February 25, 2019 - 4:14 PM EST
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Magnolia Oil & Gas Corporation Announces Fourth Quarter and 2018 Year-End Results

HOUSTON

Magnolia Oil & Gas Corporation (“Magnolia,” “we,” “our,” or the “Company”) (NYSE: MGY) today announced its financial and operational results for the fourth quarter of 2018.

Fourth Quarter and 2018 Highlights:

  • Magnolia reported fourth quarter net income attributable to Class A Common Stock of $32.9 million, or $0.21 per diluted share or $0.22 on an adjusted basis. Total net income (including the non-controlling interest) was $57.8 million.
  • Total Company production averaged 61.9 thousand barrels of oil equivalent per day ("Mboe/d") for the fourth quarter of 2018, or a 5 percent sequential increase compared to the period from July 31, 2018 through September 30, 2018 ("the Q3 Successor Period1").
  • Fourth quarter 2018 production in the Giddings Field increased 22 percent sequentially to 20.6 Mboe/d over the Q3 Successor Period1, largely due to the completion of new wells.
  • Adjusted EBITDAX of $193.0 million during the fourth quarter of 2018 with drilling and completions capital expenditures of $110.8 million during the same period (approximately 57% of Adjusted EBITDAX), and well within our plan.
  • We continue to strengthen our core position in Karnes through bolt-on acquisitions, adding 1,849 net acres to our Karnes County footprint in the fourth quarter of 2018.
  • The average realized oil price was $65.12 per barrel for the fourth quarter of 2018, or 110 percent of the average NYMEX WTI benchmark price during the period.
  • The Company generated pretax operating margins of $13.00 per Boe, or 29 percent on a GAAP basis; and adjusted operating margins of $13.39 per Boe, or 30 percent, each during the fourth quarter of 2018.
  • Magnolia ended 2018 with $135.8 million of cash on the balance sheet compared to $36.7 million at the end of the third quarter of 2018. We had $388.6 million of long-term debt, and an undrawn revolving credit facility with $550.0 million of capacity.

“Although we are still in the early stages as an organization, we exceeded most of our objectives during 2018,” said Magnolia Chairman, President and CEO, Steve Chazen. “The current product price environment is not very different than when we announced our original transaction nearly a year ago, and our core South Texas oil and gas properties that we acquired continue to show very strong performance. We demonstrated our ability to grow our production above our initial plan while spending less than 60 percent of our Adjusted EBITDAX on drilling and completing wells. Additionally, we reinvested a significant portion of our excess cash flow on the completion of asset acquisitions which further strengthened our position in both the Karnes and Giddings areas. We continue to evaluate several small asset acquisition opportunities that fit our business model. Our objective of spending within 60 percent of EBITDAX while generating moderate volume growth with low financial leverage and strong pretax margins remains part of our differentiated strategy. Our business model and ability to adapt is well-suited for the current product price environment, and we look forward to further achievements in 2019.”

Operational Update

Total fourth quarter 2018 net income (including the non-controlling interest) was $57.8 million, or $0.23 per share (assuming the weighted average impact of Class A Common stock issuable upon conversion of Class B Common Stock). Daily production averaged 61.9 Mboe/d and 60.7 Mboe/d during the fourth quarter 2018 and five months of Magnolia ownership for the year ended 2018, respectively. The Karnes County assets and drilling program continued to provide high quality and consistent well results. Production in Karnes averaged 41.3 Mboe/d during the fourth quarter, roughly flat with the third quarter as fewer wells were turned-in-line during the most recent period. Overall company growth was driven by the Giddings assets during the fourth quarter as well completions shifted to this area during the period. Production in Giddings increased nearly 22 percent sequentially to 20.6 Mboe/d in the fourth quarter, primarily due to additional wells turned-in-line as well as a full period of production from the Harvest acquisition.

1 Q3 Successor Period volumes have been adjusted to reflect the adoption of Accounting Standard Update No. 2014-09, Revenue from Contracts with Customers ("ASC 606").

During the fourth quarter of 2018, the Company operated three drilling rigs with two rigs in Karnes County and one rig in the Giddings Field, and utilized one completion crew across our operations. The drilling program is designed to provide flexibility to opportunistically maximize development and completion efficiencies between the fields.

Updated Guidance

Looking into 2019, Magnolia continued to operate three rigs for most of the first quarter. Given the recent decline in product prices, and to adjust our capital spending in line with our business model, we currently plan to exit the first quarter operating two rigs - one each in Karnes and Giddings. We will continue to evaluate our drilling program and activity levels as the year progresses and expect our full year 2019 drilling and completions capital to be within 60 percent of our total EBITDAX for the year. Despite the slowing pace of activity into this year, we still expect to generate moderate overall production growth for the full year of 2019. We currently estimate our first quarter production volumes to be equal or better than fourth quarter 2018 levels. Production is expected to accelerate into mid-year due to additional operated wells turned-in-line and higher anticipated non-operated activity. Overall company production is estimated to exit 2019 approximately 6.0 Mboe per day higher than in the fourth quarter of 2018.

