Energen Approaches 100 MBOEPD

Energen Corporation (ticker: EGN) released financial and operating results for the fourth quarter and calendar year ended December 31, 2017.

“Over the last five years, the board and management have strategically divested non-core assets and transformed Energen into a low-cost Permian pure-pay with a strong foundation for profitable growth,” said CEO James McManus. “We begin 2018 with a portfolio of high quality, oil-focused assets in the Delaware and Midland basins. The company is delivering strong returns with the continued implementation of Generation 3 frac designs that are driving significant production growth.”

Q4 2017

Energen turned to production 20 gross (16 net) wells in the Midland Basin and 5 gross (5 net) wells in the Delaware Basin. During the quarter, Energen operated 6 horizontal drilling rigs and 2 frac crews.

For the 3 months ended December 31, 2017, Energen reported GAAP net income from all operations of $262.4 million, or $2.68 per diluted share. Adjusting for a non-cash loss on mark-to-market derivatives of $37.5 million, a one-time, non-cash tax benefit of $240.1 million resulting from the Tax Cuts and Jobs Act and miscellaneous non-cash items totaling $1.4 million. Energen had adjusted net income in Q4 2017 of $61.3 million, or $0.63 per diluted share. This compares with an adjusted net loss in Q4 2016 of $26.6 million, or $(0.27) per diluted share.

Q4 2017 production – MBOEPD

2017 financial results

Energen reported GAAP net income from all operations of $306.8 million, or $3.14 per diluted share. Adjusting for a non-cash items, Energen had adjusted net income in 2017 of $73.6 million, or $0.75 per diluted share. This compares with an adjusted net loss in 2016 of $128.8 million, or $(1.36) per diluted share. Energen’s adjusted EBITDAX in 2017 totaled $653.0 million – more than double the company’s adjusted EBITDAX in 2016 of $293.2 million.

2017 production – MBOEPD

2017 capital

Drilling and development capital in 2017 totaled $902 million, including $197 million in the fourth quarter. Total capital invested in 2017, including leasehold/mineral acquisitions and FF&E, totaled $1.2 billion in 2017 and $217 million in the fourth quarter. During Q4 2017, Energen added approximately 1,600 net acres of proved and unproved leasehold for $16 million.

2018

Energen plans to invest $1.1-$1.3 billion of capital for drilling and development activities in 2018 (approximately $550-$650 million for the Delaware and Midland basins, respectively).

Approximately 81% of the capital will be invested in drilling and developing operated wells, around 13% is allocated to saltwater disposal wells and other facilities, and the remainder is expected to be spent on non-operated and other activities.

The company plans to drill approximately 130 gross/120 net horizontal wells in 2018 and complete approximately 123 gross/113 net horizontal wells, including 30 gross/28 net year-end 2017 drilled but uncompleted wells (DUCs).

The working interest of completed wells in 2018 is approximately 90%, and the average lateral length is approximately 8,000’. The company estimates its year-end 2018 DUCs will total approximately 37 gross/35 net. Energen also plans to drill 7 gross/7 net vertical wells in the Midland Basin and complete 6 gross/6 net wells. During 2018, the company plans to run an average of 9 drilling rigs and 4.5 frac crews.

Energen’s production in 2018 is estimated to range from 91.5-98.5 MBOEPD, reflecting a 25% increase from 2017 at midpoint.

2017 year-end proved reserves

Energen’s proved reserves at year-end 2017 totaled 444 MMBOE, up approximately 40% from year-end 2016.

Reserve additions of 115.5 MMBOE replaced production by 415% and were driven by an active drilling and completion program in the Midland and Delaware basins that featured Gen 3 frac designs, Energen said. Proved reserves in the Delaware Basin alone rose 177%.

Proved Reserves by Basin (MMBOE):