Net income for 51 independent energy companies rose 11% in the first quarter from the year-earlier period due to an upswing in both crude oil prices and gross refining margins, according to a report issued by the Energy Information Administration (EIA) last Tuesday. Natural gas prices were not cited as a contributor to the upbeat earnings reports of the energy companies that the EIA reviewed.

That’s because average domestic gas prices fell in the opening quarter of 2004 relative to a year earlier, ending a streak of five consecutive quarters where gas prices rose over their year-ago levels, the agency said. The average natural gas wellhead price tumbled nearly 6% to $5.22/Mcf in the first quarter compared to $5.54/Mcf for the same period in 2003, the EIA estimated. It attributed the price decline to a higher level of working gas storage during the first period of 2004 than a year ago (more than 2.5 Tcf versus about 1.2 Tcf), flat gas supply and a slight weakening of U.S. demand.

The 51 energy companies reported first quarter income of $1.24 billion compared to $1.11 billion for the comparable period in 2003. Refiners as a group (five companies) reported the biggest percentage gain in net income, 47%, on a year-to-year basis, with earnings of $102 million in the first quarter of 2004 against $69 million a year ago, the EIA said. But it noted the rise in income for the refiners’ group was mostly due to “improved circumstances peculiar to one company,” while the earnings of the other four independent refiners ranged from flat to up slightly.

The oil and gas producing group (20 companies) followed, reporting a 12.4% upswing in first quarter earnings to $508 million from $452 million during the first period in 2003. The critical factor was the 3% increase in the price of oil to $31.44 per barrel from $30.58 in early 2003, the EIA said.

The 26 oil field companies surveyed by EIA saw their first quarter net income rise 6% to $629 million from $593 million in the same quarter in 2003 due largely to 14% year-to-year growth in the worldwide rig count to 2,444.

The U.S. rig count grew at an even faster clip of 24%, rising to 1,119 rigs in the first quarter of 2004 from 901 rigs a year ago, according to the EIA. Most of the spurt came from gas rigs, which increased 29% to 961 rigs from 743 rigs in the first quarter of 2003, the agency said. It noted that the domestic oil rig count had an uptick of only 2% over the same period.

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