Latest Guidance: Painted Pony Energy to cut capex by highest amount among North American gas producers

According to data available in the Daily Oil Bulletin’s latest guidance report, Painted Pony Energy Ltd. is set to cut its capital spending this year by a greater margin than any other North American natural gas-focused producer (see note 1).

The latest weekly corporate guidance review from the DOB can be accessed at this link. This week’s edition includes data for 67 Canadian- and U.S.-based upstream companies, along with a detailed look at recent guidance announcements from Husky Energy Inc., Baytex Energy Corp. and Whitecap Resources Inc., among others.

Comparing final guidance for 2018 and latest guidance for 2019, Painted Pony expects its capital expenditures to fall by around 34%, a much greater margin than any of the other 18 natural gas-focused producers to have reported 2019 guidance in North America so far.

Source: Daily Oil Bulletin Corporate Guidance Review, Dec 17, 2018 – Jan 4, 2019

Cost efficiency and capital discipline is the clear focus for Painted Pony: “Establishing a range of capital spending in 2019 and a commitment to limit spending to match anticipated internally generated adjusted funds flow from operations provides Painted Pony the flexibility to shift capital spending based on changing market prices,” said Pat Ward, president and CEO of Painted Pony.

The Daily Oil Bulletin’s weekly guidance report is put together using upstream company guidance data provided by Evaluate Energy.

For a demonstration of the Evaluate Energy North American guidance product, click here.

Note
1) Any company with a portfolio that was made up of more than 50% natural gas in Q3 2018 is included here as a “natural gas-focused producer.”

EIA: Energy company free cash flow continues to grow

Research conducted on a group of energy companies by the U.S. Energy Information Administration (EIA) has shown that free cash flow– the difference between cash from operations and capital expenditure – was $149 billion for the four quarters ending September 30, 2018.

This analysis was part of EIA’s Financial Review of the Global Oil and Natural Gas Industry for Q3 2018, a report compiled using financial and operating data supplied by Evaluate Energy. The full list of companies included in the study group can be found in the EIA’s report.

This $149 billion was the largest four-quarter free cash flow sum seen across the entire the five year period between 2014 and 2018 and is a clear continuation of recent trends, as shown in the EIA’s chart below. While the group’s capital spending has slowly increased over the past two years, it has been consistently outstripped by increases in cash from operations.

Stronger oil prices in 2018 are the main cause behind the increase in cash generated from operations, but this growth in free cash flow is also caused by a combination of factors that have shifted the group’s focus away from capital spending. Some companies are buying back shares, while some are stockpiling cash and exercising caution when it comes to capital budgets. Other companies are continuing to pay off debt; EIA’s report also shows that it is now eight quarters in a row where debt for the study group was reduced.

Q3 2018 data shows that the number of companies with positive free cash flow is also growing. 50% of the EIA’s study group had positive free cash flow in Q3 2018, which has increased from around 35% back in Q1 2018.

A closer look at the Evaluate Energy data that was used to build the EIA report shows that it was unsurprisingly the world’s larger companies that had the largest levels of free cash flow.

Company Name

Q3 2018 – Free Cash Flow ($ billion)

PetroChina

7.6

Chevron Corporation

6.4

Royal Dutch Shell

6.4

ExxonMobil

5.9

BP Plc.

5.9

Sinopec

5.7

Rosneft

5.1

ENI

4.2

Petrobras

4.1

Equinor ASA

3.9

Source: Evaluate Energy

For more on the Evaluate Energy data used to build the EIA’s quarterly review, please request a demonstration of the Evaluate Energy database here.

Energy companies have now reduced debt for 8 consecutive quarters

Research conducted by the U.S. Energy Information Administration (EIA) has shown that energy companies have now reduced debt for eight consecutive quarters – or two full years.

This sustained debt reduction contributed to Q3 seeing the lowest long-term debt-to-equity ratio (40%) for the group since third-quarter 2014.

This analysis was part of EIA’s Financial Review of the Global Oil and Natural Gas Industry for Q3 2018, a report put together using financial and operating data supplied by Evaluate Energy.

Of the group that the EIA studied for this quarterly review, a closer look at Evaluate Energy’s data shows that only five companies reduced debt by more than 10% in Q3 2018 compared to Q2 2018.

Company Name Gross Debt, Q3 2018 ($ million) Debt Reduction vs. Q2 2018
TransGlobe Energy Corporation 53 16%
Berry Petroleum Corporation 392 14%
TransAtlantic Petroleum Ltd. 26 14%
Carrizo Oil & Gas, Inc 1,328 12%
SM Energy Company 2,593 11%

Source: Evaluate Energy

The greatest reductions in debt in pure dollar terms were predictably among the bigger companies of the EIA’s study group. Brazil’s Petrobras reduced gross debt by $3.6 billion between Q2 and Q3 2018, while Russia’s Rosneft, Chevron and PetroChina were close behind with respective reductions of $2.7 billion, $2.4 billion and $2.4 billion.

The full EIA report, along with the entire list of companies that were used to create the analysis above, is available to download from the EIA at this link.

Click here for a demonstration of the Evaluate Energy database that was used by the EIA to create the report.

