EP Energy Announces Fourth Quarter and Full Year 2016 Results; Improving Value with Increased Performance

¹ Percent hedged based on midpoint of 2017 guidance

2016 Financial Results

Fourth Quarter 2016
For the quarter ended December 31, 2016, EP Energy reported a $0.57 diluted net loss per share and   $0.12 adjusted earnings per share (Adjusted EPS). The reported net loss for the fourth quarter of 2016 was $140 million, down from a $3,731 million net loss in the same 2015 period.  The 2015 period included an after tax impairment of $2,755 million.  Adjusted EBITDAX for the fourth quarter 2016 was $255 million, down from $425 million in the fourth quarter of 2015, due primarily to lower oil and natural gas production volumes and lower realized prices, including hedge impacts, partially offset by lower operating costs.

The company ended the year with fourth quarter operating expenses of $247 million, down from $4,688 million in the fourth quarter of 2015.  The 2015 period included the before tax effects of the impairment of $4,299 million. Adjusted cash operating costs were $111 million for the fourth quarter 2016, down from $132 million in the same 2015 period. Adjusted cash operating costs were $14.80 per barrel of oil equivalent (Boe) for the fourth quarter 2016, up from $12.79 per Boe in the same 2015 period due to lower production volumes in 2016.

Full Year 2016
For the year ended December 31, 2016, EP Energy reported an $0.11 diluted net loss per share and   Adjusted EPS of $0.62. Reported net loss was $27 million for the year 2016, down from $3,748 million in the same 2015 period.  The 2015 period included after tax impairment charges of $2,755 million.  Adjusted EBITDAX for the year 2016 was $1,039 million, down from $1,641 million in 2015 due primarily to lower production volumes and lower realized pricing, including hedges, partially offset by lower operating costs for the year.

Total operating expenses for the year ended December 31, 2016 were $865 million, down from $5,863 million in the same 2015 period.  The 2015 period included the before tax effects of the impairment of $4,299 million. Adjusted cash operating costs were $440 million for the year 2016, down from $542 million in the same 2015 period. In addition, adjusted cash operating costs were $13.77 per Boe for the year 2016, up slightly from $13.56 per Boe in the same 2015 period due primarily to lower production volumes in 2016. 

2016 capital expenditures were $488 million, down from $1,324 million in the same period 2015.  In 2016 the company completed 98 wells, which was about half as many as EP Energy completed in 2015.  Beginning in the second half of 2016, the company focused much of its investment in the Wolfcamp program. In 2016, the company spent $233 million in the Wolfcamp program, $175 million in the Eagle Ford program and $76 million in the Altamont program.

Note: See Disclosure of Non-GAAP Financial Measures section of this release for applicable definitions and reconciliations to GAAP terms.

Financial Position and Liquidity
During the year 2016, EP Energy accomplished several significant milestones which improved the company's financial position.  The company successfully reduced its debt by approximately $1 billion, utilizing free cash flow from operations and asset sales proceeds to conduct opportunistic open market repurchases of its debt at a discount and partially repay amounts outstanding under its reserve-based loan facility (RBL Facility).

At December 31, 2016, EP Energy's balance sheet included approximately $20 million of cash and cash equivalents and $3.9 billion of total debt.  In addition, EP Energy successfully exchanged nearly all of its term loans due 2018 and 2019 for new term loans with an extended maturity in 2021, which eliminated the potential springing maturity of the RBL Facility in 2017.  The company has no significant near-term debt maturities with the RBL facility maturing in May 2019 and the next note maturing in 2020.

For the year ended December 31, 2016, cash flow from operations was $784 million and cash capital expenditures were $533 million.  In 2016, EP Energy generated $251 million of positive free cash flow.

EP Energy maintains a significant liquidity position of approximately $1.1 billion at year-end 2016, which is supported by the company's RBL Facility.

Additionally, in February 2017 the company issued $1 billion of notes due in 2025, to repay, in full, the $580 million notes due 2021, repurchase $250 million of notes due 2020 in the open market, and repay $111 million of the amounts outstanding under its RBL Facility.

Balance sheet improvement and the extension of its liquidity position remain priorities for the company going forward.

