Oil and Gas Production Discrepancies Impact Two Modest-Sized Companies, While Smaller Firm's Profits Nearly Triple

Strategic Insights -

Sharply higher oil and gas production in the second quarter was not enough to offset lower prices for two modest-sized producing companies, Nuevo Energy Co. and Devon Energy Corp. However, Parallel Petroleum Corp. nearly tripled its profits. Despite the challenges, Nuevo Energy and Devon Energy Corp. reported higher revenues and cash flow, while Parallel Petroleum's output increased substantially. The discrepancies in oil and gas production and prices in the second quarter had varying impacts on the companies' profits.

Key Takeaways:

  • Nuevo Energy Co. reported a 26% decline in second-quarter profits to $1.7 million (12*/share) on 11% higher revenues of $29.7 million.
  • Devon Energy Corp. saw a 21% drop in second-quarter profits to $4.1 million (19*/share) on a 3% rise in revenues to $25.5 million.
  • Parallel Petroleum Corp.'s profits nearly tripled to $210,000 (1*/share) on a 51% jump in revenues to $1.26 million.
  • Nuevo Energy's second-quarter crude oil production rose 18% to a record 6,208 b/d, but prices fell 8% from a year earlier to $16.10/bbl.
  • Devon Energy's second-quarter natural gas production increased 14% to 107.5 MMcfd, but prices dipped to $1.50/Mcf from $1.51.
  • Parallel Petroleum's second-quarter crude oil output more than doubled to 507 b/d, and natural gas production increased 37% to 3.6 MMcfd.
  • Nuevo Energy is projecting increased production in the second half from acquisitions in the Congo and California, and higher prices for crude oil and NGLs.
  • Devon Energy plans to spend $54 million over the next three and a half years developing reserves acquired from Alta Energy Corp. on May 18.
  • Devon Energy's operating costs per unit of production decreased to 55*/Mcf of gas equivalent in the second quarter from 69* for the same period last year.

Statistics:

  • Nuevo Energy's second-quarter cash flow increased 9% to $11.5 million.
  • Devon Energy's second-quarter revenues rose 3% to $25.5 million.
  • Nuevo Energy's first-half earnings declined 44% to $2.5 million (15*/share) on a 3% gain in revenues to $54.9 million.
  • Devon Energy's first-half earnings fell 14% to $8.9 million (42*/share) on 6% higher revenues of $51.7 million.
  • Parallel Petroleum's second-quarter revenues jumped 51% to $1.26 million.
  • Nuevo Energy's second-quarter natural gas output jumped 23% to a record 60.9 MMcfd, and prices increased 17% to $1.90/Mcf.
  • Devon Energy's second-quarter NGLs production rose 19% to 1,286 b/d, but prices declined to $9.96/bbl from $12.37.
  • Devon Energy's acquisition of Alta Energy Corp. boosted its reserves 37%, adding 24 million bbl of oil and 26 Bcf of natural gas.

Sources:

  • "WASHINGTON -- Sharply higher oil and gas production in the second quarter wasn't enough to offset lower prices for two modest-sized producing companies, but did significantly raise earnings of a smaller firm." (Source: The Wall Street Journal)
  • The text does not explicitly mention other sources.