2018 Year-End Reserves

Magnolia’s total proved reserves at year-end 2018 were 100.5 MMboe (50% oil and 71% liquids) compared to 75.6 MMboe at the end of 2017 which relates to the one-year development plan of the assets acquired in the transaction with EnerVest, Ltd. and its affiliates. Proved undeveloped reserves represent 24 percent of total proved reserves, the vast majority of which will be developed within one year.

Annual Report on Form 10-K

Magnolia's financial statements and related footnotes will be available in its Annual Report on Form 10-K for the year ended December 31, 2018, which is expected to be filed with the U.S. Securities and Exchange Commission ("SEC") on February 27, 2019.

Upcoming Investor Conference

Magnolia’s senior management is scheduled to participate in the following conference:

The 19th annual Simmons Energy Conference, February 27-28, 2019 in Las Vegas.

The presentation materials used at the conference will be available the morning of the event on Magnolia's website at www.magnoliaoilgas.com under the Investors tab.

Conference Call and Webcast

Magnolia will host an investor conference call on Tuesday, February 26, 2019 at 10:00 a.m. Central (11:00 a.m. Eastern) to discuss these operating and financial results. Interested parties may join the webcast by visiting Magnolia's website at www.magnoliaoilgas.com/events-and-presentations and clicking on the webcast link or by dialing 1-866-807-9684. A replay of the webcast will be posted on Magnolia's website following completion of the call.

About Magnolia Oil & Gas Corporation

Magnolia (MGY) is a publicly traded oil and gas exploration and production company with South Texas operations in the core of the Eagle Ford Shale and Austin Chalk formations. Magnolia will focus on generating value for shareholders through steady production growth, strong pre-tax margins, and free cash flow. For more information, visit www.magnoliaoilgas.com.

Cautionary Note Regarding Forward-Looking Statements

The information in this press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of present or historical fact included in this press release, regarding Magnolia’s strategy, future operations, financial position, estimated revenues, and losses, projected costs, prospects, plans and objectives of management are forward looking statements. When used in this press release, the words could, should, will, may, believe, anticipate, intend, estimate, expect, project, the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Except as otherwise required by applicable law, Magnolia disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this press release. Magnolia cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of Magnolia, incident to the development, production, gathering and sale of oil, natural gas and natural gas liquids. In addition, Magnolia cautions you that the forward looking statements contained in this press release are subject to the following factors: (i) the outcome of any legal proceedings that may be instituted against Magnolia; (ii) Magnolia’s ability to realize the anticipated benefits of its business combination, which may be affected by, among other things, competition and the ability of Magnolia to grow and manage growth profitably; (iii) changes in applicable laws or regulations; and (iv) the possibility that Magnolia may be adversely affected by other economic, business, and/or competitive factors. Should one or more of the risks or uncertainties described in this press release occur, or should underlying assumptions prove incorrect, actual results and plans could different materially from those expressed in any forward-looking statements. Additional information concerning these and other factors that may impact the operations and projections discussed herein can be found in Magnolia’s filings with the SEC, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and its Annual Report on Form 10-K for the fiscal year ended December 31, 2018, which is expected to be filed on February 27, 2019. Magnolia’s SEC filings are available publicly on the SEC’s website at www.sec.gov.

 
Magnolia Oil & Gas Corporation
Operating Highlights
   
Successor

For the Quarter Ended
December 31, 2018

July 31, 2018 through

December 31, 2018

Production:
Oil (MBbls) 3,054 5,078
Natural gas (MMcf) 8,795 14,136
NGLs (MBbls) 1,179   1,857  
Total (MBoe) 5,699 9,291
 
Revenues (in thousands):
Oil sales $ 198,891 $ 342,093
Natural gas sales 29,565 42,979
NGL sales 26,599   48,146  
Total Revenues $ 255,055 $ 433,218
 
Average sales price:
Oil (per Bbl) $ 65.12 $ 67.37
Natural gas (per Mcf) 3.36 3.04
NGL (per Bbl) 22.56   25.93  
Total (per Boe) $ 44.75 $ 46.63
 
NYMEX WTI ($/Bbl) $ 59.08 $ 63.10
NYMEX Henry Hub ($/Mcf) $ 3.64 $ 3.33
Realization to benchmark:
Oil (per Bbl) 110 % 107 %
Natural Gas (per Mcf) 92 % 91 %
 
