Top five upstream companies based on earnings
In this part, we’ll look at the five upstream companies with the highest adjusted EPS (earnings per share) in fiscal 2017. The top five were Diamondback Energy (FANG), Cimarex Energy (XEC), Penn Virginia (PVAC), Pioneer Natural Resources (PXD), and Newfield Exploration (NFX).
Diamondback Energy reported adjusted EPS of $5.18 in fiscal 2017, versus $1.87 in fiscal 2016. Earnings were higher on account of higher revenue. FANG’s oil, natural gas liquid, and natural gas revenue rose 125%. Average realized prices rose 22.5% between fiscal 2016 and 2017.
Between fiscal 2016 and 2017, Cimarex Energy’s adjusted EPS rose to $4.65 from $1.19 due to higher revenue and lower operating expenses. The 2016 earnings figure included impairment charges of $757.6 million, whereas no impairment charges were reported in fiscal 2017.
Penn Virginia’s adjusted EPS in fiscal 2017 were $2.88. Following its emergence from bankruptcy in September 2016, the company adopted new accounting policies, becoming a new entity for financial reporting purposes. Consequently, the period after September 2016 is referred to as the “successor” period and is not comparable to the “predecessor” period.
EPS from the successor period (September 13 to December 31, 2016) were $0.78, and EPS from the predecessor period (from January 1 through September 12) were -$0.08. In fiscal 2017, revenue was $160.1 million, versus $39.0 million in the successor period and $94.3 million in the predecessor period.
Pioneer Natural Resources
Between fiscal 2016 and 2017, Pioneer Natural Resources’ adjusted EPS rose to $2.16 from -$0.24. Its higher earnings were supported by higher oil and gas revenue ($3.5 billion versus $2.4 billion). Adjustments to earnings included the effect of noncash mark-to-market derivative losses of $169 million after tax, and a noncash benefit due to a $625 million reduction in PXD’s deferred tax liability resulting from the Tax Cuts and Jobs Act enacted in December 2017.
In fiscal 2017, Newfield Exploration’s EPS rose to $2.15 from $0.49 in fiscal 2016. Its higher earnings were supported by higher revenue ($1.8 billion versus $1.5 billion) and lower operating expenses ($1.3 billion versus $2.4 billion). Earnings were also affected by a one-time tax benefit of $61 million.