HighPoint Resources Corporation (the "Company" or "HighPoint")
(NYSE: HPR) today reported first quarter of 2019 financial and
operating results, including strong growth in EBITDAX and positive
well performance in both Hereford and NE Wattenberg.
For the first quarter of 2019, the Company
reported a net loss of $96.2 million, or $0.46 per diluted share.
Adjusted net income for the first quarter of 2019 was a net loss of
$10.7 million, or $0.05 per diluted share. EBITDAX for the first
quarter of 2019 was $76.9 million. Adjusted net income (loss) and
EBITDAX are non-GAAP (Generally Accepted Accounting Principles)
measures. Please reference the reconciliations to GAAP financial
statements at the end of this release.
Chief Executive Officer and President Scot
Woodall commented, "We have had an excellent start to the year as
we reported solid first quarter results. We delivered
year-over-year growth in production sales volumes of 46%, strong
EBITDAX growth of 65% and a basin operating margin1 of $30.31 per
Boe. We met production guidance despite being impacted by several
periods of severe winter weather during the quarter that affected
field operations in both NE Wattenberg and Hereford. Overall, our
team did an efficient job of working through these issues in a
timely fashion."
"Operationally, we are seeing good production
results in Hereford as the five most recent wells have reached
average cumulative production of approximately 20,000 barrels of
oil per well after 60 days. We recently initiated our development
optimization program within Hereford, which will provide valuable
drilling and completion data and a multi-generational improvement
in completion design and allow us to deliver optimum value from the
Hereford asset. We also continue to see strong results from our NE
Wattenberg high-fluid intensity completions as the initial pilot
wells are averaging more than 20% above base type-curve
expectations."
“The recent signing of Colorado Senate Bill
19-181 into law brings certainty to the industry and our
stakeholders. We believe its focus on local control should not
affect our highly advantaged acreage position, which is located
exclusively in rural areas of Weld County. Implementation of this
new bill will require changes at the COGCC and multiple rule
makings; however, we expect these rule makings will not impact our
ability to execute on our future development plans and fully
develop our well-positioned acreage within the DJ Basin."
1 Basin operating margin is defined as the average realized
price per Boe before hedging less lease operating expense,
gathering, transportation and process expense and production tax
expense
OPERATING AND FINANCIAL RESULTS
The following table summarizes certain operating
and financial results for the first quarter of 2019 and 2018 and
for the fourth quarter of 2018:
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
March 31, |
|
December 31, |
|
2019 |
|
2018 |
|
Change |
|
2018 |
|
Change |
Combined production
sales volumes (MBoe) |
2,798 |
|
|
1,914 |
|
|
46 |
% |
|
3,112 |
|
|
(10 |
)% |
Net cash provided by
operating activities ($ millions) |
$ |
77.7 |
|
|
$ |
54.3 |
|
|
43 |
% |
|
$ |
71.3 |
|
|
9 |
% |
Discretionary cash flow
($ millions) (1) |
$ |
64.2 |
|
|
$ |
34.9 |
|
|
84 |
% |
|
$ |
79.3 |
|
|
(19 |
)% |
Combined realized
prices with hedging (per Boe) |
$ |
38.01 |
|
|
$ |
37.86 |
|
|
— |
% |
|
$ |
40.29 |
|
|
(6 |
)% |
Net income (loss) ($
millions) |
$ |
(96.2 |
) |
|
$ |
(24.9 |
) |
|
(286 |
)% |
|
$ |
222.4 |
|
|
*nm |
Per
share, basic |
$ |
(0.46 |
) |
|
$ |
(0.20 |
) |
|
(130 |
)% |
|
$ |
1.06 |
|
|
*nm |
Per
share, diluted |
$ |
(0.46 |
) |
|
$ |
(0.20 |
) |
|
(130 |
)% |
|
$ |
1.06 |
|
|
*nm |
Adjusted net income
(loss) ($ millions) (1) |
$ |
(10.7 |
) |
|
$ |
(5.9 |
) |
|
(81 |
)% |
|
$ |
1.2 |
|
|
*nm |
Per
share, basic |
$ |
(0.05 |
) |
|
$ |
(0.05 |
) |
|
— |
% |
|
$ |
0.01 |
|
|
*nm |
Per
share, diluted |
$ |
(0.05 |
) |
|
$ |
(0.05 |
) |
|
— |
% |
|
$ |
0.01 |
|
|
*nm |
Weighted average shares
outstanding, basic (in thousands) |
209,932 |
|
|
123,596 |
|
|
70 |
% |
|
209,529 |
|
|
— |
% |
Weighted average shares
outstanding, diluted (in thousands) (1) |
209,932 |
|
|
123,596 |
|
|
70 |
% |
|
209,645 |
|
|
— |
% |
EBITDAX ($ millions)
(1) |
$ |
76.9 |
|
|
$ |
46.7 |
|
|
65 |
% |
|
$ |
92.1 |
|
|
(17 |
)% |
* |
|
|
Not
meaningful. |
|
|
|
|
(1) |
|
|
Discretionary cash flow, adjusted net income (loss) and EBITDAX are
non-GAAP measures. Please reference the reconciliations to GAAP
financial statements at the end of this release. |
|
|
|
|
The Company reported oil, natural gas and
natural gas liquids ("NGL") production of 2.8 MMBoe for the
first quarter of 2019, which was an increase of 46% over the first
quarter of 2018. Oil volumes totaled 1.72 MMBbls or 62% of total
equivalent production sales volumes, which was an increase of 51%
over the first quarter of 2018. The Company estimates that
approximately 65 MBoe of production was deferred during the first
quarter as a result of adverse weather in both NE Wattenberg and
Hereford.