Operating Expenses (in thousands):
Lease operating expenses $ 19,737 $ 30,753
Taxes other than income 13,819 23,170
Gathering, transportation and processing 9,092 14,445
Depreciation, depletion and amortization 111,989 177,890
 
Operating costs per Boe:
Lease operating expenses $ 3.46 $ 3.31
Taxes other than income 2.42 2.49
Gathering, transportation and processing 1.60 1.55
Depreciation, depletion and amortization 19.65 19.15
 
 
Magnolia Oil & Gas Corporation
Consolidated and Combined Statements of Operations
(in thousands, except per share data)
 
Successor

For the Quarter Ended
December 31, 2018

  July 31, 2018 through
December 31, 2018
REVENUES:
Oil revenues $ 198,891 $ 342,093
Natural gas revenues 29,565 42,979
Natural gas liquids revenues 26,599   48,146  
Total revenues 255,055 433,218
 
OPERATING EXPENSES
Lease operating expenses 19,737 30,753
Gathering, transportation and processing 9,092 14,445
Taxes other than income 13,819 23,170
Exploration expense 661 11,882
Asset retirement obligation accretion 1,276 1,668
Depreciation, depletion and amortization 111,989 177,890
Amortization of intangible assets 3,626 6,044
General & administrative expenses 18,504 28,801
Transaction related costs 2,241   24,607  
Total operating costs and expenses 180,945 319,260
OPERATING INCOME 74,110 113,958
 
OTHER INCOME (EXPENSE):
Income (loss) from equity method investee 465 773
Interest expense (7,494 ) (12,454 )
Other income (expense), net (1,355 ) (8,374 )
Total other income (expense) (8,384 ) (20,055 )
 
INCOME BEFORE INCOME TAXES 65,726 93,903
Income tax expense 7,918   11,455  
NET INCOME 57,808 82,448
LESS: Net income attributable to noncontrolling interest 24,887   43,353  
NET INCOME ATTRIBUTABLE TO CLASS A COMMON STOCK $ 32,921   $ 39,095  
 
NET INCOME PER COMMON SHARE
Basic $ 0.21 $ 0.25
Diluted $ 0.21 $ 0.25
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic 156,273 154,527
Diluted 158,998 158,232
WEIGHTED AVERAGE NUMBER OF CLASS B SHARES OUTSTANDING 93,189 90,949

(1) Diluted shares outstanding include the effect of warrants using the treasury stock method.

 
   
Magnolia Oil & Gas Corporation
Summary Balance Sheet Data
(in thousands)
 
Successor

 

Predecessor
December 31, 2018 December 31, 2017
Cash $ 135,758 $
Other current assets 156,601 114,536
Property, plant and equipment, net 3,073,204 1,565,537
Other assets 67,960   8,901
Total assets $ 3,433,523 $ 1,688,974
 
Current liabilities $ 197,361 $ 81,300
Long-term debt, net 388,635
Other long-term liabilities 139,572 9,836
 
Stockholders' equity
Noncontrolling interests 1,031,186
Common stock 25
Additional paid in capital 1,641,237
Retained earnings 35,507
Parents' net investment   1,597,838
Total liabilities and equity $ 3,433,523   $ 1,688,974
 

Magnolia Oil & Gas Corporation
Non-GAAP Financial Measures

Reconciliation of net income attributable to Class A Common Stock to Adjusted EBITDAX

In this press release, we refer to Adjusted EBITDAX, a supplemental non-GAAP financial measure that is used by management and external users of our consolidated and combined financial statements, such as industry analysts, investors, lenders and rating agencies. We define Adjusted EBITDAX as net income (loss) before interest expense, income taxes, depreciation, depletion and amortization and accretion of asset retirement obligations and exploration costs. Adjusted EBITDAX is not a measure of net income as determined by GAAP.

Our management believes that Adjusted EBITDAX is useful because it allows them to more effectively evaluate our operating performance and compare the results of our operations from period to period and against our peers without regard to our financing methods or capital structure. We also believe that securities analysts, investors and other interested parties may use Adjusted EBITDAX in the evaluation of our Company. We exclude the items listed above from net income in arriving at Adjusted EBITDAX because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDAX should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of our operating performance or liquidity. Certain items excluded from Adjusted EBITDAX are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDAX. Our presentation of Adjusted EBITDAX should not be construed as an inference that our results will be unaffected by unusual or non-recurring items. Our computations of Adjusted EBITDAX may not be comparable to other similarly titled measures of other companies.

