‘Big oil,” meanwhile, appears to be cooling to mega mergers.
Asia’s government-controlled national oil companies (NOCs) are increasingly dominant. ‘Energy Intelligence Top 100’ is the only oil company ranking that measures Asian and other government-controlled national oil companies (NOCs) side by side with privately controlled international oil companies (IOCs). This year 41 NOCs and 59 IOCs made the list.
Malaysia’s Petronas (17), China’s CNOOC (38) and Thailand’s PTT (53) have been among the fastest rising companies in recent years. Korea’s National Oil Corp. (KNOC) made it back onto the list in this edition, landing at 77 following its acquisition of Canadian assets.
Yet even more dramatic was the ascent of India’s Reliance Industries, which jumped a remarkable 26 spots to land at 40. Its success is the result of significant increases in both gas production and distillation capacity --made even more remarkable considering this growth was organic.
The Top 100 control 87 percent of the world's oil reserves and 72percent of its gas reserves. Rankings are based on operating metrics rather than more traditional measurements such as market capitalization or revenues. A company’s rank is determined by the sum of ordinal ranks in each of six operational categories: Oil Production; Gas Production; Oil Reserves; Gas Reserves; Product Sales, and Refinery Distillation Capacity.
The Top 100 are also ranked in more than 100 other financial, upstream, refining and marketing categories.
While the names at the very top of the list barely shift, “look a little deeper and most of the companies in this group are in the midst of important changes,” says ‘Top 100’ Editor and Senior Research Analyst Ian Nathan. Some of these changes “could actually push them down, not up, in the next few years.”
BP, which faces huge costs associated with Deepwater Horizon disaster, may be the most prominent example of a shrinking giant. But the 2011 rankings suggest IOCs as a group may be rethinking size and mergers as a growth strategy.
An expected consolidation wave in 2009 didn’t materialize. And a look back to 1997 shows that today’s six largest IOC’s contribute a smaller share of global oil and gas operations than their aggregated predecessors.
While the consolidation may have made strategic sense for these companies at the time, the Top 100 research suggests that operational size is now being rethought as a driver of value creation.
That would be a significant break from the past. An astonishing 48 companies appearing in the 1997 Top 100 have disappeared from the rankings due almost entirely to M&A.
Research that produced the latest ‘Top 100’ also showed:
- The 4 percent rise in Top 100 oil reserves was largely the result of a massive reserve upgrade by Petroleos de Venezuela (PDV); Top 100 gas reserves grew 2 percent.
- Top 100 oil output declined by approximately 1 percent, damped by Opec production restraint, and gas production fell nearly 2 percent, hindered by severely diminished production from both Gazprom and Turkmengas.
- Median revenue for the Top 100 was down 25 percent, while income dropped 42 percent.; median capital expenditures slid 35 percent.
- Four companies joined the Top 100 list: Cenovus Energy, Southwestern Energy, Ultra Petroleum and Korea National Oil Corp.
- North America is stirring again as a major upstream player, helped by unconventional (shale) gas success.
