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Craft Oil: The Lesser Known Side of America’s Energy Industry

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Craft Oil Infographic

Craft Oil: The Lesser Known Side of America’s Energy Industry

Go back a decade, and America’s energy industry was quite the hot button issue.

Oil prices were soaring past $100/bbl, the country was still reliant on OPEC for imports, and a lack of energy independence was becoming a costly issue. Meanwhile, the United States was being outclassed on the energy production front by both Saudi Arabia and Russia.

However, in the short span of eight years – and thanks to the use of technologies like horizontal drilling and hydraulic fracturing – the United States quickly went from having a questionable energy future to being in a clear position of strength. Today, even with lower prices, U.S. field production of crude is at a 43-year high.

America’s Independent Oil Producers

Since 2016, the U.S. has produced close to the equivalent of 30 million bpd in oil and natural gas, making the United States a champion of global energy production.

Today’s infographic from Jericho Oil focuses on a key part of the turnaround in the U.S. energy sector that often gets overshadowed by Big Oil players like ExxonMobil or Royal Dutch Shell. It covers the role of “Craft Oil” in the industry, an umbrella that includes many small, independent, and focused companies across America that produce oil and gas on a domestic basis.

The thousands of companies in this group, many which are community-driven or family-owned, actually drill 95% of the country’s oil wells to yield 54% of onshore oil and 85% of onshore gas production.

Comparing Big Oil to Craft Oil

Below is a comparison of ExxonMobil to the profile of an average Craft Oil company:

Big Oil
Craft Oil
Employees
71,300
12
Years in Business
108 years
23 years
Annual Gross Revenues
$218.6 billion
$9.25 million
Ownership
Publicly traded
75% private, 25% public
Level of Integration
Typically fully integrated, combining upstream and downstream activities to get the most out of the value chain
Usually a pure play, focused upstream on oil exploration and production
Focus
Produce, transport, refine, and market oil products
Develop new plays, and drive upstream trends such as technological innovation
Production
Domestic and international
Mostly domestic

Most Craft Oil companies are very small in comparison – but together, they contribute to a very significant portion of U.S. production, as well as the economy.

Investing in Craft Oil

Do these independent producers provide a strategic opportunity for investors?

Yes, but here are a few areas investors should consider evaluating before taking any action:

Location of Assets:
In the U.S. and Canada, independent oil companies undergo strong regulatory scrutiny to make sure their reporting and numbers give transparency to their operations.

Cash and Debt:
How much does the company have in cash? Will they have to raise more money soon?

Companies operating in junior oil and gas should not have more than 2x more debt than their current cash flow.

Management Team:
The strength of any management team is linked to their connections, past experience, and skill set. If the management team has built and sold successful projects in the past, that is a good sign of strength.

Economics:
Investors need to be aware of key metrics to gauge if junior oil and gas companies can make money in the current or projected cost environment. These include IRR (Internal Rate of Return), NPV (Net present value), and payback period. Companies that make their money back fast and with a good return can re-invest that capital into additional projects.

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Energy

Visualized: Renewable Energy Capacity Through Time (2000–2023)

This streamgraph shows the growth in renewable energy capacity by country and region since 2000.

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The preview image for a streamgraph showing the change in renewable energy capacity over time by country and region.

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The following content is sponsored by National Public Utilities Council

Visualized: Renewable Energy Capacity Through Time (2000–2023)

Global renewable energy capacity has grown by 415% since 2000, or at a compound annual growth rate (CAGR) of 7.4%.

However, many large and wealthy regions, including the United States and Europe, maintain lower average annual renewable capacity growth.

This chart, created in partnership with the National Public Utilities Council, shows how each world region has contributed to the growth in renewable energy capacity since 2000, using the latest data release from the International Renewable Energy Agency (IRENA).

Renewable Energy Trends in Developed Economies

Between 2000 and 2023, global renewable capacity increased from 0.8 to 3.9 TW. This was led by China, which added 1.4 TW, more than Africa, Europe, and North America combined. Renewable energy here includes solar, wind, hydro (excluding pumped storage), bioenergy, geothermal, and marine energy.

During this period, capacity growth in the U.S. has been slightly faster than what’s been seen in Europe, but much slower than in China. However, U.S. renewable growth is expected to accelerate due to the recent implementation of the Inflation Reduction Act.

Overall, Asia has shown the greatest regional growth, with China being the standout country in the continent.

Region2000–2023 Growth10-Year Growth (2013–2023)1-Year Growth (2022–2023)
Europe313%88%10%
China1,817%304%26%
United States322%126%9%
Canada57%25%2%

It’s worth noting that Canada has fared significantly worse than the rest of the developed world since 2000 when it comes to renewable capacity additions. Between 2000 and 2023, the country’s renewable capacity grew only by 57%.  

Trends in Developing Economies

Africa’s renewable capacity has grown by 184% since 2000 with a CAGR of 4%. 

India is now the most populous country on the planet, and its renewable capacity is also rapidly growing. From 2000–2023, it grew by 604%, or a CAGR of 8%.

It is worth remembering that energy capacity is not always equivalent to power generation. This is especially the case for intermittent sources of energy, such as solar and wind, which depend on natural phenomena.

Despite the widespread growth of renewable energy worldwide, IRENA emphasizes that global renewable generation capacity must triple from its 2023 levels by 2030 to meet the ambitious targets set by the Paris Agreement.

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