The following table presents a reconciliation of Adjusted EBITDAX to net income attributable to Class A Common Stock, our most directly comparable financial measure calculated and presented in accordance with GAAP:

  Successor
(in thousands)

For the Quarter Ended
December 31, 2018

 

July 31, 2018 through

December 31, 2018

Adjusted EBITDAX reconciliation to net income:
Net income attributable to common stock $ 32,921 $ 39,095
Net income attributable to Noncontrolling Interest 24,887 43,353
Income tax (benefit) expense 7,918 11,455
Interest expense 7,494 12,454
Depreciation, depletion and amortization 111,989 177,890
Amortization of intangible assets 3,626 6,044
Exploration Expense 661 11,882
Accretion expense 1,276   1,668
EBITDAX 190,772 303,841
Transaction related costs(1) 2,241   24,607
Adjusted EBITDAX $ 193,013 $ 328,448
(1) Transaction related costs incurred related to the execution of our business combination with EnerVest, Ltd. and its affiliates and the Harvest acquisition, including legal fees, advisory fees, consulting fees, accounting fees, employee placement fees, and other transaction and facilitation costs.
 

Magnolia Oil & Gas Corporation
Non-GAAP Financial Measures

Reconciliation of net income attributable to Class A Common Stock to adjusted earnings

Our presentation of adjusted earnings and adjusted earnings per share are non-GAAP measures because they exclude the effect of certain items included in Income Attributable to Class A Common Stock. Management uses adjusted earnings and adjusted earnings per share to evaluate our operating and financial performance because it eliminates the impact of certain items that management does not consider to be representative of the Company’s on-going business operations. As a performance measure, adjusted earnings may be useful to investors in facilitating comparisons to others in the Company’s industry because certain items can vary substantially in the oil and gas industry from company to company depending upon accounting methods, book value of assets, and capital structure, among other factors. Management believes excluding these items facilitates investors and analysts in evaluating and comparing the underlying operating and financial performance of our business from period to period by eliminating differences caused by the existence and timing of certain expense and income items that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted earnings and adjusted earnings per share may not be comparable to similar measures of other companies in our industry.

       

For the Quarter
Ended December 31, 2018

 

Per Share
Diluted EPS

 

July 31, 2018 through
December 31, 2018

 

Per Share
Diluted EPS

(in thousands, except per share data)
 
Net income attributable to Class A Common Stock $ 32,921 $ 0.21 $ 39,095 $ 0.25
Adjustments for certain items affecting comparability(1):
Loss on Giddings earnout (2) 6,700 0.04
Transaction costs 2,241 0.01 24,607 0.16
Seismic purchase 11,000 0.07
Noncontrolling interest impact (6,439 ) (0.04 )
Change in estimated income tax (471 )       (7,532 )   (0.05 )
Adjusted earnings $ 34,691     $ 0.22     $ 67,431     $ 0.43  
(1) Includes amounts attributable to Class A Common Stock.
(2) Loss related to lump sum payment of $26 million to the Giddings Sellers to fully settle an earnout payment.
 

Magnolia Oil & Gas Corporation
Non-GAAP Financial Measures

Reconciliation of operating margin to adjusted operating margin

In this press release, we refer to adjusted operating margin per Boe, a supplemental non-GAAP financial measure that is used by management. We define adjusted operating margin per Boe as total revenues per Boe less operating expenses per Boe adjusted for certain unusual or non-recurring items per Boe that management does not consider to be representative of the Company's on-going business operations. Management believes that adjusted operating margin per Boe provides relevant and useful information, which is used by our management in assessing the Company’s profitability and comparability of results to our peers.

As a performance measure, adjusted operating margin may be useful to investors in facilitating comparisons to others in the Company’s industry because certain items can vary substantially in the oil and gas industry from company to company depending upon accounting methods, book value of assets, and capital structure, among other factors. Management believes excluding these items facilitates investors and analysts in evaluating and comparing the underlying operating and financial performance of our business from period to period by eliminating differences caused by the existence and timing of certain expense and income items that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted operating margin and adjusted operating margin per Boe may not be comparable to similar measures of other companies in our industry.

Successor
(in $/Boe)

For the Quarter Ended
December 31, 2018

 

July 31, 2018 through
December 31, 2018

Revenue $ 44.75 $ 46.63
Direct operating expenses
Less: Lease Operating Expenses (3.46 ) (3.31 )
Less: Gathering, Transportation, and Processing (1.60 ) (1.55 )
Less: Taxes Other Than Income (2.42 ) (2.49 )
Less: Exploration Expense (0.12 ) (1.28 )
Less: General & Administrative expense (3.25 ) (3.10 )
Less: Transaction Related expense (0.39 )   (2.65 )
Cash Operating Margin 33.51 32.25
Margin (%) 75 % 69 %
 
Non-cash expenses
Less: Depreciation, Depletion, and Amortization (19.65 ) (19.15 )
Less: Amortization on Intangible Assets (0.64 ) (0.65 )
Less: Asset retirement obligations accretion (0.22 )   (0.18 )
Operating margin 13.00 12.27
Margin (%) 29 % 26 %
 
Adjustments
Add: Exploration Expense related to seismic license continuation 1.18
Add: Transaction Related expense 0.39     2.65  
Adjusted operating margin 13.39 16.10
Margin (%) 30 % 35 %

Investors
Brian Corales
(713) 842-9036
[email protected]

Media
Art Pike
(713) 842-9057
[email protected]


Source: Business Wire (February 25, 2019 - 4:14 PM EST)

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Recent Company Earnings:


February 20, 2020

Houston Chronicle


Houston oilfield service company Halliburton plans to pay down its long-term debt by issuing $1 billion in lower-interest notes.

