Net income for 20 top independent oil and natural gas producers rose 89% in the fourth quarter of last year over the same period in 2002, and skyrocketed 397% for all of 2003 due to robust U.S. oil and gas prices, according to a report issued by the Energy Information Administration (EIA) Friday.
Independent producers posted earnings of $261 million in the fourth quarter, up substantially from the $138 million in profits recorded during the comparable period in 2002, the Department of Energy (DOE) agency said. Several of the independents were forced to restate their reserve levels, which reduced by a “modest extent” their level of reported earnings in the final period of 2003, it noted. For 2003, the 20 independents reported net earnings of $1.6 billion, compared to profits of only $325 million in the prior year, the EIA said.
The reason for the meteoric rise in producers’ earnings was the strong price of oil and gas, according to the EIA. Wellhead gas prices jumped 28% to $4.62/Mcf in the fourth period of 2003, against $3.60/Mcf in the year-earlier quarter. Crude oil prices rose at a slower clip — 9.4% — to $27.80 a barrel in the fourth quarter, compared to $25.42 in the same period in 2002.
This was the fifth consecutive quarter that gas prices rose relative to a year ago, and the six consecutive quarter in which crude oil prices increased over their year-earlier levels, the EIA said.
The U.S. oil and gas rig count grew at a healthy rate during 2003, with the EIA noting that it rose 31% to 1,109 in the third quarter from 847 in the second quarter of the year. It said the increase in gas-directed rigs was particularly significant last year.
“The count for natural gas rigs increased 36% from Q402 to Q403, compared to the 28% increase in the price of natural gas over that period. Meanwhile, the oil rig count increased 11%, as oil price increased 9%” over the year-long period.
The EIA noted the rig count was up worldwide last year, but the upswing was most pronounced in North America. “The Canadian rig count increased 44% from 283 in 4Q02 to 408 in Q403, while the rig count outside North America increased 5%, from 753 to 791 over that period.”
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