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Energen Beat 2Q16 Expectations: What's Its Secret?

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Part 3
Energen Beat 2Q16 Expectations: What's Its Secret? PART 3 OF 6

Energen’s 2Q16 Production from Continuing Operations Rose

Energen’s 2Q16 production from all operations

For 2Q16, Energen (EGN) reported total production of 64.2 Mboe (thousand barrels of oil equivalent) per day, which is almost flat when compared with 2Q15 total production of 64.3 Mboe per day.

Energen’s 2Q16 Production from Continuing Operations Rose

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However, Energen’s 2Q16 total production is higher sequentially, by ~5%, when compared with 1Q16.

Energen’s 2Q16 production from continuing operations

For 2Q16, Energen reported production from continuing operations of 56 Mboe (thousand barrels of oil equivalent) per day, which is ~4% higher than its 2Q16 production guidance mid-point of 53.9 Mboe per day.

Energen’s 2Q16 production from continuing operations is higher by ~1% when compared with 2Q15 production of 55.4 Mboe per day. Energen’s 2Q16 production from continuing operations is also higher sequentially, by ~7%, when compared with 1Q16. Energen attributed the production increase to the outperformance of its Midland Basin horizontal plays.

Energen’s continuing operations exclude assets EGN already divested or plans to divest in 2016. Energen plans to sell the remainder of its San Juan Basin assets in 2016 along with other non-core assets in the Delaware Basin. EGN concluded that these assets don’t compete with its high-quality assets in the Midland Basin and Delaware Basin.

Energen’s production guidance

For 2016, Energen now expects full-year production from continuing operations in a range of 53.6–54.4 Mboe per day, a mid-point increase of ~0.9 Mboe per day (or ~2%) from its previous guidance of ~53 Mboe per day.

For 3Q16, Energen expects total production from continuing operations in a range of 55.2–55.6 Mboe per day.

Other upstream players

The majority of Energen’s production from continuing operations came from the Permian Basin. Other upstream companies that are also active in the Permian Basin are RSP Permian (RSPP), Approach Resources (AREX), Laredo Petroleum (LPI), Callon Petroleum (CPE), EP Energy (EPE), Diamondback Energy (FANG), and Clayton William Energy (CWEI). The Energy Select Sector SPDR ETF (XLE) generally invests at least 95% of its total assets in oil and gas related equities from the S&P 500.

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