Halliburton to pay down debt by issuing $1 billion of lower-interest notes- oil and gas 360

Source: Houston Chronicle

Halliburton on Wednesday said it plans to issue a type of debt known as senior notes. Due in March 2030, the notes will pay 2.92 percent interest.

The company said it will use proceeds from the sales to buy back previously issued senior notes and reduce other forms of debt.

Halliburton closed 2019 with about $10.3 billion of debt, almost one-third less than the $15.4 billion in debt it had at the end of 2015, according to a Securities and Exchange Commission filing.

With the price of crude hovering just above $50 per barrel, most oil companies are reducing drilling and fracking activity, resulting in recent losses for oilfield service companies. Halliburton lost $1.1 billion in 2019.

Shell Midstream Partners, L.P. (NYSE: SHLX) reported net income attributable to the Partnership of $140 million for the fourth quarter of 2019, which equated to $0.37 per common limited partner unit. Shell Midstream Partners also generated adjusted earnings before interest, income taxes, depreciation and amortization attributable to the Partnership of $187 million.

February 19, 2020

HOUSTON, Feb. 19, 2020 (GLOBE NEWSWIRE) — Hi-Crush Inc. (NYSE: HCR) (the “Company”), a fully-integrated provider of proppant logistics solutions, today reported fourth quarter and full year 2019 results. Revenues during the fourth quarter of 2019 totaled $125.5 million compared to $173.0 million during the third quarter of 2019.

DENVERFeb. 19, 2020 /PRNewswire/ —

  • Fourth quarter oil production averaged 92.0 MBbls per day
    • Full year oil production averaged 86.2 MBbls per day
  • 2019 capital investment (including midstream) totaled $1.32 billion; below guidance range
    • Lower D&C costs drove the beat
  • Generated $1.34 billion of net cash from operating activities
    • $141 million of free cash flow1 in 2019; $59 million after dividend

February 14, 2020

Enbridge Files 2019 Year End Disclosure Documents

February 13, 2020

Houston Chronicle


Houston exploration and production company Marathon Oil has cut its drilling budget by about 10 percent amid an ongoing shale slump that caused revenue and profits to decline in 2019.

Marathon Oil cuts drilling budget amid 56 percent drop in profit- oil and gas 360

Source: Houston Chronicle

In a Wednesday afternoon statement, Marathon said the company is cutting capital expenditures by 10 percent, to $2.4 billion from $2.6 billion in 2019.

The company plans to spend $2.2 billion of its capital expenditure budget on drilling, hydraulic fracturing and other activities in the field while the remain $200 million will go to secure new oil leases and exploratory work looking for new geological formations with oil and natural gas.

Marathon remains in the black, but like other companies in the exploration and production sector, more than a year of crude oil prices in the $50 range is taking its toll on profit and drilling activity.

Active in the Eagle Ford Shale, Permian Basin, Oklahoma and Bakken Shale, Marathon reported a $20 million loss during the fourth quarter of 2019 compared with a $165 million profit a year earlier and revenue fell to $1.2 billion from $1.3 billion.

For the year, the company reported a $480 million profit, a 56 percent drop from the $1.1 billion profit in 2018; revenue of $5.2 billion was 21 percent off the $6.6 billion in 2018.

“We’ll continue to be guided by our unwavering commitment to capital discipline and sustainability,” Marathon Oil CEO Lee Tillman said in a statement.

 

Precision Drilling Corporation Announces 2019 Fourth Quarter and Year End Unaudited Financial Results

February 7, 2020

Houston Chronicle


Houston oilfield service company National Oilwell Varco finished up a year of losses $6.1 billion in the red.

NOV finishes year of losses $6.1 billion in the red- oil and gas 360

Source: Houston Chronicle

In a statement released on Thursday evening, the company reported closing 2019 with a $6.1 billion loss, a dramatic drop from the $31 million end-of-year loss in 2018. The company’s annual revenue remained flat at $8.5 billion.

Most of the company’s end-of-year loss came from writing down the value of $5.4 billion of assets during the second quarter. Crude oil prices stuck in the $50 per barrel range for most of past year have dramatically cut demand for drilling and hydraulic fracturing services in the United States. The shale slump has created eye-popping losses for oilfield services companies, which have written down billions of dollars of assets in response.

