• Thursday, June 13, 2024
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BusinessDay

Energy companies’ combined market capitalisation in first-quarter dip by $1 trillion

Oil-refinery

Financial Review of the global oil and natural gas industry for the first- quarter of 2020 has revealed that Brent crude oil daily average prices were 20 percent lower than in first-quarter 2019 and averaged $51 per barrel.

This is even as the energy companies’ combined market capitalization in first-quarter 2020 decreased by more than $ 1 trillion year-over-year.

The analysis of the 102 companies contained in the financial review also showed that they increased their combined liquids production 3.7 percent in firstquarter 2020 from firstquarter 2019, while their natural gas production decreased 0.1 percent during the same period.

It was also noted that the companies increased short-term and long-term borrowing in the first quarter, increasing debt by $55 billion in the quarter.

According to the financial analysis which was carried out by U.S. Energy Information Administration, the companies wrote down $92 billion worth of assets during the quarter, the most since the fourth quarter of 2015.

The geographical spread of the headquarters of the distribution of global oil and natural gas company is across the United States of America, Europe, Canada, and such other countries like Argentina, Brazil, Chile, China, Colombia, and Russia. But with no mention of any country in Africa.

Liquids and natural gas production was 39 million barrels per day and 21 million barrels of oil equivalent per day, respectively, in first-quarter 2020.

In first- quarter 2020, global liquids production increased 3.7 percent year over-year and natural gas production decreased 0.1 percent according to the report. Crude oil prices during that period were 20 percent lower than in first-quarter 2019, and natural gas prices decreased 35percent during the same period.

Cash from operations in during the period under review was $67 billion, 25 per cent lower than in firstquarter 2019, while capital expenditure was $67 billion, which was 9 percent lower than in first-quarter 2019

Nearly 50 percent of companies had positive free cash flow, and 46 percent of them reported positive upstream earnings in firstquarter 2020.

The companies however increased debt by $55 billion in first-quarter 2020, the most for any quarter in the 2015–20 period.

Upstream capital expenditures on a per-barrel basis have averaged about $13.50 per barrel of oil equivalent since 2017 but Upstream capital expenditures per barrel of oil equivalent were 19 percent of crude oil prices in first-quarter 2020

Crude oil price declines in the second quarter of 2020 indicate further declines in cash from operations and capital expenditures.

The long-term debt-toequity ratio for energy companies was 50 percent as of first- quarter 2020 and was 65 per cent for U. S. manufacturing companies. The $92 billion in asset impairments were nearly 10 percent of the companies’ net present value of their proved reserves.