Energen Corporation's CEO Presents At The 2012 Barclays CEO Energy/Power Conference (Transcript)

Energen Corporation (EGN)

2012 Barclays CEO Energy/Power Conference

September 6, 2012 1:45 PM EST

Executives

James McManus – Chairman and Chief Executive Officer

Presentation

Moderator

Next, we have Energen Corporation, a company who has successfully transitioned itself into a Permian E&P player. It’s currently focused on exploring and producing wells in Wolfberry, Wolfcamp, 3 rd Bone Springs and Cline. Here to present is James McManus, Chairman and CEO.

James McManus

Thanks, Christine. It’s a pleasure to be here. I’d like to talk to you today really about some excellent results we are getting in the Permian, as well as an ever increasing inventory of things to do out there. We’ll making forward-looking statements so I‘d ask you to consult our SEC filings for more thorough discussion of uncertainties and risks. And with that, we’ll kick it off with Energen, a top 25 independent producer based on U.S. reserves, 3P reserves of 941 million barrel of oil equivalence. Since 2009 we really stepped it up in the Permian basin, a place we’ve been since the 1990’s but we invested another $900 million there and a company that has actively used hedging to protect cash flows.

If you look at our footprint you can the Permian basin now comprises 54% of our total reserves. We are the 12 th largest producer in Texas of oil, with the 6 most active driller in the Permian basin currently with about 19 to 20 rigs running. Still have a lot of size and scale in the San Juan basin, it’s more gas prone as most of you know but there are also some oil plays being pursued there now. 38% of our reserves were the fourth largest producer in that particular basin.

If you look at our capital expenditures for 2012, it’s right about $1 billion for drilling and development. We did a $75 million acquisition that’s record capital for us. In 2011 we invested about $810 million, virtually all of that 96% plus is going into the Permian basin, we basically scaled back our gas related drilling at the end of July in the San Juan basin. You can see very active in the Wolfberry play. Total capital there of $450 million, 8 to 10 rigs, estimated production of little under $4 million barrel of oil equivalence. 3 rd Bone Spring in the Delaware basin, another place we are very active with 5 to 7 rigs running, 43 in that well, an estimated annual production of 3 million barrel of oil equivalence and then our traditional properties in the central basin platform which is primarily been water floods that we’ve actively down spacing.

If we look then at our production growth particularly in 2012 you can see that the primary area of growth is the Wolfberry and the 3 rd Bone Spring and that our other production, our other 5 million barrels of annual production in the Permian and the central basin is basically flat coming from our water floods and then you can see the rest of our production is basically flat in the San Juan and elsewhere.

So if we look at liquids really being the driver for us and when we talk liquids we really mean oil. You can see that in 2010, really in early in ’11 when we came out with what we might be able to do with liquids production particularly ramping up in the Permian, you can see that in 2010 in the orange and the green that we had about 7 million barrel of oil equivalence production at that time and we were talking about really scaling up in the Permian and almost doubling that liquids production in 2013. Now, the 2013 estimate is an old number that we came out with 11. We still believe we’ll be in that range when we put our 2013 budget together and announce it at the end of October. You can also see the three year growth rates in oil and gas and we basically taken the company from what was predominantly a natural gas producer to one that in 2013 will have more production from oil and liquids than it had from natural gas.

Then take a look at our reserves. Obviously the growth has really been on the oil side, we are now 54% oil and liquids improved reserves at 343 million barrels of oil equivalence. Problem possible on the right-hand of the slide amounts to about 598 BOE. I will point it out to you that we still have a lot of problem possible on the gas side when prices do rebound that we would be able to go after. I would also point out fees had not included in our P2, P3 numbers is in Wolfberry down spacing to twenties, no Wolfcamp or horizontal Cline in the Midland basin and the Wolfcamp and Avalon shale in the Delaware basin. So there’s a good bit of upside in seeing these numbers move as soon as we start to incorporate those formations in our P2, P3’s.

If you then just kind of look at our overall footprint here in the Permian basin. Again, we’ve been active here since the late 1990’s; we’ve got 275,000 acres roughly. As I mentioned earlier we beefed investing some $900 million in acquisitions of both leasehold and some prude properties since mid-2009. We got multiple opportunities out here which I am going to run through in great detail with you. We believe we got a decade or more forth for drilling out here now.

Read the rest of this transcript for free on seekingalpha.com

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