World's Most Valuable Publicly Traded Oil Companies
The world consumed nearly 98.5 million barrels of oil every day in 2017. This year the U.S. Energy Information Administration (EIA) projects that consumption will rise to 100.2 million barrels a day. The average 2017 price for a barrel of Brent crude — the international benchmark grade — was $54.15. That’s about $1.95 trillion. In 2018, oil consumers will pay an average of $71.80 per barrel of Brent and spend a total of $2.63 trillion.
Global reserves of natural gas totaled more than 6.83 quadrillion cubic feet at the end of 2017. Because the market for natural gas is not international to the same degree that the oil market is, prices vary widely. In the United States, the 2017 average natural gas price for a thousand cubic feet was $2.96 at Louisiana’s Henry Hub, the main U.S. pricing point for natural gas. By comparison, a thousand cubic feet of natural gas cost $5.80 in the United Kingdom and $5.62 in Germany. The Japan/Korea price for liquefied natural gas (LNG) last year was $7.13 per million BTUs (roughly equal to a thousand cubic feet). Japan and South Korea import nearly all of their natural gas as LNG and the 2017 price was less than half what it was just five years earlier.
At the end of 2017, global proved reserves of oil totaled 1.697 trillion barrels, according to BP’s annual statistical review. In 2011, the World Bank estimated that about 90% of the world’s oil reserves and 75% of oil production were controlled by national oil companies (NOCs) owned or controlled by national governments. The ownership percentage of natural gas reserves are similar. There’s no reason to think these ownership ratios have changed significantly in recent years.
Publicly traded integrated oil & gas companies are valued to a large degree on the basis of their proved reserves. A proved reserve, by definition, is one that can with reasonable certainty (90%) be produced profitably at current prices. In the United States, the Securities and Exchange Commission (SEC) adopted rules that requires U.S.-traded companies to recalculate the value of their reserves every year. Companies also classify reserves as probable (meaning there’s a 50% certainty of profitable extraction at current prices) and possible (at least a 10% certainty of profitable extraction). Only proved reserves are considered by the SEC to be materially important for the purposes of meeting regulatory disclosure rules.
An integrated oil company is one that operates its own exploration and production (upstream) business as well as its own refining and marketing (downstream) business. There are a relative handful of such companies and 6 of the 10 largest integrated companies in the world are controlled by governments. The world’s largest state-owned integrated oil company , Saudi Aramco, has been examining an initial public offering (IPO) of about 5% of the company to raise $100 billion, the largest IPO ever and a deal that would value the company at $2 trillion. The IPO has been delayed at least into 2019 and there is some reason to doubt that it will occur even then.