EIA: 19 major companies' income grew 130% year-over-year

By Phaedra Friend Troy

The US Energy Information Administration reported Thursday that 19 major energy companies reported an increase of more than 130 percent in net second quarter 2010 income in comparison to the same period last year.

The net income for the nineteen companies included in the EIA’s findings earned $19.8 billion in the second quarter of 2010, and revenues for the companies reached $260.6 billion.

While a substantial increase, the net income from 2Q 2010 was 21 percent lower than the average second quarter income for 2005-2009, which was supported by spectacular earnings in 2007.

The companies included in the EIA’s analysis are the US operations of Alon (NYSE:ALJ), Anadarko (NYSE:APC), Apache (NYSE:APA), BP (NYSE:BP), Cenovus (NYSE:CVE), Chesapeake (NYSE:CHK), Chevron (NYSE:CVX), ConodoPhillips (NYSE:COP), Devon (NYSE:DVN), EnCana (NYSE:ECA), EOG (NYSE:EOG), EQT (NYSE:EQT), ExxonMobil (NYSE:XOM), Hess (NYSE:HES), Marathon (NYSE:MRO), Occidental (NYSE:OXY), Sunoco (NYSE:SUN), Tesoro (NYSE:TSO), Valero (NYSE:VLO), Western Refining (NYSE:WNR) and Williams (NYSE:WMB).

The EIA contends that higher crude and natural gas prices, increased foreign hydrocarbon production, ramped up US refining margins and augmented US refinery throughput was offset by decreased US crude production and lower foreign refinery throughput to afford much higher net income for these companies.

Business Segment Breakdown

The EIA reported that an $8.4 billion increase or 83 percent jump in worldwide oil and natural gas production net income was supported by $4.8 billion in worldwide refining and marketing net income, in comparison to a nearly $0 net income in the second quarter of 2009 for the downstream/marketing segments.

The old adage that you have to spend money to make money also rang true. The EIA reported that the companies also increased their upstream investments despite more than a year of lower-than-average net income.

Continuing an 18-month trend, the companies also decreased their capital expenditures for their refining/marketing segments, because of more than a year of consistently lower-than-average net income in this market.

In fact, comparing 2Q results from the 11 companies included that are involved in refining and marketing from 2005 to 2010, the numbers initially rose, then dropped, and now seem to be growing again. Increasing from $8 billion in 2005 to $12 billion in 2006 and peaking at $15 billion in 2007, the companies’ earnings plummeted to $3 billion in 2008 and then near $0 in 2009. In the second quarter of 2010, the combined refining and marketing earnings reached nearly $5 billion.

While US businesses saw an increase in second quarter corporate and petroleum earnings from 2009 to 2010 from $8 billion to nearly $20 billion, worldwide petroleum companies jumped from $10 billion to just less than $24 billion.

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