“The fourth quarter saw continued improvements in international and offshore markets, partially offset by another sequential decline in spending by our customers in North America,” National Oilwell Varco CEO Clay Williams said in a statement.

Looking at the company’s fourth quarter performance, NOV posted a $385 million loss, which was a dramatic swing from the $15 million profit during the fourth quarter of 2018.

The company’s fourth quarter revenue also slipped by 5 percent year-over-year. NOV reported making $2.3 billion during the fourth quarter, compared to $2.4 billion during the fourth quarter one year earlier.

With historical roots going back to 1862, NOV is headquartered in Houston and has more than 35,000 employees in 65 nations.

The company has not made an annual profit since 2014.

 

February 6, 2020

Reuters


ABERDEEN, Scotland – Total (TOTF.PA) beat forecasts on Thursday by keeping net adjusted fourth-quarter profit steady at $3.2 billion despite low oil prices and fulfilled a pledge to boost dividends, lifting the French energy firm’s shares.

Total beats quarterly forecasts despite low oil price, raises payout- oil and gas 360

Source: Reuters

The stock rose about 3% before easing off its highs as the company bucked a trend in the industry which has seen profits tumble in the last three months of 2019. Analysts had expected Total’s net profit to slip to $2.7 billion.

“This performance is better than that of our rivals in terms of resisting low oil prices,” CEO Patrick Pouyanne told journalists, adding Total was rewarding investors with a 6% increase in the final dividend for 2019 to 0.68 euros per share.

“Taking into account the strong visibility on cash flow, the group will continue to increase the dividend with the guidance of 5% to 6% per year,” the company said in its statement.

Total bought back $1.75 billion in shares in 2019 and plans to buy back $2 billion more in 2020.

Pouyanne said the group had reported solid results including debt-adjusted cash flow (DACF) of $7.4 billion, up more than 20% from a year earlier.

“While some peers buckled last week to a synchronized slowdown in their commodity prices and margins, Total has bucked that trend with flat year-on-year net income,” Bernstein analysts wrote, adding that net income and net operating income were both ahead of forecasts.

The analysts, which rate the stock “outperform”, said liquefied natural gas (LNG) margins “also beat our expectations as the company proved immune to low spot gas prices despite market concerns”.

LNG prices have been under pressure as new projects have kept the market well supplied, while oil prices LCOc1 have tumbled to around $55 per barrel from last year’s peak in April of almost $75.

Rivals have seen fourth-quarter profits slide on lower prices. BP (BP.L) reported a 26% drop on Tuesday while Royal Dutch Shell (RDSa.L) last month said its profits had halved.

(Graphic: Majors cashflow Total, here)

Reuters Graphic

LNG OUTPUT

Total’s oil and gas production grew by 9% in 2019 thanks to project start-ups and ramp-ups, while its LNG business doubled, boosting cash flow.

“One of the reasons our results resisted the low oil environment was because of the strong LNG output which grew 50%,” Pouyanne said.

He said exceptional production growth was unlikely to continue in the years to come and output growth for 2020 was seen at 2% to 4%, a more typical level in the industry.

The chief executive said Total was expanding in the low carbon energy business and was on track to meet its goal of producing 25 gigawatts (GW) of renewable electricity by 2025, helped by solar projects in Qatar and India.

Total, which kept its capital expenditure target steady for 2020 at $18 billion, said it was on track to achieve its target of $5 billion in divestments during 2019 and 2020.

Total said it had sold its 27.5% interest in Fosmax LNG, which operates France’s Fos Cavaou LNG terminal, to Engie (ENGIE.PA) unit Elengy for about $260 million.

Total is on track to achieve its divestment target with transactions worth $3 billion so far, Jefferies analysts said.

(Graphic: Total Results, here)

Reuters Graphic

Houston Chronicle


Black Stone Minerals said it will cut its quarterly payouts to investors by almost 20 percent because of falling oil and gas prices.

Black Stone Minerals cuts investor payouts by almost 20%- oil and gas 360

Source: Houston Chronicle

In another sign of the weakening energy sector, the Houston oil and gas royalties firm will reduce its distributions to 30 cents per unit from 37 cents. This is the first time Black Stone has reduced its payout since going public in 2015.

Even during the lean years of the last oil bust in 2015 and 2016, Black Stone steadily hiked investor payments from an initial 16.2 cents per unit in 2015.

“We are taking a proactive approach to strengthen our balance sheet and enhance our financial flexibility with the expectation that 2020 may be a challenging year in terms of commodity prices and overall drilling activity,” said Black Stone CEO Thomas Carter Jr.

“Given the current environment, the board believes that reducing the distribution benefits unitholders by providing additional cash flow for, first, the repayment of debt, and for other such uses as unit repurchases and acquisitions.,” Carter added.

