On Thursday, ConocoPhillips (COP) was the last of the big three U.S. oil companies to report disappointing full-year 2016 financial results. Chevron Corp (CVX) and ExxonMobil (XOM) reported their results a few days earlier. Full-year results at Conoco were a net loss, excluding special items, of $3.3 billion, nearly double the full-year 2015 adjusted net loss of $1.7 billion.

Conoco, which concentrates it business on pure oil and gas production, also known as the upstream business, is not the only one of the big three to report disappointing results. Chevron and Exxon both reported losses of $2.1 billion in their U.S. upstream divisions in 2016. Exxon’s results excluded an impairment charge of $2 billion; if it were included, the annual loss would have been even worse. Meanwhile Chevron's red ink was an improvement, having lost $4.1 billion the year before, while Exxon saw deterioration in 2016 from the $1.1 billion loss in 2015.

Share Price Performance

Share price performance for each company was mixed in 2016. Chevron was the clear winner, with shares appreciating 30.8% in 2016, followed by Exxon, whose shares rose 15.8%. Conoco was the clear laggard in the group, with its stock price going up by just 7.4% in 2016. This was even less than the broader market average as measured by the SPDR S&P 500 ETF (SPY), which rose 9.6% in 2016.

Falling Revenue

Despite the rebound in oil prices in 2016, top-line revenue declined for all three companies. Conoco reported a slowdown in sales of 21% in 2016, followed by a revenue decline at Chevron of 17.3%, and and a 15.9% decline at Exxon. This was partly due to stagnant production growth but also a relatively low realized oil price. Conoco reports for example that its average realized price in 2016 was just $28.35 per barrel of oil equivalent (a blended price for both oil and gas sales) at a time when oil averaged closer to $42 per barrel in 2016.

Rising Debt

2016 was also a year of rising debt. All three companies increased borrowing to meet spending needs. Chevron saw the largest increase in total debt, up 19.7% to $46.1 billion. Conoco also increased its debt load by nearly 10% and Exxon saw a 7% increase in the amount it will need to return to lenders. Conoco has publicly stated that it wants to reduce its total debt by approximately $7.3 billion to $20 billion by year-end 2019. The company is targeting asset disposals of around $5-8 billion primarily from North American natural gas. These proceeds could presumably be used to reach the company’s debt goal.  Chevron is also targeting asset sales of $2-7 billion in 2017 as part of a larger program to sell $5-10 billion over the course of 2016-2017.

Investment Cutbacks

Another way these companies tried to conserve cash was by scaling back capital investment. Conoco was the most aggressive in this area, slashing investment spending by more than 50% in the year. Chevron and Exxon also cut back spending on things like property, plant and equipment by 34.1% and 37.9%, respectively, in 2016. In their upstream businesses, a better comparison with Conoco, cutbacks were 35.4% and 43% respectively.

All three companies seem to be approaching 2017 with caution. Chevron has plans to reduce capex about around 10% using a mid-point in their given 2017 spending range. Conoco will keep capex flat in 2017, while Exxon indicates it could increase spending in the year by about 14% to $22 billion. (See also: Oil Investors Await 2017 Investment Plans.)

Stagnant Production

2016 was a challenging year for all three companies, which were hit by production declines of between 1% and 3.5%. The natural decline rate—or the annual decrease in output from an oil well without any additional investment—is around 6% per year. All three companies were successful at partially stemming this loss. Investors, however, want growth. All three companies face challenges in 2017 to boost production output. Chevron says it hopes to boost production by 4-9% in 2017, excluding its planned asset sales. Conoco expects production to be flat in 2017, and Exxon does not provide any specific production guidance in its most recent investor presentation.

Disclaimer: Gary Ashton is an oil and gas financial consultant who writes for Investopedia. The observations he makes are his own and are not intended as investment advice. Gary does not own XOM, CVX or COP.

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