EP Energy 4Q18 Credit Report

09 April 2019

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In mid-March, EP Energy (EPE) announced 4Q18 earnings that modestly surpassed consensus estimates, guided a materially significant decline in 1Q19 production on greater-than-expected capital expenditures and elected to forego taking questions on the earnings call and providing full year guidance. In 4Q18, EPE generated USD 196m in adjusted EBITDA (vs. USD 187m Factset Consensus) on production of 79.4 MBoe/d (in line with consensus). Adjusted EBITDA was down 8.8% QoQ, with realized commodity prices declining 17.5% sequentially and production modestly falling 1.2%. This was partially offset by cash settlements realized from EPE’s hedging program, along with reduced operating costs. Specifically, cash operating costs/boe fell to USD 12.16 from USD 15.2 in the prior quarter, driven by lease operating expenses falling to USD 4.79 from USD 6.23 in the prior quarter.