Energen Amid an Oil Price Plunge
While Volvo’s decision in July to start making only electric-powered cars by 2019 probably didn’t strike too much fear into the hearts at Energen Corp., there has been spirited debate of late on how well the energy giant is positioned for the future.
On the one hand, Birmingham-based Energen issued a report in June detailing a strong outlook for oil and gas production in the coming fiscal year. The report hailed the company’s Gen 3 frac design, the basis for Energen raising its 2017 production estimate by 5.9 percent over the prior guidance. The company’s year-over-year production growth is now pegged at 29 percent.
As always, opinions vary. Seaport Global Securities in June downgraded 51 energy-related stocks, suggesting that the price for a barrel of crude oil will continue to drag down the industry. Seaport sees an oversupply in the oil market through at least 2020.
Some industry analysts believe production will be a poison pill, since more oil from the U.S. could cause OPEC to protect its market share by increasing volume as well. Those analysts fear a glut that sends oil to $30 a barrel.
Energen CEO James McManus says the company has done its due diligence. “Over the last several years, Energen has taken decisive actions to reduce leverage, enhance operating margins, and position the company as a pure-play Permian Basin oil and gas exploration and production company,” McManus says.