Midstates Petroleum Company, Inc. (“Midstates” or the “Company”)
(NYSE: MPO) today announced its financial and operating results for
the three months ended June 30, 2015.
Second Quarter and Other Highlights:
- Achieved Adjusted EBITDA of $99 million
before debt restructuring costs for the second quarter of
2015.
- Reported Adjusted EBITDA that outpaced
operational capital by $29 million for the second quarter of 2015
and by $37 million for first six months of 2015.
- Increased average production in the
Mississippian Lime to a record high of 27,029 barrels of oil
equivalent (Boe) per day in the second quarter, up 31% from 20,698
Boe per day in the second quarter of 2014 and up 2% from 26,531 Boe
per day in the first quarter of 2015.
- Attained total Company production of
33,893 Boe per day in the second quarter, up 6% from 31,912 Boe per
day in the second quarter of 2014 and essentially flat with 34,164
Boe per day in the first quarter of 2015.
- Maintained estimated well level returns
of greater than 30% in the Mississippian Lime, using July 27, 2015
strip pricing and current AFE of $3.3 million.
- Reduced adjusted cash operating
expenses to $11.75 per Boe, down 14% from $13.63 per Boe in the
second quarter of 2014 and down 8% from $12.82 per Boe in the first
quarter of 2015.
- Closed the sale of remaining Louisiana
producing properties in the Dequincy area on April 21 for
approximately $42 million in net cash proceeds.
- Executed a $625 million Second Lien
note offering and approximately $525 million Third Lien note
exchange that significantly boosted liquidity and captured debt
reduction opportunity.
- Reported liquidity on June 30, 2015 of
$402 million comprised of $151 million in cash and $251 million of
availability on its revolving credit facility.
- Increased full year 2015 production
guidance to 31,500 to 33,500 Boe per day.
- Reported Adjusted Net Income totaled a
loss of $3.9 million, or $0.58 loss per common share, in the second
quarter of 2015.
Jake Brace, President and Chief Executive Officer commented, “We
are very pleased with our accomplishments during the second
quarter. On the financial side, we executed a comprehensive
liquidity enhancing transaction and closed on the sale of our
remaining producing properties in Louisiana. On the operational
side, we again increased production in the Miss Lime and held total
Company production essentially flat with the first quarter despite
the sale of our Louisiana properties and having only four rigs
active during the quarter. Just as importantly, in June we achieved
our goal of reducing our standard well costs to $3.3 million in the
Miss Lime six months early.”
Brace continued, “We have proven our ability to quickly respond
to the downturn both financially and operationally and now have a
significant time and flexibility to allow us to manage our business
through an extended period of low commodity prices. Looking
forward, we will look to protect our liquidity through rigorous
capital discipline and continued exceptional operational
performance.”
(Adjusted EBITDA, Adjusted Net Income and Cash Operating
Expenses are non-GAAP financial measures. Each measure is defined
and reconciled to the most directly comparable GAAP measure under
“Non-GAAP Financial Measures” in the tables below.)
Operational Discussion
In the second quarter of 2015, Midstates invested $70 million of
operating capital, spud 17 wells, and brought 19 wells on line.
The breakdown in operational capital spending by area (excluding
capitalized interest and G&A, asset retirement obligations,
office and other expenditures) was:
For the Three
Months Ended
June 30, 2015
Mississippian Lime $ 67,700 Anadarko Basin 1,493 Gulf Coast
1,160
Total operational capital expenditures incurred
$ 70,353
The breakdown of all capital spending was:
For the Three
Months Ended
June 30, 2015
Drilling and completion activities, including recompletions $
69,348 Acquisition of acreage and seismic data 1,005
Operational capital expenditures incurred $
70,353 Capitalized G&A, office, ARO & other 2,576
Capitalized interest 1,082
Total capital expenditures
incurred $ 74,011
Mississippian Lime
Update
Production from the Company’s Mississippian Lime properties
averaged 27,029 Boe per day for the second quarter of 2015, an
increase of approximately 31% over the second quarter of 2014.
Since acquiring these properties in October 2012, Midstates has
grown production in the Mississippian Lime from approximately 7,000
Boe per day to over 27,029 Boe per day. Through July 26, 2015, the
Company had 258 wells on production for more than 30 days with an
average peak 30-day production rate of 559 Boe per day.
