Quarterly / Earnings Reports | First Quarter (1Q) Update | Drilling Activity

New Management, New Strategy; E&P Energy Poised For Growth

Share Print Bookmark    |    Wednesday,May 09,2018

EP Energy reported its first quarter 2018 results and the new management team did not disappoint.  Crude oil production is up +1% in 1Q18 45.4 MBbls/d vs 3Q17 45.1 MBbls/d.  Why the comparison to 3Q17? because that was the last full quarter under the previous management team.   Total 1Q18 equivalent production was down 1% to 80 Mboe/d vs 3Q17 of 81 Mboe/d.

Highlights

• The company also reported net income of $18 million vs a net loss of $72 million in 3Q17.
• Corporate production is down -1% sequentially from 4Q17 to 80 MBoe/d.
• Eagle ford oil production is up +17% sequentially on increased activitiy.
• Permian production is down to 27 MBoe/d on reduced activity sequentially.
• The company also launched a natural gas EOR pilot project in April.

The new strategy which seems to be, to shift focus back from the Permian Basin to the Eagle ford property.   To this end, the company amended the previously annouced wolfcamp drilling joint venture to redirect the second tranche of capital to the Eagle Ford asset.

Russell Parker, the new president and CEO said, "We are pleased with our first quarter results and increased 1Q completion activity concentrated in the Eagle Ford" and "As we continue to focus on capital efficiency and fully loaded returns, we expect to continue to see improvements in the amount of capital deployed versus the amount of ultimate EBITDA generated.  Additionally, we are swiftly moving forward with new projects in all three areas to unlock additional net asset value.  Throughout the year we will continue to drive these initiatives in order to generate more shareholder value and improve the balance sheet."

Eagle Ford

Eagle ford asset produced 35.9 Mboe/d including 24 MBbls/d in the first quarter, a 17 and 24 percent increase from the fourth quarter of 2017, respectively.  The company average two rigs and invested $135 million and completed 24 gross (net) wells in the in the first quarter. Approximately 75 percent of the 24 wells completed in the first quarter were in-fill wells.  The company also launched a natural gas EOR pilot project in April.

Permian

The Permian property produced 27 MBoe/d including 9.8 MBbls/d of oil, a 16 and 18 percent decrease compared to fourth quarter of 2017, respectively.   In the quarter, the company invested $43 million, operated one rig and completed/frac'd 8 gross (net) wells.  The production decline was as a result of reduced activity.

Altamont :

In the first quarter, the company produced 17.2 MBoe/d, including 11.6 MBbls/d of oil, a four and five percent decrease from the fourth quarter of 2017. The company operated two joint venture drilling rigs and completed (frac'd) nine gross wells (three net wells) in its Altamont program. Total capital invested in the Altamont program in the first quarter of 2018 was $30 million.

2018 Outlook