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About Ep Energy Corporation

EP Energy is into the (E)xploration and (P)roduction of oil and gas. The company's primary operations are at the Eagle Ford Shale and Wolfcamp Shale sites in Texas and the Altamont Field in Northeastern Utah. The company owns proved reserves of around 430 million barrels of oil equivalent, about 70% of which is oil and NGLs (natural gas liquids). Altogether, it has rights on 452,000 net acres in the US. EP Energy was formed in 2012 when the former El Paso Corporation sold its exploration and production assets to an investment group for $7.2 billion.

Operations

Of EP Energy's 430MMboe (millions of barrels of oil equivalent) of proved reserves, around half are oil reserves, 28% natural gas, and 21% natural gas liquids.

It produces around 85,000boe each day via 607 producing wells. The company has identified more than 5,150 drilling locations in total.

Geographic Reach

The company operates in three areas: the Eagle Ford Shale (South Texas), the Wolfcamp Shale (Permian Basin in West Texas), and the Altamont field in the Uinta Basin (Northeastern Utah).

Sales and Marketing

EP Energy sells oil and natural gas to third parties in the US at spot market prices. NGLs are sold at market prices under monthly or long-term contracts.

Five purchasers account for about 70% of the company's oil revenues: Flint Hills Resources, Big West Oil, JP Energy Products Supply, BP Oil Supply, and Shell Trading.

The majority of its produced gas flows are on the Camino Real gas gathering system via pipelines. The gas is then redelivered into interconnects with Energy Transfer, Enterprise, Regency, and Eagle Ford Gathering. Wax crude is sold to Salt Lake City refineries under long-term sales agreements.

Financial Performance

EP Energy's revenue has been an a sharp downward slant since 2014. In fiscal 2016 revenue fell fully 60% to $767 million as the company put the brakes on capital expenditure amid the oil price squeeze. The company greatly reduced its drilling programs, particularly at its Eagle Ford and Altamont sites. Oil and natural gas sales both fell sharply, although NGL sales recorded a modest $5 million uptick. Further weighing on the top line was the sale in mid-2016 of the Haynesville Shale assets, which brought in around $15 million each year.

EP Energy made a loss again in 2016, although the scale of loss was significantly reduced at $27 million versus $3.7 billion in 2015. The low commodity price environment caused a $4.0 billion write-down in value of EP Energy's proved properties; in 2016 this loss was absent from the books. Putting the write-down to one side, the company recorded gains on extinguishment of debt totaling $392 million in 2016.

Cash from operations fell 40% to $784 million due to the gains on debt extinguishment.

Strategy

EP Energy is being squeezed by the low price of oil globally. After suffering a $4.0 billion write-down in the value of its producing assets in 2015 and seeing its revenue collapse, the board is taking steps to improve the company's liquidity position. The company sold off its Haynesville and Bossier shale assets in 2016, repurchased unsecured notes and term loans, amended certain restrictive debt covenants in its RBL (reserves based lending) Facility through to Q1 2018, consolidated debt worth $850 million into new debt maturing in June 2012, and issued $500 million of 8% senior secured notes maturing in November 2024 to repay the RBL Facility. In early 2017 it issued an additional $1.0 billion of 8% senior secured notes, maturing in 2025, to pay off in full the $580 million loan due in 2021.

Besides debt restructuring, EP Energy is managing the low oil price by scaling-down production and reducing its drilling programs.

Ep Energy Corporation

1001 LOUISIANA ST
Houston, TX 77002-5089
Phone: 1 (713) 997-1000

Firm Stats

Employer Type: Publicly Owned
EVP and COO: Clayton A. Carrell
Senior Vice President Of Operations: Chad England
Chairman, President, and CEO: Brent J. Smolik
Employees (This Location): 22
Employees (All Locations): 372

Major Office Locations

Houston, TX

Other Locations

Dilley, TX