During the next eight days, independent US oil explorers are expected to report 2015 losses totaling almost $14 billion, the result of the steepest price collapse in a generation.
Hess Corp. kicked off earnings season for the companies on Wednesday, reporting a net loss of $1.82 billion for the quarter and $3.06 billion for the year, its first annual loss since 2002.
It will be followed by peers, including Murphy Oil Corp. and Anadarko Petroleum Corp., which also have been squeezed by a crude drop of more than 70% since June 2014, Bloomberg reported.
“It’s not going to be pretty,” said Carl Larry, head of oil and gas for Frost & Sullivan LP in Houston.
Investors have punished oil and gas explorers, wiping out more than $300 billion in market value for the companies in the Bloomberg Intelligence North America Independent E&Ps Valuation Peer Group in the past year.
Distressed debt exchanges and bankruptcies are mounting. The companies have fired thousands of workers, abandoned drilling projects, cut dividends and restructured debt to conserve cash and fend off insolvency.
For most independent explorers—those that do not also own refineries and retail gasoline stations—cash flows have been “decimated” by the decline in oil prices, a team of analysts at Wells Fargo Securities LLC, including David Tameron and Gordon Douthat, said in a note to clients on Jan. 25.
After spending the past half decade slimming down from an owner of refineries, filling stations and oil wells to a pure-play crude explorer, Hess may have few assets left to sell if it finds itself needing to raise cash, Fitch Ratings said in a report this month.
Hess cut its 2016 drilling budget by 40% to $2.4 billion on Tuesday. Murphy Oil is expected to post a full-year loss of $1.8 billion, which would be the worst 12-month result for the driller since at least 1987, according to data compiled by Bloomberg.
Anadarko is next in line with results on Feb. 1. The producer is expected to post a $6 billion loss for last year, which would also be its worst result since at least 1987.
Occidental Petroleum Corp. and ConocoPhillips are expected to post full-year losses of $2.74 billion and $1.58 billion, respectively, on Feb. 4.
The combined estimated loss for those five companies is $13.8 billion.
