U.S. ENERGY INFORMATION ADMINISTRATION
WASHINGTON DC 20585
FOR IMMEDIATE RELEASE
January 11, 2002
Major U.S. Energy Companies' Capital Expenditures
Nearly
Double as
Profits Hit
Record High in 2000
Profits of the major energy companies hit a new record as worldwide net income soared to $53.2 billion in 2000, up 133 percent from net income in 1999, according to data released today by the Energy Information Administration (EIA) in Performance Profiles of Major Energy Producers 2000.
Worldwide capital expenditures of major U.S. energy companies also hit an all-time high, totaling $109.3 billion in 2000, up 90 percent from expenditures in 1999. Mergers and acquisitions accounted for nearly all of the growth in capital expenditures, and most of the merger and acquisition activity in 2000 involved transactions between the majors. Excluding the effects of mergers and acquisitions, capital expenditures increased by only 3 percent between 1999 and 2000. 
Over 80 percent of the value of mergers and acquisitions in 2000 went for oil and gas production assets. The high level of capital expenditures for previously discovered oil and gas reserves is part of a recent trend among the majors. In recent years, the growth in the major energy companies' U.S. reserve base has come increasingly from mergers and acquisitions. By 2000, over 60 percent of the companies' total additions to reserves were gained in this way, up from an average of slightly over 10 percent in the 1990 to 1996 period (figure).
Nevertheless, the major energy companies' performance with the drill bit in 2000 was among the best in the 27 years spanned by EIA's Financial Reporting System. The majors' worldwide additions to their oil and gas reserves from exploration and development activities, mainly drilling, totaled 6.6 billion barrels (crude oil equivalent) in 2000. Only the 6.8 billion barrels added in 1997 exceeded this level. Worldwide reserve additions of the major energy companies exceeded worldwide oil and gas production by 22 percent in 2000. That is, the "replacement ratio," an often-used measure of exploration and development performance, equaled 122 percent in 2000, again the second best since at least 1974.
Other key findings reported in Performance Profiles of Major Energy Producers 2000 include:
- The upswing in the major energy companies' bottom-line results was mainly driven by sharply higher prices for oil and natural gas in 2000. Net income from worldwide oil and gas production totaled $40.6 billion in 2000, up 159 percent from the 1999 level.
- The majors' petroleum refining and marketing operations also posted strong gains in income in 2000, as net income from U.S. refining and marketing in 2000 was up 57 percent from net income in 1999 and up 56 percent in foreign refining and marketing. Tight supply conditions together with sporadic price spikes for gasoline and distillate led to a widened spread between refined product prices and crude oil input costs.
- Earnings from the "other energy" line of business nearly quadrupled to $2.7 billion in 2000. The other energy line of business is mainly composed of electricity supply and trading, natural gas trading at wholesale and retail, and provision of associated services such as risk management.
Other topics reviewed in Performance Profiles of Major Energy Producers 2000 include U.S. major energy companies' involvement in proposed Caspian Sea pipelines, recent trends in the majors' resource development strategies with a special focus on their growing presence in Rocky Mountain natural gas development, the role of mergers and acquisitions in the changing character of major energy companies, and an update to an earlier report on restructuring in motor gasoline marketing.
Performance Profiles of Major Energy Producers 2000 is available electronically on the EIA Website at: http://www.eia.gov/emeu/perfpro/. The report presents data and analyses of the major energy companies' financial performance by lines of business, resource development issues including regional costs of finding and producing oil and gas, and trends in energy industry restructuring.
| The report described in this press release was prepared by the Energy Information Administration, the independent statistical and analytical agency within the U.S. Department of Energy. The information contained in the press release and the report should be attributed to the Energy Information Administration and should not be construed as advocating or reflecting any policy position of the Department of Energy or any other organization. |
-EIA-
EIA Program Contact: Jon A. Rasmussen, 202/586-1449, jon.rasmussen@eia.doe.gov
EIA Press Contact: National Energy Information Center, 202/586-8800, infoctr@eia.doe.gov
EIA-2002-01
File Last Modified: January 11, 2002
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