News Release Details
CORRECTION - HighPoint Resources Reports Third Quarter 2019 Financial and Operating Results
- Reported production sales volume of 3.4 million barrels of oil equivalent ("MMBoe") for the third quarter of 2019, represents an increase of 20% over the second quarter of 2019 and a 24% increase over the third quarter of 2018
- Oil production sales volume of 2.18 million barrels of oil ("MMBbls") for the third quarter of 2019 or 64% of total equivalent production sales volume, represents an increase of 25% over the second quarter of 2019 and a 27% increase over the third quarter of 2018
- Reported net income of
$11.1 million or$0.05 per diluted share and adjusted net income (non-GAAP) of a loss of$7.4 million or$0.03 per diluted share
- EBITDAX (non-GAAP) of
$94.3 million increased 33% over the second quarter of 2019 driven by a significant per unit reduction in controllable cash operating costs1 of 29% and 30% compared to both the second quarter of 2019 and third quarter of 2018, respectively
- Continued positive results from DSU 11-63-16 (east pad) as wells are exhibiting a dramatic 120% increase in current daily production rate through 130 days with a shallower decline compared to previously completed wells, demonstrating economic development of both the Niobrara and Codell formations in Hereford
- Encouraging early performance from upspaced DSU 11-63-16 (west pad) that is exhibiting a meaningful increase of 55% in current daily production rate through 85 days compared to previously completed wells and continues ramping to peak production
- Became cash flow positive in the third quarter of 2019
- Semi-annual borrowing base review recently completed with
$500 million credit facility reaffirmed
Reconciliations of non-GAAP measures, including adjusted net income and EBITDAX can be found in the tables at the end of this release
1 Cash operating costs include lease operating expense, gathering, transportation and processing expense and production tax expense
For the third quarter of 2019, the Company reported net income of
Chief Executive Officer and President
OPERATING AND FINANCIAL RESULTS
The following table summarizes certain operating and financial results for the third quarter of 2019 and 2018 and for the second quarter of 2019:
Three Months Ended September 30, |
Three Months Ended June 30, |
||||||||||||||||
2019 | 2018 | Change | 2019 | Change | |||||||||||||
Combined production sales volumes (MBoe) | 3,399 | 2,736 | 24 | % | 2,841 | 20 | % | ||||||||||
Net cash provided by operating activities ($ millions) | $ | 96.8 | $ | 91.3 | 6 | % | $ | 20.9 | 363 | % | |||||||
Discretionary cash flow ($ millions) (1) | $ | 79.9 | $ | 65.9 | 21 | % | $ | 57.5 | 39 | % | |||||||
Combined realized prices with hedging (per Boe) | $ | 36.88 | $ | 41.23 | (11 | )% | $ | 37.48 | (2 | )% | |||||||
Net income (loss) ($ millions) | $ | 11.1 | $ | (29.4 | ) | *nm | $ | (1.9 | ) | *nm | |||||||
Per share, basic | $ | 0.05 | $ | (0.14 | ) | *nm | $ | (0.01 | ) | *nm | |||||||
Per share, diluted | $ | 0.05 | $ | (0.14 | ) | *nm | $ | (0.01 | ) | *nm | |||||||
Adjusted net income (loss) ($ millions) (1) | $ | (7.4 | ) | $ | 2.3 | *nm | $ | (15.0 | ) | 51 | % | ||||||
Per share, basic | $ | (0.04 | ) | $ | 0.01 | *nm | $ | (0.07 | ) | 43 | % | ||||||
Per share, diluted | $ | (0.03 | ) | $ | 0.01 | *nm | $ | (0.07 | ) | 57 | % | ||||||
Weighted average shares outstanding, basic (in thousands) | 210,550 | 209,502 | 1 | % | 210,377 | — | % | ||||||||||
Weighted average shares outstanding, diluted (in thousands) (1) | 210,937 | 209,502 | 1 | % | 210,377 | — | % | ||||||||||
EBITDAX ($ millions) (1) | $ | 94.3 | $ | 78.0 | 21 | % | $ | 71.1 | 33 | % |
(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 3.4 MMBoe for the third quarter of 2019, which was a 20% increase over the second quarter of 2019 and a 24% increase over the third quarter of 2018. Oil volumes totaled 2.18 MMBbls, which was a 25% increase over the second quarter of 2019 and a 27% increase over the third quarter of 2018. Third quarter of 2019 volumes were negatively impacted by depressed processing yields, including basin-wide ethane rejections.
