Upstream operator Athlon Energy Inc. (ATHL) reported strong fourth quarter results on the back of buoyed production volumes and a substantial increase in price realizations.
The company reported earnings per share of 24 cents, in line with the Zacks Consensus Estimate and up from 20 cents in the prior-year quarter.
During the three-month period ended Dec 31, 2013, Athlon Energy reported revenues of $91.0 million beating the Zacks Consensus Estimate of $87.0 million and soaring above the year-ago quarter level of $46.0 million.
For 2013, the company reported earnings per share of 94 cents, up from 65 cents in 2012 and ahead of the Zacks Consensus Estimate of 93 cents. Revenues, at $299.4 million, improved from $157.1 million in 2012 and also surpassed the Zacks Consensus Estimate of $289.0 million.
Volume Analysis
Athlon Energy’s overall production during the reported quarter was 1,351 thousand barrels of oil equivalent (MBOE), up 68.7% from the prior-year quarter. Total oil production surged 83.2% to 819 thousand barrels (MBbl) from 447 MBbl. Natural gas volumes increased 45.6% year over year to 1,453 million cubic feet (Mmcf).
Realized Prices
Average oil price realization (before impact of cash settled derivatives) increased almost 14.0% to $93.58 per barrel. Moreover, average realized natural gas price was also up 4.8% from the year-ago quarter to $3.25 per thousand cubic feet (Mcf).
Costs & Expenses
Depletion, depreciation, and amortization costs increased to $25.2 million from $16.7 million in the year ago quarter, while lease operating expenses recorded an increase of 27.5% to $9.8 million. Athlon Energy’s total expense for the quarter was $45.9 million, a 48% jump from fourth quarter 2012.
Drilling Statistics, Capital Expenditure & Balance Sheet
Athlon Energy drilled 45 net vertical wells and 1.6 net horizontal wells during the quarter. Discretionary cash flows came in at $60.4 million in the fourth quarter of 2013. The company spent $118.8 million as development capital expenditures.
As of Dec 31, 2013, Athlon Energy had $500.0 million in long-term debt, with a debt-to-capitalization ratio of 43.9%.
Proved Reserves
As of Dec 31, 2013, Athlon Energy’s proved reserves totaled 127.3 million barrels of oil equivalent (MMBoe), reflecting a 48% increase from 86 MMBoe reported at the end of 2012.
Acquisition
The company closed the acquisition of properties in the Midland, Upton, Martin, and Andrews counties for a total consideration of $88 million. Athlon Energy also plans to spend an additional $8.7 million to acquire more working interest in these properties.
Zacks Rank & Stock Picks
Athlon Energy currently sports a Zacks Rank #1 (Strong Buy), implying that it is expected to significantly outperform the broader U.S. equity market over the next one to three months.
Meanwhile, one can consider other players in the oil and gas exploration and production sector like Warren Resources Inc. (WRES), Abraxas Petroleum Corp. (AXAS) and Range Resources Corp. (RRC). While Warren Resources enjoys a Zacks Rank #1, Abraxas Petroleum and Range Resources hold a Zacks Rank #2 (Buy).
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