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Shale Oil Q4 Earnings Falter on Commodity Price Meltdown

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With the fourth-quarter earnings season over, it’s time to sit back and analyze the bevy of shale bigwigs just put in their reports. Most of them reported profits that improved in the fourth quarter compared to the same period a year before, aided along by strong production growth. At the same time, a number of them missed the Zacks Consensus Estimate on weaker commodity prices.

In this writeup, we dive into the results from Matador Resources Company (MTDR - Free Report) , Continental Resources, Inc. (CLR - Free Report) , Pioneer Natural Resources Company (PXD - Free Report) , Diamondback Energy, Inc. (FANG - Free Report) , Anadarko Petroleum Corporation (APC - Free Report) and Concho Resources Inc. (CXO - Free Report) .

MTDR

Matador Resources is an independent oil and natural gas exploration and production company with focus on shale plays in the Eagle Ford and Permian basins. 

Earnings & Revenue: The company reported fourth-quarter adjusted earnings per share of 37 cents, ahead of the Zacks Consensus Estimate of 27 cents and the year-ago profit of 25 cents. The outperformances were driven by strong production and natural gas pricing gains.

Total revenues at the Dallas, TX-based energy explorer was $289.9 million, up around 88% from a year ago. Sales also beat the Zacks Consensus Estimate of $201 million.

Production: The production of oil and natural gas averaged a record 55,536 oil-equivalent barrels per day (BOE/d) (60% oil), up 27% from last year. Results were also above the Zacks Consensus Estimate of 54,843 BOE/d.

Realized Prices: Realized oil prices were slightly lower than expected at $49.09 per barrel. Matador Resources sold natural gas at $3.47 per thousand cubic feet (Mcf) as against our projection of $3.30 per Mcf.

Guidance: Matador Resources expects its average daily production to increase 3-4% sequentially in the first quarter.

Share Price Impact: The company's shares were largely unmoved as the all-round quarterly beat was offset by the lower oil output projection and a likely 2019 pending in excess of cash flow.

CLR

Continental Resources is an independent oil and gas company with principal operations in the STACK & SCOOP plays in central Oklahoma and the Bakken/Three Forks formations of North Dakota and Montana.

Earnings & Revenue: The company reported fourth-quarter adjusted earnings per share of 54 cents, lagging the Zacks Consensus Estimate of 59 cents due to lower oil equivalent price realizations and higher operating expenses. However, Continental Resources’ bottom line improved from the year-ago quarter's earnings of 41 cents per share, driven by higher production from the North Dakota Bakken as well as SCOOP and STACK regions.

Total revenues at the Oklahoma City, OK-based energy explorer was $1.1 billion, up 10% from a year ago and missed the Zacks Consensus Estimate by 1.5%.

Production: The production of oil and natural gas averaged 324,001 BOE/d (58% oil), up 13% from last year. Overall volumes were also above the Zacks Consensus Estimate.

Realized Prices: At $50.06 per barrel, realized oil prices fell well short of the Zacks Consensus Estimate of $62. Continental Resources sold natural gas at $3.26 per Mcf as against our projection of $3.37 per Mcf.

Guidance: Continental Resources expects its 2019 average daily production to be roughly 328,000 BOE/d.

Share Price Impact: The company's shares plunged more than 5% following the earnings disappointment with the main culprits being the soft commodity price realizations and the lofty fourth quarter capital expenditure of $742.6 million.

PXD

Pioneer Natural Resources is a large independent oil and gas exploration and production company with focus on the Spraberry field in the Permian Basin and the Eagle Ford Shale in South Texas.  

Earnings & Revenue: The Zacks Rank #3 (Hold) company reported fourth-quarter adjusted earnings per share of $1.18, lower than the Zacks Consensus Estimate of $1.40 and lagged the year-ago profit of $1.22, primarily due to lower realized prices from oil and natural gas.

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Total revenues at the Irving, TX-based energy explorer was $2.7 billion, jumping 75% from a year ago and ahead of the Zacks Consensus Estimate of $2.3 billion, thanks to higher activities in the prolific Permian Basin.

Production: The production of oil and natural gas averaged 319,633 BOE/d (82% liquids), up 5% from last year. Results were in line with the Zacks Consensus Estimate.

Realized Prices: On an oil equivalent basis, average realized price was $38.16 per barrel in the reported quarter, compared with $38.68 a year ago. Moreover, realizations failed to match the Zacks Consensus Estimate of $51.

