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Transitioning from growth to value amid abundant oil

Staff writer ▼ | June 15, 2016
For the top 50 largest U.S. exploration and production (E&P) companies, revenues and capital expenditures dropped 41% during 2015.
U.S. oil
Energy source   9th annual U.S. oil and gas reserves study
This is the first year since 2004 that EIA-posted monthly WTI spot prices averaged below $60 per barrel for the entire 12 months.

EY's US oil and gas reserves study 2016, which analyzes US E&P results based on end-of-year oil and gas reserve estimates, found study companies reported total capital expenditures of $117.5 billion and revenues of $129.8 billion.

Amid staggering downward reserve revisions (4.1 billion barrels of oil and 40.0 tcf of gas), end-of-year oil reserves decreased 12% to 24.1 billion barrels and end-of-year gas reserves dropped 21% to 147.0 tcf.

Additionally, property impairments (including ceiling test charges) — which were recorded by 44 of the 50 study companies — totaled $141.8 billion during 2015.

Although combined oil and gas production increased 6% in 2015, prices caused revenues to decline 41% to $129.8 billion for the year. This significant drop coupled with substantial property impairments led study companies to report net losses of $112 billion.

The largest impairments were reported by companies that follow full cost accounting, which requires a "ceiling test" be conducted each quarter to review properties for impairment. These tests require companies use a 12-month average of the first-day-of-month reference prices.