EOG Posts 1Q15 Net Loss on Lower Energy Prices (Part 3 of 5)
(Continued from Part 2)
EBITDAX cuts a positive figure in 1Q15
As we discussed earlier in this series, EOG Resources’ (EOG) net profit slumped in 1Q15. The company recorded a net loss of $170 million in the latest quarter, a considerable decline from $661 million net income in 1Q14. However, its adjusted profits performed better in 1Q15 than its net income suggests.
EOG Resources’ adjusted EBITDAX (or earnings before interest expense, income taxes, depreciation, depletion and amortization, exploration costs, dry hole costs, and impairments) was $1.14 billion in 1Q15, down 50% from $2.30 billion recorded in 1Q14. EBITDAX is calculated by eliminating the unrealized mark-to-market gains or losses from derivatives transactions and the net gains on asset dispositions.
Product revenue breakdown
In 1Q15, EOG Resources’ three primary products—crude oil and condensates, natural gas liquids (or NGLs), and natural gas—registered declines in revenue. NGLs posted the steepest decline of 54%, followed by natural gas (48%) and crude oil and condensates (47%).
US leads the fall in operating income
The United States is the largest geography in EOG Resources’ portfolio, accounting for 96% of EOG Resources’ operating income in the past eight quarters before 1Q15. In 1Q15, EOG posted a $173 million operating loss in the US, compared with $1.04 billion in operating income in 1Q14. Among EOG Resources’ other international assets, only Trinidad posted a $47 million operating profit in 1Q15, down 37% from 1Q14.
In 1Q15, falling crude oil prices led to a sharp decline in many of the upstream companies’ income in the US, including Whiting Petroleum (WLL), EQT Corporation (EQT), and Concho Resources (CXO). Concho Resources accounts for 1.4% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).
Volume and price analysis
As noted in the chart above, the production volume of crude oil and NGLs increased in 1Q15, compared with 1Q14, while natural gas production decreased. However, all product segments witnessed a sharp decrease in realized price in the latest quarter.
EOG Resources’ NGLs and crude oil realized prices plummeted 58% and 53%, respectively, in 1Q15 from 1Q14. The realized price for natural gas declined 45%.
Continue to Part 4
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