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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: The Ox who wrote (65598)	5/2/2000 1:42:00 PM
From: The Ox	Read Replies (1) \| Respond to of 95453

U.S. Oil & Gas Profits Rebound; Capital Spending Falls Top 50 Companies' U.S. Revenues Up 16%, Reserve Replacement Costs Down 42%; 2000 Spending Projected to Rise 20%+ STAMFORD, Conn., May 2 /PRNewswire/ -- The largest U.S. oil and gas companies recorded a five fold increase in net profits during 1999, spurred by a combination of escalating crude oil and natural gas prices and lower operating costs, according to a new analysis by petroleum research company John S. Herold, Inc. Herold 33rd Annual Reserve Replacement Cost Analysis -- Top 50 U.S. Companies (RRC 50) found that domestic oil reserves at the end of 1999 were virtually unchanged from year end 1998, declining 0.2% to 18.1 billion barrels. Natural gas reserves closed out 1999 at 94.1 trillion cubic feet, up 0.7%. The annual reserves replacement cost study -- which is based upon a compilation of operating and financial data disclosed to the Securities and Exchange Commission by the 50 companies with the largest domestic inventories of proved oil and gas reserves (the Herold 50) -- said reserves levels were sustained despite a 25% decline in capital spending, from $29.7 billion in 1998 to $22.2 billion in 1999. Exploration and development spending fell more steeply than overall capital investment, declining $8.9 billion to $15.6 billion. Expenditures to acquire proven properties by the Herold 50 rose to $6.6 billion, $1.4 billion more than in 1998. In 1999, the Herold 50 accounted for nearly 56% of U.S. proven oil reserves, 57% of domestic gas reserves, and 53% of domestic oil and gas production, and study results should be considered indicative of the entire U.S. oil and gas exploration and production industry. Herold chairman Art Smith said the 36% decline in E&D spending among the Herold 50 reflected a "prudent way to rein in spending during hard times by deferring more speculative exploration and development projects," Smith said. "Another conservative way to replace production is buying proved reserves, and our analysis showed that companies did substantially boost acquisition spending." More prudent E&D strategies enabled the Herold 50 to trim reserve replacement costs-expressed on a barrel of oil equivalent (BOE ) basis -- in 1999 by 42%, to $5.13/BOE, paced by finding and development costs that plunged nearly 60% to $5.18/BOE, the best performance since 1995. Reserve replacement costs were 16% below the three year average despite a 27% increase in acquisition costs to $5.01 BOE. The Herold 50 replaced 98% of the oil and gas they produced in 1999, a substantial improvement over just 61% in 1998. The oil replacement rate jumped from 54% in 1998 to 97%, largely due to price related reserve additions. Meanwhile, the natural gas replacement improved marginally from 96% to 98%. Over a five year period, the Herold 50 has achieved a 105% replacement rate, 94% through exploration and development and 11% through acquisitions. Despite rising production taxes resulting from higher oil and gas prices, overall production costs of the Herold 50 dropped 4.6% to $3.53/BOE, a five year low. Even though total oil and gas production by the combined Herold 50 declined 2.6%, Herold senior vice president Nicholas D. Cacchione noted that group production revenues increased nearly 16% to $42.9 billion. Pretax income of the Herold 50 increased nine fold to $13.7 billion. Net income was $9.7, five times the total in 1998. Cacchione said, "These statistics indicate that when oil executives keep their capital spending within cash flow and focus on their best projects, the industry can be profitable and create value for shareholders. Cacchione added, "In 2000, U.S. spending by the Herold 50 should grow well in excess of 20%, as larger spending increases by independents -- including acquisitions such as Anadarko's purchase of Union Pacific Resources -- are offset by single digit spending growth among the integrated companies." Founded in 1948, John S. Herold, Inc. is a specialized research and consulting firm focusing exclusively on the petroleum industry. Herold provides its clients with key financial, operational and capital markets data together with independent, objective analyses of the valuation and performance of the world's oil and gas companies. Herold also offers in-depth electronic financial and mergers and acquisitions databases, provides specialized consulting services, and sponsors the highly regarded annual Herold Pacesetter Energy Conference. To receive a copy of " Herold 33rd Annual Reserve Replacement Cost Analysis -- Top 50 U.S. Companies", please contact Tom Sommers or A.D. Koen at 713-752-1900. For further information about the contents of the report, please contact Nicholas D. Cacchione at 203-359-4339. SOURCE John S. Herold, Inc. CO: John S. Herold, Inc. ST: Connecticut, Texas IN: OIL UTI FIN SU: ECO 05/02/2000 12:43 EDT prnewswire.com