The Company had four rigs drilling in its Mississippian Lime
horizontal well program in Woods and Alfalfa Counties, Oklahoma for
the entire second quarter. Midstates spud a total of 17 wells, of
which six were producing, seven were awaiting completion and four
were drilling at June 30, 2015. The Company brought 19 fracture
stimulated horizontal wells online during the second quarter.
In late July, the Company reduced its active rig count to three
operated drilling rigs in the area. In spite of the reduction in
rig count, Midstates intends to drill approximately the same amount
of net wells during 2015. The reduction is due to continued
drilling efficiency gains and increased working interests in
operated wells attributable to partner non-consents, all of which
allow the Company to drill a higher number of net wells with fewer
rigs. Midstates increased its 2015 production guidance to 31,500 to
33,500 Boe per day, while maintaining its capital expenditure
guidance for the year. Additionally, through a combination of
operational efficiencies and service cost reductions, the Company
has already accomplished its goal of reducing standard well costs
to $3.3 million in the Mississippian Lime by year-end. With current
well cost AFEs of $3.3 million, Midstates is generating rates of
return in excess of 30% at the current strip and will continue to
work with its service providers on cost reductions and design
improvements to further improve well level returns.
Anadarko Basin Update
Due to the commodity price environment, the Company does not
currently plan to operate any rigs in the Anadarko Basin area
during 2015. Midstates’ focus thus far in the basin in 2015 has
been on its high-return capital and expense workover program
designed to offset some natural production decline and to reduce
lease operating costs. The Company intends to continue a limited
workover program through the end of the year.
Midstates did not spud or bring on line any new wells during the
second quarter and had no wells awaiting completion on June 30,
2015. Production for the second quarter in the area averaged 6,586
Boe per day.
Sale of Remaining Louisiana Producing
Properties
On April 21, 2015 the Company closed the sale of its ownership
interest in developed and undeveloped acreage in the Dequincy
area located in Beauregard and Calcasieu
Parishes, Louisiana to Pintail Oil and Gas LLC, for net
cash proceeds of approximately $42 million, which was after
customary closing adjustments. The proceeds from the sale will be
used for general corporate purposes.
Liquidity Enhancing Transaction and
Note Exchange
On May 21, 2015 the Company completed a private offering of
Senior Secured Second Lien Notes at par with an aggregate principal
amount of $625 million and an annual interest rate of 10%. A
portion of the net proceeds were used to fully repay borrowings
under the Company’s revolving credit facility, with the remainder
held in cash for general corporate purposes.
Concurrently with the offering of Second Lien Notes, the Company
exchanged approximately $279.8 million of its 10.75% Senior
Unsecured Notes due 2020 and approximately $350.3 million of its
9.25% Senior Unsecured Notes due 2021 for new Third Lien Senior
Secured Notes in an aggregate principal amount of $504.1 million,
representing an exchange at 80% of par value. Additionally, on June
2, 2015, Midstates exchanged approximately $26.5 million of its
10.75% Senior Unsecured Notes due 2020 and approximately $2.0
million of its 9.25% Senior Unsecured Notes due 2021 for new Third
Lien Senior Secured Notes in an aggregate principal amount of $20
million, representing an exchange at 70% of par value. The Third
Lien Notes will pay cash interest of 10% and pay-in-kind interest
of 2% per annum.
The Company also amended its revolving credit facility to
provide additional covenant flexibility and allow for the Second
Lien Note issuance and Third Lien Note exchange transactions. Upon
completion of the transactions, the Company’s borrowing base under
its revolving credit facility was reduced to $253 million.
Financial Discussion
On August 3, 2015, the Company completed a 1-for-10 reverse
stock split of its outstanding common stock. The following
discussion and tables give retroactive effect to the impact of the
reverse stock split on share and per share amounts for all periods
presented.
Adjusted EBITDA, which excludes transaction costs and debt
restructuring costs, totaled $98.7 million in the second quarter of
2015, compared with $122.1 million in the second quarter of 2014
and $101.3 million in the first quarter of 2015. The Company
incurred $34.6 million of transaction costs and debt restructuring
cost in the second quarter of 2015, $2.5 million in the second
quarter of 2014 and $1.7 million in the first quarter of 2015.
Lower average realized prices were the main drivers in the decline
in Adjusted EBITDA versus the second quarter of 2014 and
essentially flat with the first quarter of 2015.
