Earnings mixed for three energy companies
TULSA — Three energy companies that posted quarterly earnings after markets closed Wednesday detailed their ongoing responses to the coronavirus pandemic.
Laredo Petroleum, which has 100% of its 2020 oil production hedged, reported it earned a first- quarter 2020 net income of $235 million, or $1.01 per share, compared to a loss of about $9.5 million, or 4 cents per share, the year before.
WPX Energy, citing the impact of a $1 billion non-cash goodwill impairment it made related to its Williston Basin assets, posted a first-quarter 2020 loss of $388 million, or 85 cents per share including discontinued operations, compared to a loss of $48 million, or 11 cents per share, the year before.
Matrix Service Co., which considers the first three months of a calendar year the third quarter of its fiscal year, posted a net loss of about $5.5 million, or 21 cents per share, compared to a net income of about $8.9 million, or 33 cents per share, the previous year.
The company noted it took a charge of about $6.6 million during the quarter to account for restructuring activities.
For Laredo, hedging matters, as it has 5.4 million barrels of oil swapped at a weightedaverage price of $59.50 West Texas Intermediate and 1.8 million barrels swapped at a weighted- average price of $53.13 Brent to cover its 2020 production.
But the company, which already had cut its capital expenditure plans for 2020 once, announced Wednesday it is cutting those costs again to $265 million.
“The challenges presented to the oil and gas industry by demand destruction and price volatility related to COVID- 19 and OPEC+ are unprecedented,” Jason Pigott, Laredo's CEO, stated as part of its earnings release.
Pigott noted the company exceeded both oil and total production guidance for the quarter as it continues to cut costs.
“Our workforce has demonstrated amazing flexibility … and has continued to perform
at the high standards we have set for ourselves,” Pigott said.
WPX's CEO Rick Muncrief said its focus is on keeping its employees healthy while it protects its cash flow and preserves its assets.
The company stated it will shut in wells that will remove about 45,000 barrels ( 30,000 owned by WPX) per day of production from the market in May, and is considering doing the same in June.
After it acquired Felix Energy earlier this year, it had 15 rigs running in the Delaware and Williston basins, but plans to exit 2020 only using six. It also released four hydraulic fracturing crews it had been using, aiming to build an inventory of drilled, uncompleted wells for future development.
Like Laredo, it announced this week an additional cut to its capital expenditures plan, leaving it with $450 million to use for the year.
“We will continue to maintain the strength of our balance sheet and remain disciplined in our approach to the present
challenges,” Muncrief stated as part of the earnings release. “Nothing is easy right now, but rebalancing supply with demand will take place over the remainder of the year.”
As for Matrix, it continues to implement a previously announced business restructuring and improvement plan that, when finished, is expected to save the company about $ 40 million annually and adapt its cost structure to meet anticipated lower revenues in the near future.
“Matrix is focused on two strategic priorities — safeguarding the
health and safety of our employees and taking appropriate steps to position the company against the challenging market backdrop,” John R. Hewitt, Matrix' CEO, stated as part of its earnings release.
“The pandemic-created supply/ demand imbalance across the energy market will correct itself over the coming months, and we believe the steps we are taking will position us to take advantage of this recovery,” Hewitt continued.