Production sales volumes for the third quarter were comprised of approximately 64% oil, 21% natural gas and 15% NGLs.
For the third quarter of 2019, West Texas Intermediate ("WTI") oil prices averaged
For the third quarter of 2019, the Company had derivative commodity swaps in place for 19,730 barrels of oil per day tied to WTI pricing at
Three Months Ended September 30, |
Three Months Ended June 30, |
||||||||||||||||
2019 | 2018 | Change | 2019 | Change | |||||||||||||
Average Realized Prices before Hedging: | |||||||||||||||||
Oil (per Bbl) | $ | 52.27 | $ | 66.96 | (22 | )% | $ | 55.46 | (6 | )% | |||||||
Natural gas (per Mcf) | 1.03 | 1.59 | (35 | )% | 1.58 | (35 | )% | ||||||||||
NGLs (per Bbl) | 5.76 | 24.31 | (76 | )% | 9.81 | (41 | )% | ||||||||||
Combined (per Boe) | 35.68 | 48.10 | (26 | )% | 37.83 | (6 | )% | ||||||||||
Average Realized Prices with Hedging: | |||||||||||||||||
Oil (per Bbl) | $ | 54.08 | $ | 55.92 | (3 | )% | $ | 54.88 | (1 | )% | |||||||
Natural gas (per Mcf) | 1.06 | 1.64 | (35 | )% | 1.59 | (33 | )% | ||||||||||
NGLs (per Bbl) | 5.76 | 24.31 | (76 | )% | 9.81 | (41 | )% | ||||||||||
Combined (per Boe) | 36.88 | 41.23 | (11 | )% | 37.48 | (2 | )% |
Lease operating expense ("LOE") averaged
Production tax expense averaged
Three Months Ended September 30, |
Three Months Ended June 30, |
||||||||||||||||
2019 | 2018 | Change | 2019 | Change | |||||||||||||
Average Costs (per Boe): | |||||||||||||||||
Lease operating expenses | $ | 2.47 | $ | 2.65 | (7 | )% | $ | 3.79 | (35 | )% | |||||||
Gathering, transportation and processing expense | 0.47 | 0.51 | (8 | )% | 0.61 | (23 | )% | ||||||||||
Production tax expenses | 2.31 | 4.20 | (45 | )% | 3.13 | (26 | )% | ||||||||||
Depreciation, depletion and amortization | 24.99 | 21.54 | 16 | % | 25.56 | (2 | )% | ||||||||||
General and administrative expense | 3.25 | 4.64 | (30 | )% | 4.37 | (26 | )% |
Debt and Liquidity
At
The Company completed its semiannual redetermination in
Capital Expenditures
Capital expenditures for the third quarter of 2019 totaled
OPERATIONAL UPDATE
Hereford Field
Production sales volumes for the third quarter of 2019 in Hereford averaged a Company record of 10,101 Boe/d (80% oil) or a 41% increase over the second quarter of 2019. During the third quarter of 2019, 6 gross wells were spud and 16 gross wells were placed on flowback.
The following provides an update of current DSU activity:
- DSU 11-63-16 (east pad) - was placed on flowback in June and includes seven wells drilled at a density of 16 wells per section. The wells were completed with a Gen 2 completion that used approximately 30 barrels of fluid per lateral foot and approximately 1,500 pounds of sand per lateral foot. Through 130 days of flowback, the average per well daily production rate is currently 120% greater than previously completed wells, demonstrating an economic development template for the Hereford field. This rate continues to improve compared to the previously disclosed daily production rate indicating a 75% per well increase following 105 days.
