Energy companies prepare for more difficult earnings announcements

Oil and natural gas companies throughout the state and country are bracing for another difficult round of earnings as they prepare to report numbers for the first quarter, a period that included more than 15-year low oil prices.

Oklahoma City’s largest publicly traded oil and natural gas companies — Devon Energy Corp., Continental Resources Inc. and Chesapeake Energy Corp. — are scheduled to report next week, but some other industry leaders already have begun disclosing their first-quarter information.

So far, the news is more of the difficulty the industry has experienced for much of the past two years.

Oil on Thursday topped $46 a barrel for the first time in nearly six months, but the low prices in the first quarter undercut budget projections and forced companies to whittle down their already drastically reduced plans.

ConocoPhillips Inc. on Thursday reported a first-quarter loss of $1.5 billion, or $1.18 a share, down from a profit of $272 million, or 22 cents a share in the year-ago period.

The Houston-based company with roots in Bartlesville and Ponca City said Thursday that it has further cut its 2016 drilling budget to $5.7 billion, down from $6.4 billion previously, citing “reduced deepwater exploration activity, deferrals and lower costs across the portfolio.”

Most Oklahoma Citybased producers focus entirely on onshore North American production, which typically has fewer expenses and less lead time than offshore projects. But the Oklahoma City companies faced the same challenging oil and natural gas prices.

Most Oklahoma City producers, along with most others in the oil patch, three months ago set 2016 budgets onethird to two-thirds lower than 2015 levels as continued low oil prices eroded revenues and made many drilling projects unprofitable.

Oil prices have recovered somewhat over the past two months. While still below levels comfortable for oil producers, Thursday’s closing price of $46.03 a barrel is up 77 percent from lows of $26.05 experienced in February. The steady rise over the past several weeks has sparked optimism that oil prices could continue their gradual recovery throughout the year.

Thursday’s oil price rally came after the U.S. Energy Information Administration said domestic oil production declined for the seventh consecutive week to the lowest levels since October 2014. Domestic commercial storage levels, however, continued to increase, adding 2 million barrels this week to 540.6 million, the highest level since 1929.