EnerCom, Inc. compiled third quarter earnings per share, revenue, EBITDA and cash flow per share analyst consensus estimates on 185 E&P and OilService companies in our database. Click here for the full chart of estimates.
OAG360 notes that additional supporting slides for the following data can be found on the Analytics Page.
The median OilService company earnings estimate for the quarter ending September 30, 2012, is $0.45 per share compared to actual earnings per share of $0.31 and $0.40 for Q1 2012 and Q2 2012, respectively. The median E&P earnings estimate for the quarter ending September 30, 2012, is $0.15 per share compared to actual earnings per share of $0.22 and $0.14 for Q1 2012 and Q2 2012, respectively.
ENERGY COMMODITY PRICES
WTI oil price averaged $92.16, $93.30 and $102.99 per barrel during Q3 2012, Q2 2012 and Q1 2012 respectively, while the Henry Hub natural gas price averaged $2.88, $2.28 and $2.44 per MMBtu over the same time periods.
Crude Oil. The average near-term futures price for WTI in September 2012 increased to $94.51 per barrel or 0.4% higher than the prior month and 10.4% higher than the same month last year. The five-year strip at September 28, 2012, was $90.08 per barrel, -2.3% lower than the previous month.
Brent crude continued to trade at a premium to WTI, as it has since Q3’10. In September 2012, the average near-term futures price for Brent was $113.03, 0.3% higher than the prior month and 19.7% higher than the average WTI near-month futures price.
The median analyst estimate at the beginning of October for 2013 NYMEX oil was $90.88 per barrel with a high of $113.00 per barrel and a low of $65.00 per barrel.
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 October 5, 2012 traded at 27.6 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.
Natural Gas. For the first seven months of 2012, natural gas consumption was 2.5% higher than the same period in 2011 and 4.8% higher than the same period in 2008. By consuming sector: industrial (+0.3%), commercial (-14.1%), power generation (+28.4%) and residential (-19.2%). Despite the increase in demand, the market continues to be oversupplied but production seems to be flattening. Dry gas production in July 2012 was 65.3 Bcf/d, up 0.1% from June 2012 but up 3.7% over the same month last year. This could result in a near term recovery in gas prices. Click here to read our write-up titled Two Natural Gas Scenarios: Take Your Pick.
The average price for the NYMEX near-month natural gas futures contract during September 2012 was $2.92 per MMBtu, 3.9% higher than the previous month and -24.8% lower than the same month last year. The five-year strip price ended the month at $4.29 per MMBtu. At the end of September, the median analyst price forecast for 2013 Henry Hub was $3.50 per MMBtu, flat with estimates from last month.
Rig Count — Natural Gas Rig Count Declines
The U.S. land rig count sourced from RigData at Q3 2012 stood at 1,997 rigs, a decrease of 94 rigs from Q2’12. The aggregate decrease resulted from a reduction in rigs drilling for gas (-60), gas/oil (-43) and oil (-1), offset slightly by an increase in rigs drilling for other (+10).
In Q3 2012, there were 1,161 horizontal rigs in the U.S., a decrease from 1,194 in Q2’2012. In Q3 2012, the number of horizontal rigs targeting natural gas exclusively dropped from December 31, 2011 by 151 rigs to 245 for a decline of 38%. The number of rigs targeting oil exclusively increased from December 31, 2011 by 48 rigs to 246 for an increase of 24%.
By play and as compared to Q2’12, rig count changes include Haynesville (-20 rigs, or -36%), Fayetteville Shale (-4 rig, or -19%), Woodford Shale (-4 rigs, or -36%), Appalachian Basin (-20 rigs, or -13%), Williston Basin (-4 rigs, or -2%), Eagle Ford Shale (-3 rigs, or -1%), DJ Niobrara (+2 rigs, or +8%), Permian Basin (-8 rigs, or -2%).
By region and as compared to Q2’12, horizontal rig count increases occurred in South Texas (+3 rigs, or +2%), Rockies (+5 rigs, or +2%) and West Texas and New Mexico (+18 rigs, or +14%) driven by accelerated drilling programs in the liquids rich Eagle Ford Shale and the Wolfberry oil play in the Permian Basin. Declines were in East Texas and North Louisiana (-18 rigs, or -29%), Midcontinent (-24 rigs or -9%), North Texas (-2 rigs, or -4%) and Northeast (-16 rigs, or -12%).
In Q3 2012, 58% of working rigs were drilling horizontally, up from 57% in Q2 2012 and up from 57%, 56% and 55% in Q1’12, Q4’11 and Q3’11, respectively.
Equity Markets. In September 2012, the energy sector outperformed the broad markets month-over-month as the S&P 500, XNG, XOI and OSX changed by 2.4%, 5.0%, 2.3% and 0.1%, respectively. The S&P 500 had the largest year-over-year increase gaining 27.3%.
From EnerCom’s E&P Database: For September 28, 2012 year-to-date large-cap stocks gained 0.5% while mid-cap, small-cap and micro-cap E&P stocks lost 2.5%, 3.3% and 5.8%, respectively. Year-to-date, oil-weighted companies gained 3.5% while gas-weighted companies finished down 8.9%.
By region as of September 28, 2012 year-to-date, Bakken stocks lost 2.5%. Midcontinent, Diversified and Gulf of Mexico stocks had a year-to-date gain of 5.6%, 3.8% and 6.1%, respectively.
From EnerCom’s OilServices Database: As of September 28, 2012 year-to-date, OilService large-cap and small-cap stocks gained 6.5% and 1.9%, respectively, while mid-cap and micro-cap stocks lost 1.4% and 0.2%, respectively.
Expected Themes for Conference Calls
Below are some themes and thoughts we expect to take prominence on this quarter’s conference calls.
- Reduced rig count and its effect on land drillers
- North American spending versus International
- Lower utilization rates
- Oversupplied equipment markets
- International business outlook
- Offshore new builds (FPSOs, etc.)
- Balance sheet strength and liquidity
- Backlogs and backlog conversions
- Deep water Gulf of Mexico activity
- OPEC impact on equipment and service purchases
- Canadian winter drilling season
- Alaska opportunities
- LNG off-take opportunities
- Economic outlook
- Early guidance on 2013 CAPEX spending
- Early guidance on Q4 2012 exit rate and 2013 production rate
- Midstream contracts
- Debt deals/redeterminations
- Balance sheets/liquidity positions
- New play activity (Brown Dense, Tuscaloosa, Utica, Mississippian, Stealth, Heath, etc.)
- Natural gas hedging strategies
- Takeaway capacity and infrastructure concerns
- Rig costs and associated horizontal lateral lengths
- Changing EURs and rates of returns in certain key plays
- Brighter Gulf of Mexico outlook
- Hedging hopes – longer and stronger?
- Seismic shoots
- Economic outlook – macro and micro
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.