U.S. E&Ps have just concluded discussions of their Q4 and full-year 2023 results and, as usual, the view of analysts and investors can be summed up by one question: What have you done for me lately? But while the collective results of the 44 producers we track were off from the previous quarter and a record 2022, there’s a lot to be said for how well they held up through a period of unusually low natural gas prices. In fact, if you take a step or two back for a longer-term perspective you’d see a strong historical performance that suggests E&Ps really have learned how to do well through commodity price ups and downs. In today’s RBN blog, we analyze the 2023 results of a representative group of major U.S. producers and look ahead to how 2024 may shake out.
As shown by the rightmost blue bar and left axis in Figure 1, the 44 E&Ps we monitor earned a collective $84.4 billion in 2023, or just under half the $175.9 billion they earned in 2022 and 2% lower than their 2021 earnings. Cash flow for the 44 companies was $143.8 billion in 2023 (rightmost orange bar and left axis), 36% below the $226 billion reached in 2022 but 7% higher than 2021. The key driver in the changes in profitability was a one-third decline in realized prices to $37.56/boe (right end of gray line and right axis). Henry Hub natural gas prices were in freefall during 2023, averaging $2.67/MMBtu for the year, or nearly 60% lower than the $6.51/MMBtu posted in 2022. WTI crude oil prices were much less volatile, but still lower, declining 18% in 2023 to $77.60/bbl.
Figure 1. E&Ps’ Earnings, Cash Flow and Realized Prices, 2019-23.
Source: Oil & Gas Financial Analytics, LLC
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