The top 25 independent FTSE oil and gas producers has been saved
The top 25 independent FTSE oil and gas producers
UK upstream independents league table 2021
- Oil market overview
- Overview of League Table
- Who entered the league table in 2021?
- Who left the league table in 2021?
Oil market overview
Crude oil producers had a strong year as oil prices recovered and then rose significantly over the course of 2021. The increase in oil prices was driven by global economic growth following the successful rollout of COVID-19 vaccination programmes and relaxation of lockdown restrictions around the world. The OPEC+ agreement to limit crude oil production caused oil prices to surge in the spring, while supply disruptions contributed to oil price rises during autumn 2021. Natural gas prices, particularly in Europe and Asia, also rose during 2021 and became highly volatile in the second half of the year.
The Brent crude oil spot price rose from $50/barrel (b) in January 2021 to close to $86/b in late October 2021. After a dip in November, the benchmark index finished the year above $77/b. This was in large part due to the change in sentiment regarding the impact the Omicron variant would have on global oil demand.
Chart 1. Europe Brent crude spot price and UK natural gas day-ahead price
Table 1: Upstream independents league table 2021
Overview of league table
The total market capitalisation of the top 25 upstream independents surged 84 per cent to £11.7 bn in 2021 from a record low of £6.3 bn in 2020, and back to where it was in 2017 and 2018. The combined market cap of the top three companies (Harbour Energy, Energean and Capricorn Energy) accounted for nearly 50 per cent of the league table by market cap.
The global recovery of oil markets and highly volatile natural gas prices increased the market caps of 22 companies in the league table, while those of three declined at the end of December 2021 compared with the end of December 2020.
Changes at the top
Harbour Energy, formed from the reverse takeover of Premier Oil by Chrysaor (which was previously private and not part of the index) during 2021, took over the top position in the league table. The size of the combined entity also accounted for a large portion of the increase in the league table’s total market cap. Harbour Energy’s healthy balance sheet and strong cash flow generation capacity means that it could be well-placed to take advantage of future expansion activities, including mergers and acquisitions (M&A).
Energean, although slipping to second position in the league table, saw its market cap rise nearly 20 per cent at the end of 2021 compared with the end of 2020. As well as benefitting from higher commodity prices and gas demand, the company demonstrated further solid progress on its Karish gas development project, exceeding published H1 production guidance. This has helped demonstrate Energean’s ability to successfully integrate the Edison E&P assets it acquired.
Who entered the league table in 2021?
Four companies entered the top 25 in 2021:
- Jadestone Energy entered the league table at 9th position after changing its country of incorporation from Canada to the UK. This resulted from an internal reorganisation that saw a UK-based entity become the ultimate parent company of Jadestone Canada and its subsidiaries. The Asia Pacific focused company had a successful year as it commenced production at its Montara field, located offshore Australia, and completed the acquisition of assets in Malaysia and Indonesia.
- Kistos, joined the FTSE as a financial services company in late 2020, but was reclassified as an oil producer in April 2021 and entered the league table at 12th position. The North Sea focused company, which has exploration licences in the Netherlands, pursues a strategy to acquire assets that play a role in energy transition. During the year, Kistos acquired Tulip Oil Netherlands B.V., completed a successful drilling campaign at its main Dutch asset and benefited from high gas prices which enabled it to maintain a healthy cash balance.
- Jersey Oil and Gas, the UK North Sea focused oil and gas producer re-entered the league table at 24th position. The company is planning to turn its new development in the Greater Buchan Area in the Central North Sea into the first fully electrified project in the region.
- Advance Energy re-entered the league table at 25th position boosted by more than a nine-fold increase in its market cap. This was driven by the acquisition of a 50 per cent stake in the Buffalo Oil Field in East Timor in 2021 after raising $30 million through a share placing.
Who left the league table in 2021?
Four companies left the league table in 2021 and the exits were all due to a decline in their market caps.
- Reabold Resources
- Serinus Energy
- SDX Energy
- President Energy
With confidence growing in the ability of vaccines to contain current COVID-19 variants, oil and gas prices are projected to remain strong throughout 2022. These will help upstream independents continue to generate healthy cash flows that, in turn, could see increased investment in growth through asset development as well as M&A.
Several upstream independents published carbon emission reduction targets during the year. Plans to achieve these targets include electrifying platforms, using renewable electricity, reducing flaring, venting and methane leaks, as well as investing in carbon offset projects and operational efficiency improvement programmes. Markets and potential M&A investors expect companies to be able to demonstrate progress in executing their net zero plans as part of their wider environmental, social and governance aspirations.
How we did it
We included all United Kingdom, Guernsey, Jersey and Isle of Man incorporated crude oil producers trading on the London Stock Exchange as of 31 December 2021. We then compared market capitalisation from the same point of the previous year and rank the top 25 companies by British pounds value.
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