EIA: Despite higher 1Q downstream earnings, integrated firms’ earnings fell 54%

First-quarter financial results for globally integrated oil companies indicated that higher refining margins in the downstream sector were unable to fully offset the impact of lower crude oil prices on the upstream sector, according to data from the US Energy Information Administration.

The 11 companies reported total first-quarter earnings of $22 billion, down 54% compared with first-quarter 2014 results. Upstream profits fell 80% year-over-year to $28 billion, while downstream profits jumped 95% to $6 billion—the largest for any quarter since third-quarter 2012, EIA says.

As a result, downstream accounted for 63% of combined earnings in the first quarter compared with a 15% average downstream share during 2011-14.

EIA says first-quarter earnings statements show that the high crack spreads during the period contributed to higher downstream profits. Even though absolute prices for both crude oil and products declined in this year’s first quarter compared with first-quarter 2014, North Sea Brent prices fell more than wholesale gasoline and heating oil prices, resulting in an increase in refining margin.

First-quarter crack spreads for gasoline and heating oil—based on futures prices for North Sea Brent crude oil and gasoline and heating oil in New York Harbor—averaged 28¢/gal and 49¢/gal, respectively, representing year-over-year increases of 7¢/gal for gasoline and 4¢/gal for heating oil.

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