Adjusted Net Income, which excludes transaction costs and debt
restructuring cost, impairment of oil and gas properties, and
unrealized gains and losses on derivatives and the related tax
impact, totaled a loss of $3.9 million for the second quarter of
2015, or 0.58 per share. The Company reported a GAAP net loss of
$598.4 million (before preferred dividends) for the second quarter
of 2015 which includes a full cost ceiling impairment of $498.4
million (before taxes), compared to net loss of $2.1 million for
the second quarter of 2014 and net loss of $193.6 million in the
first quarter of 2015.
Production and Pricing
Production during the second quarter of 2015 totaled 33,893 Boe
per day, up 6% from 31,912 Boe per day in the second quarter of
2014 and essentially flat with 34,164 Boe per day during the first
quarter of 2015. Second quarter 2015 production from the Company’s
Mississippian Lime properties contributed roughly 80%, or 27,029
Boe per day, and the Anadarko Basin properties contributed roughly
19%, or 6,586 Boe per day, while Gulf Coast properties contributed
the balance of 278 Boe per day. Production in the Anadarko Basin
declined versus the 2014 period due to limited capital activity
during 2015. For the total Company, oil volumes comprised 41% of
total production, natural gas liquids (NGLs) 20%, and natural gas
39% during the second quarter.
In the second quarter of 2015, Midstates’ average realized price
per barrel of oil, before realized commodity derivatives, was
$53.14 ($81.19 with realized derivatives) while its average
realized price for NGL sales was $16.61 per barrel (there were no
NGL hedges in place during the first quarter). Natural gas averaged
$2.23 per thousand cubic feet (Mcf), before realized derivatives
($3.14 with realized derivatives). Detailed comparisons of
commodity prices by period and region are included in the tables
below.
Oil, NGL and natural gas sales revenues, before the impact of
derivatives, decreased by $85.6 million, or 48%, to $93.7 million
during the second quarter of 2015, as compared to $179.3 million
for the second quarter of 2014, and increased by $4.3 million, or
5%, as compared to $89.4 million in the first quarter of 2015. The
increase in revenues for the second quarter of 2015 versus the
first quarter of 2015 was attributable to higher average realized
oil prices. The realized gain on derivatives for the second quarter
of 2015 was $42.2 million, compared to a realized loss of $17.1
million for the second quarter of 2014 and a realized gain of $52.6
million for the first quarter of 2015.
Midstates added new 2015 oil hedges during the second quarter of
2015. The Company currently has hedges in place on approximately
1.1 million barrels of oil, or 12,000 barrels of oil per day, in
the third and fourth quarters of 2015 at an average price of
approximately $71.55 per barrel. Additionally, Midstates currently
has gas hedges in place on approximately 4.6 million British
Thermal Units (BTUs), or 50,000 million BTUs per day, in the third
and fourth quarters of 2015 at an average price of approximately
$4.13 per million BTUs. These hedges provide added security on
Midstates’ oil and natural gas revenue, which together account for
approximately 80% of total revenue for 2015. A detailed summary of
the Company’s hedging position as of August 4, 2015 is included in
the tables below.
Costs and Expenses
Adjusted Cash Operating Expenses for the second quarter of 2015
were $11.75 per Boe, compared with $13.63 per Boe in the second
quarter of 2014 and $12.82 per Boe in the first quarter of 2015.
The decrease in per Boe cash costs in the second quarter of 2015
compared with the first quarter of 2015 was attributable to lower
lease operating and workover expense and lower severance and other
tax expenses.
Lease operating and workover expenses (LOE) totaled $21.8
million, or $7.06 per Boe, in the second quarter of 2015, compared
with $19.7 million, or $6.79 per Boe, in the second quarter of 2014
and $23.2 million, or $7.56 per Boe, in the first quarter of 2015.
Second quarter 2015 LOE and workover expenses decreased on a per
Boe basis, as compared to first quarter of 2015, primarily due to
the divesture of the Company’s producing assets in Louisiana, where
operating costs are relatively higher.
Severance and other taxes were $2.5 million (3.3% of total
revenue) as compared to $5.6 million (3.8% of total revenue) in the
same period in 2014 and $3.6 million (3.2% of total revenue) in the
first quarter of 2015.
