HOUSTON, May 8, 2019 /PRNewswire/ -- EP Energy Corporation (NYSE: EPE) today reported first quarter 2019 financial and operational results.
1Q'19 Results:
- Equivalent production of 73.2 MBoe/d
- Oil production of 39.4 MBbls/d
- Net loss of $140 million, including $95 million loss on financial derivatives
- Adjusted EBITDAX of $148 million
- Oil and gas expenditures of $154 million, including $4 million acquisition capital
- Adjusted oil and gas expenditures of $150 million
- Completed two horizontal wells in Northeastern Utah (NEU)
- Completed (based on wells fracture stimulated or frac'd) 17 gross wells (10 net)
- Increased Drilled but Uncompleted (DUC) wells to 46
- Lease operating expense of $5.55 per Boe
- G&A expense of $3.16 per Boe, Adjusted G&A expense of $2.50 per Boe
- Reaffirmed the RBL Facility borrowing base in April 2019 and ended the first quarter with $440 million of liquidity, including $10 million of cash
1Q'19 Operating and Financial Performance
Below is a summary of first quarter 2019 results compared to the first quarter 2018:
1Q'19 | 1Q'18 | 1Q'19 vs. 1Q'18 | |
Oil Production (MBbls/d) | 39.4 | 45.4 | - 13% |
Equivalent Production (MBoe/d) | 73.2 | 80.1 | - 9% |
Percent Oil (%) | 53.8 | 56.7 | - 5% |
LOE per Unit ($/Boe) | 5.55 | 5.48 | + 1% |
Lease Operating Expense ($MM) | 37 | 39 | - 5% |
G&A expense per Unit ($/Boe) | 3.16 | 2.58 | + 22% |
Adjusted G&A expense per Unit ($/Boe)1 | 2.50 | 2.31 | + 7% |
Net Income (Loss) ($MM) | (140) | 18 | - 878% |
Adjusted EBITDAX ($MM)1 | 148 | 189 | - 22% |
Oil and Gas Expenditures ($MM) | 154 | 456 | - 66% |
Adjusted Oil and Gas Expenditures (excl. acquisition capital ) ($MM)1 | 150 | 208 | - 28% |
Net completions (frac'd) | 10 | 35 | - 71% |
Change in DUC inventory from prior quarter | 17 | (5) | + 440 % |
1 See Disclosure of Non-GAAP Financial Measures for applicable definitions and reconciliations to GAAP terms. | |||
Financial Position and Liquidity
The company ended the quarter with $10 million in cash, $180 million borrowings outstanding on the RBL Facility, and $19 million in letters of credit, resulting in $440 million of available liquidity and $4.5 billion of net debt. The company repurchased $50 million in principal amount of its unsecured notes at a discount in the quarter. In April 2019, the banks reaffirmed the current RBL Facility borrowing base of $1.36 billion and commitments of $629 million.
Operations Update
For the first quarter 2019, average daily production was 73.2 MBoe/d, including 39.4 MBbls/d of oil. During the first quarter 2019, the company completed (frac'd) 17 gross wells (10 net) and incurred capital expenditures of $150 million, excluding acquisitions. The company had lower production in the first quarter 2019 compared to the first quarter 2018 due to lower net completions during the first quarter 2019 and fourth quarter 2018.
Northeastern Utah (NEU)
In the first quarter 2019, the company's assets in NEU produced 15.5 MBoe/d, including 10.0 MBbls/d of oil, a 10% and 14% decrease, respectively, from the first quarter 2018. EP Energy operated one drilling rig and completed (frac'd) four gross (one net) wells, of which two were vertical and two were horizontal, in the first quarter 2019. Total capital invested in NEU in the first quarter 2019 was $25 million excluding acquisition capital.
In the second quarter 2019, the company expects to average one drilling rig and complete and bring online three gross (three net) horizontal wells in late June in NEU.