Production sales volumes for the first quarter
were comprised of approximately 62% oil, 22% natural gas and 16%
NGLs.
For the first quarter of 2019, WTI oil prices
averaged $54.90 per barrel, Northwest Pipeline ("NWPL") natural gas
prices averaged $3.79 per MMBtu and NYMEX natural gas prices
averaged $3.15 per MMBtu. Commodity price realizations to benchmark
pricing were WTI less $4.01 per barrel of oil and NWPL less $1.58
per Mcf of gas. The NGL price averaged approximately 24% of the WTI
price per barrel and was impacted by temporary third-party
processing inefficiencies that adversely affected prices.
For the first quarter of 2019, the Company had
derivative commodity swaps in place for 17,085 barrels of oil per
day tied to WTI pricing at $58.33 per barrel, 12,500 MMBtu of
natural gas per day tied to NWPL regional pricing at $3.06 per
MMBtu, derivative collars in place for 2,500 MMBtu of natural gas
with a ceiling price of $4.45 per MMBtu and a floor price of $3.25
per MMBtu, and no hedges in place for NGLs.
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
March 31, |
|
December 31, |
|
2019 |
|
2018 |
|
Change |
|
2018 |
|
Change |
Average Realized Prices
before Hedging: |
|
|
|
|
|
|
|
|
|
Oil (per Bbl) |
$ |
50.82 |
|
|
$ |
60.45 |
|
|
(16 |
)% |
|
$ |
56.35 |
|
|
(10 |
)% |
Natural
gas (per Mcf) |
2.21 |
|
|
1.95 |
|
|
13 |
% |
|
2.13 |
|
|
4 |
% |
NGLs (per
Bbl) |
13.29 |
|
|
20.31 |
|
|
(35 |
)% |
|
22.54 |
|
|
(41 |
)% |
Combined
(per Boe) |
36.35 |
|
|
42.24 |
|
|
(14 |
)% |
|
41.88 |
|
|
(13 |
)% |
|
|
|
|
|
|
|
|
|
|
Average Realized Prices
with Hedging: |
|
|
|
|
|
|
|
|
|
Oil (per
Bbl) |
$ |
54.01 |
|
|
$ |
53.00 |
|
|
2 |
% |
|
$ |
54.08 |
|
|
— |
% |
Natural
gas (per Mcf) |
1.98 |
|
|
1.98 |
|
|
— |
% |
|
2.01 |
|
|
(1 |
)% |
NGLs (per
Bbl) |
13.29 |
|
|
20.31 |
|
|
(35 |
)% |
|
22.54 |
|
|
(41 |
)% |
Combined
(per Boe) |
38.01 |
|
|
37.86 |
|
|
— |
% |
|
40.29 |
|
|
(6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating expense ("LOE") averaged $4.03
per Boe in the first quarter of 2019 compared to $3.27 per Boe in
the first quarter of 2018. First quarter LOE is typically greater
compared to the remainder of the year due to higher seasonal
operating costs. LOE for the first quarter of 2019 was higher on a
year-over-year basis primarily as a result of adverse weather
experienced in NE Wattenberg and Hereford and one-time annual
compressor maintenance.
Production tax expense averaged $1.39 per Boe in
the first quarter of 2019 compared to $2.70 per Boe in the first
quarter of 2018. Production taxes for the first quarter of 2019
include an annual true-up of Colorado ad valorem tax based on
actual assessments and a true-up of the Colorado severance tax.
Production tax is expected to average approximately 8%-9% of
revenues for the remainder of 2019.