Operations
For the year ended December 31, 2016, average daily production was 87.6 MBoe/d, including 46.6 MBbls/d of oil.  Fourth quarter 2016 average daily production was 82.5 MBoe/d, including 45.7 MBbls/d of oil.

During the fourth quarter and the second half of 2016, the company increased its completion activity.  As a result, the fourth quarter reflected a return to sequential quarterly production growth in all commodities.

Wolfcamp Program
In 2016, the company completed 44 wells in its Wolfcamp program and produced 21.4 MBoe/d, an 8 percent increase from 2015. Total completions in 2016 were up from 36 in 2015, a 22 percent increase.  In the fourth quarter of 2016, the company completed 21 wells, up from one completed well in the same 2015 period, and produced 27.4 MBoe/d, a 29 percent increase from the fourth quarter of 2015. 

Total well costs in the Wolfcamp program averaged $4.6 million in 2016 which was approximately 13 percent lower than 2015 average well costs of $5.3 million.  This cost reduction was realized even as the company applied enhanced completion designs with longer laterals in 2016.

Also in 2016, EP Energy amended its existing development agreement with its royalty owner, University Lands (UL). This amendment provided the company flexibility to extend its leasehold timeframe to 2021, and most importantly added a sliding scale royalty framework that improves well returns in the current price environment. Coupled with the recently announced joint venture in the Wolfcamp, these actions served to significantly increase the value and return profile of the Wolfcamp asset.

Eagle Ford Program
In 2016, the company completed 39 wells in its Eagle Ford program and production was 43.5 MBoe/d, a 25 percent decrease from 2015. Total completions in 2016 were down from 118 in 2015, a 67 percent decrease. During the fourth quarter of 2016, the company completed five wells and produced 37.7 MBoe/d, a 33 percent decrease from the fourth quarter of 2015.

EP Energy continued to reduce well costs in its Eagle Ford program.  The average 2016 well cost was approximately $4.2 million, almost 28 percent lower than 2015 average well cost of $5.8 million.

The company continued to execute efficiently in the Eagle Ford in 2016.  EP Energy has one rig currently running with the expectation of increasing completion activity.

Altamont Program
The company continued to efficiently develop its Altamont program, with the highest returns achieved in its recompletion program.   In 2016, the company completed 15 new wells and performed 52 recompletions.  Full year production was 16.5 MBoe/d, 4 percent lower than 2015.  In the fourth quarter 2016, the company completed four wells and had production volumes of 17.4 MBoe/d.

The company is continuing to benefit from improved realized pricing relative to WTI oil prices. Along with these higher price realizations, the company also realized higher returns with its drilling joint venture.

Hedge Program Update
In 2016, EP Energy realized $639 million from settlements on financial derivatives.  At year-end 2016, the MTM value of the company's hedge positions was approximately $57 million.  For 2017, EP Energy has effectively hedged approximately 75 percent of its expected oil production at an average price of $61.66 per barrel, and hedged approximately 76 percent of its expected natural gas production at an average price of $3.28 per MMBtu.

2016 Proved Reserves
EP Energy's proved oil and natural gas reserves were 432.4 MMBoe as of December 31, 2016, a 21 percent decrease compared to proved reserves at December 31, 2015 of 546.0 MMBoe. Proved developed reserves in 2016 were 47 percent of total proved reserves and 53 percent oil.

2016 proved reserves were lower than 2015 due to the Haynesville asset divestiture, lower average SEC prices, and the impact of the SEC's five-year development rule after our reduction in estimated capital in the company's long-range development plan.

The company operates 91 percent of its producing wells and has operational control over approximately 98 percent of its drilling inventory as of December 31, 2016.

The SEC first-day-of-the-month 12-month average prices for reserves as of December 31, 2016 were $42.75 per Bbl for oil, $2.48 per MMBtu for natural gas and $16.47 per Bbl for NGL, down from $50.28 per Bbl for oil, $2.59 per MMBtu for natural gas and $16.64 per Bbl for NGL in the prior 12-month period.

Future Drilling Inventory
At year-end 2016, EP Energy's estimated future drilling inventory, which includes proved undeveloped reserves and unproven resources, totaled 5,156 identified locations — 894 in the Eagle Ford, 2,937 in the Wolfcamp, and 1,325 in the Altamont.