General and administrative expenses totaled $11.5 million, or
$3.79 per Boe, compared with $13.4 million, or $4.63 per Boe, in
the second quarter of 2014, and $11.7 million, or $3.79 per Boe, in
the first quarter of 2015. Second quarter 2015, second quarter 2014
and first quarter 2015 general and administrative expenses included
non-cash share-based compensation expense of $2.1 million ($0.68
per Boe), $2.2 million ($0.73 per Boe) and $0.8 million ($0.26 per
Boe), respectively. General and administrative expenses in the
second quarter of 2015 included approximately $1.3 million, or
$0.42 per Boe, related to employee and other costs associated with
the previously announced closing of the Houston office and the
relocation of the Company’s corporate headquarters to Tulsa.
Interest expense totaled $44.9 million (net of amounts
capitalized) for the second quarter of 2015 as compared to $33.8
million in the second quarter of 2014 and $36.5 million in the
first quarter of 2015. The Company capitalized $1.1 million in
interest to unproved properties during the second quarter of 2015
as compared to $3.3 million in the second quarter of 2014 and $1.0
million in the first quarter of 2015.
During the second quarter, the Company did not record an income
tax benefit or loss, and had an effective tax rate of 0%.
Liquidity
On June 30, 2015, Midstates’ liquidity was approximately $402
million, consisting of $251 million of available borrowing capacity
under the Company’s revolving credit facility and $151 million of
cash and cash equivalents. As a result of its financing transaction
in May of 2015, the borrowing base under its revolving credit
facility was adjusted to $253 million.
Conference Call
Information
The Company will host a conference call to discuss second
quarter results on Wednesday, August 5 at 11:00 am Eastern time.
Participants may join the conference call by dialing (877) 645-4610
(for U.S. and Canada) or (281) 241-6688 (International). The
conference call access code is 82234823 for all participants. To
listen via live web cast, please visit the Investors section of the
Company’s website, www.midstatespetroleum.com.
A supplemental information packet will be posted to the
Company’s website tomorrow morning for reference during the
conference call.
An audio replay of the conference call will be available
approximately two hours after the conclusion of the call. The audio
replay will remain available until August 19 and can be accessed by
dialing (855) 859-2056 (for U.S. and Canada) or (404) 537-3406
(International). The conference call audio replay access code is
82234823 for all participants. The audio replay will also be
available in the Investors section of the Company’s website
approximately two hours after the conclusion of the call and remain
available for approximately 90 calendar days.
Forward-Looking
Statements
This press release contains 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. All statements
that are not statements of historical fact, including statements
regarding the Company’s strategy, future operations, financial
position, estimated revenues and losses, projected costs, resource
potential, drilling locations, prospects and plans and objectives
of management. Without limiting the generality of the foregoing,
these statements are based on certain assumptions made by the
Company based on management’s experience, expectations and
perception of historical trends, current conditions, anticipated
future developments and other factors believed to be appropriate.
Although the Company believes that its plans, intentions and
expectations reflected in or suggested by the forward-looking
statements made in this press release are reasonable, the Company
gives no assurance that these plans, intentions or expectations
will be achieved when anticipated or at all. Moreover, such
statements are subject to a number of factors, many of which are
beyond the control of the Company, which may cause actual results
to differ materially from those implied or expressed by the
forward-looking statements. These factors include, but are not
limited to variations in the market demand for, and prices of, oil
and natural gas; uncertainties about the Company’s estimated
quantities of oil and natural gas reserves, resource potential and
drilling locations; the adequacy of the Company’s capital resources
and liquidity including, but not limited to, access to additional
borrowing capacity under its revolving credit facility; costs and
difficulties related to the integration of acquired businesses and
operations with Midstates’ business and operations; general
economic and business conditions; weather-related downtime; failure
to realize expected value creation from property acquisitions;
uncertainties about the Company’s ability to replace reserves and
economically develop its current reserves; risks related to the
concentration of the Company’s operations; drilling results; and
potential financial losses or earnings reductions from the
Company’s commodity derivative positions.
Any forward-looking statement speaks only as of the date on
which such statement is made and the Company undertakes no
obligation to correct or update any forward-looking statement,
whether as a result of new information, future events or otherwise,
except as required by applicable law.
