EnerCom, Inc. compiled fourth quarter earnings per share, revenue, EBITDA and cash flow per share analyst consensus estimates on 187 E&P and OilService companies in our database.
The median OilServices company earnings estimate for the quarter ending December 31, 2013, is $0.30 per share compared to actual earnings per share of $0.25 and $0.26 for Q3’13 and Q2’13, respectively. In Q4’12, the average OilServices company earnings were $0.28. The median E&P company earnings estimate for the quarter ending December 31, 2013, is $0.21 per share compared to actual earnings per share of $0.10 and $0.30 for Q3’13 and Q2’13, respectively. In Q4’12, the average E&P company earnings were $0.04.
ENERGY COMMODITY PRICES
WTI oil price averaged $97.61, $105.81, and $94.14 per barrel during Q4’13, Q3’13, and Q2’13 respectively, while the Henry Hub natural gas price averaged $3.85, $3.56, and $4.02 per MMBtu over the same time periods. WTI averaged $88.17 per barrel in Q4’12.
Crude Oil. U.S. oil consumption in October 2013 was 19.3 MMBOPD, up 0.1% compared to the prior month and 3.0% higher than the same month last year. U.S. crude oil production was 7.8 MMBOPD, which remains near the highest level since November 1992 and 11.8% higher than the same month last year. The average near-term futures price for WTI in December 2013 was $97.89 per barrel, or 4.2% higher than the prior month, 10.6% higher than the same month last year. The five-year strip at December 31, 2013 was $85.40 per barrel.
The average price of gasoline (all grades, all formulations) in December 2013 was $3.36 per gallon, 1.1% higher than the previous month but 0.7% lower than the same month last year. In December 2013, the average near-term futures price for Brent was $110.7 per barrel, up 2.6% from the prior month and 13.1% higher than the WTI near-month futures price.
The median analyst estimate at the beginning of January for 2014 NYMEX oil was $95.00 per barrel with a high of $104.00 per barrel and a low of $83.00 per barrel.
Natural Gas. In October 2013, total natural gas consumption was 60.0 Bcf/d, up 2.5% from the prior month but -2.2% lower than the same month last year. Dry gas production in October 2013 was 67.0 Bcf/d, up 1.0% from September 2013 and up 0.9% over the same month last year.
For the month of October 2013 (the most recent data point), the EIA reported that U.S. LNG imports averaged of 0.18 Bcf/d. At 2.8 Tcf (week ending 1/3/14), natural gas storage was -10.1% below the five-year historical average, and -17.6% below the five-year high. The January 3, 2014 mark was matched the low point on the 5-year (2009-2013) range. We also note that cold weather led to a net withdrawal of 285 billion cubic feet (Bcf) for the week ending Friday, December 13, 2013, which was surpassed on January 16, 2014, when storage dropped by 287 Bcf. The January mark is the largest storage withdrawal since recordkeeping began in 1994.
Stronger oil prices and weaker natural gas prices combined to keep commodity prices decoupled on an energy-equivalent basis, as the spot price for oil as of January 8, 2014 traded at 21.2 times the equivalent natural gas price, more than the standard 6:1 energy equivalent ratio.
The average near-term futures price for Henry Hub in November 2013 increased to $4.277 per MMBtu or 15.9% higher than the prior month, and 24.2% higher than the same month last year. The five-year strip at December 31, 2013 was $4.17 per MMBtu. The median analyst estimate at the beginning of January for 2014 NYMEX gas was $4.00 per MMBtu with a high of $4.30 per MMBtu and a low of $3.70 per MMBtu.
Rig Count. The U.S. land rig count sourced from RigData (page 80) on December 31, 2013, stood at 1,875 rigs, an increase of 29 rigs from Q3’13. On December 31, 2013, there were 1,169 horizontal rigs in the U.S., an increase from 1,119 in Q3’2013. On December 31, 2013, the number of horizontal rigs targeting natural gas exclusively dropped from December 31, 2011 by 188 rigs to 208 for a decline of 47%. The number of rigs targeting oil exclusively increased from December 31, 2011 by 69 rigs to 267 for an increase of 35%.
By play and as compared to Q3’13, rig count changes include Haynesville (+1 rig), Fayetteville Shale (-3 rigs), Woodford Shale (+2 rigs), Appalachian Basin (+9 rig), Williston Basin (+5 rigs), Eagle Ford Shale (-1 rig), DJ Niobrara (+4 rigs) and Permian Basin (+6 rigs).
By region and as compared to Q3’13,, horizontal rig count changes occurred in East Texas and North Louisiana (no change), North Texas (-2 rigs), Northeast (+7 rigs), Rockies (+10 rigs), South Texas (+2 rigs) and West Texas and New Mexico (+32 rigs).
On December 31, 2013, 62% of working rigs were drilling horizontally, up 1% from Q3 2013 and Q2 2013.
Equity Markets. In December 2013, the S&P 500, XNG, XOI and OSX changed by 2.4%, 2.1%, 1.9% and 1.6% month-to-month, respectively. The S&P 500 had the largest year-over-year increase gaining 29.6%.
From EnerCom’s E&P Database: For January 3, 2014 year-to-date large-cap, mid-cap, small-cap and micro-cap E&P stocks lost -2.6%, -3.2%, -3.5% and -1.2%, respectively. Year-to-date, oil-weighted and gas-weighted companies lost -2.9% and -1.7%, respectively.
By region as of December 6, 2013 year-to-date, Bakken, Midcontinent and Diversified stocks lost -4.0%, -1.1% and -2.1%, respectively, Gulf of Mexico stocks were down -4.3%, Canadian stocks were up 0.7%, and European stocks were down -7.1%.
From EnerCom’s Oil Service’s Database: As of December 6, 2013 year-to-date, Oil Service’s large-cap, mid-cap, small-cap and stocks lost -1.8%, -1.6%, -1.0% and micro-cap stocks gained 0.6%, respectively.
Expected Themes for Conference Calls
Below are some themes and thoughts we expect to take prominence on this quarter’s conference calls.
- U.S. crude delivery and refining systems (rail systems, etc.)
- Crude oil and natural gas differentials (Wattenberg, Bakken, etc.)
- Drilling and completion efficiencies (Batch completions and pad drilling)
- Down spacing opportunities in the Permian, Eagle Ford and Marcellus
- 2014 capital spending budgets
- 2014 commodity price outlook
- 2014 production forecasts
- Midstream contracts and take-away capacity
- New play activity (Tuscaloosa Marine Shale, Hunton, Utica, Mississippian Lime, Cline)
- Micro Seismic/4D Shoots
- Rates of return and expanded drilling programs on East Texas natural gas plays
- Infrastucture build out in Bakken, Eagle Ford, and D-J Basins
- Lack of M&A activity in the E&P space
- Global economic outlook
- International margins vs. North American margins
- Rig Count – Effects of drilling efficiencies
- Trends and outlook on dayrates and backlog (onshore and offshore drillers)
- Balance sheet strength and liquidity
- Deepwater activity
- Oilfield service equipment utilization rates
- Work activity in Permian, Appalachia, Rockies
- New equipment buys and builds
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