Recycle Ratio

The tide is shifting in the energy sector back toward hydrocarbons as renewables face new, big hurdles. The latest tangible sign of this shift is BP’s decision to refocus on traditional oil and gas and deemphasize renewables, which follows ExxonMobil’s and Shell’s restructuring of strategies in the same direction. The likelihood that hydrocarbon demand will continue to grow throughout this decade has reinforced the importance of E&P companies adding to their proved oil and gas reserves. In today’s RBN blog, we analyze crucial trends from the 2024 reserve reporting of the major U.S. oil and gas producers. 

RBN analysis of 31 exploration and production (E&P) companies shows sharp differences between two groups of gas-weighted firms. The US diversified group is struggling to increase production, and slashing capital spending in light of weak profitability. Meanwhile, the Appalachian group is flying high as the most profitable classification in our analysis – largely as a result of slashing costs in response to weak natural gas prices. Today we wrap up our three-part analysis of U.S. E&P company’s 2015 outlook.

The E&Ps have cut Capex to the bone, but as a group they expect oil and gas production in 2015 to increase versus last year.  That’s true from an overall perspective, and it is an important indicator of upcoming production trends.  But the real revelations come when you dig into the details.  In the oily sector, small and mid-size companies are making deeper cuts but are faring much better than the big boys.  On the gassy side, E&Ps in Appalachia are knocking it out of the park, while more diversified gassy players are having a much harder time of it.   Today we begin a blog series to drill deeper into the company numbers to see why and how these differences happen.