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UK upstream independents league table 2022

The top 25 independent oil and gas producers

This article explores how the top 25 independent oil and gas producers listed on the London Stock Exchange performed in 2022.
Oil market overview

Many upstream independents made record profits due to high oil and gas prices in 2022. Demand for oil and gas recovered in most large economies around the world, with the exception of China. However, the reduction of Russian gas flows into Europe following the invasion of Ukraine played havoc with the European natural gas market. The continent was forced to replace Russian pipeline gas with more expensive liquefied natural gas from global markets.

After a strong start to the year at around $80/barrel (b), the Europe Brent Crude oil spot price reached a five-year high of around $133/b in March following the start of the Ukrainian war. It climbed close to $130/b again during the summer on the back of high demand and tight supplies. The price declined in the second half of the year as the global economy started to weaken and ended the year at a level similar to that at the start (see Chart 1).

The UK natural gas price became highly volatile in 2022. It spiked twice during the year, first following the invasion of Ukraine, and again in August after the gas flow stopped on Nord Steam 1, the main pipeline delivering gas from Russia to Germany. On both occasions, the gas price crossed the GBp500/therm mark, over ten times the five-year historical average before the energy crisis. The unseasonably mild autumn and the windy end to the year combined with high gas inventory levels across Europe caused the price to drop significantly in the final quarter of 2022.

In May 2022, the UK government introduced a windfall tax, the Energy Profits Levy (EPL), on UK North Sea production. Six months later, the Autumn Statement 2022 further increased the tax rate set in the EPL and extended its duration. The tax is expected to have an adverse impact on free cash flow generation and investment appetite in the UK’s remaining offshore reserves.

Chart 1. Europe Brent Crude spot price and UK natural gas day-ahead price throughout 2022

Table 1: Upstream independents league table 2022

  1. Ithaca Energy is a crude oil producer, however its FTSE subsector on the London Stock Exchange (LSE) is currently classified as Offshore Drilling and Other Services.
  2. Savannah Energy’s trading is currently suspended (13 February 2023) as it is in the process of acquiring Petronas' upstream and midstream asset portfolio in Chad and Cameroon.
Overview of the league table

The total market capitalisation of the top 25 upstream independents increased 16 per cent to £13.6 billion in 2022, the highest since 2014. The combined market cap of the top three companies (Harbour Energy, Energean and Ithaca Energy) accounted for nearly 50 per cent of the league table.

High energy prices and the post-pandemic recovery in demand for oil and gas boosted the market caps of 15 companies in the league table, while those of 9 declined at the end of December 2022 compared with the end of December 2021.

Changes at the top

Harbour Energy retained its top position, but its market cap declined from last year.

Energean remained in second position, while its market cap rose 53 per cent compared with 2021. Increased production, promising gas discoveries and higher European demand for Israeli gas boosted its share price as Europe has tried to diversify away from Russian supplies.

Ithaca Energy listed on the LSE in 2022 and entered the league table at third position. The company already has several growth projects in the UK Continental Shelf (UKCS), including the Cambo and Rosebank fields, and is looking to strengthen its presence further in the North Sea.

Who entered the league table in 2022?

Five companies entered the top 25 in 2022:

  • Ithaca Energy entered at third position following its listing in November 2022. The UKCS-focused company, which is backed by Israel’s Delek Group, increased its asset portfolio through acquisitions in the last five years. Ithaca completed its acquisition of Siccar Point Energy during 2022.
  • Zephyr Energy entered at 19th position after its reclassification as a crude oil producer in 2022. The US-based independent, focused on the Rocky Mountains region, has grown its portfolio through drilling in its existing acreage and bolt-on acquisitions in the Williston Basin. Zephyr is planning to further develop its assets in the Paradox Basin in Utah (US) in the future.
  • Afentra moved up 11 places and entered at 23rd position by acquiring mature production and development assets in Africa. In 2022, it entered into two agreements to acquire assets in offshore blocks in Angola.
  • Wentworth Resources, an Africa-focused natural gas producer, entered at 24th position. The company’s market cap was boosted by strong gas demand and increased production guidance from its Mnazi Bay asset in Mozambique. Wentworth is set to be taken over by its partner in the Mnazi Bay field, Maurel & Prom, a French independent.
  • Rockhopper Exploration returned at 25th position after two years. Its share price was boosted following a win in an arbitration case against the Italian government over a cancelled oil rig project and a licence extension from the Falkland Islands government at the South Falkland Basin.

Who left the league table in 2022?

Five companies left the league table in 2022 due to a decline in their market caps.

  • Phoenix Global Resources
  • Enwell Energy
  • JKX Oil & Gas
  • Trinity Exploration and Production
  • Advance Energy

2023 outlook

After earning record profits in 2022, many independents entered 2023 with healthy cash flows and robust balance sheets. Their strong financial positions could offer many oil and gas companies expansion opportunities. One example is Serica Energy’s announced acquisition of Tailwind Energy that will be completed in 2023. However, several deals failed in 2022 and the uncertain economic environment may lead companies to practice capital discipline and/or pay out dividends to shareholders.

In addition, the introduction of windfall taxes on upstream businesses in the UK and some other European countries may mean independents reconsider where they deploy capital in the future.

In 2023, we expect new policies to accelerate the energy transition and strengthen the importance of natural gas as a transition fuel. At the same time, the war in Ukraine is creating a mandate for independents to support European energy security by investing in natural gas.

How we did it

We looked at all United Kingdom, Guernsey, Jersey and Isle of Man incorporated crude oil producers trading on the London Stock Exchange as of 31 December 2022. We then compared market capitalisation from the same point of the previous year and ranked the top 25 companies by British pounds value.

If you’d like to discuss the league table further, please get in touch with one of our industry specialists.

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