(Adds CEO and analyst comments, share move)
By Shanti S Nair
Aug 7 (Reuters) - Oil and gas company Energen Corp beat quarterly profit estimates on Tuesday, helped by new well designs and higher oil prices, prompting it to forecast a rise in production for the rest of the year.
The company, which is a potential takeover target for activist investor Carl Icahn and hedge fund Corvex Management, sold oil at a higher average realised price of $61.21 per barrel in the second quarter, compared with $44.54 a year earlier.
Chief Executive Officer James McManus said wells completed with the “Generation 3” frac design, which typically use tighter spacing between fractures and increased sand concentration, led to a rise in production.
“At the midpoint of our new guidance range for 2018, Energen will reach a milestone by producing more than 100,000 boe/d for the first time in company history,” McManus said in a statement.
The Alabama-based company has been selling assets to focus on the Permian Basin, which saw a record production of 3.2 million barrels per day (bpd) in May.
Energen said it now expects production for 2018 to be between 97,000 barrels of oil equivalent per day (boe/d) and 104,000 boe/d, up from its previous forecast of 92,000 and 99,000 boe/d.
Analysts lauded the fact that the company raised its production view while maintaining its capital expenditure budget. Oil producers are under pressure from investors to increase output while reining in expenses.
“While we expected a production increase, the magnitude was greater than we had expected,” Williams Capital Group analyst Gabriele Sorbara said.
Energen reiterated its capital expenditure estimate range of $1.1 billion to $1.3 billion, but said higher costs associated with ancillary services and steel tariffs could push it towards the high end of the range.
The company’s net income more than doubled to $68.3 million, or 70 cents per share, in the second quarter ended June 30.
Excluding items, the company earned 77 cents per share, beating the average analyst estimate of 75 cents, according to Thomson Reuters I/B/E/S.
Total average production increased to 97,400 boe/d from 72,500 boe/d.
Total revenue rose to $339.6 million from $256.8 million.
Energen’s shares were up 1 percent at $75.00 before the opening bell. (Reporting by Shanti S Nair and Laharee Chatterjee in Bengaluru; Editing by Maju Samuel)