PostRock Energy Corporation (NASDAQ:PSTR) provided shareholders with an update for its plans for 2015 and also made clear its intentions to lower costs for the coming year. Oil production rose to 754 barrels per day which is up from 2014’s total by 43%. In December, the company’s oil production reached 929 barrels per day. The company’s gas production slowed 9% to 36 MMcF per day. Revenues for 2014 increased by 15% over 2013’s total. Operating expenses were reduced by about $1 million when compared to 2013. The company also reduced debt by 10% to bring it down to $83 million.
PostRock Energy Corporation (NASDAQ:PSTR)’s new cost efficient programs are starting to take effect. They intend to reduce operating costs by $4 million annually, beginning in 2015. They set their capital budget at $5.5 million. That is a reduction of 80% from the previous year. Depending how well gas prices act, that could be reduced more. The company also reduced the staff at its Oklahoma City headquarters by 25%. This is planned to save an additional $2.2 million. These are on top of other smaller operational cost cutting measures. They also intend to reduce maintenance capital and to complete all projects that were started in 2014. No drilling is planned for 2015 unless gas prices move higher. This is to preserve the asset and not have to sell it at a discounted price.
The company has hedged both its gas and oil deposits. The oils hedged at $93.73 per barrel and gas $4.01 per MMbtu. This is a prudent and smart plan going forward and protects PostRock Energy Corporation (NASDAQ:PSTR)’s saleable assets. The two plants in Houston have been tapped and they will not resume until prices appreciate. They were both high-producers in 2014 but once the commodity devalued it was no longer prudent to keep them drilling.
The stock has had a good run recently and has found valuable support. It is starting to muscle up and once volume strengthens may make a effort to take out the $9 level.