It's earnings season — the quarterly event when publicly traded companies must report their profits and losses.
One trend that has emerged each quarter for the past several years is that while most producers are working to increase their oil output, many local producers — and most domestic producers in general — still produce a large amount of natural gas.
A barrel of oil contains six times the energy as 1,000 cubic feet of natural gas. Historically, the two fuels have traded at a roughly 6-to-1 ratio.
That all changed in 2008 when domestic natural gas producers discovered how to produce natural gas from shale and other dense rock layers.
They flooded the market with natural gas, causing prices to tumble from $13.31 in July 2008 to $2.25 just 14 months later.
The price has remained between $2 and $4 for much of the past three years even as the price of crude oil has hovered between $80 and $110.
The trend has led natural gas companies to produce as much oil and natural gas liquids as possible, moving away from a focus on natural gas. Natural gas liquids such as butane, propane and ethane command a higher price than natural gas, but still trade for far less than oil.
Many producers prefer a mix of oil, natural gas liquids and dry natural gas, saying the blend provides protection from sudden price changes in any one of the fuels.
Most wells produce all three. The focus today is primarily on wells with a relatively high oil content, but there's not practical way to not recover natural gas.
Oklahoma's publicly traded energy companies illustrate that point.
Chesapeake Energy Corp., which formerly billed itself as “America's Champion of Natural Gas,” this week said it boosted its oil production 22 percent over the past year.
Still, oil represents only 18 percent of the company's total production, up from 14 percent in the third quarter of 2012. Natural gas dropped to 73 percent of Chesapeake's total production in the quarter, down from 79 percent one year ago.
Devon Energy Corp. said this week that its saw a 38 percent year-over-year increase in its U.S. oil production. Overall, oil represented about 24 percent of the company's total production in the third quarter, with natural gas liquids adding another 19 percent.
SandRidge Energy Inc. was one of the first natural gas companies to shift its focus to oil when natural gas prices tumbled. SandRidge has focused its efforts on the Mississippian play in northern Oklahoma. With 48 percent oil, the area is considered a strong oil play.
Oil represented 48 percent of SandRidge's total production in the third quarter.
Continental Resources Inc. has focused on oil for decades, even as natural gas prices were rising. Oil represented 71 percent of the company's total production in the third quarter.
Many producers say natural gas prices eventually will rebound. For now, however, analysts and investors focus on the ratios between oil, natural gas and natural gas liquids almost as much as revenue and profits.
Companies with a strong mix or that lean to oil could be worth their weight in black gold.