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Analyzing Upstream Companies’ Production Mix

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Production mix

ConocoPhillips (COP) has a production mix of 43% and 46% in natural gas and crude oil, respectively. In contrast, EQT (EQT) and Cabot Oil & Gas (COG) have production mixes of 90% and 95%, respectively, in natural gas. Companies with high exposure to natural gas and crude oil will likely be impacted the most by changes in these commodities’ prices. Integrated energy producer ExxonMobil’s (XOM) production mix was 46% in both natural gas and crude oil. ExxonMobil has the highest individual weight in the Energy Select Sector SPDR Fund (XLE).

The average production mix of the above upstream companies is 50% in natural gas. These upstream companies have a 38% production mix in crude oil.

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Other upstream companies like Pioneer Natural Resources (PXD) and EOG Resources operate with a production mix of 45.8% and 48.5% in natural gas, respectively. However, these companies have a production mix of 32% and 38% in oil, respectively. Anadarko Petroleum (APC) operates with a production mix of 51% and 34.6% in natural gas and crude oil, respectively.

Price-to-BOE reserves ratio

Below is a breakdown of three other companies’ price-to-BOE (barrels of oil equivalent) reserves ratios:

  • ConocoPhillips has a price-to-BOE reserves ratio of 7x.
  • EOG Resources (EOG) has a price-to-BOE reserves ratio of 18x.
  • Apache (APA) has a price-to-BOE reserves ratio of 7.6x.

However, it’s important to note that a lower ratio usually indicates that a company is undervalued compared to its peers.

In the next part, we’ll discuss the December seasonality of crude oil inventories.

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