Eagle Ford
EP Energy's assets in Eagle Ford produced 33.0 MBoe/d, including 22.2 MBbls/d of oil in the first quarter 2019, both an 8% decrease from the first quarter 2018. EP Energy averaged approximately three drilling rigs, invested $125 million excluding acquisition capital and completed (frac'd) 13 gross (nine net) wells in the first quarter 2019. The majority of these wells came online in March.
The company expects to average three drilling rigs and complete 13 gross wells (10 net) over the second quarter 2019, focusing on development in the southern and eastern portion of the La Salle acreage.
Permian
EP Energy's assets in the Permian basin produced 24.7 MBoe/d, including 7.2 MBbls/d of oil in the first quarter 2019, a 9% and 27% decrease, respectively, from the first quarter 2018. In the first quarter 2019, the company did not drill or complete any wells in the basin.
Hedge Program Update
EP Energy maintains a solid hedge program which provides continued commodity price protection. A summary of the company's current open hedge positions is listed below:
2019 | 2020 | |||||||||
Total Fixed Price Hedges | ||||||||||
Oil volumes (MMBbls)1 | 10.2 | 11.7 | ||||||||
Average ceiling price ($/Bbl) | $ | 66.41 | $ | 65.11 | ||||||
Average floor price ($/Bbl) | $ | 55.95 | $ | 55.90 | ||||||
Natural Gas volumes (TBtu) | 19.3 | — | ||||||||
Average price ($/MMBtu) | $ | 3.72 | $ | — | ||||||
Average floor price ($/MMBtu) | $ | 2.86 | $ | — | ||||||
Note: Positions are as of May 1, 2019 (Contract months: April 1, 2019 - Forward) | ||||||||||
1 The table includes WTI three-way collars of 9.1 MMBbls and 11.7 MMBbls in 2019 and 2020, respectively, and WTI collars of 1.1 MMBbls in 2019. | ||||||||||
2019 Second Quarter Outlook Provided
The table below summarizes the company's current operational and financial guidance for the second quarter 2019. The company plans to maintain the activity levels from the end of the first quarter through the second quarter 2019.
1Q'19 | 2Q'19 | ||||||
Production Volumes | |||||||
Oil production (MBbls/d) | 39.4 | 37 - 39 | |||||
Total production (MBoe/d) | 73.2 | 70 - 73 | |||||
Oil & Gas Expenditures ($ million)1 | $150 | $140 - $150 | |||||
Eagle Ford | $125 | ~70% | |||||
NEU | $25 | ~30% | |||||
Average Gross Drilling Rigs and | |||||||
Eagle Ford | 3 | 3 | |||||
NEU | 1 | 1 | |||||
Gross completions (frac'd) | 17 | 16 | |||||
Net Completions (frac'd) | 10 | 13 | |||||
Ending DUC inventory | 46 | 65 | |||||
Operating Costs | |||||||
Lease operating expense ($MM) | $37 | $36 - $40 | |||||
Lease operating expense ($/Boe) | $5.55 | $5.60 - $6.10 | |||||
Reported G&A expense ($/Boe) | $3.16 | $2.95 - $3.50 | |||||
Adjusted G&A expense ($/Boe)2,4 | $2.50 | $2.35 - $2.90 | |||||
Transportation ($/Boe) | $3.74 | $3.60 - $3.90 | |||||
Taxes, other than income ($/Boe)3 | $1.73 | $2.50 - $2.75 | |||||
DD&A ($/Boe) | $14.34 | $14.50 - $15.50 | |||||
1 Includes ~15% non-drill capital for general equipment, capitalized G&A and interest, enhanced facility projects, enhanced oil recovery projects, leasing and seismic, and excludes net acquisition costs and divestiture proceeds of ~$4 million in 1Q'19. | |||||||
2 Adjusted G&A represents G&A expense less approximately $0.60 - $0.60 per Boe of non-cash compensation expense in 2Q'19 Estimate. | |||||||
3 Severance taxes estimates are based on current WTI prices. | |||||||
4 See Disclosure of Non-GAAP Financial Measures for applicable definitions and reconciliations to GAAP terms. | |||||||
Webcast Information
EP Energy has scheduled a webcast at 10:00 a.m. Eastern Time, 9:00 a.m. Central Time, on May 9, 2019, to discuss its first quarter financial and operational results. The webcast may be accessed online through the company's website at epenergy.com in the Investor Center. Materials relating to the webcast will be available in the Investor Center. A limited number of telephone lines will be available to participants by dialing 888-317-6003 (conference ID#1090228) 10 minutes prior to the start of the webcast. A replay of the webcast will be available through June 11, 2019 on the company's website in the Investor Center or by dialing 877-344-7529 (conference ID#10131317).
