EnerCom, Inc. compiled second 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 June 30, 2013, is $0.31 per share compared to actual earnings per share of $0.33 and $0.28 for Q1’13 and Q4’12, respectively. The median E&P earnings estimate for the quarter ending June 30, 2013, is $0.23 per share compared to actual earnings per share of $0.02 and $0.04 for Q1’13 and Q4’12, respectively.
ENERGY COMMODITY PRICES
WTI oil price averaged $94.14, $94.36, and $88.17 per barrel during Q2’13, Q1’13 and Q4’12 respectively, while the Henry Hub natural gas price averaged $4.02, $3.48 and $3.40 per MMBtu over the same time periods.
Crude Oil. U.S. oil consumption in April 2013 was 18.6 MMBOPD, down 0.4% compared to the prior month and 1.2% higher than the same month last year. U.S. crude oil production increased to 7.4 MMBOPD, which is the highest level since November 1992 and 17% higher than the same month last year. The average near-term futures price for WTI in June 2013 was $95.80 per barrel, or 1.1% higher than the prior month, 16.3% higher than the same month last year. The five-year strip at June 28, 2013 was $85.48 per barrel.
The average price of gasoline (all grades, all formulations) in June 2013 was $3.69 per gallon, 1.1% higher than the previous month and 2.6% greater than the same month last year.
Brent crude continued to trade at a premium to WTI, as it has since Q3’10, but the gap is narrowing. In June 2013, the average near-term futures price for Brent was $103.34 per barrel, essentially unchanged than the prior month and 7.7% higher than the WTI near-month futures price.
The median analyst estimate at the beginning of July for 2013 NYMEX oil was $93.29 per barrel with a high of $102.50 per barrel and a low of $85.00 per barrel. We note that as of July 15, 2013 the crude oil futures markets continue to be in a state of backwardation, implying expectations of lower prices in the future.
Natural Gas. In April 2013, total natural gas consumption was 64.9 Bcf/d, down 22.4% from the prior month and 0.5% lower than the same month last year. Demand in Q1’13 was 76.4 Bcf/d, which was 1.8% higher than the same period in 2012. By consuming sector: industrial (-1.2%), commercial (+20.4%), power generation (-23.7%) and residential (+24.8%).
Natural gas production growth has been flattening. Dry gas production in April 2013 was 66.2 Bcf/d, up 0.7% from March 2013 and up 1.2% over the same month last year. For the month of April 2013 (the most recent data point), the EIA reported that U.S. LNG imports averaged of 0.17 Bcf/d, down 35% from the prior month.
At 2.7 Tcf (week ending 7/5/13), natural gas storage was 1% below the five-year historical average, and 14% below the five-year high.
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 July 9, 2013 traded at 28.0 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 July 2013 declined to $3.81 per MMBtu or -5.0% lower than the prior month, but 52.5% higher than the same month last year. The five-year strip at June 28, 2013 was $4.26 per MMBtu. The median analyst estimate at the beginning of July for 2013 NYMEX gas was $3.70 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 July 5, 2013, stood at 1,831 rigs, an increase of 3 rigs from Q2’13. The aggregate increase resulted from a change in rigs drilling for gas (+21), gas/oil (-18), oil (-13) and other (+13).
On July 5, 2013, there were 1,117 horizontal rigs in the U.S., an increase from 1,114 in Q2’2013. On July 5, 2013, the number of horizontal rigs targeting natural gas exclusively dropped from December 31, 2011 by 190 rigs to 206 for a decline of 48%. The number of rigs targeting oil exclusively increased from December 31, 2011 by 42 rigs to 240 for an increase of 21%.
By play and as compared to Q2’13, rig count changes include Haynesville (+3 rigs), Fayetteville Shale (+1 rigs), Woodford Shale (no change), Appalachian Basin (-6 rigs), Williston Basin (-5 rigs), Eagle Ford Shale (-2 rigs), DJ Niobrara (+1 rig) and Permian Basin (-2 rigs).
By region and as compared to Q1’13, horizontal rig count increases occurred in the Midcontinent (+2 rigs), South Texas (no change), the Rockies (+1 rig), Texas Gulf Coast (-1 rig) and West Texas and New Mexico (+9 rigs).
On July 5, 2013, 61% of working rigs were drilling horizontally, unchanged from Q2 2013, down from 62% in Q1 2013, up from 60% in Q4 2012 and 58% in Q3 2012.
Equity Markets. In June 2013, the S&P 500, XNG, XOI and OSX changed by -1.5%, -2.3%, -4.0% and -0.3% month-to-month, respectively. The OSX had the largest year-over-year increase gaining 25.6% (page 25).
From EnerCom’s E&P Database: For July 5, 2013 year-to-date large-cap, mid-cap, small-cap and micro-cap E&P stocks gained 21.9%, 6.7%, 7.1% and 7.1%, respectively. Year-to-date, oil-weighted and gas-weighted companies gained 2.5% and 15.7%, respectively.
By region as of July 5, 2013 year-to-date, Bakken, Midcontinent and Diversified stocks gained 11.2%, 17.9% and 14.3%, respectively, while Gulf of Mexico lost 0.6%.
From EnerCom’s OilServices Database: As of July 5, 2013 year-to-date, OilService’s large-cap, mid-cap, small-cap and micro-cap stocks gained 11.0%, 8.3%, 17.2% and 22.8%, respectively.
Expected Themes for Conference Calls
Below are some themes and thoughts we expect to take prominence on this quarter’s conference calls.
- Micro Seismic/4D Shoots
- Rig Count – Effects of drilling efficiencies
- International margins vs. North American margins
- 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
- 2014 commodity price outlook
- 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.