The plunge in crude oil prices eroded North American oil
and gas companies’ earnings in the last quarter of 2014.
A sample of 56 US-based oil and gas producers and refiners posted combined net earnings of $8.7 billion for fourth-quarter 2014, a decrease of $11.6 billion from year-earlier
results. The group’s collective net earnings for the 12 months
ended Dec. 31, 2014, were $87 billion compared with $95
billion in 2013. Revenues for the fourth quarter and the full
year decreased 14% and 2% year-over-year, respectively.
Lower crude oil prices weighed heavily on upstream earnings, despite continued growth in US crude oil production
in the fourth quarter. Downstream, fourth-quarter refining
margins compressed with the narrowing of the prices of US
and West Canadian crudes to Brent and other international
crudes. Refinery throughput and average refinery utilization
rates remained strong.
Meanwhile, a sample of 12 oil and gas producers and
pipeline companies with headquarters in Canada posted
a combined net loss of $390.7 million (Can.) for fourth-quarter 2014 compared with net earnings of $358.5 million
(Can.) in the prior year’s fourth quarter. However, on a full-year basis, their profits increased to $18.9 billion (Can.) from
$13.1 billion (Can.) in 2013.
Commodity prices, refining margins
Crude oil prices fell sharply in fourth-quarter 2014 as robust global production exceeded demand. The average quarterly WTI and Brent marker prices decreased to $73.16/bbl
and $76.40/bbl, respectively, for fourth-quarter 2014 from
$97.34/bbl and $109.21/bbl, respectively, for fourth-quarter
The quarterly average composite cost of crude oil for US
refiners was $73.7/bbl, down from $96/bbl a year ago, according to the US Energy Information Administration.
Quarterly refining margins in most US regions decreased
from a year ago, according to Muse, Stancil & Co. Cash mar-
gins in fourth-quarter 2014 averaged $17.98/bbl for Midwest
refiners, $12.93/bbl for the West Coast, $6.12/bbl for the
Gulf Coast, and $5.08/bbl for the East Coast. In the same
quarter of last year, these refining margins were $23.23/bbl,
$15.04/bbl, $8.43/bbl, and – 11¢/bbl, respectively.
Front-month gas on the New York Mercantile Exchange
averaged $3.848/MMbtu in fourth-quarter 2014 compared
with $3.857/MMbtu a year earlier. Retail gasoline prices declined 80¢ during the quarter to average $2.55/gal. Diesel
fell 30¢ to $3.42/gal.
ExxonMobil Corp. reported fourth-quarter 2014 earnings of
$6.78 billion compared with $8.64 billion for same quarter
in 2013, reflecting both lower upstream and downstream
earnings. Lower commodity prices in the upstream and
higher planned maintenance costs in the downstream were
partially offset by improved chemical margins, the company
Excluding the impact of the expiry of the Abu Dhabi onshore concession, the company’s fourth-quarter 2014 liquids
production increased 80,000 b/d from the same period last
year, and natural gas output decreased 653 MMcfd.
Chevron Corp. reported $3.5 billion in fourth-quarter
2014 net income compared with $4.9 billion in the same
quarter in 2013. Foreign currency effects increased earnings
by $432 million in fourth-quarter 2014 compared with an
increase of $202 million a year earlier. Full-year 2014 earnings were $19.3 billion compared with 21. 6 billion in 2013.
Compared with fourth-quarter 2013, the company’s US
upstream earnings of $432 million in the fourth quarter
2014 were down $371 million, and international upstream
earnings of $2.24 billion decreased $1.81 billion, primarily
due to sharply lower oil realizations and higher depreciation
During the fourth quarter Chevron’s worldwide net oil
production remained unchanged at 2.58 million boe/d compared with the year-ago level as increased production from
“project ramp-ups” in the US, Argentina, Brazil, Nigeria, and
Bangladesh were offset by normal field declines as well as
the effect of asset sales.
EOG Resources Inc. reported fourth-quarter 2014 net income of $444.6 million compared with fourth-quarter 2013
net income of $580 million. In fourth-quarter 2014, EOG increased its US crude oil and condensate production by 28%,
while total company crude oil and condensate production
Fourth-quarter earnings hit
by dropping crude oil prices