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
March 31, |
|
December 31, |
|
2019 |
|
2018 |
|
Change |
|
2018 |
|
Change |
Average Costs (per
Boe): |
|
|
|
|
|
|
|
|
|
Lease operating
expenses |
$ |
4.03 |
|
|
$ |
3.27 |
|
|
23 |
% |
|
$ |
2.17 |
|
|
86 |
% |
Gathering, transportation and processing expense |
0.62 |
|
|
0.22 |
|
|
182 |
% |
|
0.58 |
|
|
7 |
% |
Production tax expenses |
1.39 |
|
|
2.70 |
|
|
(49 |
)% |
|
3.34 |
|
|
(58 |
)% |
Depreciation, depletion and amortization |
25.95 |
|
|
21.41 |
|
|
21 |
% |
|
24.53 |
|
|
6 |
% |
General
and administrative expense |
4.52 |
|
|
5.28 |
|
|
(14 |
)% |
|
3.44 |
|
|
31 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt and Liquidity
At March 31, 2019, the Company had cash and cash
equivalents of $45 million and $404 million available under its
$500 million credit facility, after taking into account a $26
million letter of credit, resulting in total liquidity of $449
million. The Company is currently undergoing its semi-annual
borrowing base review and expects that its $500 million borrowing
base will remain unchanged. Net debt totaled $650.3 million at
March 31, 2019.
Capital Expenditures
Capital expenditures for the first quarter of
2019 totaled $126.1 million, which was at the low end of the
Company's guidance range of $125-$135 million. The Company operated
three drilling rigs during the first quarter and capital projects
included spudding 28 gross extended reach lateral ("XRL") wells and
placing 12 gross XRL wells on initial flowback.
Capital expenditures included $111.9 million for
drilling and completion operations, $0.3 million for leasehold, and
$13.9 million for infrastructure and corporate assets.
OPERATIONAL UPDATE
Hereford Field
Production sales volumes for the first quarter
of 2019 in Hereford averaged 6,447 Boe/d (72% oil). During the
first quarter of 2019, 13 gross wells were spud and 5 gross wells
were placed on flowback in February on the eastern portion of
drilling and spacing unit ("DSU") 11-63-15. The wells were
completed during the fourth quarter of 2018 using the previous
standard completion design of approximately 18 barrels of fluid per
lateral foot, approximately 1,500 pounds of sand per lateral foot,
and controlled flowback. The wells were placed on flowback in
February 2019 and have achieved average cumulative production of
approximately 20,000 barrels of oil (87% of equivalent volumes) per
well after 60 days. The remaining five XRL wells in this section
were placed on flowback in April.
An extensive reservoir and geologic technical
study of well performance was recently initiated within DSU
11-63-16 and DSU 11-63-17. This entails utilizing microseismic and
fiber optic technology to determine the optimal stimulation design
and well spacing to be utilized for full scale DSU development.
This technology advancement allows for real-time collection of data
and performance monitoring that provides immediate feedback with
respect to future completions, facilitates the application of
completion technology and validates well spacing assumptions. In
addition, a methodical sequencing of drilling and completion
operations is being implemented to create a buffer zone around
active completions to mitigate interference from offset activity
and increase stimulation intensity.
The technical study area consists of 23 XRL
wells within the two DSUs, incorporates fiber optic monitoring on
three wells, well spacing assumptions of 10 to 16 XRL wells per DSU
and microseismic monitoring across the area. To date, all 23 XRL
wells have been drilled, including the three wells equipped with
fiber optic monitoring and completion operations have commenced on
the initial pad in DSU 11-63-16. Early drilling and completion data
is being processed and real-time integration of the data has
commenced. The initial completions will utilize approximately 30
barrels of fluid per lateral foot, which is approximately 70%
greater than the previous completion design. It is anticipated that
the wells will be placed on initial flowback beginning in second
quarter of 2019. Completed well costs for the high-fluid intensity
wells are expected to average approximately $4.9 million in 2019,
which is approximately 5% lower than wells drilled in the 2018.
Summit Midstream is in the process of expanding
its Hereford gas processing complex from 20 MMcf/d to 60 MMcf/d.
The new plant is anticipated to be commissioned in the second
quarter of 2019.
NE Wattenberg
The Company produced an average of 24,637 Boe/d
(59% oil) in the first quarter of 2019 in NE Wattenberg,
representing a 19% increase over the first quarter of 2018. For the
first quarter of 2019, 15 gross wells were spud and 7 gross wells
were placed on flowback. The Company continues to see improved well
performance through high-fluid intensity completions. The initial
11 well pilot program has reached average cumulative production of
approximately 77,000 barrels of oil (80% of equivalent volumes) per
well after approximately 205 days of production and are tracking
more than 20% above the base NE Wattenberg type-curve. The Company
remains highly encouraged by the results of the program and this
completion design has been implemented as the new standard for
future development.
