Some E&Ps sauntered, some staggered through the first quarter of 2015, but most were on firm footing despite the slide of oil.

Companies adjusted to the realities of stagnant oil prices, largely because of quick cost concessions from service and supply companies. First quarter earnings brought net losses to the doorstep of some operators forced to write down the value of their resources.

Other E&Ps showed remarkable staying power: EOG Resources (EOG) and Concho Resources Inc. (CXO) said that “returns/margins are starting to approximate returns achieved in 2014 when crude prices were significantly higher,” said David Tameron, senior analyst, Wells Fargo Securities.

At least one giant deal is on the horizon: Pioneer Natural Resources Co. (PXD) said it expects to announce the sale of its Eagle Ford Midstream business in May, a transaction that could net the company $900 million or more. It would also spur the company to begin a coordinated drilling campaign.

Mike Kelly, senior analyst, Global Hunter Securities, said the oil and gas industry is in two camps. Companies are “looking to park savings on the balance sheet versus those eager to demonstrate profitable growth at current strip pricing.”

Losses were, in some cases, staggering with two companies alone accounting for $8 billion in losses.

Apache Corp. (APA) reported May 7 a first-quarter 2015 net loss of $4.7 billion, most due to an after-tax ceiling-test write down of $4.7 billion as a result of substantially lower prices. Continental Resources Inc. (CLR) reported a net loss of $132 million with financials mixed due to weak natural gas and crude oil prices. Rex Energy Corp. (REXX) reported a $20.2 million net loss, but after months of concerns over its long-term liquidity. While the company’s liquidity is strong at $317 million, its debt remains a concern, said Daniel Katzenberg, analyst, Baird Energy.

However, Rex showed solid performance and increased its 2015 production guidance by 8 million cubic feet equivalent per day (MMcfe/d), or 4%, on unchanged capex of $135- to $145 million.

Indifferent Honest

With dozens of companies reporting earnings, analysts have a lot to chew over. Companies, such as Chesapeake Energy Corp. (CHK), were cheered on by some and painted as troubled by others.

Jonathan D. Wolff, analyst, Jefferies, saw a rapid cash burn from Chesapeake. While the company produced better volumes in the first quarter of 2015, that success was overshadowed by a $1.2 billion reduction in cash from the previous quarter, he said.

Chesapeake’s ending cash dropped to $2.9 billion from $4.1 billion in the fourth quarter of 2014. Coupled with weak cash generation of “just $423 million and a $375 million working capital improvement,” Wolff downgraded Chesapeake to Underperform.

For the first quarter of 2015, Chesapeake reported a net loss of $3.8 billion compared to net income of $374 million in the first quarter of 2014. Chesapeake took a $3.6 billion impairment charge due to commodity prices but did not detail how it revalued assets. The company has reduced capex 45% to $3.5- to $4 billion compared to 2014 and has budgeted for $6 billion in liquidity at the end of 2015.

The company’s average production was about 686,000 barrels of oil equivalent per day (boe/d), an increase of 14% compared to 2014, adjusted for asset sales.

Wolff also noted Chesapeake’s unfavorable product mix, which includes 18% black oil.

Other challenges: “lofty ongoing infrastructure costs” and high net debt of more than $12 billion, he said.

“The more difficult financial position should make it more challenging to secure needed economic reinvestment options,” he said.

Seen through a different lens, Chesapeake upped its cash position significantly from the same time period in 2014, when its cash was just over $1 billion.

David Kistler, co-head of E&P research, Simmons & Co. International, said the company had stronger than expected operations during the first quarter with production and cash flow beats versus expectations.

The company generated $787 million in cash flow, above consensus estimates of $651 million.

Doug Lawler, Chesapeake CEO, said the company’s cash costs remain at industry-low levels.

“We expect our assets to continue delivering greater efficiencies even as we reduce our activity levels throughout 2015,” Lawler said. “We remain on target to balance our capital spending and our cash flow by year-end, and the capital efficiencies that we are seeing in each of our operating areas are helping to strengthen that cash flow.”

Chesapeake operates in the Utica, Marcellus, Powder River Basin, Haynesville, Mississippian Lime and Eagle Ford.

Many analysts expect Chesapeake to make an acquisition in the near future, though Wolff casts doubt on what it will be able to afford.

Picked Upon

Analysts also gave a fairly good thrashing to Goodrich Petroleum Corp. (GDP). Kelly rated the company Sell after a sizable cash flow miss and 13% lower production volumes than forecast.

Goodrich, which operates primarily in the Tuscaloosa Marine Shale (TMS), delayed completions on six wells and had problems with one of the three wells it completed in the quarter.

The company also controls Haynesville core, and the Bossier Shale Angelina River Trend. Its Eagle Ford Shale assets are being marketed.

Gordon Douthat, senior analyst, Wells Fargo, rated Goodrich Negative.

“The balance sheet is the overriding concern,” Douthat said in a report. He said liquidity, at about $100 million, is sufficient for now. But in October, the company’s borrowing base will be redetermined and the company will likely need more money. Goodrich’s Eagle Ford holdings remain on the block.

The Bellwether

In Texas, the mighty Pioneer Natural Resources underwhelmed with its first-quarter 2015 production as weather took its toll. For now, the company will wait until it sells its Eagle Ford midstream assets before ramping up production.

The company did not change its capex guidance and stuck to its full year production forecast. However, more than half of volumes will have to come in the second half of the year since Pioneer deferred 25 wells as it shifted operations exclusively in-house.

Douthat said the assets should produce proceeds of $1 billion.

Increased activity won’t impact production until 2016, which would mean growth then but a flat profile in 2015, he said.

Global Hunter Securities said production was 194,000 boe/d compared to guidance of 192-197 Mboe/d. That represented a 4% drop from the fourth quarter of 2014. EBITDA was $402 million versus consensus of $397 million.

Darren Horowitz, analyst, Raymond James, noted Pioneer key exported 20 Mboe/d gross of Eagle Ford condensate and a 15% decrease in drilling and completion capital compared to 2014.

“The big news came with the company's announcement to add two rigs per month beginning in July, should a positive outlook on oil prices remain,” he said. “It will be very interesting to see the market's reaction to Pioneer indicating it plans to start adding rigs aggressively starting in July based on current oil prices.”

Most investors have indicated they would prefer companies to wait.

“The rest of the industry will be watching the market's reaction closely as others have hinted at rig increases later in the year, but Pioneer is the first to lay out a timeline and magnitude of a potential rig count increase,” he said.

Contact the author, Darren Barbee, at dbarbee@hartenergy.com.