- DSU 11-63-16 (west pad) - was placed on flowback in July and includes four wells drilled at a density of 8 wells per section. The wells were completed with a Gen 3 completion that utilized greater fluid of up to 40 barrels per lateral foot and approximately 1,500 pounds of sand per lateral foot and assessed performance improvement opportunities of upspacing and increased completion intensity. Through 85 days of production, the average per well daily production rate is presently 55% greater than the previously completed wells and continues trending higher.
- DSU 11-63-17 - was placed on flowback in July and includes twelve wells drilled at a density of 12 wells per section. The wells are assessing the performance impact of Gen 4 completions that utilized greater fluid of up to 52 barrels per lateral foot and an average of approximately 1,500 pounds of sand per lateral foot. These wells were stimulated with larger fluid completions than all previous wells and continue to ramp to peak production.
The Company continues to recognize well cost efficiencies that have resulted in lower completed well costs. Based on the current price outlook, future wells are anticipated to average approximately
NE Wattenberg
The Company produced an average of 26,845 Boe/d (58% oil) in the third quarter of 2019 in NE Wattenberg and spud 9 gross wells and placed 5 gross XRL and 4 gross SRL wells on flowback in the area. Recent activity includes placing five XRL wells located in DSU 5-61-35 on flowback in September. Subsequent to the end of the quarter two additional XRL wells located in DSU 5-61-35 were placed on flowback. These wells continue to ramp to peak production and were completed with high-fluid intensity completions.
The Company is also recognizing well cost efficiencies in NE Wattenberg as future wells are anticipated to cost an average of approximately
2019 OPERATING GUIDANCE
The Company is providing capital expenditure and production guidance for the fourth quarter of 2019 as discussed below and reiterates full-year 2019 guidance.
See "Forward-Looking Statements" below.
- Production of 3.6-3.7 MMBoe
- Oil volumes to approximate 2.3 MMBbls or approximately 63% of total production volumes
- Capital expenditures of
$30-$40 million
- Lease operating expense is expected to average
$2.50-$3.00 per Boe
- Cash general and administrative expense of
$2.50-$3.00 per Boe
- Gathering, transportation and processing costs of
$0.75-$0.95 per Boe
COMMODITY HEDGES UPDATE
The following table summarizes the Company's current hedge position as of November 4, 2019:
Oil (WTI) Swaps | Oil (WTI) Collars | Natural Gas (NWPL) Swaps | ||||||||||||||||||||||
Period | Volume Bbls/d |
Price $/Bbl |
Volume Bbls/d |
Floor $Bbl |
Ceiling $/Bbl |
Volume MMBtu/d |
Price $/MMBtu |
|||||||||||||||||
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 | 14,500 | $ | 57.35 | — | $ | — | $ | — | — | $ | — | |||||||||||||
4Q20 | 14,500 | $ | 57.35 | — | $ | — | $ | — | — | $ | — | |||||||||||||
1Q21 | 1,000 | $ | 57.13 | — | $ | — | $ | — | — | $ | — | |||||||||||||
2Q21 | 1,000 | $ | 57.13 | — | $ | — | $ | — | — | $ | — | |||||||||||||
3Q21 | — | $ | — | — | $ | — | $ | — | — | $ | — |
Realized sales prices will reflect basis differentials from the index prices to the sales location.
UPCOMING EVENTS
Third Quarter Conference Call and Webcast
The Company plans to host a conference call on Tuesday, November 5, 2019, to discuss third quarter 2019 results. The call is scheduled at
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:
December 3, 2019 -Bank of America Merrill Lynch Leveraged Finance Conference ,Boca Raton, FL
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 full-year 2019 operational and financial metrics. Forward-looking statements in this release relate to, among other things, future production, projects and opportunities, and future financial results including free cash flows, liquidity and debt metrics.
