Energy companies see challenging 2009

Author: Arup Roychoudhury

BANGALORE (Reuters) - Oil and gas companies Bill Barrett Corp (BBG.N) and Unit Corp (UNT.N) posted quarterly results that were hurt by one-time writedowns and charges, resulting from the precipitous fall in oil and gas prices, and forecast a bleak outlook for 2009.

Parker Drilling (PKD.N), which posted better-than-expected adjusted fourth-quarter results, also forecast first-quarter earnings below expectations and said it expects its U.S. Gulf of Mexico barge business to decline sharply in 2009.

The energy sector has been hit hard by a sell-off in oil and gas prices and the global credit crunch, forcing many companies to cut their 2009 spending and trim output to protect profit margins.

In Europe, Norwegian engineering group Aker Solutions (AKSO.OL), a supplier to the oil and gas industry, posted a sharp fall in fourth-quarter core profit.

But it stuck to its 2009 outlook saying it was too early to say how the financial crisis would affect its business.

Bill Barrett, whose quarterly profit beat expectations, cut its 2009 capital expenditure outlook to $350 million, a 42 percent drop from the $601 million it spent in 2008.

"We expect the momentum of supply growth from 2008 to exert downward pressure on pricing through the winter and summer months of 2009," Chief Executive Fred Barrett said during a conference call with analysts. The company also lowered its 2009 production target.

Tulsa, Oklahoma-based Unit Corp said it expects drilling activity to slow down, as it plans to drill only about 175 wells in 2009, down 37 percent from 2008 levels.

"We expect further rigs to be stacked and rates to decline in 2009," Jesup and Lamont Securities analyst Lewis Kreps said.

Unit Corp said it has postponed construction of five drilling rigs, and canceled construction of three others.

WRITEDOWN, CHARGES HURT Q4

For the fourth quarter, Bill Barrett reported a 176 percent jump in earnings to 15 cents a share. Excluding an impairment charge of $25.3 million and other gains, the company reported earnings of 46 cents a share.

Energy companies like ConocoPhillips (COP.N), have recorded large charges in the fourth quarter, to adjust the book value of their assets to account for a more than 50 percent drop in crude oil prices and weakness in global equity markets.

Unit Corp's fourth-quarter results also included a similar non-cash ceiling test writedown of $282 million, excluding which the company reported a profit of $1.19 a share.

Shares of Parker were up as much as 37.5 percent Tuesday on the New York Stock Exchange before paring gains to trade 30 percent up at $1.66.

Shares of Bill Barrett were trading up 9 percent at $19.68, while Unit Corp shares were up 3 percent at $22.40 Tuesday afternoon on the New York Stock Exchange.

(Editing by Dinesh Nair, Jarshad Kakkrakandy)