Drilling operations are currently focused on the
central portion of NE Wattenberg in DSU 5-61-34 (7 XRL wells) and
DSU 5-61-35 (7 XRL wells). The wells are anticipated to be
completed during the second quarter of 2019. In addition,
completion activity continues on the western portion of the field
in DSU 4-63-3 (4 standard reach lateral wells) and DSU 4-63-5 (7
XRL wells). The wells are expected to be placed on flowback
beginning in the third quarter of 2019.
2019 OPERATING GUIDANCE
The Company is reiterating its 2019 operating
guidance and providing second quarter of 2019 guidance for capital
expenditures and production as discussed below.
See "Forward-Looking Statements" below.
- Capital expenditures of
approximately $350-$380 million, unchanged
- Second quarter of 2019 capital expenditures are expected to be
approximately $120-$130 million
- Production of 12.5-13.0 MMBoe,
unchanged
- Second quarter 2019 production is expected to approximate
2.8-2.9 MMBoe (approximately 62% oil) and incorporates downtime
associated with the commissioning of the Summit Midstream natural
gas process facility in Hereford
- Lease operating expense of $35-$39
million, unchanged
- Cash general and administrative
expense of $41-$45 million, unchanged
- Gathering, transportation and
processing costs of $10-$12 million, unchanged
- Unused commitment for firm natural
gas transportation charges of $18-$19 million, unchanged
COMMODITY HEDGES UPDATE
The following table summarizes our current hedge
position as of May 6, 2019:
|
|
|
|
|
|
|
Oil (WTI) Swaps |
|
Oil (WTI)
Collars |
|
Natural Gas
(NWPL) |
|
|
|
|
|
Swaps |
|
Volume |
|
Price |
|
Volume |
|
Floor |
|
Ceiling |
|
Volume |
|
Price |
Period |
Bbls/d |
|
$/Bbl |
|
Bbls/d |
|
$Bbl |
|
$/Bbl |
|
MMBtu/d |
|
$/MMBtu |
2Q19 |
17,250 |
|
$ |
59.18 |
|
— |
|
$ |
— |
|
$ |
— |
|
7,000 |
|
$ |
2.11 |
3Q19 |
16,731 |
|
$ |
59.00 |
|
3,000 |
|
$ |
55.00 |
|
$ |
77.56 |
|
7,000 |
|
$ |
2.11 |
4Q19 |
16,712 |
|
$ |
59.01 |
|
3,000 |
|
$ |
55.00 |
|
$ |
77.56 |
|
7,000 |
|
$ |
2.11 |
1Q20 |
15,000 |
|
$ |
60.13 |
|
— |
|
$ |
— |
|
$ |
— |
|
— |
|
$ |
— |
2Q20 |
12,500 |
|
$ |
59.87 |
|
— |
|
$ |
— |
|
$ |
— |
|
— |
|
$ |
— |
3Q20 |
10,000 |
|
$ |
58.90 |
|
— |
|
$ |
— |
|
$ |
— |
|
— |
|
$ |
— |
4Q20 |
10,000 |
|
$ |
58.90 |
|
— |
|
$ |
— |
|
$ |
— |
|
— |
|
$ |
— |
1Q21 |
1,000 |
|
$ |
57.13 |
|
— |
|
$ |
— |
|
$ |
— |
|
— |
|
$ |
— |
2Q21 |
1,000 |
|
$ |
57.13 |
|
— |
|
$ |
— |
|
$ |
— |
|
— |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized sales prices will reflect basis
differentials from the index prices to the sales location.
UPCOMING EVENTS
First Quarter Conference Call and Webcast
The Company plans to host a conference call on
Tuesday, May 7, 2019, to discuss first quarter 2019 results.
The call is scheduled at 10:00 a.m. Eastern time (8:00 a.m.
Mountain time). Please join the webcast conference call live or for
replay via the Internet at www.hpres.com, accessible from the home
page. To join by telephone, call (855) 760-8152 ((631) 485-4979
international callers) with passcode 5283548. The webcast will
remain on the Company's website for approximately 7 days and a
replay of the call will be available through May 14, 2019 at
(855) 859-2056 ((404) 537-3406 international) with passcode
5283548.
An updated corporate slide presentation that
will be referenced on the conference call will be available on the
“Investor Relations” section of the Company’s website prior to the
start of the call.
Investor Events
Members of the Company's management are
currently scheduled to participate in the following investor
events:
- May 14-15, 2019 - Tudor, Pickering, Holt & Co. Hotter 'N
Hell Conference in Houston, TX
- June 5-6, 2019 - Bank of America Merrill Lynch 2019 Energy
Credit Conference in New York, NY
- June 10, 2019 - Stifel 2019 Cross Sector Insight Conference in
Boston, MA
- June 11-12, 2019 - Wells Fargo West Coast Energy Conference in
San Francisco, CA
- June 18-19, 2019 - J.P. Morgan Energy Conference in New York,
NY
Presentation materials will be posted to the investor relations
section of the Company's website at www.hpres.com prior to the
start of the events.
WEBSITE INFORMATION
This press release, along with other news about
HighPoint, is available
at http://investor.hpres.com/news-releases. We routinely post
information that may be important to investors in the investor
relations section of our website,
http://investor.hpres.com/news-releases. We use this website as a
means of disclosing material, non-public information and for
complying with our disclosure obligations under Regulation FD, and
we encourage investors to consult that section of our website
regularly for important information about the Company. The
information contained on, or that may be accessed through, our
website is not incorporated by reference into, and is not a part
of, this document. Investors interested in automatically receiving
news and information when posted to our website can also
visit http://investor.hpres.com/news-releases to sign up
for email alerts.
FORWARD LOOKING STATEMENTS
All statements in this press release, other than
statements of historical fact, are forward-looking statements
within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934.
Words such as expects, forecast, guidance, anticipates, intends,
plans, believes, seeks, estimates and similar expressions or
variations of such words are intended to identify forward-looking
statements herein; however, these are not the exclusive means of
identifying forward-looking statements. In particular, the Company
is providing "2019 Operating Guidance", which contains projections
for certain second quarter and full-year 2019 operational and
financial metrics. Additional forward-looking statements in this
release relate to, among other things, future capital expenditures,
costs, projects and opportunities, the availability of additional
natural gas processing capacity and the impact of regulatory
developments.
These and other forward-looking statements in
this press release are based on management's judgment as of the
date of this release and are subject to numerous risks and
uncertainties. Actual results may vary significantly from those
indicated in the forward-looking statements. Please refer to the
HighPoint Resources' Annual Report on Form 10-K for the year ended
December 31, 2018 filed with the SEC, and other filings,
including our Current Reports on Form 8-K and Quarterly Reports on
Form 10-Q, all of which are incorporated by reference herein, for
further discussion of risk factors that may affect the
forward-looking statements. See our Quarterly Report on Form 10-Q
for the quarter ended March 31, 2019 for additional information.
The Company encourages you to consider the risks and uncertainties
associated with projections and other forward-looking statements
and to not place undue reliance on any such statements. In
addition, the Company assumes no obligation to publicly revise or
update any forward-looking statements based on future events or
circumstances.
ABOUT HIGHPOINT RESOURCES
CORPORATION
HighPoint Resources Corporation (NYSE: HPR) is a
Denver, Colorado based company focused on the development of oil
and natural gas assets located in the Denver-Julesburg Basin of
Colorado. Additional information about the Company may be found on
its website at www.hpres.com.
HIGHPOINT RESOURCES