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 HighPoint’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the
ABOUT
Company contact:
Selected Operating Highlights
(Unaudited)
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Production Data: | |||||||||||||||
Oil (MBbls) | 2,180 | 1,716 | 5,648 | 4,360 | |||||||||||
Natural gas (MMcf) | 4,236 | 3,294 | 11,544 | 8,946 | |||||||||||
NGLs (MBbls) | 513 | 471 | 1,466 | 1,207 | |||||||||||
Combined volumes (MBoe) | 3,399 | 2,736 | 9,038 | 7,058 | |||||||||||
Daily combined volumes (Boe/d) | 36,946 | 29,739 | 33,106 | 25,853 | |||||||||||
Average Sales Prices (before the effects of realized hedges): | |||||||||||||||
Oil (per Bbl) | $ | 52.27 | $ | 66.96 | $ | 52.82 | $ | 64.61 | |||||||
Natural gas (per Mcf) | 1.03 | 1.59 | 1.58 | 1.59 | |||||||||||
NGLs (per Bbl) | 5.76 | 24.31 | 9.47 | 22.04 | |||||||||||
Combined (per Boe) | 35.68 | 48.10 | 36.57 | 45.70 | |||||||||||
Average Realized Sales Prices (after the effects of realized hedges): | |||||||||||||||
Oil (per Bbl) | $ | 54.08 | $ | 55.92 | $ | 54.31 | $ | 54.70 | |||||||
Natural gas (per Mcf) | 1.06 | 1.64 | 1.52 | 1.65 | |||||||||||
NGLs (per Bbl) | 5.76 | 24.31 | 9.47 | 22.04 | |||||||||||
Combined (per Boe) | 36.88 | 41.23 | 37.42 | 39.66 | |||||||||||
Average Costs (per Boe): | |||||||||||||||
Lease operating expenses | $ | 2.47 | $ | 2.65 | $ | 3.37 | $ | 2.99 | |||||||
Gathering, transportation and processing expense | 0.47 | 0.51 | 0.56 | 0.40 | |||||||||||
Production tax expenses | 2.31 | 4.20 | 2.29 | 3.74 | |||||||||||
Depreciation, depletion and amortization | 24.99 | 21.54 | 25.47 | 21.55 | |||||||||||
General and administrative expense (1) | 3.25 | 4.64 | 4.00 | 4.88 |
(1) Includes long-term cash and equity incentive compensation of
Consolidated Condensed Balance Sheets
(Unaudited)
As of September 30, |
As of December 31, |
||||||
2019 | 2018 | ||||||
(in thousands) | |||||||
Assets: | |||||||
Cash and cash equivalents | $ | 19,568 | $ | 32,774 | |||
Other current assets (1) | 100,229 | 157,007 | |||||
Property and equipment, net | 2,127,989 | 2,029,523 | |||||
Other noncurrent assets (1) | 15,841 | 33,156 | |||||
Total assets | $ | 2,263,627 | $ | 2,252,460 | |||
Liabilities and Stockholders' Equity: | |||||||
Current liabilities | $ | 185,608 | $ | 248,185 | |||
Long-term debt, net of debt issuance costs | 793,530 | 617,387 | |||||
Other long-term liabilities | 154,926 | 174,790 | |||||
Stockholders' equity | 1,129,563 | 1,212,098 | |||||
Total liabilities and stockholders' equity | $ | 2,263,627 | $ | 2,252,460 |
(1) At September 30, 2019, the estimated fair value of all of the Company's commodity derivative instruments was an asset of
Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Operating Revenues: | |||||||||||||||
Oil, gas and NGL production | $ | 121,281 | $ | 131,585 | $ | 330,472 | $ | 322,534 | |||||||
Other operating revenues, net | 1 | (459 | ) | 374 | (200 | ) | |||||||||
Total operating revenues | 121,282 | 131,126 | 330,846 | 322,334 | |||||||||||
Operating Expenses: | |||||||||||||||
Lease operating | 8,385 | 7,237 | 30,434 | 21,082 | |||||||||||
Gathering, transportation and processing | 1,611 | 1,398 | 5,076 | 2,829 | |||||||||||
Production tax | 7,868 | 11,504 | 20,666 | 26,363 | |||||||||||
Exploration | 56 | 19 | 93 | 39 | |||||||||||
Impairment, dry hole costs and abandonment | 1,170 | 184 | 2,487 | 609 | |||||||||||
(Gain) Loss on sale of properties | — | 74 | 2,901 | 1,046 | |||||||||||
Depreciation, depletion and amortization | 84,948 | 58,946 | 230,170 | 152,106 | |||||||||||
Unused commitments | 4,418 | 4,574 | 13,239 | 13,684 | |||||||||||
General and administrative (1) | 11,048 | 12,696 | 36,109 | 34,427 | |||||||||||
Merger transaction expense | 2,078 | 100 | 4,492 | 6,140 | |||||||||||
Other operating expenses, net | 230 | (764 | ) | 210 | (716 | ) | |||||||||
Total operating expenses | 121,812 | 95,968 | 345,877 | 257,609 | |||||||||||
Operating Income (Loss) | (530 | ) | 35,158 | (15,031 | ) | 64,725 | |||||||||
Other Income and Expense: | |||||||||||||||
Interest and other income | 94 | 451 | 562 | 1,843 | |||||||||||
Interest expense | (15,167 | ) | (13,165 | ) | (43,227 | ) | (39,348 | ) | |||||||
Commodity derivative gain (loss) (2) | 31,047 | (51,547 | ) | (54,600 | ) | (128,166 | ) | ||||||||
Gain (loss) on extinguishment of debt | — | (257 | ) | — | (257 | ) | |||||||||
Total other income and expense | 15,974 | (64,518 | ) | (97,265 | ) | (165,928 | ) | ||||||||
Income (Loss) before Income Taxes | 15,444 | (29,360 | ) | (112,296 | ) | (101,203 | ) | ||||||||
(Provision for) Benefit from Income Taxes | (4,330 | ) | — | 25,271 | — | ||||||||||
Net Income (Loss) | $ | 11,114 | $ | (29,360 | ) | $ | (87,025 | ) | $ | (101,203 | ) | ||||
Net Income (Loss) per Common Share | |||||||||||||||
Basic | $ | 0.05 | $ | (0.14 | ) | $ | (0.41 | ) | $ | (0.56 | ) | ||||
Diluted | $ | 0.05 | $ | (0.14 | ) | $ | (0.41 | ) | $ | (0.56 | ) | ||||
Weighted Average Common Shares Outstanding | |||||||||||||||
Basic | 210,550 | 209,502 | 210,288 | 181,145 | |||||||||||
Diluted | 210,937 | 209,502 | 210,288 | 181,145 |
(1) Includes long-term cash and equity incentive compensation of
(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 September 30, |
Nine Months Ended September 30, |
||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | |||||||||||||||
Included in commodity derivative gain (loss): | |||||||||||||||
Realized gain (loss) on derivatives (1) | $ | 4,075 | $ | (18,780 | ) | $ | 7,731 | $ | (42,628 | ) | |||||
Prior year unrealized (gain) loss transferred to realized (gain) loss (1) | (20,739 | ) | 4,920 | (61,430 | ) | 20,940 | |||||||||
Unrealized gain (loss) on derivatives (1) | 47,711 | (37,687 | ) | (901 | ) | (106,478 | ) | ||||||||
Total commodity derivative gain (loss) | $ | 31,047 | $ | (51,547 | ) | $ | (54,600 | ) | $ | (128,166 | ) |
(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 meaningful comparison to its peers.
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | |||||||||||||||
Operating Activities: | |||||||||||||||
Net income (loss) | $ | 11,114 | $ | (29,360 | ) | $ | (87,025 | ) | $ | (101,203 | ) | ||||
Adjustments to reconcile to net cash provided by operations: | |||||||||||||||
Depreciation, depletion and amortization | 84,948 | 58,946 | 230,170 | 152,106 | |||||||||||
Impairment, dry hole costs and abandonment | 1,170 | 184 | 2,487 | 609 | |||||||||||
Unrealized derivative (gain) loss | (26,972 | ) | 32,767 | 62,331 | 85,538 | ||||||||||
Deferred income tax benefit | 4,330 | — | (25,271 | ) | — | ||||||||||
Incentive compensation and other non-cash charges | 2,521 | 2,323 | 9,501 | 5,813 | |||||||||||
Amortization of deferred financing costs | 642 | 598 | 1,917 | 1,729 | |||||||||||
(Gain) loss on sale of properties | — | 74 | 2,901 | 1,046 | |||||||||||
(Gain) loss on extinguishment of debt | — | 257 | — | 257 | |||||||||||
Change in operating assets and liabilities: | |||||||||||||||
Accounts receivable | (4,987 | ) | (4,592 | ) | 13,488 | (8,789 | ) | ||||||||
Prepayments and other assets | 354 | (332 | ) | (1,109 | ) | (1,421 | ) | ||||||||
Accounts payable, accrued and other liabilities | 10,600 | 10,746 | 3,867 | (25,287 | ) | ||||||||||
Amounts payable to oil and gas property owners | 6,139 | 8,272 | (16,784 | ) | 33,804 | ||||||||||
Production taxes payable | 6,990 | 11,415 | (1,079 | ) | 15,983 | ||||||||||
Net cash provided by (used in) operating activities | $ | 96,849 | $ | 91,298 | $ | 195,394 | $ | 160,185 | |||||||
Investing Activities: | |||||||||||||||
Additions to oil and gas properties, including acquisitions | (117,823 | ) | (101,798 | ) | (375,976 | ) | (322,614 | ) | |||||||
Additions of furniture, equipment and other | (384 | ) | (146 | ) | (3,958 | ) | (616 | ) | |||||||
Repayment of debt associated with merger, net of cash acquired | — | — | — | (53,357 | ) | ||||||||||
Proceeds from sale of properties | — | (415 | ) | 1,334 | (221 | ) | |||||||||
Other investing activities | 32 | (104 | ) | (1,400 | ) | 232 | |||||||||
Net cash provided by (used in) investing activities | $ | (118,175 | ) | $ | (102,463 | ) | $ | (380,000 | ) | $ | (376,576 | ) | |||
Financing Activities: | |||||||||||||||
Proceeds from debt | 50,000 | — | 200,000 | — | |||||||||||
Principal payments on debt | (25,000 | ) | (118 | ) | (26,859 | ) | (350 | ) | |||||||
Other financing activities | (218 | ) | (3,116 | ) | (1,741 | ) | (4,745 | ) | |||||||
Net cash provided by (used in) financing activities | $ | 24,782 | $ | (3,234 | ) | $ | 171,400 | $ | (5,095 | ) | |||||
Increase (Decrease) in Cash and Cash Equivalents | 3,456 | (14,399 | ) | (13,206 | ) | (221,486 | ) | ||||||||
Beginning Cash and Cash Equivalents | 16,112 | 107,379 | 32,774 | 314,466 | |||||||||||
Ending Cash and Cash Equivalents | $ | 19,568 | $ | 92,980 | $ | 19,568 | $ | 92,980 |
Reconciliation of Discretionary Cash Flow, Adjusted Net Income (Loss) and EBITDAX
(Unaudited)
Discretionary Cash Flow Reconciliation
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | |||||||||||||||
Net Cash Provided by (Used in) Operating Activities | $ | 96,849 | $ | 91,298 | $ | 195,394 | $ | 160,185 | |||||||
Adjustments to reconcile to discretionary cash flow: | |||||||||||||||
Exploration expense | 56 | 19 | 93 | 39 | |||||||||||
Merger transaction expense | 2,078 | 100 | 4,492 | 6,140 | |||||||||||
Changes in working capital | (19,096 | ) | (25,509 | ) | 1,617 | (14,290 | ) | ||||||||
Discretionary Cash Flow | $ | 79,887 | $ | 65,908 | $ | 201,596 | $ | 152,074 |
Adjusted Net Income (Loss) Reconciliation
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Net Income (Loss) | $ | 11,114 | $ | (29,360 | ) | $ | (87,025 | ) | $ | (101,203 | ) | ||||
Provision for (Benefit from) income taxes | 4,330 | — | (25,271 | ) | — | ||||||||||
Income (Loss) before income taxes | 15,444 | (29,360 | ) | (112,296 | ) | (101,203 | ) | ||||||||
Adjustments to net income (loss): | |||||||||||||||
Unrealized derivative (gain) loss | (26,972 | ) | 32,767 | 62,331 | 85,538 | ||||||||||
(Gain) loss on sale of properties | — | 74 | 2,901 | 1,046 | |||||||||||
(Gain) loss on extinguishment of debt | — | 257 | — | 257 | |||||||||||
One-time item: | |||||||||||||||
Merger transaction expense | 2,078 | 100 | 4,492 | 6,140 | |||||||||||
(Income) expense related to properties sold | 229 | (764 | ) | (43 | ) | (716 | ) | ||||||||
Adjusted Income (Loss) before income taxes | (9,221 | ) | 3,074 | (42,615 | ) | (8,938 | ) | ||||||||
Adjusted (provision for) benefit from income taxes (1) | 1,851 | (757 | ) | 9,588 | 2,202 | ||||||||||
Adjusted Net Income (Loss) | $ | (7,370 | ) | $ | 2,317 | $ | (33,027 | ) | $ | (6,736 | ) | ||||
Per share, diluted | $ | (0.03 | ) | $ | 0.01 | $ | (0.16 | ) | $ | (0.04 | ) |
(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 September 30, |
Nine Months Ended September 30, |
||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | |||||||||||||||
Net Income (Loss) | $ | 11,114 | $ | (29,360 | ) | $ | (87,025 | ) | $ | (101,203 | ) | ||||
Adjustments to reconcile to EBITDAX: | |||||||||||||||
Depreciation, depletion and amortization | 84,948 | 58,946 | 230,170 | 152,106 | |||||||||||
Impairment, dry hole and abandonment expense | 1,170 | 184 | 2,487 | 609 | |||||||||||
Exploration expense | 56 | 19 | 93 | 39 | |||||||||||
Unrealized derivative (gain) loss | (26,972 | ) | 32,767 | 62,331 | 85,538 | ||||||||||
Incentive compensation and other non-cash charges | 2,521 | 2,323 | 9,501 | 5,813 | |||||||||||
Merger transaction expense | 2,078 | 100 | 4,492 | 6,140 | |||||||||||
(Gain) loss on sale of properties | — | 74 | 2,901 | 1,046 | |||||||||||
(Gain) loss on extinguishment of debt | — | 257 | — | 257 | |||||||||||
Interest and other income | (94 | ) | (451 | ) | (562 | ) | (1,843 | ) | |||||||
Interest expense | 15,167 | 13,165 | 43,227 | 39,348 | |||||||||||
Provision for (benefit from) income taxes | 4,330 | — | (25,271 | ) | — | ||||||||||
EBITDAX | $ | 94,318 | $ | 78,024 | $ | 242,344 | $ | 187,850 |
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.
Source: HighPoint Resources Corporation