Five key takeaways from EIA’s review of Q3 2018

The U.S. Energy Information Administration (EIA) has released its latest quarterly review of financial performance in the global oil and gas industry, which was compiled using energy company data extracted from Evaluate Energy.

Here are five key takeaways from the report, which can be downloaded in full at this link.

1) On the back of significant year-over-year increases in global oil prices, energy companies’ cash from operations in Q3 2018 was $144 billion, a 45% increase from Q3 2017.

2) Energy companies’ free cash flow – the difference between cash from operations and capital expenditure – was $149 billion for the four quarters ending September 30, 2018, the largest four-quarter sum during the five year period between 2014 and 2018.

3) Energy companies have now reduced debt for eight consecutive quarters, contributing to the lowest long-term debt-to-equity ratio since third-quarter 2014. For more on debt reduction, click here.

4) Global liquids production increased 2.7% and natural gas production increased 3.9% year over year in third-quarter 2018.

5) Capital expenditure for the 106 companies in the report hit $80 billion in Q3 2018, which is 11% higher than overall energy company spending in Q3 2017.

The full report, along with the list of companies that were used to create the analysis above, is available to download from the EIA at this link.

Click here for a demonstration of the Evaluate Energy database that was used by the EIA to create the report.

U.S. upstream capex climbs again in Q3 2018

For the second consecutive quarter, capital spending in the U.S. upstream sector climbed in Q3 2018. This is according to early Q3 analysis based on a selection of 64 U.S.-based E&P companies within the Evaluate Energy database.

The 64 companies recorded a combined capital spend of $34.1 billion in the third quarter, which is a 4% increase over spending by the same group in Q2 2018. $34.1 billion is the largest capital spend by the group since Q3 2015.

Source: Evaluate Energy

Despite the climb in capital spending, an increase in share repurchases meant that capex did not make up as big a portion of overall cash usage in Q3 as it did in Q2 (62% vs. 66%). Cash used for share repurchases only made up 4% of overall cash usage for the 64 companies during Q2, but grew to 11% of cash usage in Q3.

Net debt repayment, which totalled $5.8 billion, fell to just 11% of total cash usage, its lowest share of the group’s cash usage since Q1 2017.

Source: Evaluate Energy

For more on the data available in Evaluate Energy on U.S., Canadian and global oil and gas producers, book a demo with our sales representatives at this link.

Five key takeaways from the EIA’s latest quarterly financial oil and gas review

The U.S. Energy Information Administration (EIA) has released its latest quarterly review of financial performance in the global oil and gas industry, which was built using energy company data extracted from Evaluate Energy.

Here are five key takeaways from the report, which can be downloaded in full at this link.

1. On the back of higher oil prices, cash from operations in Q2 2018 was $118 billion, a 27 per cent increase from Q2 2017.

2. Around 40 per cent of the study group recorded positive free cash flow — the difference between cash from operations and capital expenditure — and 78 per cent of the group saw positive upstream earnings in Q2 2018.

3. The companies’ annualized free cash flow was $119 billion for the four quarters ending June 30, 2018, the largest four-quarter sum between 2013 and 2018.

4. The study group has now reduced debt for seven consecutive quarters, contributing to Q2 2018 showing the lowest long-term debt-to-equity ratio since third-quarter 2014.

5. The companies in the study group saw returns on equity increase to nine per cent in Q2 2018, the largest level since third-quarter 2014, while long-term debt-to-equity ratios for the group declined to 41 per cent.

The full report, along with the list of companies that were used to create the analysis above, is available to download from the EIA at this link.

Click here for a demonstration of the Evaluate Energy database that was used by the EIA to create the report.

EIA: Oil and gas companies reduce debt for seven consecutive quarters

Oil and gas companies have cut their debt positions as a group for seven consecutive quarters, according to the latest analysis from the U.S. Energy Information Administration (EIA).

This analysis was part of EIA’s Financial Review of the Global Oil and Natural Gas Industry for Q2 2018, a report built using financial and operating data supplied by Evaluate Energy.

At greater than 20 per cent, Q2 2018 actually saw the largest overall reduction in debt for the EIA’s group of companies in the study period. Four quarters of the past seven have seen general debt reductions by the combined group of over 10 per cent.

This change in general usage of cash and move towards debt repayments has meant the energy companies, as a group, have been relatively less inclined towards capital spending.

While Q2 2018 did see a two per cent increase in capital spending compared to the same period last year according to the EIA analysis, the report also shows that operating cash flows (on an annualized basis) have increasingly outstripped capital spending levels since the end of 2016.

The full report, along with the list of companies that were used to create the analysis above, is available to download from the EIA at this link.

Click here for a demonstration of the Evaluate Energy database that was used by the EIA to create the report.

Oil reserves for the largest U.S. companies increased by 21% in 2017

Significant extensions and discoveries by the 50 largest U.S. oil and gas companies (see note 1) are responsible for a 21% increase in oil reserves in 2017, according to EY’s latest U.S. oil and gas reserves and production study, which can be downloaded here.

The study was built using raw data extracted from Evaluate Energy. For a demonstration of Evaluate Energy’s financial and operating database, please click here.

