Oil Companies On Slippery Ground As Harvey Hampers Production
Zacks Investment Research | Sep 12, 2017 04:50AM ET
U.S. Gulf Coast refiners are slowly coming back online after taking a hit from Harvey. The downstream operators in the area are restarting operations while keeping a close eye on exploration and production companies to observe how much oil and gas can come to their refineries post-Harvey.
The recovery period is dependent on the extent of damages. More than seven refineries in the area are currently operating at reduced rates. The situation has compelled several companies to revise their guidance for third quarter production.
Companies That Revised Guidance
At the beginning of the month, oil explorer and producer EOG Resources, Inc. (NYSE:EOG) reduced its third-quarter U.S. crude and condensate volume guidance range by 15,000 barrels per day as the Houston, TX-based company's operations in the Eagle Ford shale were affected by the storm. However, EOG Resources kept its guidance for the full year intact, hoping production would ramp up in due course. The company carries a Zacks Rank #3 (Hold). You can see now been revised to $161 million . Earnings per share for the same time period are now expected to be 44 cents compared with the earlier guided range of 54 cents to 56 cents.
Houston-based energy company Carrizo Oil & Gas, Inc. (NASDAQ:CRZO) reported that its Eagle Ford Shale assets were not affected by the storm. Nevertheless, the company's sales volume decreased temporarily as third-party midstream facilities and Gulf Coast refineries related to the company were down for a brief period owing to Harvey. Zacks #3 Ranked Carrizo will update its production guidance after collecting more information on the stalled operations.
Other Companies Affected by Harvey
Chesapeake Energy Corp. (NYSE:CHK) paused its drilling and completion of new wells in the Eagle Ford shale and evacuated staff from the production area. ExxonMobil Corp. (NYSE:XOM) shut its operations in some oil wells in the Eagle Ford shale region before the storm. Marathon Oil Corp. (NYSE:MRO) released most of its personnel from its Texas operations suspending work ahead of Harvey.
Conclusion
Most of the oil companies on the U.S. Gulf Coast are still recovering, which is limiting production. This can result in more companies revising their output projections for the third quarter. Production guidance for the whole year will depend on the output levels achieved in other areas and the speed of recovery in the affected region.
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