Midstates Petroleum Company,
Inc.Condensed Consolidated Balance Sheets(In
thousands, except share amounts)(Unaudited)
June 30, 2015
December 31, 2014 ASSETS CURRENT ASSETS: Cash and
cash equivalents $ 151,037 $ 11,557 Accounts receivable: Oil and
gas sales 67,338 69,161 Joint interest billing 19,484 42,407 Other
16,758 22,193 Commodity derivative contracts 35,858 126,709 Other
current assets 2,388 1,098 Total
current assets 292,863 273,125 PROPERTY AND EQUIPMENT: Oil
and gas properties, on the basis of full-cost accounting 3,558,960
3,442,681 Other property and equipment 14,734 13,454 Less
accumulated depreciation, depletion, amortization and impairment
(2,119,458 ) (1,333,019 ) Net property and equipment
1,454,236 2,123,116 OTHER ASSETS: Deferred income taxes
9,579 35,821 Other noncurrent assets 39,560
43,731 Total other assets 49,139 79,552
TOTAL $ 1,796,238 $
2,475,793 LIABILITIES AND EQUITY
CURRENT LIABILITIES: Accounts payable $ 8,818 $ 22,783 Accrued
liabilities 155,221 183,831 Commodity derivative contracts 1,867 -
Deferred income taxes 9,579 44,862
Total current liabilities 175,485 251,476 LONG-TERM
LIABILITIES: Asset retirement obligations 17,737 21,599 Long-term
debt 1,924,412 1,735,150 Other long-term liabilities 1,401
1,706 Total long-term liabilities 1,943,550
1,758,455 COMMITMENTS AND CONTINGENCIES (Note 15)
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value,
49,675,000 shares authorized; no shares issued or outstanding
- -
Series A mandatorily convertible preferred
stock, $0.01 par value, $403,320 and $387,808 liquidation value at
June 30, 2015 and December 31, 2014, respectively; 8% cumulative
dividends; 325,000 shares issued and outstanding
3 3
Common stock, $0.01 par value, 100,000,000
shares authorized; 7,257,0077 shares issued and 7,164,968 shares
outstanding at June 30, 2015 and 7,049,173 shares issued and
6,995,705 shares outstanding at December 31, 2014
73 70 Treasury stock, at cost (3,021 ) (2,592 ) Additional
paid-in-capital 886,284 882,528 Retained deficit (1,206,136
) (414,147 ) Total stockholders' equity (322,797 ) 465,862
TOTAL $ 1,796,238
$ 2,475,793
Midstates Petroleum Company,
Inc.Condensed Consolidated Statements of
Operations(In thousands, except per share
amounts)(Unaudited)
For the Three Months
Ended June 30,
For the Six Months
Ended June 30,
2015 2014 2015
2014 REVENUES: Oil sales $ 67,498 $ 131,273 $ 126,755
$ 247,495 Natural gas liquid sales 10,239 23,020 21,249 48,539
Natural gas sales 15,995 24,994 35,167 50,379 Gains (losses) on
commodity derivative contracts - net(1) (19,293 ) (31,467 ) 2,079
(54,140 ) Other 315 170 678
379 Total revenues 74,754 147,990
185,928 292,652
EXPENSES: Lease operating and
workover 21,758 19,721 45,020 39,848 Gathering and transportation
3,931 2,940 7,369 5,795 Severance and other taxes 2,505 5,632 6,069
13,279 Asset retirement accretion 390 432 835 929 Depreciation,
depletion, and amortization 55,255 71,074 113,683 137,975
Impairment in carrying value of oil and gas properties 498,389 -
673,056 86,471 General and administrative(2) 11,461 13,434 23,115
25,118 Acquisition and transaction costs 251 2,483 251 2,611 Debt
restructuring costs 34,398 - 36,141 - Other -
609 73 939 Total expenses
628,338 116,325 905,612
312,965
OPERATING INCOME (LOSS)
(553,584 ) 31,665 (719,684 ) (20,313 )
OTHER INCOME
(EXPENSE): Interest income 27 9 36 19 Interest expense — net of
amounts capitalized (44,880 ) (33,813 )
(81,382 ) (67,760 ) Total other income (expense)
(44,853 ) (33,804 ) (81,346 ) (67,741 )
LOSS BEFORE TAXES (598,437 ) (2,139 ) (801,030 )
(88,054 ) Income tax benefit - 41
9,041 2,311
NET
LOSS $ (598,437 ) $ (2,098
) $ (791,989 ) $ (85,743
) Preferred stock dividend (669 ) (4,806 ) (800 )
(7,426 ) Participating securities - Series A Preferred Stock - - -
- Participating securities - Non-vested Restricted Stock -
- - -
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $
(599,106 ) $ (6,904 ) $
(792,789 ) $ (93,169 )
Basic and diluted net loss per share attributable to common
shareholders $ (88.44 ) $ (1.04 ) $ (117.45 ) $ (14.07 ) Basic and
diluted weighted average number of common shares outstanding
6,774 6,645 (6,750 ) 6,622
(1) Includes $42.2 million of realized
gains and $17.1 million of realized losses on commodity derivatives
for the three months ended June 30, 2015 and 2014, respectively,
and $94.8 million of realized gains and $31.9 million of realized
losses on commodity derivatives for the six months ended June 30,
2015 and 2014, respectively.
