EnerCom, Inc. compiled first quarter earnings per share, revenue, EBITDA and cash flow per share analyst consensus estimates on 190 E&P and OilService companies in our database. Click here for the full chart of estimates.
The median OilService company earnings estimate for the quarter ending March 31, 2013, is $0.36 per share compared to actual earnings per share of $0.28 and $0.22 for Q4’12 and Q3’12, respectively. The median E&P earnings estimate for the quarter ending March 31, 2013, is $0.18 per share compared to actual earnings per share of $0.04 and -$0.02 for Q4’12 and Q3’12, respectively.
ENERGY COMMODITY PRICES
WTI oil price averaged $94.36, $88.17, and $92.16 per barrel during Q1’13, Q4,12 and Q3,12 respectively, while the Henry Hub natural gas price averaged $3.48, $3.40 and $2.88 per MMBtu over the same time periods.
Crude Oil. U.S. oil consumption in January 2013 was 18.6 MMBOPD, up 0.3% compared to the prior month and 2.0% higher than the same month last year. The average near-term futures price for WTI in March 2013 decreased to $92.96 per barrel or -2.5% lower than the prior month, and -12.5% lower than the same month last year. The five-year strip at March 28, 2013 was $89.71 per barrel.
The average price of gasoline (all grades, all formulations) in March 2013 was $3.78 per gallon, 1.1% higher than the previous month but -3.3% lower than the same month last year.
Brent crude continued to trade at a premium to WTI, as it has since Q3’10. In March 2013, the average near-term futures price for Brent was $116.07 per barrel,-5.6% lower than the prior month but 17.8% higher than the WTI near-month futures price. Brent in March 2013 was -12.0% lower than the same month last year.
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The median analyst estimate at the beginning of April for 2013 NYMEX oil was $92.00 per barrel with a high of $104.75 per barrel and a low of $85.00 per barrel.
Natural Gas. In January 2013, total natural gas consumption was 92.4 Bcf/d, up 15.8% from the prior month and 4.1% higher than the same month last year. For the twelve months of 2012, natural gas consumption was 4.1% higher than the same period in 2011. By consuming sector: industrial (+2.5%), commercial (-8.1%), power generation (+20.3%) and residential (-11.6%).
Natural gas production growth has been flattening. Dry gas production in January 2013 was 65.2 Bcf/d, down -1.0% from December 2012 and down -1.1% over the same month last year. For the month of January 2013 (the most recent data point), the EIA reported that the U.S. imported an average of 0.44 Bcf/d of LNG.
At 1.7 Tcf (week ending 4/5/13), natural gas storage was -4.0% below the five-year historical average, and -32.5% below the five-year high. This mark is the first time since 2011 that natural gas storage has been below the five-year historical average.
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 April 5, 2013 traded at 23.2 times the equivalent natural gas price, more than the standard 6:1 energy equivalent ratio. We note that the ratio has closed as oil prices have declined and natural gas prices have increased year-over-year.
The average near-term futures price for Henry Hub in March 2013 decreased to $3.77 per MMBtu or 14.0% higher than the prior month, and 64.3% higher than the same month last year. The five-year strip at March 28, 2013 was $4.36 per MMBtu.
The median analyst estimate at the beginning of April for 2013 NYMEX gas was $3.63 per MMBtu with a high of $4.00 per MMBtu and a low of $3.25 per MMBtu.
Rig Count — Natural Gas Rig Count Declines.
The U.S. land rig count sourced from RigData on April 5, 2013, stood at 1,821 rigs, a decrease of 34 rigs from Q4’12. The aggregate decrease resulted from a reduction in rigs drilling for gas (-32), gas/oil (+26), oil (-24) and other (-4).
On April 5, 2013, there were 1,116 horizontal rigs in the U.S., an increase from 1,107 in Q4’2012. On April 5, 2013, the number of horizontal rigs targeting natural gas exclusively dropped from December 31, 2011, by 193 rigs to 203 for a decline of 49%. The number of horizontal rigs targeting oil exclusively increased from December 31, 2011, by 41 rigs to 239 for an increase of 21%.
By play and as compared to Q4’12, rig count changes include Haynesville (-1 rigs, or -2.9%), Fayetteville Shale (-1 rigs, or -5.9%), Woodford Shale (-3 rigs, or -60%), Appalachian Basin (-14 rigs, or -10.1%), Williston Basin (-6 rigs, or -3.2%), Eagle Ford Shale (-4 rigs, or -1.8%), DJ Niobrara (+6 rigs, or +22.2%), Permian Basin (+2 rigs, or +0.5%).
By region and as compared to Q4’12, horizontal rig count increases occurred in the Midcontinent (+18 rigs, or +7.4%), the Rockies (+3 rigs, or +1.2%), Texas Gulf Coast (+5 rigs, or +4.5%) and West Texas and New Mexico (+18 rigs, or +12.2%). Declines were in East Texas and North Louisiana (-6 rigs, or -12.0%), North Texas (-9 rigs, or -23.7%), South Texas (-16 rigs, or -11.7%) and the Northeast (-7 rigs, or -5.5%). Alaska remained unchanged (+0 rigs from 1).
Equity Markets. In March 2013, the S&P 500, XNG, XOI and OSX changed by 11.4%, 13.8%, 7.2% and 3.1% month-to-month, respectively. The XNG had the largest year-over-year increase gaining 6.3% (Slide 36).
From EnerCom’s E&P Database: For April 5, 2013 year-to-date large-cap, mid-cap and small-cap E&P stocks gained 10.5%, 6.6% and 8.4%, respectively, while micro-cap stocks lost 0.1%. Year-to-date, oil-weighted and gas-weighted companies gained 0.1% and 11.1%, respectively.
By region as of April 5, 2013 year-to-date, Bakken, Midcontinent and Diversified stocks gained 1.2%, 17.5% and 6.6%, respectively, while Gulf of Mexico lost 7.4%.
From EnerCom’s OilService Database: As of April 5, 2013 year-to-date, OilService’s large-cap, mid-cap, small-cap and micro-cap stocks gained 3.1%, 6.8%, 8.4% and 7.2%, respectively.
Expected Themes for Conference Calls
Below are some themes and thoughts we expect to take prominence on this quarter’s conference calls. OilService Companies:
- Rig Count – Effects of drilling efficiences
- International margins vs. North American margins – Where’s the money at?
- Trends and outlook on dayrates and backlog (onshore and offshore drillers)
- LNG off-take opportunities
- Global economic outlook
- Offshore new builds (FPSOs, etc.)
- Onshore new builds – rigs, horsepower, frac spreads
- Balance sheet strength and liquidity
- Deepwater activity
- 2013 commodity price outlook – Are E&P companies grim about 2013 oil and natural gas prices?
- Natural gas and crude oil hedging strategies
- Crude differentials (WTI vs. Brent vs. LLS)
- Midstream contracts and take-away capacity
- Debt levels and the effect on capital spending
- Outspending cash flow and liquidity
- Drilling efficiencies
- Status of non-core divestitures and MLPs for paying down debt
- New play activity (Brown Dense, Tuscaloosa Marine Shale, Utica, Mississippian Lime, Pearsall, Heath, etc.)
- New Permian plays (horizontal Wolfcamp B, Cline and Fusselman)
- Does $4.00+ per Mcf mean rigs going up in dry gas plays (e.g., Haynesville and Barnett shales)?
- Down spacing opportunities
Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication.