BIGGEST COMPANIES ENJOY A STRONG SPIKE.
Houston’s public companies picked up steam this year, despite a fourth-quarter dip in oil prices, as U.S. oil production broke records.
The city’s 100 biggest public companies saw revenues increase by 20 percent to $760.9 billion from $636.9 billion in
2017, according to data collected for the Chronicle 100. That’s up from last year’s 13 percent revenue growth.
Eighty-nine of those companies, from refiner
Phillips 66 to pipeline operator Noble Midstream Partners, reported higher revenue than in 2017. Phillips 66 alone pulled in $111.5 billion dollars in 2018, 25 percent more than the year before and nearly double the amount of the second-highestearning Sysco Corp., which earned $59.6 billion.
Houston business leaders often pride themselves on the city’s economic diversity, but the Chronicle 100 shows the metro area’s top publicly traded companies remain stubbornly homogenous.
Eleven of Houston’s top 12 companies by revenue were in the energy industry. The food-supply company Sysco Corp. was the exception.
“People like to throw out the term that Houston is the energy capital of the world,” said Patrick Jankowski, an economist with the business group Greater Houston Partnership. “And, if you look at all the energy companies here, it’s a proof point of that statement.”
Houston’s top companies included exploration and production companies, businesses providing oilfield equipment or
services, pipeline companies, refining and petrochemical companies, and businesses that prosper by geographically clustering a pool of specialized knowledge. Initiatives such as Houston’s proposed “innovation district” are attempting to start a technology cluster in the city as well.
“The goal is to create this integrated robust ecosystem, and we’re taking some significant steps in that direction,” Mayor Sylvester Turner said at a press conference in January announcing that a business-acceleration program named MassChallenge would be part of the innovation district.
Clustering also means that one industry’s troubles can have an outsized impact on a city, such as when Detroit saw its automobile-manufacturing industry undercut by foreign makers or Houston saw oil dip below $40 a barrel.
“They’re going to be important until something grows up to replace them or to share a spot on the list,” Jankowski said. “We’re starting to see that, but it takes time.”
For now, energy remains supreme. And as companies in the Permian Basin solve the problem of transporting crude and natural gas, those revenues could continue to rise.
“Contributions from our natural gas pipelines segment were up substantially compared to the first quarter of 2018,” said Steve Kean, chief executive officer of pipeline company Kinder Morgan, during its first-quarterearnings call. He projected “attractive returns” once its pipeline connecting the Permian Basin to the Corpus Christi area opens in October. “Our customers are anxious to have us get their gas out of the Permian Basin.”
Many of the largest revenue increases this year came from mergers and acquisitions, although the consulting company Deloitte reported that the number of deals declined from 2017. McDermott International, Select Energy Services, Magnolia Oil & Gas and Noble Midstream Partners all doubled their revenue between 2017 and 2018 following significant mergers and acquisitions.
And even as the International Energy Agency predicts demand for gasoline will slow because of more efficient vehicles and electric cars, it does not see a peak in global oil demand because of the growing use of petrochemicals and jet fuel.
“People say Houston needs to be more diversified,” Jankowski said.
“And I agree with that.
But (oil) has been a pretty good horse to ride over the past 118 years, going back to Spindletop in 1901.”