(2) Includes $2.1 million, or $0.68 per
Boe, and $2.2 million, or $0.73 per Boe, of non-cash expenses
related to share-based compensation, respectively, for the three
months ended June 30, 2015 and 2014 and $2.9 million, or $0.47 per
Boe, and $3.7 million, or $0.67 per Boe, respectively, for the six
months ended June 30, 2015 and 2014.
Midstates Petroleum Company,
Inc.Condensed Consolidated Statements of Changes in
Stockholders’ Equity (Deficit)(In thousands, except share
amounts)(Unaudited)
Series A
Preferred Stock
Common Stock Treasury
Stock
Additional
Paid-in-Capital
Retained Deficit
Total
Stockholders'
Equity (Deficit)
Balance as of December 31, 2014 $ 3 $
70 $ (2,592 ) $ 882,528
$ (414,147 ) $ 465,862
Share-based compensation $ - $ 3 $ - $ 3,756 $ - $ 3,759
Acquisition of treasury stock - - (429 ) - - (429 ) Net loss
- - - - (791,989 )
(791,989 )
Balance as of June 30, 2015 $ 3
$ 73 $ (3,021 ) $
886,284 $ (1,206,136 ) $
(322,797 )
Midstates Petroleum Company,
Inc.Condensed Consolidated Statement of Cash Flows(In
thousands)(Unaudited)
Three Months
Ended June 30,
Six Months
Ended June 30,
2015 2014 2015
2014 CASH FLOWS FROM OPERATING ACTIVITIES: Net
loss $ (598,437 ) $ (2,098 ) $ (791,989 ) $ (85,743 ) Adjustments
to reconcile net loss to net cash provided by operating activities:
(Gains) losses on commodity derivative contracts — net 19,293
31,467 (2,079 ) 54,140 Net cash (paid) received for commodity
derivative contracts not designated as hedging instruments 42,189
(17,138 ) 94,797 (31,948 ) Asset retirement accretion 390 432 835
929 Depreciation, depletion, and amortization 55,255 71,074 113,683
137,975 Impairment in carrying value of oil and gas properties
498,389 - 673,056 86,471 Share-based compensation, net of amounts
capitalized to oil and gas properties 2,096 2,127 2,897 3,668
Deferred income taxes - (41 ) (9,041 ) (2,311 ) Amortization of
deferred financing costs 6,487 1,811 8,356 4,197 Paid-in-Kind
interest on Third Lien 1,187 - 1,187 - Amortization of deferred
gain from debt restructuring (1,775 ) - (1,775 ) - Change in
operating assets and liabilities:
Accounts receivable — oil and gas sales (27,433 ) 1,769 139 (998 )
Accounts receivable — JIB and other 9,142 6,559 22,617 (1,557 )
Other current and noncurrent assets (186 ) 2,878 (1,275 ) (1,094 )
Accounts payable (3,115 ) 1,943 (2,793 ) 4,756 Accrued liabilities
22,234 (32,805 ) 30,340 4,365 Other (83 ) 174
(305 ) 711
Net cash provided by
operating activities $ 25,633 $
68,152 $ 138,650 $
173,561 CASH FLOWS FROM INVESTING
ACTIVITIES: Investment in property and equipment (79,111 )
(152,767 ) (190,278 ) (275,547 ) Proceeds from the sale of oil and
gas properties 40,284 147,519
40,284 147,519
Net cash used in investing activities $
(38,827 ) $ (5,248 ) $
(149,994 ) $ (128,028 )
CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from
long-term borrowings 625,000 - 625,000 - Repayment of revolving
credit facility (468,150 ) (131,000 ) (468,150 ) (131,000 )
Proceeds from revolving credit facility 33,000 84,000 33,000 84,000
Transaction costs incurred (34,398 ) - (34,398 ) - Deferred
financing costs (3,038 ) (50 ) (4,199 ) (545 ) Acquisition of
treasury stock (124 ) (842 ) (429 )
(1,491 )
Net cash used in financing activities $
