Production appears to have rebounded in October after steep losses in September when flood waters rushed down the South Platte River and its tributaries, uprooting oil tanks and exposing oil and gas pipelines.
Responding to production cuts, analysts have tweaked their production and earnings per share estimates for some companies ahead of third-quarter earnings reports.
Before flooding in September, gas production averaged 812 million cubic feet per day in the Denver-Julesburg Basin, which includes Northern Colorado, according to energy analyst firm Bentek Energy in Denver.
Average daily production dropped to 780 million cubic feet per day during flooding, but increased to an average 831 million cubic feet per day by the second week of October. Exactly how much oil production might have declined is unknown because of lagging oil data in the Denver-Julesburg Basin. Oil production reached an average 150,000 barrels per day in June.
Erika Coombs, Bentek energy analyst, believes oil production followed a similar curve as the decline and subsequent rise in gas production.
“Since most (gas production) has come back online, we would expect the oil sites to also have come back online pretty rapidly,” she said.
Anadarko Petroleum Corp. (NYSE: APC), one of the largest producers in Northern Colorado, at one point halted production on 675 wells. The Woodlands, Texas,-based company lowered its 2013 total sales volume estimate by 2.5 million barrels of oil, according to a statement from the company. However, it believes sales volumes still will hit 281 million to 287 million barrels of oil equivalent this year, the same amount the company put forth when it announced its second-quarter earnings.
Anadarko has not said how many wells it has returned to production, nor what kind of wells it has shut off.
“Since you don’t know what the profile of the wells are, you don’t necessarily know what the immediate effect is,´ said James Sullivan, vice president and senior analyst for Alembic Global Advisors in New York City.
Sullivan said flooding will delay drilling activity during the second half of the year, and could affect the company into the first quarter of 2014.
“They will be affected, but it will probably be a little bit of a lagging effect,” he said.
The company, however, typically gives conservative guidance on its annual oil production, so Sullivan believes actual production will fall within the 2013 range given by Anadarko.
Houston-based Noble Energy Inc. (NYSE: NBL), another large oil and gas producer in Northern Colorado, posted an average production loss of 2,000 barrels of oil equivalent daily during the third quarter because of flooding. Noble Energy will lose 5,000 to 7,000 barrels per day during the fourth quarter because of delays in its drilling activities, the company said in a statement.
Noble Energy shut off 758 wells because of last month’s flooding, but it had brought about 430 wells back online earlier this month, a company spokesman said.
All of the company’s rigs have resumed operations, a Noble spokeswoman said. Noble plans to accelerate drilling to eliminate a backlog by the end of the first quarter of 2014.
Northern Colorado represents one of many pieces of Noble’s total global production, said Stephen Simko, senior equity analyst for Morningstar Equity Research.
“It doesn’t seem like this is going to have any material long-term impact on Noble as a company,” Simko said. “In terms of drilling and production, at most, this is for them a minor disruption.”
The company still expects to lose $7 million to $17 million because of flooding, according to published accounts.
Birmingham, Ala.,-based Sterne Agee Group Inc. lowered its earnings-per-share estimates for Noble to $3.31 from $3.36.
Sterne Agee estimates average third-quarter production at 289,000 barrels of oil per day, down from 291,000 barrels of oil per day. It estimates average daily fourth-quarter production will sink from 304,000 barrels to 298,000. However, much of that postponed production will mean increased oil growth in 2014.
A spokeswoman for oilfield services company Halliburton Co. (NYSE: HAL) said flooding did not damage its equipment or facilities. Analysts, however, say the company will lose 2 or 3 cents per share from flooding: Halliburton does an estimated 75 percent of the hydraulic fracturing in the region, according to Sterne Agee. The firm lowered its third-quarter and 2013 earnings per-share estimates for Halliburton to $.82 and $3.21 from $.85 and $3.25, respectively.
Synergy Resources Corp. (NYSE: SYRG) in Platteville cut production on 20 of its wells after the flooding. Ten of the wells remained shut off earlier this month.
“We are not expecting much impact,´ said Jon Kruljak, Synergy’s vice president for capital markets and investor relations, in an email. “We had less than 10 percent of our wells shut-in only for a few days. That represented less than 5 percent of our daily production and most of them are back on line.”
Encana Corp. (TSX: ECA) (NYSE: ECA), a Calgary, Alberta, company that drills for gas around Erie, shut off production to 397 of its wells – 61 remained offline earlier this month. The company did not have an estimate of how the shut-off wells might affect total production.
“We’re still working through that,” spokesman Doug Hock said.