Friday, June 9, 2017

Oil-Weighted E&Ps Profit from Higher Prices, Shifts in Strategy -- RBN Energy -- June 9, 2017

Active rigs:

Active Rigs522782192189

RBN Energy: oil-weighted E&Ps profit from higher prices, shifts in strategy. Two examplses:
Apache Corp. posted the largest operating profit in the peer group during the first quarter of 2017 at $744 million, compared with $37 million for full-year 2016, while generating $1.4 billion in cash flow. Higher prices and lower lease operating costs led to significant margin expansion across all of the company’s major regions. Compared with first-quarter 2016 results, margins went from $21/boe to $33/boe for Apache’s operations in Egypt, $17/boe to $37/boe for the North Sea, $11/boe to $20/boe for the Permian and $5/boe to $13/boe in the rest of the company’s North American operations. After cutting capital expenditures by 83% in 2014-16, Apache is taking advantage of its dramatic turnaround to boost investment from $1.7 billion to $3.1 billion, with the increase slated to fund 14%-21% output growth from its Permian properties, including its new Alpine High play.
EOG Resources posted a $232 million operating profit in the first quarter of 2017, the second-largest quarterly profit in our study group, and EOG joined Apache as the only producers that generated more than $1 billion in cash flow. EOG produced 571 Mboe/d, including a record 316 Mb/d of crude oil. In the first quarter, EOG received more than $10/boe over its 2016 realized prices, or $36.98/boe. Lifting costs were $11.73/boe in the first quarter, up nearly $2/boe from its 2016 results, which the company said resulted from the divestment of lower-cost natural gas-weighted properties. Reductions in DD&A expense helped offset the rise in lifting costs, falling 4.5% to $15.88/boe. In contrast to the industry trend, impairments increased from $3/boe in 2016 to $3.73/boe in the first quarter of 2017, which was also divestiture-related.
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