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Sunday, October 6, 2013

Another Metric To Track Performance Of Bakken-Focused Companies

When the earnings reports start coming out next month, we will be inundated with data points. I have great difficulty tracking all the data points.

I guess if I had only two metrics for Bakken-focused companies the second metric would be related to their daily rate of production, such as  "year-over-year percent growth in production."

Even if I had the data I wouldn't know what to make of it. I don't know what industry standards are.

So, this throw-away Motley Fool article was incredibly useful to me. This data is nothing new; it's easily found at every corporate presentation, but I guess the data was just too overwhelming for me. But now I have a data point that puts things in perspective.

According to Motley Fool,
EOG is expected to deliver best-in-class crude oil growth through 2017. This year the company is expected to grow its oil production by 35%, which is the minimum rate it has delivered since 2010. That's well above Devon for example which is expected to grow its oil production by 16%-19% this year and Occidental which will only grow its oil production by 8% this year. With investors putting such a premium on companies that can grow oil production these days, this is an important consideration.
Note: there are two important data points in the "production-growth metric." Obviously KOG should increase production on a percentage basis at a greater rate than XOM.

KOG, OAS, CLR, and WLL would be in a different class than XOM, CVX, and COP. But if you are a "splitter" and not a "lumper," then even KOG and OAS would be in a different class than WLL and CLR.

This earnings season I'm going to try tracking "production-growth-year-over-year" for the various Bakken-focused operators.

Here's a start, for me.

CLR:
Continental Resources, Inc. expects to increase total crude oil and natural gas production in a range of 26% to 32% in 2014, based on non-acquisition capital expenditures of $4.05 billion.  Continental expects average daily production in 2014 will be in a range of 170,000 to 180,000 barrels of oil equivalent (Boe) per day, with an exit rate for December 2014 of approximately 200,000 Boe per day.
EOG: 
From the Motley Fool article linked above, the company expects a 35% growth rate.
HK:
  • 3Q13: 37,707 boed/d (an increase of 237% yoy; guiding >40% production growth in 2014

KOG: 
  • 3Q13: 35,400 boepd; 125% production increase year-over-year (3Q12 - 3Q13)
  • 2Q13: 23,500 boepd -- an 88% increase in production  year-over-year; (if I did the math correctly and read the corporate graphic correctly -- big "ifs")
  • 2Q12: 12,500 boe/d
OAS:
Increased average daily production to 30,171 barrels of oil equivalent per day, a 48% increase over the second quarter of 2012

2 comments:

  1. If my sources are correct, in the next couple quarters, you will see KOG production and stock price dip slightly. "Boots on the ground" say their frac crews are idle, caught up, and waiting for the rigs to finish more wells. It will be fun to see if this is reliable info.

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    Replies
    1. You are probably correct. That is one of the challenges of pad drilling: drilling all the wells first, with one rig, one well at a time, it could be quite some time before the last well on a multi-well pad is drilled. And then they frack them nearly simultaneously. Over time, this will start to even out, but early on, pad drilling could cause some anomalies.

      There are other issues, however, including the contracts operators have to deliver a certain amount of oil by a certain date.

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