Independents took a beating in the fourth quarter of last year with 55 of the largest companies reporting earnings before special items totaling $1.1 billion, or $2.18/boe (sold), off more than 50% from $2.3 billion, or $4.79/boe, posted for the third quarter, and off 75% from $4.3 billion, or $9.51/boe, posted for the fourth quarter of 2000, according to a final analysis by Adamstown, MD-based Energy Performance Review.

Substantially lower prices were partly offset by increased volumes of oil and gas sold. Revenues, totaling $10.8 billion, were off 16% from the prior quarter and off 32% from the prior-year quarter. If special items are included, the 55 companies actually show a loss of $144 million, or $0.30/boe, compared to a positive $4.5 billion for the 2001 fourth-quarter period.

Special items reported for the fourth quarter totaled a net negative $1.2 billion compared to a net positive $199 million for the 2000 period. The major items were writedowns, including $556 million for Devon Energy, $156 million for EEX Corp., $122 million for Burlington Resources, $86 million for Unocal, $78 million for Nuevo Energy, $68 million for Newfield Exploration and $64 million for Swift Energy.

Twelve-month results for the 55 companies reflect record income posted for the first quarter of the year when prices were substantially higher. Earnings before special items totaled $12.5 billion, or $6.67/boe, up 7% from the 2000 period. Revenues totaled $57 billion and were up 17%.

The primary factor in results for the fourth quarter was a continued decline in oil and gas prices. Average domestic crude-oil realization was off 30% from the 2000 period, to $18.86/bbl, natural gas was off 43%, to $2.73/Mcf, and gas liquids were off 46%, to $12.12/bbl. These declines were partly offset by increased volumes. Worldwide natural gas were volumes up 11% and worldwide crude oil and liquids volumes up 7%.

Price realization for the 12-month period was off 9% for crude oil and natural gas liquids, but up 33% for natural gas, reflecting the strong spike in gas prices posted for the first quarter of the year.

Looking at the largest companies in the independent oil and gas group, the most profitable measured by 2001 fourth-quarter earnings/boe, including special items and reported pre-tax were El Paso Production at $9.69/boe, NFG Oil & Gas at $6.10/boe, and Southwestern Oil & Gas at $5.72/boe. The most profitable reported net of tax were Benton Oil & Gas at $16.70 (including a $42.4 million tax gain), Plains Resources at $7.35, Chesapeake Energy at $6.16, Patina Oil & Gas at $5.60 and Dominion Exploration at $5.26.

For more results from EPR’s database call John Gehman at (301) 831-8464 or visit EPR’s web site at www.energyperformancereview.com.

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