Revenues follow oil prices upward
RISING oil prices rescued corporate revenues across the area last year, lifting sales and raising stock prices as the energy industry emerged from a crippling bust. Revenue for Houston’s 100 biggest public companies rose 13 percent to $636.9 billion from $561.7 billion in 2016, according to data collected for the Chronicle 100.
Eighty-five of those companies, from the top revenue generator, refiner Phillips 66 , to fourth-tolast exploration and drilling company W&T Offshore, reported higher revenue compared with 2016. Overall revenues fell far short of the $976.7 billion earned when oil prices peaked in 2014, but Patrick Jankowski, chief economist for the Greater Houston Partnership, said economic growth picked up in the second half of 2017 as companies rebuilt their workforces.
“It became obvious that the worst was over,” he said.
A plunge in crude oil prices during the summer of 2014 carried into 2015 and 2016, forcing Houston’s biggest energy companies
nies to resume exploration and drilling.
Now, with oil prices above $60 a barrel, economists and executives agree that demand for oil, natural gas and petrochemicals will continue to rise this year. The resurgence in drilling in West Texas and elsewhere has boosted U.S. exports of crude and natural gas while multimillion-dollar chemicals plants — which use petroleum feedstocks — are planned or under construction along the Gulf Coast.
“In the oil and gas industry, things continue to get better,” Jankowski said.
In 2017, revenues rose across the board for energy producers, a marked difference from the prior year. ConocoPhillips, Occidental Petroleum and EOG Resources saw revenues increase 22.8 percent, 24 percent and 46.5 percent, respectively.
Oil field service companies also rebounded. Sector leaders Schlumberger and Halliburton saw revenues increase 9.5 percent and 29.8 percent, respectively.
Houston drilling and pressure pumping contractor Patterson-UTI saw a particularly substantial turnaround. Its revenues increased 157 percent to $2.35 billion after falling by roughly half in 2016.
Patterson-UTI’s $1.8
billion merger with Seventy Seven Energy accounted for much of the increase, expanding its contract drilling and fracking services. It also acquired driller MS Energy Services.
“Last year was a year of integration of new companies and growing the business post-downturn,” said CEO Andy Hendricks.
Liquefied natural gas exporter Cheniere Energy again stood out for massive revenue growth. It collected $5.6 billion, more than three times the $1.3 billion it collected in 2016 when it began shipping LNG cargoes from its Louisiana export hub.
Refining giant Phillips 66. which also transports oil and natural gas products through pipelines, brought in $89 billion in revenue, up 26 percent from the year prior. The company’s refining profit margins improved, as did demand for its products.
“The momentum we achieved last year has carried into 2018,” chairman and CEO Greg Garland said in a statement.
The surge in oil and natural gas production also boosted profits for petrochemicals companies. The shale boom has unleashed a cheap and steady supply of natural gas liquids such as ethane and other chemical feedstocks.
Chemical maker Lyondell-Basell’s profit surged more than 18 percent. The company recently expanded capacity at three of its facilities in La Porte, Corpus Christi and Channelview, increasing its annual production capacity for ethylene, the building block of most plastics, by 2 billion pounds.
Outside the energy industry, sales for food distributor Sysco Corp. were up 7.4 percent; garbage handler Waste Management, up 6.4 percent; and car retailer Group 1 Automotive, up 2.2 percent. Revenues also increased for American National Insurance Co., the wireless communication company Crown Castle International Corp., funeral services provider Service Corporation International, and real estate companies Camden Property Trust and LGI Homes.