The US Energy Information Administration (EIA) has revealed insights from its latest Financial Review of the Global Oil and Natural Gas Industry for the third quarter of 2023 (3Q23), shedding light on key findings and financial trends within the sector.
Here are the highlights from the report:
Price Trends: The Brent crude oil daily average price experienced a 12 percent decrease in 3Q23 compared to the same period in 3Q22, averaging at $86 per barrel. In contrast, the Henry Hub daily average price for natural gas plummeted by 67 percent over the same period, averaging at $2.66 per million British thermal units.
Production Statistics: Among the 142 energy companies surveyed, combined petroleum liquids production surged by 4.8 percent year over year, marking the highest level since 1Q20. However, natural gas production witnessed a slight decline of 1.2 percent during the same period.
Financial Metrics: Shareholder distributions through dividends and share repurchases continued to exceed pre-pandemic levels, averaging at $67 billion over the past four quarters. Concurrently, the collective market capitalization of energy companies soared to a five-year high, reaching $2.54 trillion.
Geographic Focus: Most companies under scrutiny are headquartered in North America, with approximately 57 percent producing less than 50,000 barrels per day in 3Q23.
Financial Performance: Cash from operations in 3Q23 amounted to $163 billion, showing a 25 percent decrease from 3Q22. Despite this, capital expenditure surged by 16 percent to $85 billion compared to the previous year.
Free Cash Flow and Debt: About 72 percent of companies reported positive free cash flow, while the long-term debt-to-equity ratio remained stable at 37 percent. Additionally, the companies collectively reduced debt by $10 billion in 3Q23.
Market Capitalization and Returns: The energy companies witnessed a remarkable 20 percent increase in market capitalization in 3Q23 compared to the same period in the previous year, reaching a five-year peak. The return on equity for these companies stood at 19 percent, surpassing returns observed in the US manufacturing sector.
Future Indicators: The report foresees a downward trajectory in cash from operations as crude oil prices decreased year over year in 4Q23.
The analysis primarily focuses on 142 global oil and natural gas companies, utilizing data sourced from publicly available financial statements aggregated by the Evaluate Energy data service.
This comprehensive report offers a detailed glimpse into the financial and operational landscape of the energy sector, outlining both positive trends and potential challenges that could shape the industry’s future trajectory.