uploads///Net margins

These Upstream Companies Had the Widest Net Margins in 2017

By

Mar. 14 2018, Updated 9:55 a.m. ET

Top five upstream companies based on net margins

Let’s now look at the five upstream companies with the widest net profit margins in fiscal 2017. Profit margins are helpful in gauging a company’s profitability and operational efficiency. Profit margin growth shows that a company is increasing its operational efficiency and making more money on each unit sale.

Article continues below advertisement

Laredo Petroleum

Laredo Petroleum (LPI) had a net profit margin of ~67% in fiscal 2017, compared with -43.6% in fiscal 2016. In fiscal 2017, its revenue grew 38% and its net income was $548.9 million, whereas it had a net loss of $260.7 million in fiscal 2016. LPI’s fiscal 2017 net income was also supported by lower operating expenses ($572.5 million versus $685.3 million in fiscal 2016) and gains on the sale of investments (~$406 million).

EQT

In fiscal 2017, EQT ’s (EQT) net profit margin was ~45%, compared with -28% in fiscal 2016. In fiscal 2017, EQT’s revenue grew 110% YoY (year-over-year) and its net income was $1.5 billion, versus a net loss of $452.9 million in fiscal 2016. Higher revenue offset the impact of operating expenses rising to $2.4 billion from $1.9 billion in fiscal 2016.

Article continues below advertisement

Diamondback Energy

In fiscal 2017, Diamondback Energy (FANG) reported a net profit margin of 40%, versus -31% in fiscal 2016. FANG’s revenue rose 128% from fiscal 2016. Meanwhile, its net income in fiscal 2017 was $482.3 million, versus a net loss of $165 million in fiscal 2016. Like EQT, Diamondback’s high operating expenses in fiscal 2017 ($600 million versus $595 million in fiscal 2016) were offset by significantly higher revenue.

SRC Energy

SRC Energy’s (SRCI) net profit margin was 39.2% in fiscal 2017, compared with -204.56% in fiscal 2016. The company’s net income rose to $142.4 million from a net loss of $219.1 million. Its higher net income was supported by higher revenue and lower operating expenses ($204.9 million versus $318.7 million in fiscal 2016). SRC’s oil, natural gas, and natural gas liquid revenue rose ~238% to $362.5 million from $107.2 million in fiscal 2016.

Concho Resources

In fiscal 2017, Concho Resources (CXO) had a net profit margin of 37%, compared with -89% in fiscal 2016. In fiscal 2017, its revenue increased 58% YoY and its net income was $956 million. I had a net loss of $1.5 billion in fiscal 2016. Its net margin was also supported by its operating costs and expenses being lower in fiscal 2017 ($1.5 billion) than in fiscal 2016 ($3.7 billion).

Advertisement

More From Market Realist