We compiled first quarter earnings per share, revenue, EBITDA and cash flow per share analyst consensus estimates on 185 exploration and production (E&P) and OilService companies in our database. The median OilService company earnings estimate for the quarter ending March 31, 2012, is $0.45 per share compared to actual earnings per share of $0.34 and $0.30 for Q4 2011 and Q3 2011, respectively. The median E&P earnings estimate for the quarter ending March 31, 2012, is $0.24 per share compared to actual earnings per share of ($0.07) and $0.45 for Q4 2011 and Q3 2011, respectively.
Click here for the complete estimates table.
ENERGY COMMODITY PRICES
WTI oil price averaged $102.99, $94.03 and $89.51 per barrel during Q1 2012, Q4 2011 and Q3 2011 respectively, while the Henry Hub natural gas price averaged $2.44, $3.33 and $4.12 per MMBtu over the same time periods.
Crude Oil. The average near-term futures price for WTI in March 2012 increased to $106.20 per barrel or 3.9% higher than the prior month and 3.1% higher than the same month last year. The five-year strip at March 30, 2012, was $98.49 per barrel, 1.1% lower than the previous month.
Brent crude continued to trade at a premium to WTI, as it has since Q3'10. In March 2012, the average near-term futures price for Brent was $124.54, 4.6% lower than the prior month and 17.3% higher than the average WTI near-month futures price.
The median analyst estimate at the beginning of April for 2012 NYMEX oil was $95.00 per barrel with a high of $110.00 per barrel and a low of $80.00 per barrel, flat with March 2012 estimates.
Commodity prices remain decoupled on an energy-equivalent basis, as the spot price for oil at the end of March traded at 53.8 times the equivalent natural gas price, more than the standard 6:1 energy equivalent ratio.
Natural Gas. Natural gas prices reflect the oversupplied market, as the average price for the NYMEX near-month natural gas futures contract during March 2012 was $2.29 per MMBtu, 9.2% lower than the previous month and 43.6% lower than the same month last year. The five-year strip price ended the month at $3.90 per MMBtu, up 2.1% from the prior month. The median analyst estimate at the beginning of April for Henry Hub natural gas for 2012 was $3.78 per MMBtu, up $0.25 per MMBtu from the prior month, with a high of $5.25 per MMBtu and a low of $2.50 per MMBtu.
Pushing natural gas demand lower is unseasonably warm weather. Temperatures in the first three months of 2012 set records for the contiguous United States with an average temperature of 42.0°F, approximately 6.0°F above the long-term average. Twenty-five states, all east of the Rockies, experienced their warmest first quarter on record, and an additional 16 states had first-quarter temperatures ranking among their ten warmest.
These unseasonable warm temperatures continue to be causing a lower draw on natural gas storage. At 2.5 Tcf (week ending 3/30/12), natural gas storage was 60.0% above the five-year historical average, and 49.1% above the five-year average high.
Rig Count. The U.S. land rig count sourced from RigData at April 6, 2012 stood at 2,057 rigs, a decrease of 18 rigs from the end of March 2012. The aggregate decline resulted from a reduction in rigs drilling for gas (down 65) and other (up 15) offset by an increase in rigs drilling for oil (up 32). On that date, 57% of working rigs were drilling horizontally, unchanged from 57% in Q1 2012 and up from 56%, 55% and 55% in Q4'11, Q3'11 and Q2'11, respectively.
On April 6, 2012, there were 1,171 horizontal rigs in the U.S., a decrease from 1,191 in Q1'12. On April 6, 2012, the number of rigs targeting natural gas exclusively dropped from December 31, 2011 by 89 rigs to 307 for a decline of 22.5%. The number of rigs targeting oil exclusively increased from December 31, 2011 by 35 rigs to 233 for an increase of 17.7%.
By play and as compared to Q4'11, rig count changes include Haynesville ( down 18 rigs, or -21%), Fayetteville Shale ( down 6 rigs, or -20%), Woodford Shale (0 rigs, or 0%), Appalachian Basin ( down 15 rigs, or -9%), Williston Basin (0 rigs, or 0%), Eagle Ford Shale (+11 rigs, or +5%), DJ Niobrara (+3 rigs, or +14%), Permian Basin (+13 rigs, or +3%).
In March 2012, the energy sector underperformed the broad markets month-over-month as the S&P 500, XNG, XOI and OSX changed by 3.1%, -3.9%, -4.6% and -6.3%, respectively. The OSX had the largest year-over-year decrease from March 2011 to March 2012 losing 19.4% compared to a 6.2% year-over-year gain for the S&P 500.
From EnerCom's E&P and OilService Databases: For April 5, 2012 year-to-date, large-cap, small-cap and micro-cap E&P stocks gained 7.1%, 5.8% and 6.4%, respectively. Mid-cap stocks lost 1.4% over the same period. Year-to-date, oil-weighted companies finished up 9.3%, as compared to a loss of 3.6% for gas-weighted companies.
By region as of April 5, 2012 year-to-date, Canadian E&P stocks lost 4.5%, as compared to gains of 5.8% and 13.1% for E&Ps weighted to the Bakken and mid-continent.
As of April 5, 2012 year-to-date, OilService large-cap, mid-cap, small-cap and micro-cap stocks gained 6.6%, 5.1%, 2.9% and 10.9%, respectively.
EXPECTED THEMES FROM FIRST QUARTER CONFERENCE CALLS
Below are some themes and thoughts we expect to take prominence on this quarter's conference calls.
- Takeaway capacity and infrastructure concerns
- Lower utilization rates and project backlogs
- Long-term contracts for frac spreads, drilling rigs and other mission critical equipment
- Margins and pricing in the North American market veering international
- International business outlook
- Balance sheet strength and liquidity
- Economic outlook
- Debt redeterminations and liquidity
- Takeaway capacity and infrastructure concerns
- OilService cost trends across the lower 48
- Oil vs. gas weighting of capital expenditure budgets and the future of commodity prices
- New play activity (Utica, Mississippian, etc.)
- Availability of frac crews in the most active plays
- Status of drilling carries in joint ventures
- Economic outlook - macro and micro
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.