Exploration & Production | Quarterly / Earnings Reports | First Quarter (1Q) Update | Financial Results | Forecast - Production | Capital Markets
QEP Hones In on Drilling Efficiencies in 1Q; Maintains Production
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QEP Resources, Inc. reported first quarter 2015 financial and operating results.
Chuck Stanley, Chairman, President and CEO of QEP Resources, commented: "Our strong first quarter operational performance, coupled with our premier E&P asset portfolio and solid financial position, demonstrates the flexibility we have built into our business to manage through the current volatile commodity price environment. As we forecasted, production volumes declined in the first quarter of 2015, driven by a deliberate slowdown in activities in response to lower commodity prices. We have significantly decelerated drilling activity to manage through the commodity price trough and we are continuing to actively manage the timing of well completions to take advantage of the contango in forward crude oil and natural gas prices. These actions should allow us to capture additional service cost savings, preserve liquidity and be profitable in the long-term.
"With the slowdown in activity, we have redoubled our focus on driving greater efficiencies in our operations as evidenced by outstanding results from enhanced completion designs in the Williston Basin and Pinedale, which are greatly improving well productivity and overall economics. We are also very excited about the strong performance of our most recent Lower Mesaverde horizontal well and its implications on the economic viability of our multi-Tcfe liquids-rich natural gas play in the Uinta Basin, which, in addition to high-density development in the Williston Basin, could add significantly to our inventory of future development locations."
Operations Update
QEP's detailed 1Q operational update is available here:
QEP 1Q: Bakken, Permian, Uinta, Pinedale Ops
QEP Energy
- Adjusted EBITDA decreased 33% compared with the first quarter 2014, driven by significant decreases in average field level prices for crude oil, natural gas and NGLs, partially offset by higher crude oil production volumes and proceeds from settled commodity derivatives combined with decreases in both production and property taxes.
- Net natural gas equivalent production increased by 2% to 75.2 Bcfe in the first quarter 2015 compared with 73.7 Bcfe in the first quarter 2014. The increase was due primarily to increased crude oil and NGL production in the Williston Basin and a full quarter of production from the Permian Basin acquisition, partially offset by decreased Haynesville production and the divestiture of Midcontinent assets during the second and fourth quarters of 2014.
- Crude oil production increased 35%, while natural gas production decreased 4% and NGL production decreased 40% in the first quarter 2015 compared with the first quarter 2014. The decrease in NGL production was primarily driven by the Company's decision to reject ethane during the first quarter of 2015.
- Crude oil and NGL revenues decreased 44% compared with the first quarter 2014, and represented approximately 62% of field-level production revenues.
- During the quarter QEP Energy realized $101.9 million in commodity derivative gains compared with $33.3 million derivative losses in the first quarter of 2014.
- QEP Energy's capital investment (on an accrual basis) for the first quarter of 2015 was $280.2 million, down $164.4 million from the fourth quarter 2014.
QEP Marketing and Other
- During the first quarter of 2015, QEP paid $509.8 million in federal income taxes primarily related to the $2.5 billion sale of substantially all of its midstream business which closed on December 2, 2014.
- In February 2015, QEP restructured and streamlined several functional areas within the company in response to the lower commodity price environment. This restructuring resulted in an approximately 7.5% decrease in company-wide headcount and approximately $2.3 million in associated severance costs.
QEP 2015 Guidance
QEP Resources' full year 2015 guidance and related assumptions are shown below. The Company's updated guidance assumes no asset acquisitions or divestitures and that QEP will not recover ethane from its produced gas for the entire year:
Financial Results
QEP Resources, Inc. reported first quarter 2015 financial and operating results. The Company reported a net loss from continuing operations of $55.6 million, or $0.32 per diluted share, for the first quarter 2015 compared with net income from continuing operations of $12.7 million, or $0.07 per diluted share, in the first quarter 2014.
Net income or loss includes non-cash gains and losses associated with the change in the fair value of derivative instruments, gains and losses from asset sales, and impairment charges. Excluding these items, the Company's first quarter 2015 Adjusted Net Loss (a non-GAAP measure) was $8.7 million, or $0.05 per diluted share, compared with Adjusted Net Income from continuing operations of $41.1 million, or $0.23 per diluted share, for the comparable 2014 period. The decrease in Adjusted Net Income from continuing operations was due primarily to significantly lower average field-level prices for crude oil, natural gas and NGLs, partially offset by higher crude oil volumes, lower production taxes and higher proceeds from realized commodity derivatives.
Adjusted EBITDA (a non-GAAP measure) for the first quarter 2015 was $222.8 million, compared with $333.1 million on a continuing operations basis in the first quarter 2014, a 33% decrease.