Page 10 - NorthAmOil Week 07

NorthAmOil PERFORMANCE NorthAmOil
Shale producer results start to roll in
US
A handful of shale producers released their results for the fourth quarter of 2019 this week, with more set to follow and several trends already emerging. Prominent Permian Basin players Diamondback Energy and Concho Resources announced their fourth-quarter earnings on February 18, along with Devon Energy, which has more diversi ed shale operations across the US.
e companies’ results show that shale pro- duction continues to grow, despite the low oil price environment. However, two out of the three rms – Devon and Concho – have announced that they are reining in capital spending this year, illustrating ongoing pressure on shale drillers from investors.
Diamondback
Diamondback had already pre-announced its fourth-quarter production in January, with the result coming in above analyst expectations and providing some encouragement a er running into some fracture interference in the third quar- ter of 2019.
e company’s output in the fourth quarter averaged 301,300 barrels of oil equivalent per day (boepd), or 195,000 barrels per day (bpd) of oil. is was an increase of 5% on the 287,100 boepd reported for the third quarter, and up 65% year on year from 182,800 boepd in the nal quarter of 2018.
Diamondback reported a net loss of $487mn in the fourth quarter of 2019, down from a $307mn pro t in the same quarter of 2018. e loss included a $790mn impairment that the company attributed to lower commodity pric- ing. Its adjusted net income came in at $308mn, or $1.93 per diluted share.
e rm said it had turned 78 gross operated horizontal wells to production in the nal quar- ter of last year, while its capital expenditures for the quarter totalled $748mn. Over the whole of
2019, the company’s capex reached $2.9bn. Diamondback has set out capex guidance of $2.8-3.0bn for 2020, in line with its spending last year. Its production for the year is projected at 310,000-325,000 boepd, with oil output reaching
205,000-215,000 bpd.
The company also said it had approved a
doubling of its dividend, to $1.50 per common share. The move comes as a number of shale drillers bow to investor demands to focus more on dividends.
Concho
Concho, one of the largest producers in the Per- mian, reported a loss of $471mn, or $2.38 per share, for the fourth quarter of 2019, down from a pro t of $1.5bn in the same quarter of 2018. e company noted that special items a ecting its most recent earnings included a $201mn goodwill impairment charge and a $133mn loss on the disposition of assets, primarily related to certain exchanges of oil and gas proper- ties. Concho said that without these and other special items, its fourth-quarter adjusted net income was $206mn, or $1.03 per share – a 9% y/y increase from $189mn, or $0.94 per share, a year ago.
Concho’s total fourth-quarter production rose to 337,288 boepd, up 10% y/y from 307,097 boepd. Oil output accounted for 215,000 bpd, up 8%. Over the whole of 2019, Concho’s produc- tion grew 26% y/y to 331,000 boepd, including a 25% increase in oil output to 209,000 bpd.
e company scaled back its 2020 capex guid- ance to $2.6-2.8bn, the midpoint of which is 10% lower than its 2019 spending. Despite this, Con- cho expects higher activity this year, amounting to 300-320 gross operated well completions with an average lateral length of 10,000 feet (3,048 metres). In 2019, the company achieved 294 gross operated well completions with an average lateral length of around 9,000 feet (2,743 metres).
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w w w. N E W S B A S E . c o m Week 07 19•February•2020