EP Energy (EPE, Financial) anticipates delivering a 4 percent increase in the total oil production for 2015 in the range of 94.5 to 109.5 thousand barrels of oil equivalent per day (MBoe/d) compared to the production during the mid-point of 2014. Also, the mid-point of 56,000 to 64,000 barrels of oil per day is 10 percent above the 2014 level.
Making the right move by improving operations
The oil drilling company forecasts approximately 160 to 190 well completions for the fiscal year 2015 compared to 273 reported completions in the previous year.
EP Energy seems to implement an advanced drilling technology which is allowing it to enhance the productions and lower the well count. EP Energy is significantly and deeply exploring its key wells to expand the oil production at lowered costs.
EP Energy has added over 500 potential locations to its drilling inventory since 2013 ending with approximately 5,700 recognized drilling locations for over 30 years of drilling inventory at 2015 production levels.
The energy giant is fully aware about the ongoing reduction in commodity prices and is proactively involved in lowering its capital expenditure with a sharp focus on its highest-return growth prospects which solidifies its financial position.
The significant expansion in the drilling program for 2015 highlights the solid growth strategy of EP Energy and the company’s improved drilling technologies which are enabling it to minimize its costs.
EP Energy has developed a superior-quality asset base with an ongoing improvement in their quality to develop into a highly efficient organization. It is continuously lowering the operating costs for its business and estimates nearly 15 percent lowering in overall annual service costs. EP Energy has signed several key agreements to allow it for about a 10 percent lowering of cost and further believes to execute other cost saving agreements all through this year. The company forecasts a significant enhancement of the health of its balance sheet with an attractive liquidity position allowed by its $2.75 billion revolving credit facility and a solid multi-year hedge plan.
Improving metrics
The fiscal year 2015 drilling activities of the energy major are estimated to be focused on its greatest-return opportunities mainly in the Eagle Ford plan and the highly efficient regions of the Haynesville, Wolfcamp and Altamont programs. EP Energy estimate to run a total of six to seven drilling rigs on an average in its four major schedules, implementing approximately 160 to 190 wells during 2015. The overall equivalent production during 2015 is believed to be nearly 94.5 MBoe/d to 109.5 MBoe/d with about 56 to 64 MBbls/d of oil production, an increase of four percent and 10 percent respectively over the 2014 production mid-points.
The improvement in the drilling techniques coupled with the key wells discovery is enabling EP Energy to expand its production at much lower costs. This has provided a cost advantage to the drilling major enabling it to maintain a robust liquidity position to plan other major potential growth investments and delivering enhanced shareholder returns.
After the successful completion of the infield pilot program at Eagle Ford, EP Energy targets on developing a 40 acre infield program in La Salle County and is witnessing a significant expansion in its Wolfcamp production. It is also motivated by its superior drilling and design completion performances particularly in Crokett County. Hence, EP Energy seems to be robustly positioned with an outstanding hedge program, and an attractive $1.8 billion of liquidity by year end, strengthening it to overcome the downturn.
Conclusion
Overall, the investors are advised to invest into EP Energy Corporation looking at the logical company valuation with the trailing P/E of 3.19 which is better than the industry’s average P/E of 11.67 and signifies that the stock is competitively priced. The profit margin of 34.83% is impressive and depicts significant investor profits. However, EP Energy needs to optimize its hugely debt-laden balance sheet with total debt of significant $4.60 billion against feeble total cash position of $22.00 million only to avoid any obstacles into its growth trajectory.