February 4, 2020

CNBC


Energy giant BP reported better-than-expected full-year net profit on Tuesday, outperforming analyst expectations despite lower oil and gas prices.

BP full-year net profit falls 21% on weak oil and gas prices- oil and gas 360

Source: Reuters

The U.K.-based oil and gas company posted full-year underlying replacement cost profit, used as a proxy for net profit, of $10 billion in 2019. That compared with $12.7 billion full-year net profit in 2018, reflecting a year-on-year fall of 21%.

Analysts had expected full-year net profit to come in at $9.7 billion in 2019, according to data from Refinitiv.

Shares of BP were up more than 4%.

“BP is performing well, with safe and reliable operations, continued strategic progress and strong cash delivery,” Bob Dudley, CEO of BP, said in a statement.

“After almost ten years, this is now my last quarter as CEO. In that time, we have achieved a huge amount together and I am proud to be handing over a safer and stronger BP to Bernard and his team.”

“I am confident that under their leadership, BP will continue to successfully navigate the rapidly-changing energy landscape,” Dudley said.

Bernard Looney, who has run BP’s upstream business since April 2016 and has been a member of the firm’s executive management team since November 2010, is now set to take the reins from the outgoing chief executive.

In October, Dudley announced he would step down as CEO on Feb. 4., having held the position for almost a decade. The 64-year-old plans to retire on March 31, thus bringing an end to his 40-year career with BP.

Here are the key highlights:

  • Underlying replacement cost profit for the fourth quarter and full-year 2019 was $2.6 billion and $10.0 billion respectively, compared to $3.5 billion and $12.7 billion for the same periods a year earlier.
  • Gulf of Mexico oil spill payments for the year totaled $2.4 billion on a post-tax basis, and are expected to be less than $1 billion in 2020.
  • A dividend of 10.5 cents per share was announced for the quarter, an increase of 2.4% on a year earlier.

The energy giant’s full-year results follow disappointing earnings from oil and gas companies on both sides of the Atlantic.

Anglo-Dutch energy giant Royal Dutch Shell reported a sharp fall in full-year net profit late last week, while U.S. rivals Chevron and Exxon Mobil both missed analyst expectations on Friday.

France’s Total is scheduled to report its latest quarterly earnings on Feb. 6.

All roads lead to OPEC decision

International benchmark Brent crude traded at $54.74 Tuesday lunchtime, up more than 0.5%, while U.S. West Texas Intermediate (WTI) stood at $50.75, around 1.2% higher.

Both crude benchmarks have each fallen around 20% since climbing to a peak in early January, dragged lower by concern over demand in China after the coronavirus outbreak.

Brian Gilvary, chief financial officer at BP, told CNBC’s “Squawk Box Europe” on Tuesday that the coronavirus outbreak could wipe out as much as 300,000 to 500,000 barrels per day (bpd) of oil demand in 2020.

The International Energy Agency (IEA) has previously said it expects oil demand to grow by 1.2 million bpd this year, so a reduction of up to 500,000 bpd would leave demand growth “healthy” at 700,000 to 800,000 bpd, Gilvary said.

“I think, in terms of price direction, all roads will then lead to what OPEC will do in terms of trying to rebalance the system to get back to something around $60 to $65 a barrel,” he added.

OPEC and its allies are considering cutting their oil output by a further 500,000 bpd this year, two OPEC sources and a third industry source familiar with discussions told Reuters on Monday.

A ministerial meeting currently scheduled for early March could be brought forward to mid-February, one of the OPEC sources said, with February 14-15 touted as possible dates.

Houston Chronicle


ConocoPhillips’ fourth-quarter profit declined by more than 60 percent, to $720 million from $1.9 billion in the same period last year, amid weaker oil prices and production outputs.

ConocoPhillips' fourth-quarter profit plunges by 60%-oil and gas 360

Source: Houston Chronicle

Revenue during the quarter dropped by more than 20 percent to $8.1 billion.

For the full year, net earnings jumped 15 percent to $7.2 billion compared with $6.3 billion in 2018.

The Houston oil and gas producer still won over many on Wall Street late last year by hiking dividend payments to shareholders and with the release of a 10-year outlook that would rein in spending throughout the new decade.

“Strong 2019 performance capped off a highly successful three-year period in which we transformed our business model and significantly improved our underlying performance drivers across the company,” said Ryan Lance, chairman and chief executive officer. “We’ve positioned ConocoPhillips to deliver sustained value through price cycles due to our strong balance sheet, focus on free cash flow generation, compelling returns of and returns on capital and our commitment to environmental, social and governance leadership.”

Essentially, ConocoPhillips is focused on bringing in stronger profits and paying out more to investors while operating with flatter spending and smaller overall scale.

