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Energen Corporation's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: EGN

At this time, I will turn the call over to Energen’s Chairman and CEO James McManus. James?

James McManus

Thanks Julie and Good morning to you all. This was another really excellent quarter for Energen. Earning adjusted for non-cash market-to-market gains of $0.73 per diluted shares, the first call estimate of $0.62. Our second 2012, Oil and NGO production increased 40% year-over-year, our Permian Basin production alone was 54% year-over-year and our total production was up 21% year-over-year, even though we’re not focusing on natural gas.

And our third balance spring was results continue to exceed our model and our Wolfberry well performance continues to meet our expectations. Last quarter, we told you about one of the third Bone Spring wells that had the highest initial rate in the play that we were aware of, this quarter, the Black Mamba 1-57 #1H in Loving County tested initial stabilized rate of 2257 BOE per day, 69% oil and that blew the first quarter well out of the water by about 500 barrel of oil equivalents a day. Once again, this well was not tested, wide opened, but rather on a 16/64 inch choke and had a pressure of 39,000 PSI so it obviously could perform even better than that.

But the biggest news it that we’ve added 1230 horizontal Wolfcamp and Cline locations to our potential drilling inventory in the Midland Basin and Eastern Shelf. Clearly, the pace of drilling in the horizontal Wolfcamp and Cline plays have increased and more information is now available that supports the viability of these emerging plays across much of our Midland Basin acreage as well as in Mitchell County on the Eastern Shelf where we have legacy water flood operations.

Based on well data and internal evaluations by our team of geologists and engineers, we believe that our current acreage position in the Midland Basin and the Eastern Shelf hold the potential for 860 drilling opportunities in the upper Wolfcamp and Cline as well as 420 potential locations in the middle and lower benches of the very thick Wolfcamp Shale formation.

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