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Jagged Peak (JAG) Q3 Earnings Miss on Lower Oil & Gas Prices

Zacks Equity Research

Jagged Peak Energy Inc. JAG reported third-quarter 2019 adjusted earnings of 10 cents per share, missing the Zacks Consensus Estimate of 13 cents and deteriorating from the year-ago quarter’s 18 cents.

In addition, revenues of $150.1 million missed the Zacks Consensus Estimate of $152 million and declined from the year-ago quarter’s $155.4 million.

Although the company reported higher production volumes, it was more than offset by lower commodity price realizations and increased operating expenses. This resulted in weak quarterly results.

Jagged Peak Energy Inc. Price, Consensus and EPS Surprise

Jagged Peak Energy Inc. Price, Consensus and EPS Surprise
Jagged Peak Energy Inc. Price, Consensus and EPS Surprise

Jagged Peak Energy Inc. price-consensus-eps-surprise-chart | Jagged Peak Energy Inc. Quote

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Production Surges

In the quarter, total production volumes were recorded at 3,616 thousand barrels of oil equivalent (MBoe), up from 3,323 MBoe in the September quarter of 2018. Notably, oil contributed 76.3% to its total production volumes.

Oil production increased from 27,507 barrels per day (Bbls/d) to 29,980 Bbls/d in the quarter under review. Natural gas production was reported at 25,339 thousand cubic feet per day (Mcf/d), up from 23,245 Mcf/d in the year-ago period. Natural gas liquids output in the quarter was 5,096 Bbls/d, higher than the year-ago level of 4,738 Bbls/d.

Price Realizations Plunge

The average realized price, excluding realized hedge settlements, per barrel of oil equivalent was $41.51. The figure was significantly lower than the year-ago quarter’s $46.64 a barrel. Average realized price for oil was $53.55 per barrel compared with $55.95 in the year-ago quarter. The same for natural gas was recorded at 31 cents per Mcf, which plunged from the year-ago level of $1.19. Natural gas liquids price in the quarter under review averaged $3.47 per barrel, lower than $24.81 in third-quarter 2018.

Expenses Increase

Total operating expenses in the quarter amounted to $140.4 million, higher than the year-ago level of $90.7 million. Total lease operating expenses, which jumped nearly 57% from the prior-year quarter, primarily led to the surge in total operating costs. On a per BOE basis, lease operating expenses increased to $4.85 in the September quarter from $3.37 in the corresponding period of 2018.

Capital Expenditure & Balance Sheet

For the September quarter, the company’s capital spending on drill, complete and equip activities was $162.6 million.

As of Sep 30, 2019, its total cash and cash equivalents amounted to $10.6 million, and long-term debt was $705.3 million, with a debt-to-capitalization ratio of 43%.

Guidance

The company discontinued to provide guidance following its merger agreement with Parsley Energy, Inc. PE, signed on Oct 14. The transaction is expected to conclude in first-quarter 2020.

Zacks Rank and Stocks to Consider

Currently, Jagged Peak has a Zacks Rank #4 (Sell). Some better-ranked players in the energy space are Lonestar Resources US Inc. LONE and Contango Oil & Gas Company MCF. Both the companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lonestar’s 2020 earnings per share are expected to rise 77% year over year.

Contango Oil & Gas’ bottom line for the current year is expected to rise around 87% year over year.

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Contango Oil & Gas Company (MCF) : Free Stock Analysis Report
 
Parsley Energy, Inc. (PE) : Free Stock Analysis Report
 
Lonestar Resources US Inc. (LONE) : Free Stock Analysis Report
 
Jagged Peak Energy Inc. (JAG) : Free Stock Analysis Report
 
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