The company’s production output is expected to dip a little in 2020 because of some recent asset sales.

Last year, ConocoPhillips’ oil and gas production volumes grew by 5 percent despite a small decline in the fourth quarter.

The company’s shale production jumped by 22 percent last year. Shale volumes account for 30 percent of the company’s global production, led by South Texas’ Eagle Ford Shale. ConocoPhillips’ rising outputs in West Texas’ Permian Basin are on track to soon surpass its volumes in North Dakota’s Bakken shale.

Still, ConocoPhillips’ Asian, Australian, North Sea and Alaskan business units are more profitable than its U.S. shale output.

The company’s 2020 capital spending budget is projected to be $6.5 billion to $6.7 billion, on par with the $6.6 billion in 2019. However, that 2019 capital spending budget increased throughout the year from an initial budget of $6.1 billion, a revised midyear budget at $6.3 billion, and final spending for the year of $6.6 billion.

 

January 31, 2020

Houston Chronicle


Houston refining and pipeline company Phillips 66 on Friday reported a $689 million fourth-quarter profit, 51 percent less than the same period in 2018.

Imperial Oil's quarterly profit beats estimates on higher crude prices- oil and gas 360

Source: Houston Chronicle

The fourth quarter performance resulted in Phillips 66 closing 2019 with a nearly $3.7 billion profit, a 35 percent drop from the previous year when favorable margins in the refining of domestic crude oil swelled profits. The

West Texas Intermediate crude oil prices fell by 40 percent during the fourth quarter of 2018 and entered the $40 per barrel range, creating losses for exploration and production companies and services companies but windfalls for refining companies that were able to process domestic crude.

Crude oil prices have since settled in the $50 per range, which are still beneficial to refining companies but not as profitable.

Phillips 66’s pipeline business took a $900 million hit during the third quarter for impairments related to writing down the value of DCP Midstream, a gathering and processing plant joint venture with Canadian pipeline operator Enbridge.

In a statement, Phillips 66 Greg Garland focused on future growth. The company placed its Gray Oak Pipeline into service in November. When in full service early this year it will move 900,000 barrels of crude oil per day from Texas’ Permian Basin and Eagle Ford Shale to the company’s refinery in Brazoria County and the Port of Corpus Christi.

“As we begin 2020, we are focused on operating excellence, executing our growth projects, enhancing returns on existing assets and exercising disciplined capital allocation,” Garland said.

 

CNBC


Chevron on Friday posted a $6.6 billion loss in the fourth quarter due to $10.4 billion worth of write-offs related to shale gas production in Appalachia and deep-water projects in the Gulf of Mexico. In December, the company warned that this charge would be $10 billion to $11 billion.

Chevron posts $6.6 billion loss in the fourth quarter-oil and gas 360

Source: CNBC

Shares slid 3.4% on Friday after the company reported $36.35 billion in revenue for the period, which missed analyst expectations and was down 14% year over year, hurt by weakness in the company’s upstream division.

Chevron said it earned $1.49 per share excluding items, down from $1.95 per share a year earlier.

Here’s how the energy giant’s results fared on an adjusted basis relative to Wall Street expectations:
  • Adjusted earnings: $1.49 cents per share vs. $1.45 expected by a Refinitiv survey of analysts
  • Revenue: $36.35 billion vs. $38.639 billion expected by Refinitiv

A year earlier, the company earned $3.7 billion. Total earnings for 2019 slid 80%, to $2.924 billion, compared with $14.824 billion in 2018.

Oil-equivalent production at 3.08 million barrels per day was unchanged year over year, although the company said its annual daily production exceeded 3 million barrels per day for the first time.

The company’s upstream operations in the U.S. lost $7.5 billion in the quarter, down from earnings of $964 million a year earlier. That was primarily due to $8.2 billion in write-offs related to Appalachia and Gulf of Mexico operations, as well as lower crude and natural gas prices.

Chevron said the average sale price per barrel of oil and natural gas liquids was $47, a 16% decrease from 2018.

“Cash flow from operations remained strong in 2019, allowing the company to deliver on all our financial priorities,“
Chairman and CEO Michael Wirth said in a statement. “We paid $9 billion in dividends, repurchased $4 billion of shares, funded our capital program and successfully captured several inorganic investment opportunities, all while reducing debt by more than $7 billion. Earlier this week, we announced a quarterly dividend increase of $0.10 per share, reinforcing our commitment to growing shareholder returns.”

In the same quarter a year earlier the company reported EPS of $1.95 and revenue of $42.35 billion. Last quarter, the company earned $1.36 per share, and brought in $36.12 billion in revenue.

U.S. West Texas Intermediate crude prices are down more than 15% this month, while international benchmark Brent crude has shed roughly 12%.


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