Simmons & Company International
Energy Industry Research
W. Mark Meyer
mmeyer@simmonsco-intl.com
David A. Pursell
dpursell@simmonsco-intl.com
May 30, 2001
Ryan E. Zorn
rzorn@simmonsco-intl.com
1Q01 Reported Oil And Natural Gas Production Trends
Still Waiting On The “Big Lag”
Great angst prevails in the energy industry as natural gas prices have fallen from their $10/mcf
December 2000 peak to below $4/mcf. Large inventory builds over the past six weeks, combined with
record levels of gas-directed drilling, have led many to conclude that the weak fundamentals are
caused by an inevitable supply response. After analyzing first quarter 2001 reported production data
(we know we are not the only ones performing this exercise) we arrive at a very different
conclusion…significant supply response remains elusive. We believe the large injections are the
result of several demand side factors: 1) mild weather, 2) fuel switching from natural gas to liquid
petroleum products, and 3) NGL bypass.
Our first quarter 2001 crude oil and natural gas production volume compilation includes reported
results from a representative group of the largest publicly traded major integrated and independent oil
and natural gas producers - the same companies represented in our second, third, and fourth quarter
2000 reports. In the aggregate, the group accounts for approximately 50% of U.S. natural gas
production, 50% of U.S. liquids production, and 20% of non-U.S., non-OPEC liquids production. In
addition, the group currently operates roughly a third of active domestic drilling rigs and nearly half of
active domestic drilling rigs permitted to drill higher potential targets below 15,000 feet.
First Quarter 2001 Production Growth Results
Oil Production Growth U.S. Gas Production Growth
-3.4%
-0.8%
0.0%
1.1%
-1.2%
0.4%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
1Q - y/y(%) 1Q - q/q(%)
U.S. Oil
Intl. Oil
Total Oil
0.4%
1.9%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
1Q - y/y(%) 1Q - q/q(%)
Companies: AHC, BP, CHV, COC, EPG, XOM, KMG, MRO, OXY, P, RD, TX, UCL, APA, APC, BR, EOG, MND, UPR.
Note: ARC and VRI included in BP totals. UCL restated for consolidated PRS. CGP included in EPG results. APC restated for UPR.
Sources: Company 1Q01 press releases, other reports, and Simmons & Company International analysis.
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