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U.S. independents ride high on commodity prices First quarter profits expected to jump 60 percent from prior quarter, 400 percent from first quarter 2002; natural gas prices surpass $8 Petroleum News Alaska
First-quarter earnings for U.S.-based exploration and production independents, largely on the strength of commodity prices, are expected to jump an average 60 percent over the prior quarter and an astronomical 400 percent compared to the same period last year, according to analysts' consensus based on preliminary Thomson/First Call estimates.
Companies weighted to natural gas should do particularly well in the current quarter ending March 31. Prices surpassed $8 per million cubic feet this winter, while inventories approached record lows on strong demand fueled by lagging production, cold weather and war jitters.
Of the 20 leading U.S. independents tracked by Petroleum News Alaska, including those with positions in both Alaska and the Lower 48, all are expected to report higher earnings this quarter than last quarter and a year ago. And none is expected to dip into the red.
Companies with direct or historical ties to Alaska represent half of the 20 leading U.S. independents surveyed by PNA.
They include Houston's Burlington Resources, which has acquired acreage on both sides of the Alaska-Canadian border to take advantage of any future Arctic gas pipelines. The company could see its first-quarter profit soar to $1.29 per share, up 65 percent from the prior quarter's 78 cents per share and up a whopping 430 percent from the year ago's 24 cents per share. Unocal, XTO, returns expected to be up First-quarter consensus for Cook Inlet producer Unocal, with its strong international gas position, is for 77 cents per share, a 60 percent increase over the 48 cents per share the company earned in the prior quarter and a 353 percent jump in the 17 cents per share it made in last year's first quarter.
XTO Energy, another Cook Inlet producer with rapidly growing natural gas reserves in the Lower 48, is expected to post first-quarter earning of 52 cents per share, representing an 18 percent increase over the prior quarter's 44 cents per share, but only a 30 percent increase over the year ago quarter's 40 cents per share.
Analysts' consensus for Forest Energy, which made a splash in Alaska with its big Redoubt Shoal oil discovery, is for the Denver-based independent to more than triple its profit margin, from 19 cents per share in the 2002 fourth quarter to 67 cents per share in the 2003 first quarter. The company actually lost 3 cents per share in the first quarter of 2002, when U.S. gas prices were far weaker. Anadarko gains expected to be modest, Pioneer's staggering North Slope explorer and oil producer Anadarko Petroleum, currently the largest U.S.-based independent with a particular hunger for North American natural gas, likely will experience a more modest gain versus its peers, Thomson/First Call estimates indicate. The company should earn about $1.34 per share for the first quarter, up 11 percent from $1.21 per share in the prior quarter. However, anticipated first quarter earnings still would be nearly 300 percent more than the 34 cents per share the company earned a year earlier.
Pioneer Natural Resources, another big Lower 48 independent to find an exploration niche on Alaska's North Slope, should continue to see increasing production primary from its big four projects in deepwater Gulf of Mexico and offshore South Africa. For the first quarter, Pioneer is expected to make 53 cents per share, up a staggering 300 percent from the 16 cents per share it earned in the prior quarter. It also represents a nearly 18-fold increase from the 3 cents per share it made in the year ago quarter.
Denver-based Evergreen Resources, aiming to become Alaska's first commercial coalbed methane producer by year-end, is expected to post first-quarter earnings of about 86 cents per share, representing a nearly 40 percent increase from prior quarter earnings of 62 cents per share and a six-fold increase from year ago earnings of 12 cents per share.
The consensus for Oklahoma's Devon Energy, which would replace Anadarko as the largest U.S. independent should its pending merger with Ocean Energy be approved, is for first-quarter earnings to increase to $1.98 per share, up about 40 percent from $1.42 per share earned in the prior quarter and up nearly four-fold from the same period last year. Devon, through its merger with Canada's Anderson Exploration, owns rights to several thousand acres of Alaska exploration lands.
Ocean, which once owned Alaska natural gas distributor Enstar, also could see a 40 percent increase in first-quarter earnings, to about 53 cents per share compared to 37 cents per share for the prior quarter. The company earned just 11 cents per share in the year-ago quarter.
Other major independents surveyed by PNA included Lower 48 producers Chesapeake Energy, Newfield Exploration, Tom Brown, Spinnaker Exploration, Pogo Producing, Saint Mary Land & Exploration and Cabot Oil & Gas. Most are expected to turn in first-quarter earnings substantially above the prior and a year ago quarters.
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