2017 Outlook

2017 Capital Program
In 2017, EP Energy expects capital spending to range from $630 million to $730 million.  The company maintains flexibility with regard to its spending range which is driven by the timing of an additional drilling rig in its Wolfcamp program.

Equivalent production in 2017 is expected to range from 75 MBoe/d to 82 MBoe/d with 45 MBbls/d to 49 MBbls/d of oil production.  The company expects to grow Wolfcamp production, primarily in the second half of 2017, while holding Eagle Ford and Altamont production volumes flat from the second half of 2016.

Going forward, EP Energy expects to allocate excess cash flow generated by its Eagle Ford and Altamont programs to provide funds for its growing Wolfcamp program.

Operations
For the full year 2017, the company expects to complete 175 to 190 gross wells, with the majority in its Wolfcamp program in the Permian Basin.

In its Wolfcamp program, the company is expanding its development across Reagan and Crockett counties in each of the A, B and C benches.  In 2017, the company expects to have two joint venture drilling rigs active for the full year, and plans to add a third drilling rig at mid-year.  The company plans to drill longer laterals in 2017, with average lateral lengths greater than 9,000 feet, and average well cost of approximately $4.9 million, compared with average lateral lengths of approximately 8,400 feet, and an average well cost of $4.6 million in 2016.  The slight increase in costs is driven by longer lateral wells, which on average are more than 7 percent longer than the previous year.

The company expects to maintain a one-rig drilling program in its Eagle Ford program in 2017 and remains focused on reducing base decline rates, increasing efficiencies and generating high returns in this program.  Average well cost in 2017 is expected to be $4.3 million compared with an average well cost of $4.2 million in 2016.

In its Altamont program, the company expects to average two rigs in 2017.   The company will also continue its high return recompletion program in 2017.  Average well cost in 2017 is expected to be $4.4 million compared with an average well cost of $4.1 million in 2016.  The company expects to drill deeper wells in 2017 which contributes to the higher cost.

The table below summarizes the company's operational and financial guidance for 2017 compared with 2016 results, including pro forma 2016 for the Haynesville Shale asset sale completed in May 2016.

		2017		2016		Pro-forma 20164
Oil production (MBbls/d)		45 – 49		46.6		46.6
Total production (MBoe/d)		75 – 82		87.6		81.4
Oil & Gas capital ($ million)1,2
Wolfcamp		$245 – $325		$233		$233
Eagle Ford		$260 – $270		$175		$175
Altamont		$125 – $135		$76		$76
Total capital program ($ million)		$630 – $730		$484		$484 Werbung Mehr Nachrichten zur Ep Energy Aktie kostenlos abonnieren E-Mail-Adresse Bitte überprüfe deine die E-Mail-Adresse. Benachrichtigungen von ARIVA.DE (Mit der Bestellung akzeptierst du die Datenschutzhinweise) -1 Vielen Dank, dass du dich für unseren Newsletter angemeldet hast. Du erhältst in Kürze eine E-Mail mit einem Aktivierungslink. Hinweis: ARIVA.DE veröffentlicht in dieser Rubrik Analysen, Kolumnen und Nachrichten aus verschiedenen Quellen. Die ARIVA.DE AG ist nicht verantwortlich für Inhalte, die erkennbar von Dritten in den „News“-Bereich dieser Webseite eingestellt worden sind, und macht sich diese nicht zu Eigen. Diese Inhalte sind insbesondere durch eine entsprechende „von“-Kennzeichnung unterhalb der Artikelüberschrift und/oder durch den Link „Um den vollständigen Artikel zu lesen, klicken Sie bitte hier.“ erkennbar; verantwortlich für diese Inhalte ist allein der genannte Dritte. Andere Nutzer interessierten sich auch für folgende News 24.04.24 - PR Newswire Fidelity European Trust Plc - Monthly Factsheet 24.04.24 - PR Newswire Fidelity China Special Situations Plc - Monthly Factsheet 24.04.24 - PR Newswire Oscillate Plc - Holding(s) in Company Solarboom 2024:    5 Gründe die für diese Aktie sprechen… weiterlesen» Anzeige wo-site-teaser-box-16746_site-teaser-box_2024-04-24_08%253A00%253A00_2024-04-25_09%253A00%253A59