Exxon Mobil's acquisition of XTO closed June 25, which effectively removed XTO and its assets from the Q210 results presented here. Consequently, XTO was removed from the compiled numbers for Q209, Q208, Q207, Q206, and Q205 to maintain comparability.
d U.S. and foreign oil and natural gas capital expenditures do not necessarily sum to the worldwide total due to the manner in which these data are disclosed (i.e., some companies fail to separate their capital spending into domestic and foreign, but simply provide a worldwide total).
Note: Both the worldwide oil and natural gas production and refining/marketing lines of business include companies that reported domestic and foreign operations separately and those that do not separate domestic and foreign results. Thus, the number of companies with worldwide oil and natural gas production operations is greater than the sum of the companies reporting domestic results and those reporting foreign results. The same is also true for refining/marketing operations.
Sources: Compiled from companies' quarterly reports to stockholders.



Table 2. U.S. Energy Prices and the U.S. Gross Refining Margin Q209 Q210 Percent Change U.S. Energy Pricesa (Q210 Dollars) (%) Imported Average Crude Oil Price ($/barrel) 57.92 74.33 28.3 Natural Gas Wellhead Price ($/thousand cubic feet) 3.47 4.79 17.5 U.S. Gross Refining Margin ($/barrel)b 13.23 9.57 19.8 a Energy Information Administration, Short-Term Energy Outlook, (September 8, 2010), Table 2.
b Compiled from data in Energy Information Administration, Petroleum Marketing Monthly, DOE/EIA-380 (Washington, DC), Table 1, Table 4 and Table 5; and Energy Information Administration, Monthly Energy Review, DOE/EIA-0035, (Washington, DC) Table 3.2.
Note: The U.S. Gross Refining Margin is the difference between the composite wholesale product price and the composite refiner acquisition cost of crude oil.

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