uploads///Growth in Debt of Different Production Mix

Debt Fell for XOP Stocks with a Crude Oil Production Mix over 90%


Jan. 18 2016, Updated 10:05 p.m. ET

Growth of debt

In the previous part of this series, we analyzed the sales performances of companies within the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) by production mix. In this part of the series, we’ll analyze the debt growth of XOP companies by production mix. Interestingly, the debt of XOP upstream companies that operate with a production mix of crude oil greater than 90% fell by an average of 1% on a YoY (year-over-year) basis in 3Q15. Kosmos Energy’s (KOS) debt fell by 11.7%, but Denbury Resources’ (DNR) debt rose by 8.3% YoY. The graph below illustrates the increase in debt of companies with different production mixes in crude oil.

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The debt of upstream companies operating with a production mix of 70%–90% in crude oil grew by an average of 70% YoY. Clayton Williams Energy’s (CWEI) debt grew by 10%, whereas Energy XXI’s (EXXI) debt grew by 22%. Energy XXI (EXXI) operates with a production mix of 71% in crude oil and 29% in natural gas. EXXI constitutes 1.8% of XOP.

Halcón Resources Corporation’s (HK) and Oasis Petroleum’s (OAS) debt grew by 17.6% and 6.4%, respectively.

Moderate rate debt growth for companies with a lower production mix

Upstream companies operating with a production mix of crude oil less than 70% saw their debt grow by an average of 27%. Pioneer Natural Resources’ (PXD) and Apache Corporation’s (APA) debt grew by 0.4% and 15.6%, respectively. These companies operate with production mixes of 46% and 49%, respectively.

In the next part of this series, we’ll discuss the weighted average cost of capital of companies with various production mixes in crude oil.


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