Guidance: Pioneer Natural, which plans to operate exclusively in the Permian Basin and is in the process of selling its other assets, expects Permian production between 302,000 BOE/d and 317,000 BOE/d in the first quarter of 2019.

Share Price Impact: Notwithstanding the weak earnings performance, the company's shares rose more than 1% in the aftermath the report. Apart from strong volumes, investors welcomed Pioneer Natural’s lower-than-expected capital expenditure guidance for 2019 and the dividend increase.

FANG

Diamondback Energy focuses on growth through a combination of acquisitions and active drilling in the lucrative Permian Basin spread over west Texas and New Mexico. 

Earnings & Revenue: The company reported fourth-quarter adjusted earnings per share of $1.21, below the Zacks Consensus Estimate of $1.62 and the comparable 2017 period profit of $1.56 on lower realized prices.

Total revenues at the Midland, TX-based energy explorer was $633.1 million, coming below the Zacks Consensus Estimate of $663 million but increased 58.6% year over year on strong production.

Production: The production of oil and natural gas averaged 182,785 BOE/d (71% oil), up 97% from last year. Results were also above the Zacks Consensus Estimate of 171,500 BOE/d.

Realized Prices: Average realized crude price was $45.51 per barrel in the reported quarter, compared with $53.59 a year ago. Moreover, oil realizations failed to match the Zacks Consensus Estimate of $50.

Guidance: Diamondback is forecasting full-year output range of 275,000-290,000 BOE/d, of which 68-70% is oil.

Share Price Impact: The company's shares inched up 1% despite the earnings underperformance as investors chose to concentrate on the quarterly production beat and slightly lower capital spending projection for 2019.

APC

Anadarko Petroleum is one of the world's largest independent oil and gas exploration and production companies with assets in onshore resource plays in the Rocky Mountain region, the southern United States, and the Appalachian basin.

Earnings & Revenue: The company reported fourth-quarter adjusted earnings per share of 38 cents, lagging the Zacks Consensus Estimate of 57 cents on lower-than-expected oil prices.

However, The Woodlands, TX-based company improved from the year-ago profit of 18 cents on higher production.

In the reported quarter, Anadarko Petroleum’s revenues of $3.3 billion fell short of the Zacks Consensus Estimate of $3.5 billion but was 14% above the fourth-quarter 2017 sales. 

Production: The production of oil and natural gas averaged 701,000 BOE/d (73% liquids), up from last year’s 637,000 BOE/d but below the Zacks Consensus Estimate of 707,000 BOE/d.

Realized Prices: Average realized crude price was $59.86 per barrel in the reported quarter, compared with $56.32 a year ago. However, realizations were significantly lower that the Zacks Consensus Estimate of $70 per barrel.

Guidance: Anadarko Petroleum expects its first-quarter average daily production to be in the range of 667,000 to 711,000 BOE/d.

Share Price Impact: The company's shares lost around 7.5% as investors were spooked by the below-consensus production guidance for the first quarter, apart from the across-the-board miss.

CXO

Concho Resources is an independent oil and gas exploration and production company with producing properties mainly in the Permian Basin of southeast New Mexico and West Texas.

Earnings & Revenue: The company reported adjusted net earnings per share of 94 cents, lagging the Zacks Consensus Estimate of $1.10 due to lower average oil sales price.

But the bottom line improved significantly from the prior-year quarter’s adjusted income of 66 cents per share. The improvement came on the back of robust production growth.

Total operating revenues for the fourth quarter amounted to $1.1 billion, which increased substantially from $780 million a year ago. The top line at the Midland, TX-based energy explorer, though, could not surpass the Zacks Consensus Estimate of $1.2 billion.

Production: The production of oil and natural gas averaged 307,097 BOE/d (65% oil), up 45% from last year. However, volumes were below the Zacks Consensus Estimate of 309,577 BOE/d.

Realized Prices: Average realized crude price was $49.10 per barrel in the reported quarter, compared with $52.84 a year ago, considerably below the Zacks Consensus Estimate of $60.

Guidance: Concho Resources expects production between 300,000 BOE/d and 306,000 BOE/d in the first quarter of 2019.

Share Price Impact: Following the headline misses, the company's shares plunged more than 8.5%. Apart from the production and pricing numbers coming in below expectations, investors were also worried about the company's reduced oil production growth guidance for 2019.

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