CORPORATIONSelected Operating
Highlights(Unaudited)
|
|
|
Three Months Ended |
|
March 31, |
|
2019 |
|
2018 |
Production Data: |
|
|
|
Oil
(MBbls) |
1,720 |
|
|
1,137 |
|
Natural
gas (MMcf) |
3,756 |
|
|
2,562 |
|
NGLs
(MBbls) |
452 |
|
|
350 |
|
Combined
volumes (MBoe) |
2,798 |
|
|
1,914 |
|
Daily
combined volumes (Boe/d) |
31,089 |
|
|
21,267 |
|
|
|
|
|
Average
Sales Prices (before the effects of realized hedges): |
Oil (per Bbl) |
$ |
50.82 |
|
|
$ |
60.45 |
|
Natural
gas (per Mcf) |
2.21 |
|
|
1.95 |
|
NGLs (per
Bbl) |
13.29 |
|
|
20.31 |
|
Combined
(per Boe) |
36.35 |
|
|
42.24 |
|
|
|
|
|
Average
Realized Sales Prices (after the effects of realized hedges): |
Oil (per
Bbl) |
$ |
54.01 |
|
|
$ |
53.00 |
|
Natural
gas (per Mcf) |
1.98 |
|
|
1.98 |
|
NGLs (per
Bbl) |
13.29 |
|
|
20.31 |
|
Combined
(per Boe) |
38.01 |
|
|
37.86 |
|
|
|
|
|
Average Costs (per
Boe): |
|
|
|
Lease
operating expenses |
$ |
4.03 |
|
|
$ |
3.27 |
|
Gathering, transportation and processing expense |
0.62 |
|
|
0.22 |
|
Production tax expenses |
1.39 |
|
|
2.70 |
|
Depreciation, depletion and amortization |
25.95 |
|
|
21.41 |
|
General
and administrative expense (1) |
4.52 |
|
|
5.28 |
|
(1) |
|
|
Includes
long-term cash and equity incentive compensation of $0.97 per Boe
and $0.75 per Boe for the three months ended March 31, 2019
and 2018, respectively. |
|
|
|
|
HIGHPOINT RESOURCES
CORPORATIONConsolidated Condensed Balance
Sheets(Unaudited)
|
|
|
|
|
As of |
|
As of |
|
March 31, |
|
December 31, |
|
2019 |
|
2018 |
|
|
|
|
|
(in thousands) |
Assets: |
|
|
|
Cash and cash
equivalents |
$ |
44,658 |
|
|
$ |
32,774 |
|
Other
current assets |
62,387 |
|
|
157,007 |
|
Property
and equipment, net |
2,096,160 |
|
|
2,029,523 |
|
Other
noncurrent assets |
9,331 |
|
|
33,156 |
|
Total
assets |
$ |
2,212,536 |
|
|
$ |
2,252,460 |
|
|
|
|
|
Liabilities and
Stockholders' Equity: |
|
|
|
Current
liabilities (1) |
$ |
249,755 |
|
|
$ |
248,185 |
|
Long-term
debt, net of debt issuance costs |
687,768 |
|
|
617,387 |
|
Other
long-term liabilities (1) |
158,538 |
|
|
174,790 |
|
Stockholders' equity |
1,116,475 |
|
|
1,212,098 |
|
Total
liabilities and stockholders' equity |
$ |
2,212,536 |
|
|
$ |
2,252,460 |
|
(1) |
|
|
At
March 31, 2019, the estimated fair value of all of the
Company's commodity derivative instruments was a liability of $1.4
million, comprised of $4.4 million of current liabilities and
offset by $3.0 million of non-current assets. This amount will
fluctuate based on estimated future commodity prices and the
current hedge position. |
|
|
|
|
HIGHPOINT RESOURCES
CORPORATIONConsolidated Statements of
Operations(Unaudited)
|
|
|
Three Months Ended |
|
March 31, |
|
2019 |
|
2018 |
|
|
|
|
|
(in thousands, except per share amounts) |
Operating
Revenues: |
|
|
|
Oil, gas and NGL
production |
$ |
101,705 |
|
|
$ |
80,831 |
|
Other
operating revenues, net |
275 |
|
|
(21 |
) |
Total
operating revenues |
101,980 |
|
|
80,810 |
|
Operating
Expenses: |
|
|
|
Lease
operating |
11,277 |
|
|
6,251 |
|
Gathering, transportation and processing |
1,723 |
|
|
419 |
|
Production tax |
3,893 |
|
|
5,175 |
|
Exploration |
25 |
|
|
13 |
|
Impairment, dry hole costs and abandonment |
322 |
|
|
317 |
|
(Gain)
Loss on sale of properties |
(5 |
) |
|
408 |
|
Depreciation, depletion and amortization |
72,610 |
|
|
40,985 |
|
Unused
commitments |
4,469 |
|
|
4,538 |
|
General
and administrative (1) |
12,660 |
|
|
10,107 |
|
Merger
transaction expense |
2,414 |
|
|
4,763 |
|
Other
operating expenses, net |
(24 |
) |
|
39 |
|
Total
operating expenses |
109,364 |
|
|
73,015 |
|
Operating Income
(Loss) |
(7,384 |
) |
|
7,795 |
|
Other Income and
Expense: |
|
|
|
Interest
and other income |
314 |
|
|
691 |
|
Interest
expense |
(13,679 |
) |
|
(13,090 |
) |
Commodity
derivative gain (loss) (2) |
(105,191 |
) |
|
(20,333 |
) |
Total
other income and expense |
(118,556 |
) |
|
(32,732 |
) |
Income (Loss) before
Income Taxes |