About EP Energy
The company focuses on enhancing the value of its high quality asset portfolio, increasing capital efficiency, maintaining financial flexibility, and pursuing accretive acquisitions and divestitures. EP Energy is working to set the standard for efficient development of hydrocarbons in the U.S. Learn more at epenergy.com.
The following table provides the company's production results, average realized prices, results of operations and certain non-GAAP financial measures for the periods presented. See Disclosure of Non-GAAP Financial Measures for applicable definitions and reconciliations to GAAP terms.
Quarter ended March 31, | |||||||
2019 | 2018 | ||||||
Oil Sales Volumes (MBbls/d) | |||||||
Eagle Ford | 22.2 | 24.0 | |||||
NEU | 10.0 | 11.6 | |||||
Permian | 7.2 | 9.8 | |||||
Total Oil Sales Volumes | 39.4 | 45.4 | |||||
Natural Gas Sales Volumes (MMcf/d) | |||||||
Eagle Ford | 33 | 36 | |||||
NEU | 33 | 34 | |||||
Permian | 58 | 56 | |||||
Total Natural Gas Sales Volumes | 124 | 126 | |||||
NGLs Sales Volumes (MBbls/d) | |||||||
Eagle Ford | 5.3 | 5.9 | |||||
NEU | — | — | |||||
Permian | 7.8 | 7.8 | |||||
Total NGLs Sales Volumes | 13.1 | 13.7 | |||||
Equivalent Sales Volumes (MBoe/d) | |||||||
Eagle Ford | 33.0 | 35.9 | |||||
NEU | 15.5 | 17.2 | |||||
Permian | 24.7 | 27.0 | |||||
Total Equivalent Sales Volumes | 73.2 | 80.1 | |||||
Net (loss) income ($ in millions) | (140) | 18 | |||||
Adjusted EBITDAX ($ in millions) | 148 | 189 | |||||
Basic and diluted net (loss) income per common share ($) | (0.56) | 0.07 | |||||
Adjusted EPS ($) | (0.15) | (0.07) | |||||
Capital Expenditures ($ in millions)(1) | 154 | 456 | |||||
Adjusted Capital Expenditures ($ in millions) | 150 | 208 | |||||
Total Operating Expenses ($/Boe) | 28.60 | 31.11 | |||||
Adjusted Cash Operating Costs ($/Boe) | 13.52 | 13.97 | |||||
Depreciation, depletion and amortization rate ($/Boe) | 14.34 | 16.69 | |||||
Average realized prices(2) | |||||||
Oil price on physical sales ($/Bbl) | 54.32 | 61.56 | |||||
Oil, including financial derivatives ($/Bbl)(3) | 56.01 | 58.86 | |||||
Natural gas price on physical sales ($/Mcf) | 1.58 | 1.94 | |||||
Natural gas, including financial derivatives ($/Mcf)(3) | 1.76 | 2.03 | |||||
NGLs price on physical sales ($/Bbl) | 15.64 | 20.93 | |||||
NGLs, including financial derivatives ($/Bbl)(3) | 15.64 | 20.91 | |||||
_________________________ | |||||||
(1) | The quarters ended March 31, 2019 and 2018 include $4 million and $248 million of acquisition capital, respectively. | ||||||
(2) | Oil and natural gas prices on physical sales reflect operating revenues for oil and natural gas reduced by oil and natural gas purchases associated with managing our physical sales. | ||||||
(3) | Prices per unit are calculated using total financial derivative cash settlements. | ||||||