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Fourth Quarter Earnings Reports Confirm Bleak Energy Climate In Oklahoma

Feb 19, 2016

It’s been another volatile week for Oklahoma’s energy industry, and many of the state’s oil and gas companies released earnings report for the final quarter of 2015 that continue to paint a grim portrait of the economic downturn.

 

Devon Energy unveiled its Q4 numbers Wednesday, amid a series of staff reductions that will lead 1,000 people losing their jobs, either through retirements or layoffs.

 

The company’s oil production was up 16 percent compared to the same quarter last year, but the core earnings were down nearly 7 percent from $343 million to $319 million, according to The Journal Record’s Sarah Terry-Cobo:

 

Devon beat Wall Street analysts’ estimates on earnings per common share by 6 cents, reporting 77 cents per common share, down more than 8 percent from the previous quarter at 84 cents per common share.

Devon reported a net loss of $4.5 billion for the fourth quarter, down substantially from a net loss of $408 million in the same period of 2014. The company reported a net loss of $11.12 cents per diluted share for the fourth quarter, down from a loss of $1.01 per diluted share in the same period in 2014.

 

Williams Woes

 

Tulsa-based Williams Companies also reported a big loss in Q4 - $701 million.

“Last year at that time they had income of $193 million, so you can look at that a billion-dollar swing over the course of the year,” said The Journal Record’s managing editor Adam Brooks. “For calendar 2015, they lost $557 million, and that compared to an income of $2.1 billion in 2014, so you can really see the horrible year the industry had in those numbers.”

 

In September, Williams Companies and Dallas-based Energy Transfer Equity announced a pending merger. Brooks says even as the downturn continues, there’s little hesitation to complete the deal.

 

“In its conference to discuss the results, the company said its board of directors is still committed to making it happen. They actually want to make it happen as quickly as possible,” Brooks said. “They started planning for the integration. They have a few more steps. Shareholder approval is one, and some regulations. But they do sound like they expect it to go forward.”

 

Seventy Seven Stock Spike

 

As the entire sector drills less, the oilfield services industry is also affected. Oklahoma City-based Seventy Seven energy lost $60 million in the fourth quarter, and $155 million for the year, but their stock price did rise 24 percent after Wednesday’s trading.

 

Seventy Seven has high long-term debt, and CEO Jerry Winchester says describing 2016 as “challenging” would be an understatement, Terry-Cobo writes. It’s also trying to diversify its customer base beyond the parent company it spun off from nearly two years ago - Chesapeake Energy.

 

“Half of their fracking jobs are still for their former parent company, but 80 percent of their drilling is for non-Chesapeake customers,” Brooks said. “So they are making some strides in that area.”

 

The Business Intelligence Report is a collaborative news project between KGOU and The Journal Record.

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