The U.S. Energy Information Administration (EIA) has published its Financial Review of the Global Crude Oil and Natural Gas Industry: Third-Quarter 2024, revealing key trends in production, investment, and shareholder distributions.
Production Trends:
Global petroleum liquids production increased by 3 percent year-over-year (y-o-y), while natural gas production fell by 2 percent compared to Q3 2023.
About 59 percent of analyzed companies produced less than 50,000 barrels per day in Q3 2024.
Price Declines:
Brent crude oil prices dropped 11 percent in real terms y-o-y.
Henry Hub natural gas prices saw an even sharper decline of 18 percent y-o-y.
Financial Metrics:
Cash from operations was $144 billion in Q3 2024, a 1 percent decrease in real terms from Q3 2023 due to lower energy prices.
Capital expenditure amounted to $75 billion, also 1 percent lower in real terms than Q3 2023.
Upstream Investments:
Upstream capital expenditures averaged $15.65 per barrel of oil equivalent over the past four quarters, representing 24 percent of crude oil prices in Q3 2024.
Companies increased their debt by $13 billion, raising the long-term debt-to-equity ratio to 39 percent.
Shareholder Returns:
Distributions to shareholders via dividends and share repurchases averaged $55 billion over the last four quarters, significantly above pre-pandemic levels.
These distributions accounted for a substantial portion of cash from operations.
Market Capitalization and Equity:
Combined market capitalization of energy companies declined by 9 percent in real terms y-o-y in Q3 2024.
The return on equity averaged 12 percent over the past year, slightly trailing the average returns of U.S. manufacturing companies.
Hedging Gains:
Hedging derivatives provided a net gain of $4 billion in Q3 2024, partially offsetting lower cash flows from declining prices.
Outlook:
Early Q4 2024 data indicates a continued 10 percent decline in crude oil prices y-o-y, suggesting potential further reductions in cash from operations.
This financial review underscores the challenges of declining commodity prices for the energy sector, even as companies increase production in some areas and maintain robust shareholder returns.