Source: Chart created using data published for 50 U.S. oil and gas companies in EY’s U.S. oil and gas reserves and production study for 2018.

“Oil reserves for the study companies increased 21 per cent in 2017 due to significant extensions and discoveries, net upward revisions and purchases partially offset by production and sales. As a result, the study companies reported the highest oil reserves for the five-year study period,” the report said.

Extensions and discoveries increased by 76% in 2017 from 2016 and, at five billion barrels, were the highest of the study period (2013-2017) following the lowest level reported last year.

End-of-year gas reserves for the study companies increased 19% in 2017 to 176 tcf, marking the highest level of gas reserves since 2014.

“The increase is mainly due to extensions and discoveries, upward revisions and purchases, partially offset by sales of proved gas reserves and production,” the report noted.

Study companies recorded net upward revision of 9.9 tcf in 2017— the first net upward revision for the study period. The study companies reported 13.3 tcf upward revisions and 3.4 tcf downward revisions

Notes

1) The 50 companies are the 50 largest in the U.S. based on 2017 end-of-year oil and gas reserve estimates. The study companies cover approximately 44% of the US combined oil and gas production for 2017.

U.S. companies maintain near-record output during downturn

Despite cuts in capital investment during the price downturn, a new EY study based on Evaluate Energy data shows that the 50 largest U.S. oil and gas companies (see note 1) were able to maintain record levels of output.

The new EY U.S. oil and gas reserves and production study is available to download here.

Capital investment fell during the 2015-2016 down cycle, and reserve additions fell almost in lockstep. In 2017, reserve additions increased dramatically, with an improved price environment. The report said capital expenditure levels far below the 2014 spending peak were “sufficient to maintain production at near-record levels.”

Source: Chart created using data published for 50 U.S. oil and gas companies in EY’s US oil and gas reserves and production study for 2018.

Sustaining the surge were dramatic improvements in cost efficiency: between 2014 and 2017, the amount of capital dollars required to add a barrel of reserves fell by more than half, from US$16.79/boe to US$6.62/boe for the study group.

“Some of that reduction is due to efficiency improvement and is sustainable; however, some of the reduction is due to service cost reduction and cannot be sustained without continued stress on the service sector due to increasing costs of labour and services,” the EY study says.

Evaluate Energy holds operating cost and capital spending data for every U.S. E&P company, as well as for hundreds of significant oil and gas producers around the world. For a demo of Evaluate Energy, click here.

For the full EY report, click here. The report uses Evaluate Energy data to analyse production, reserve and operating cost changes over a 5-year period.

Notes

1) The 50 companies are the 50 largest in the U.S. based on 2017 end-of-year oil and gas reserve estimates. The study companies cover approximately 44% of the U.S. combined oil and gas production for 2017.

Nine things we learned from EY’s new production and reserves study

A new EY study based on Evaluate Energy data analyses the data from the 50 largest U.S. oil and gas companies (see notes) between 2013 and 2017. The full EY study can be downloaded here. For a demonstration of Evaluate Energy, where the raw data was extracted from, please click here.

Here are nine things we learned from the study:

1. The 50 U.S. companies saw revenues and results of operations increase as commodity prices improved during 2017. Revenues in 2017 were US$135.9 billion, up 32% from 2016 and the highest since 2014.

2. The 50 companies continued optimizing their portfolios and cost structures amid the uncertainty surrounding prices throughout the downturn.


Source: Chart created using data published for 50 U.S. oil and gas companies in EY’s US oil and gas reserves and production study for 2018.

3. Capital expenditures totalled US$114.5 billion in 2017, 32% higher than 2016 and 2% lower than 2015. “Growth is observed in all categories of spend. Development and exploration spend increased the most by 49% and 30%, respectively,” the report said.

4. The studied companies drilled 30% and 23% more development and exploration wells, respectively, compared to 2016.

5. Impairments in 2017 were US$10.2 billion, a 47% reduction from 2016 and the lowest since 2013 as the study companies’ outlook of future prices further stabilized.

6. Depreciation, depletion and amortization (DD&A) expenses decreased, mainly due to lower unit-of-production rates, which resulted from reserve revisions and dispositions as well as higher impairments in prior periods.

7. After-tax earnings of US$17.2 billion in 2017 were a substantial improvement from US$33.8 billion in net losses in 2016 and the first combined net income position since 2014.

8. Oil production increased 5% from 2.3 billion bbls in 2016 to 2.4 billion in 2017. The 2017 figure represents a 35% increase from 2013 to 2017. Natural gas production fell in 2017, but this was mainly due to sales of assets to companies outside of the study group.

9. Oil reserves for the study companies increased 21% in 2017 due to significant extensions and discoveries, net upward revisions and purchases partially offset by production and sales. End-of-year gas reserves for the study companies increased 19% in 2017 to 176 tcf, marking the highest level of gas reserves since 2014.

Notes

The 50 companies are the 50 largest in the U.S. based on 2017 end-of-year oil and gas reserve estimates. The study companies cover approximately 44% of the U.S. combined oil and gas production for 2017.