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Why Did RSP Permian’s Revenues Rise in Fiscal 3Q15?

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Comparing revenue growth

In this article, we’ll discuss how our four mid-cap (middle capitalization) upstream companies fared in terms of revenue growth in the recently reported quarter.

RSP Permian (RSPP) recorded a fiscal 3Q15 revenue rise, while Carrizo Oil & Gas (CRZO) and Matador Resources (MTDR) witnessed revenue falls compared to the previous year’s quarter. Laredo Petroleum’s (LPI) revenues changed very little during the same period.

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The holdout: RSPP

RSP Permian registered the highest revenue rise in fiscal 3Q15. It recorded a 47% rise compared to the previous year’s quarter. Its fiscal 3Q15 revenue was $101.5 million versus $69 million in fiscal 3Q14.

By the end of its latest quarter ending September 30, 2015, 93% of RSP Permian’s total revenues came from crude oil sales. Crude oil revenues fell 17%, while its natural gas revenues rose 43% over fiscal 3Q14. NGLs (natural gas liquids) revenues, on the other hand, fell 38%.

RSPP’s revenues rose due to higher production volume partially offset by lower average realized prices. As a result of RSPP’s hedges, its effective average prices were 57% higher than realized prices without hedges. This benefited the company’s 3Q15 revenues.

The mediocre: LPI

Laredo Petroleum’s fiscal 3Q15 revenue remained nearly unchanged at $293 million compared to a year ago. While its 3Q15 revenues from crude oil, natural gas, and NGLs fell, its gain on derivatives rose versus fiscal 3Q14. LPI had hedges in place, which benefited the company by keeping its average realized energy prices 62% above the before-hedge realized prices.

The laggards

Matador Resources recorded a 12.5% revenue fall in fiscal 3Q15 compared to a year ago. Its revenue was ~$98 million versus $112 million in fiscal 3Q14. Although MTDR’s total production remained nearly unchanged, its realized crude oil prices fell sharply from fiscal 3Q14 to fiscal 3Q15.

Carrizo Oil & Gas recorded an 18.3% fiscal 3Q15 revenue fall compared to a year ago. Its fiscal 3Q15 revenue was $154 million versus $189 million in fiscal 3Q14. Crude oil accounted for ~90% of CRZO’s revenue from selling energy products.

CRZO’s revenues from crude oil, natural gas, and NGLs fell compared to fiscal 3Q14. This was led by steep fall in average realized prices, partially offset by moderate production growth. CRZO makes up 0.12% of the Vanguard Energy ETF (VDE).

We’ll take a look at the adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) growth figures of these companies in the following article.

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