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Sales and Gross Profit Performance of Upstream Companies

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Upstream companies’ gross profits

In fiscal 3Q15, the gross profits of upstream companies EOG Resources (EOG), Anadarko Petroleum (APC), and Pioneer Natural Resources (PXD) grew by 62%, 40%, and 11%, respectively, on a YoY (year-over-year) basis. These companies’ sales grew by 14%, 26%, and 23%, respectively. In contrast, ConocoPhillips’ (COP) gross profits fell by 21%. Also, the company’s sales fell by 3% on a YoY basis in fiscal 3Q15. The gross profits of Apache (APA) and Cabot Oil & Gas (COG) fell by 24% and 36%, respectively, on a YoY basis in fiscal 3Q15. Apache’s sales fell by 14% while Cabot’s sales grew by 16%.

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The graph above shows the sales and gross profit growth on a YoY basis for the upstream companies mentioned above. Most upstream companies hedge their production to avoid the impacts of crude oil and natural gas price changes. The above upstream companies also operate in a small proportion in either the midstream or downstream segment. Their main revenue sources are usually from exploration and production activities.

YTD performance

Now, let’s look at a breakdown of the above companies’ YTD (year-to-date) performances:

  • The upstream companies mentioned above fell by an average of 37% on a YTD basis.
  • EQT’s (EQT) gross profits grew by 35.4% on a YoY basis in fiscal 3Q15. However, its gross profits fell by 35% on a YTD basis.
  • EOG and Pioneer Natural Resources fell by 22.2% and 18.5%, respectively, on a YTD basis. We should note that these two companies outperformed other companies that saw a YTD fall in their gross profit and sales growth.
  • Meanwhile, The United States Oil Fund (USO) fell by 47.6% on a YTD basis.

In the next part of this series, we’ll talk about moving averages and analysts’ estimates for refineries.

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