Crude Oil ( ) Brent Crude ( ) Natural Gas ( ) S&P 500 ( ) PHLX Oil ( )

EnerCom, Inc. compiled third quarter earnings per share, revenue, EBITDA and cash flow per share analyst consensus estimates on 182 E&P and OilService companies in our database.

Click here for the full chart of estimates.

The median OilServices company earnings estimate for the quarter ending September 30, 2013, is $0.33 per share compared to actual earnings per share of $0.30 and $0.33 for Q2’13 and Q1’13, respectively. The median E&P company earnings estimate for the quarter ending September 30, 2013, is $0.23 per share compared to actual earnings per share of $0.28 and $0.02 for Q2’13 and Q1’12, respectively.

ENERGY COMMODITY PRICES

WTI oil price averaged $105.81, $94.14, and $94.36 per barrel during Q3’13, Q2’13, and Q1’13 respectively, while the Henry Hub natural gas price averaged $3.56, $4.02, and $3.48 per MMBtu over the same time periods.

Crude Oil. U.S. oil consumption in July 2013 was 19.0 MMBOPD, up 1.7% compared to the prior month and 2.4% higher than the same month last year.  U.S. crude oil production increased to 7.6 MMBOPD in July 2013 as well, which remains near the highest level since November 1992 and 20.2% higher than the same month last year. The average near-term futures price for WTI in September 2013 was $106.23 per barrel, or flat with the prior month, 12.3% higher than the same month last year. The five-year strip at September 30, 2013 was $87.84 per barrel.

The average price of gasoline (all grades, all formulations) in October 2013 was $3.60 per gallon, 1.3% lower than the previous month and 7.8% lower 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 September 2013, the average near-term futures price for Brent was $111.25 per barrel, a slight bump from 110.45 in August, and 4.7% higher than the WTI near-month futures price.

 

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The median analyst estimate at the beginning of September for 2014 NYMEX oil was $97.58 per barrel with a high of $112.00 per barrel and a low of $83.00 per barrel.

Natural Gas. In July 2013, total natural gas consumption was 61.6 Bcf/d, up 10.6% from the prior month and 7.9% lower than the same month last year. Demand in Q3’13 was 59.49 Bcf/d, which was 4.9% lower than the same period in 2012. By consuming sector: industrial (+3.5%), commercial (+16.3%), power generation (-15.5%) and residential (+22.7%).

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Natural gas production growth continues to remain relatively flat. Dry gas production in July 2013 was 67.0 Bcf/d, up 0.5% from June 2013 and up 2.6% over the same month last year.  For the month of July 2013 (the most recent data point), the EIA reported that U.S. LNG imports averaged of 0.26 Bcf/d.

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At 3.6 Tcf (week ending 10/4/13), natural gas storage was 1.6% above the five-year historical average, and -3.7% below the five-year high.

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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 10, 2013 traded at 27.5 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 September 2013 increased to $3.62 per MMBtu or 6.1% higher than the prior month, but 24.0% higher than the same month last year. The five-year strip at September 30, 2013 was $4.13 per MMBtu. The median analyst estimate at the beginning of October for 2014 NYMEX gas was $4.00 per MMBtu with a high of $4.50 per MMBtu and a low of $3.70 per MMBtu.

Rig Count — Natural Gas Rig Count Declines

The U.S. land rig count sourced from RigData on October 4, 2013, stood at 1,860 rigs, an increase of 14 rigs from Q3’13. The aggregate increase resulted from a change in rigs drilling for gas (-9), gas/oil (+11), oil (+16) and other (-4).

On October 4, 2013, there were 1,128 horizontal rigs in the U.S., an increase from 1,119 in Q3’2013. On October 4, 2013, the number of horizontal rigs targeting natural gas exclusively dropped from December 31, 2011 by 192 rigs to 204 for a decline of 48%.  The number of rigs targeting oil exclusively increased from December 31, 2011 by 55 rigs to 253 for an increase of 28%.

By play and as compared to Q3’13, rig count changes include Haynesville (-2 rigs), Fayetteville Shale (-2 rigs), Woodford Shale (+2 rigs), Appalachian Basin (+1 rig), Williston Basin (+4 rigs), Eagle Ford Shale (-5 rigs), DJ Niobrara (+2 rigs) and Permian Basin (+1 rig).

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By region and as compared to Q3’13, horizontal rig count changes occurred in East Texas and North Louisiana (-2 rigs), North Texas (+4 rigs), Northeast (-5 rigs), Rockies (+3 rigs), South Texas (-5 rigs) and West Texas and New Mexico (+15 rigs).

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Equity Markets. In September 2013, the S&P 500, XNG, XOI and OSX changed by 3.0%, 1.2%, 2.3% and 5.6% month-to-month, respectively. The OSX had the largest year-over-year increase gaining 20.0%.

From EnerCom’s E&P Database:  For October 4, 2013 year-to-date large-cap, mid-cap, small-cap and micro-cap E&P stocks gained 32.1%, 15.4%, 25.8% and 13.6%, respectively. Year-to-date, oil-weighted and gas-weighted companies gained 10.6% and 26.8%, respectively.

By region as of October 4, 2013 year-to-date, Bakken, Midcontinent and Diversified stocks gained 17.2%, 48.5% and 20.1%, respectively, and Gulf of Mexico stocks were up 15.1%.

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From EnerCom’s Oil Service’s Database: As of October 4, 2013 year-to-date, Oil Service’s large-cap, mid-cap, small-cap and micro-cap stocks gained 15.9%, 12.3%, 22.6% and 19.6%, respectively.

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Expected Themes for Conference Calls

Below are some themes and thoughts we expect to take prominence on this quarter’s conference calls.

OilService Companies:

  • Global economic outlook
  • Micro Seismic/4D Shoots
  • International margins vs. North American margins
  • Deepwater activity
  • Rig Count – Effects of drilling efficiencies
  • Trends and outlook on dayrates and backlog (onshore and offshore drillers)
  • Onshore new builds – rigs, horsepower, frac spreads
  • Balance sheet strength and liquidity
  • Deepwater activity

E&P Companies:

  • Stacked pay zones
  • Down spacing opportunities in the Permian, Eagle Ford and Marcellus
  • Water sources for fracture stimulation
  • Debt levels and the effect on capital spending
  • New play activity (Brown Dense, Tuscaloosa Marine Shale, Utica, Mississippian Lime, Pearsall, Heath, etc.)
  • 2014 commodity price outlook
  • Natural gas and crude oil hedging strategies
  • Crude differentials (WTI vs. Brent vs. LLS)
  • Midstream contracts and take-away capacity
  • Outspending cash flow and liquidity
  • Drilling efficiencies
  • Status of non-core divestitures and MLPs for paying down debt
  • Permian plays (horizontal Wolfcamp B, Cline)

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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.


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. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.