A GlobalData analysis of companies in the oil & gas industry has shed light on which companies are diversifying their revenue streams, and which are concentrating their activities in particular geographic areas or sectors.
GlobalData’s analysis of company filings shows that Rubis SCA has been doing more than any other major player in the sector to spread its revenues out geographically, according to a GlobalData analysis of 14 key companies for whom such data is available.
The concentration of Rubis SCA’s revenue distribution across product categories fell by 35.1%, compared to a median decrease of 3% for other firms in the sector.
The largest share of Rubis SCA’s revenue comes from Caribbean, which accounted for 36.8% of the firm’s global earnings in 2020.
The table below shows how the ten largest companies in the oil & gas industry are performing with regards to diversification.
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SK Holdings Co Ltd has led in the race to diversify earnings across different product categories.
The concentration of the company's geographic revenue distribution fell by 22.7% between 2018 and 2020, compared to a median decrease of 0.9% for other firms in the sector.
The corporation saw its largest revenue growth between 2018 and 2020 in SK Telecom Co., Ltd., which grew from 0.18% of the company's revenues to 0.18%.
The largest share of SK Holdings Co Ltd's revenue comes from SK Innovation Co., Ltd., which accounted for 33.4% of the firm's global earnings in 2020.
Who is failing to diversify?
Not all major oil & gas firms have been successfully diversifying their revenue streams, however.
Yantai Jereh Oilfield Services Group Co Ltd has seen its revenues increasingly concentrated in particular geographic regions.
The concentration of the company's geographic revenue distribution rose by 213.4% between 2018 and 2020, compared to a median decrease of 3% for other firms in the sector.
The concentration of National Shipping Company of Saudi Arabia's revenue distribution across product categories rose by 27.3%, compared to a median decrease of 0.9% for other firms in the sector.
Revenue diversification is the key to security
This analysis is based on GlobalData's database of over 8,000 of the world's leading companies, with a combined market capitalisation of $102 trillion and over 140 million employees.
Based on data included in company filings, GlobalData calculated the normalised standard deviation of each company's revenue streams.
The standard deviation is a statistic frequently used to measure how spread out a distribution of numbers is. The data is normalised in order to ensure so that the size of a company's revenue stream does not bias the results.
A lower standard deviation means that a company's revenues are more evenly spread between different revenue streams.
Since all companies divide their revenues differently, these standard deviations can't be directly compared. Instead, GlobalData analysed the direction of change for each company between 2018 and 2020.
The analysis sheds light on how different companies in the oil & gas industry are hedging against risks.
The supply chain distruptions caused by the Covid-19 pandemic have shown the importance of geographic diversification of revenues. Lockdowns, which have often been targeted at specific sectors, have similarly demonstrated the value of maintaining a diverse product offering.
Among all companies examined by GlobalData, geographic revenue concentration fell by an average of 0.5% between 2018 and 2020, compared to an average decrease of 2.96% for the oil & gas industry.
Product revenue concentration among all companies examined rose by a median of 1%, compared to an average decrease of 0.9% for the oil & gas industry.