Over the last decade, the U.S has surprised many oil industry analysts by becoming the third largest producer of oil in the world. Thanks to its large reserves and the development of new technologies to extract oil, the U.S now produces more than 8 million barrels a day and is on tap to produce over 10 billion by 2018, according to the U.S. Energy Information Administration.
The top 10 oil and gas companies in the U.S generated over $650 billion in revenue in 2016 with the top 5 companies generating more than 80% of that total.
So which oil and gas companies are the most important players by revenue?
The following table shows the 10 largest oil & gas companies based in the U.S., by revenue as of 2017. This ranking does not include private oil companies, or companies with headquarters outside of the United States. Revenue data was retrieved from their 2016 respective income statement.
Measuring the Size of an Oil Company
Financial experts typically use several different metrics to measure the size of an oil company. For the chart above, we’ve used total revenue. Some financial analysts may use other metrics, for example, book value, market capitalization, or total assets.
Other metrics can also be helpful when it comes to measuring the size of an oil company. These may include total number of barrels produced, or number of rigs being serviced. More detailed specifics isn’t always presented in the company’s annual report.
How Oil and Gas Companies Generate Revenue
Oil and gas companies can generate revenue in a number of ways. These can include the servicing of oil rigs, exploration of new oil wells, extraction of oil and crude oil processing and refining into more useful products such as gasoline, heating oil, kerosene, diesel fuel, etc.
Investors and analysts should keep in mind that revenue and profit or net income are not the same thing. Revenue is essentially the total income of a business, and does not take into account operating expenses or other costs associated with the day-to-day operations of the company. Profit, sometimes called net income, is what’s left over after accounting for these expenses. Some metrics used by analysts to measure profitability for oil and gas companies include earnings per share, net profit, profit margin and the pe ratio, among other ratios useful in the oil and gas industry.
How can you invest in oil and gas companies?
Investors can purchase individual oil and gas stocks or funds that contain companies in this sector. Raw Earth, for example, an exchange-traded fund (ETF) available on Stash, is a single investment that offers the opportunity to invest in some of the companies included on this list.
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