(125,940 |
) |
|
(24,937 |
) |
(Provision for) Benefit
from Income Taxes |
29,711 |
|
|
— |
|
Net Income (Loss) |
$ |
(96,229 |
) |
|
$ |
(24,937 |
) |
|
|
|
|
Net Income (Loss) per
Common Share |
|
|
|
Basic |
$ |
(0.46 |
) |
|
$ |
(0.20 |
) |
Diluted |
$ |
(0.46 |
) |
|
$ |
(0.20 |
) |
Weighted Average Common
Shares Outstanding |
|
|
|
Basic |
209,932 |
|
|
123,596 |
|
Diluted |
209,932 |
|
|
123,596 |
|
(1) |
|
|
Includes
long-term cash and equity incentive compensation of $2.7 million
and $1.4 million for the three months ended March 31, 2019 and
2018, respectively. |
|
|
|
|
(2) |
|
|
The
table below summarizes the realized and unrealized gains and losses
the Company recognized related to its oil and natural gas
derivative instruments for the periods indicated: |
|
|
|
|
|
Three Months Ended |
|
March 31, |
|
2019 |
|
2018 |
|
|
|
|
|
(in thousands) |
Included in commodity
derivative gain (loss): |
|
|
|
Realized gain (loss) on
derivatives (1) |
$ |
4,649 |
|
|
$ |
(8,388 |
) |
Prior
year unrealized (gain) loss transferred to realized (gain) loss
(1) |
(19,759 |
) |
|
6,094 |
|
Unrealized gain (loss) on derivatives (1) |
(90,081 |
) |
|
(18,039 |
) |
Total
commodity derivative gain (loss) |
$ |
(105,191 |
) |
|
$ |
(20,333 |
) |
(1) |
|
|
Realized
and unrealized gains and losses on commodity derivatives are
presented herein as separate line items but are combined for a
total commodity derivative gain (loss) in the Consolidated
Statements of Operations. This separate presentation is a non-GAAP
measure. Management believes the separate presentation of the
realized and unrealized commodity derivative gains and losses is
useful because the realized cash settlement portion provides a
better understanding of the Company's hedge position. The
Company also believes that this disclosure allows for a more
accurate comparison to its peers. |
|
|
|
|
HIGHPOINT RESOURCES
CORPORATIONConsolidated Statements of Cash
Flows(Unaudited)
|
|
|
Three Months Ended |
|
March 31, |
|
2019 |
|
2018 |
|
|
|
|
|
(in thousands) |
Operating
Activities: |
|
|
|
Net income (loss) |
$ |
(96,229 |
) |
|
$ |
(24,937 |
) |
Adjustments to reconcile to net cash provided by operations: |
|
|
|
Depreciation, depletion and amortization |
72,610 |
|
|
40,985 |
|
Impairment, dry hole costs and abandonment |
322 |
|
|
317 |
|
Unrealized derivative (gain) loss |
109,840 |
|
|
11,945 |
|
Deferred
income tax benefit |
(29,711 |
) |
|
— |
|
Incentive
compensation and other non-cash charges |
4,318 |
|
|
835 |
|
Amortization of deferred financing costs |
640 |
|
|
563 |
|
(Gain)
loss on sale of properties |
(5 |
) |
|
408 |
|
Change in
operating assets and liabilities: |
|
|
|
Accounts
receivable |
15,470 |
|
|
9,166 |
|
Prepayments and other assets |
(72 |
) |
|
(111 |
) |
Accounts
payable, accrued and other liabilities |
7,304 |
|
|
822 |
|
Amounts
payable to oil and gas property owners |
(10,906 |
) |
|
9,609 |
|
Production taxes payable |
4,102 |
|
|
4,715 |
|
Net cash
provided by (used in) operating activities |
$ |
77,683 |
|
|
$ |
54,317 |
|
Investing
Activities: |
|
|
|
Additions
to oil and gas properties, including acquisitions |
(130,862 |
) |
|
(88,854 |
) |
Additions
of furniture, equipment and other |
(1,309 |
) |
|
(122 |
) |
Repayment
of debt associated with merger, net of cash acquired |
— |
|
|
(53,357 |
) |
Other
investing activities |
(273 |
) |
|
(157 |
) |
Net cash
provided by (used in) investing activities |
$ |
(132,444 |
) |
|
$ |
(142,490 |
) |
Financing
Activities: |
|
|
|
Proceeds
from debt |
70,000 |
|
|
— |
|
Principal
payments on debt |
(1,859 |
) |
|
(116 |
) |
Other
financing activities |
(1,496 |
) |
|
(1,485 |
) |
Net cash
provided by (used in) financing activities |
$ |
66,645 |
|
|
$ |
(1,601 |
) |
Increase (Decrease) in
Cash and Cash Equivalents |
11,884 |
|
|
(89,774 |
) |
Beginning Cash and Cash
Equivalents |
32,774 |
|
|
314,466 |
|
Ending Cash and Cash
