Diversified E&Ps Nearly Complete In Transitioning -- RBN Energy -- Friday The 13th -- April 13, 2018

Traveling: see this post.

Director's Cut should be released today: I may miss it when it is released due to traveling. The link is here.


Bakken: getting busy. Link here.

North Dakota natural gas: all five natural gas plants undergoing construction or seeking permits to expand have been approved for expansion.

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Back to the Bakken

 

Active rigs:

$67.07↑	4/13/2018	04/13/2017	04/13/2016	04/13/2015	04/13/2014
Active Rigs	60	51	30	91	189

RBN Energy: diversified E&Ps nearly complete transitioning; growth around the corner, part 3.

Defying predictions of widespread bankruptcies and credit defaults, the U.S. exploration and production companies (E&Ps) we track returned to profitability in 2017 through a strategic transformation that featured the “high-grading” of portfolios, impressive capital discipline and an intense focus on operational efficiencies. 

However, the road to recovery has been longer and more challenging for some companies, particularly a few of the E&Ps in our Diversified Peer Group, whose output and reserves are more balanced between oil and gas. Their portfolio realignments have been the biggest among our three peer groups — collectively they have shed $36 billion in assets and 3.6 billion barrels of oil equivalent (boe) in proved reserves over the last three years. Today, we continue our review of how rebounding oil prices are affecting E&P cash flow, this time focusing on producers with a rough balance of oil and natural gas assets.

The Diversified Peer Group’s 2017 results and 2018 guidance show that the 17 companies have moved along the same general path to recovery as the overall E&P sector, although the degree of the Diversified companies’ rebound to date has fallen short of that accomplished by the Oil-Weighted and Gas-Weighted peer groups.

After bleeding a total of $80 billion in red ink in 2015 and 2016, the Diversified group reported $2.5 billion in pre-tax operating losses on substantial asset impairments from divestitures, compared with a combined $3.4 billion in profits for the remaining E&Ps. Based on 2018 guidance, the group’s annual production has nearly stabilized at just under 1,800 MMboe  after 4% and 5% contractions in 2016 and 2017, respectively. In comparison, the Oil-Weighted group is guiding to 11% output growth and the Gas-Weighted group is expecting 12% growth.

Like the rest of the industry, the Diversified producers are maintaining impressive capital spending discipline despite higher oil prices, which will generate a $6.1 billion — or 49% — increase in free cash flow. However, in sharp contrast with the remainder of the E&P sector, the Diversified companies are collectively using all the additional funds (and more) to reward shareholders for their patience during the long transformation process by authorizing $6.4 billion in share buybacks and $136 million in dividend increases.