Aug 2 Oil and natural gas producers Cimarex
Energy Co and Swift Energy Co are ramping up
production of the more lucrative oil and natural gas liquids,
but a fall in prices for the fuels weighed on second-quarter
Natural gas prices fell to their lowest in a decade
in April due to mounting supplies of the fuel in the United
Exploration and production companies have in response
started increasing output of crude oil and natural gas liquids
(NGLs) like butane, propane and ethane that are sold for higher
Swift Energy was drilling and completing more wells
targeting crude oil, condensate and NGL production, Chief
Executive Terry Swift said in a statement.
The company expects year-end reserves levels to rise 15
percent to 20 percent this year, up from its previous estimate
of a 10 percent to 15 percent increase.
Swift said 40 percent of the year-end reserves will
primarily be crude oil and NGL. The company, which now expects
half of its year-end output to come from liquids, said it will
spend more than it had previously budgeted this year.
Cimarex also said it was shifting its capital expenditure
towards more oil and liquids-rich areas. The company expects
third-quarter volumes to rise between 3 percent and 8 percent to
average 610 million cubic feet equivalent per day (mmcfe/d) to
With the supply of NGL liquids soaring, the profit edge
companies were eying is diminishing.
U.S. crude oil prices fell 9 percent to average $93
per barrel in the April-June quarter. The fall in crude oil
prices pressurized NGL prices, which have fallen about 15
percent from the first quarter.
Natural gas prices fell 46 percent from last year to
average $2.4 per million British thermal unit in the quarter.
Cimarex, Swift and smaller peer PetroQuest Energy
reported lower quarterly sales for the second time in a row,
hurt by weak prices for oil, natural gas and NGL.
All three companies managed to ramp up production in the
quarter, but that did not earn them higher revenue as lower
commodity prices weighed.
Cimarex, which primarily operates in the Mid-Continent and
Permian Basin areas, said oil and gas revenue in the second
quarter fell 24 percent to $343.2 million. Revenue at Swift
Energy fell 14 percent to $134.8 million.
Oil and gas sales at PetroQuest Energy fell 20 percent.
Denver-based Cimarex's net income more than halved to $64.3
million, or 74 cents per share in the second quarter.
Swift Energy's earnings from continuing operations fell 89
percent to $3 million, or 7 cents per share.