Equivalents |
$ |
44,658 |
|
|
$ |
224,692 |
|
|
|
|
|
|
|
|
|
HIGHPOINT RESOURCES
CORPORATIONReconciliation of Discretionary Cash
Flow, Adjusted Net Income (Loss) and
EBITDAX(Unaudited)
Discretionary Cash Flow
Reconciliation
|
|
|
Three Months Ended |
|
March 31, |
|
2019 |
|
2018 |
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
Net Cash Provided by
(Used in) Operating Activities |
$ |
77,683 |
|
|
$ |
54,317 |
|
Adjustments to
reconcile to discretionary cash flow: |
|
|
|
Exploration expense |
25 |
|
|
13 |
|
Merger
transaction expense |
2,414 |
|
|
4,763 |
|
Changes
in working capital |
(15,898 |
) |
|
(24,201 |
) |
Discretionary Cash
Flow |
$ |
64,224 |
|
|
$ |
34,892 |
|
|
|
|
|
|
|
|
|
Adjusted Net Income (Loss) Reconciliation
|
|
|
Three Months Ended |
|
March 31, |
|
2019 |
|
2018 |
|
|
|
|
|
(in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
Net Income (Loss) |
$ |
(96,229 |
) |
|
$ |
(24,937 |
) |
Provision
for (Benefit from) income taxes |
(29,711 |
) |
|
— |
|
Income (Loss) before
income taxes |
(125,940 |
) |
|
(24,937 |
) |
|
|
|
|
Adjustments to net
income (loss): |
|
|
|
Unrealized derivative (gain) loss |
109,840 |
|
|
11,945 |
|
(Gain)
loss on sale of properties |
(5 |
) |
|
408 |
|
One-time
item: |
|
|
|
Merger
transaction expense |
2,414 |
|
|
4,763 |
|
(Income)
expense related to properties sold |
(299 |
) |
|
39 |
|
Adjusted Income (Loss)
before income taxes |
(13,990 |
) |
|
(7,782 |
) |
Adjusted
(provision for) benefit from income taxes (1) |
3,300 |
|
|
1,912 |
|
Adjusted Net Income
(Loss) |
$ |
(10,690 |
) |
|
$ |
(5,870 |
) |
Per
share, diluted |
$ |
(0.05 |
) |
|
$ |
(0.05 |
) |
(1) |
|
|
Adjusted
(provision for) benefit from income taxes is calculated using the
Company's current effective tax rate prior to applying the
valuation allowance against deferred tax assets. |
|
|
|
|
EBITDAX Reconciliation
|
|
|
Three Months Ended |
|
March 31, |
|
2019 |
|
2018 |
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
Net Income (Loss) |
$ |
(96,229 |
) |
|
$ |
(24,937 |
) |
Adjustments to
reconcile to EBITDAX: |
|
|
|
Depreciation, depletion and amortization |
72,610 |
|
|
40,985 |
|
Impairment, dry hole and abandonment expense |
322 |
|
|
317 |
|
Exploration expense |
25 |
|
|
13 |
|
Unrealized derivative (gain) loss |
109,840 |
|
|
11,945 |
|
Incentive
compensation and other non-cash charges |
4,318 |
|
|
835 |
|
Merger
transaction expense |
2,414 |
|
|
4,763 |
|
(Gain)
loss on sale of properties |
(5 |
) |
|
408 |
|
Interest
and other income |
(314 |
) |
|
(691 |
) |
Interest
expense |
13,679 |
|
|
13,090 |
|
Provision
for (benefit from) income taxes |
(29,711 |
) |
|
— |
|
EBITDAX |
$ |
76,949 |
|
|
$ |
46,728 |
|
|
|
|
|
|
|
|
|
Discretionary cash flow, adjusted net income
(loss) and EBITDAX are non-GAAP measures. These measures are
presented because management believes that they provide useful
additional information to investors for analysis of the Company's
performance and, in the case of discretionary cash flow, liquidity.
In addition, the Company believes that these measures are widely
used by professional research analysts and others in the valuation,
comparison and investment recommendations of companies in the oil
and gas exploration and production industry, and that many
investors use the published research of industry research analysts
in making investment decisions.
These measures should not be considered in
isolation or as a substitute for net income, income from
operations, net cash provided by operating activities or other
income, profitability, cash flow or liquidity measures prepared in
accordance with GAAP. The definition of these measures may vary
among companies, and, therefore, the amounts presented may not be
comparable to similarly titled measures of other companies.
Company contact: Larry C. Busnardo, Vice
President, Investor Relations, 303-312-8514
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