152,290 $ (47,892 ) $
150,824 $ (49,036 )
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
139,096 15,012 139,480 (3,503 )
Cash and cash equivalents, beginning of period
11,941 14,648
11,557 33,163 Cash and
cash equivalents, end of period $ 151,037
$ 29,660 $ 151,037
$ 29,660
Midstates Petroleum Company,
Inc.Selected Financial and Operating
Statistics(Unaudited)
For the Three Months Ended
June 30,
For the Three Months
Ended March 31,
2015 2014 2015 PRODUCTION
DATA - Mississippian: Oil (Boe/day) 10,828 8,221 10,675 Natural
gas liquids (Boe/day) 5,314 4,445 5,367 Natural gas (Mcf/day)
65,324 48,185 62,933 Oil equivalents (MBoe) 2,460 1,883 2,388
Average daily production (Boe/day) 27,029 20,697 26,531
PRODUCTION DATA - Anadarko: Oil (Boe/day) 2,937 4,380 3,028
Natural gas liquids (Boe/day) 1,404 1,780 1,240 Natural gas
(Mcf/day) 13,468 16,348 12,734 Oil equivalents (MBoe) 599 809 575
Average daily production (Boe/day) 6,586 8,885 6,390
PRODUCTION DATA - Gulf Coast: Oil (Boe/day) 194 1,688 858
Natural gas liquids (Boe/day) 55 384 275 Natural gas (Mcf/day) 177
1,544 664 Oil equivalents (MBoe) 25 212 112 Average daily
production (Boe/day) 278 2,329 1,243
PRODUCTION DATA -
Combined: Oil (Boe/day) 13,959 14,290 14,561 Natural gas
liquids (Boe/day) 6,773 6,609 6,882 Natural gas (Mcf/day) 78,969
66,078 76,331 Oil equivalents (MBoe) 3,084 2,904 3,075 Average
daily production (Boe/day) 33,893 31,912 34,164
AVERAGE
SALES PRICES: Oil, without realized derivatives (per Bbl) $
53.14 $ 100.95 $ 45.22 Oil, with realized derivatives (per Bbl)
81.19 89.12 79.45 Natural gas liquids, without realized derivatives
(per Bbl) 16.61 38.27 17.78 Natural gas liquids, with realized
derivatives (per Bbl) 16.61 38.52 17.78 Natural gas, without
realized derivatives (per Mcf) 2.23 4.16 2.79 Natural gas, with
realized derivatives (per Mcf) 3.14 3.84 3.92
COSTS AND
EXPENSES (PER BOE OF PRODUCTION) Lease operating and workover $
7.06 $ 6.79 $ 7.56 Gathering and transportation 1.27 1.01 1.12
Severance and other taxes 0.81 1.94 1.16 Asset retirement accretion
0.13 0.15 0.14 Depreciation, depletion, and amortization 17.92
24.47 19.00 Impairment of oil and gas properties 161.60 - 56.80
General and administrative 3.79 4.63 3.79 Acquisition and
transaction costs 0.09 0.86 - Debt restructuring costs 11.15 - 0.57
Other - 0.21 0.03
Midstates Petroleum Company,
Inc.Summary of Commodity Derivative Contracts as of June 30,
2015(Unaudited)
2015
Oil
Q3
Q4 Total WTI Swaps Volume (Bbls)
1,104,000 1,104,000 2,208,000 Volume
(Bbl/d) 12,000 12,000 12,000 Price ($/Bbl) $ 71.56 $ 71.56 $ 71.56
Natural Gas
Swaps Volume (Mmbtu)
4,600,000 4,600,000 9,200,000 Volume (Mmbtu/d) 50,000 50,000 50,000
Price ($/Mmbtu) $ 4.13 $ 4.13 $ 4.13
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA is a supplemental non-GAAP
financial measure that is used by management and external users of
the Company's consolidated financial statements, such as industry
analysts, investors, lenders and rating agencies. The Company
defines Adjusted EBITDA as earnings before interest income,
interest expense, income taxes, depreciation, depletion and
amortization, property impairments, unrealized commodity derivative
gains and losses and non-cash stock-based compensation expense.
Adjusted EBITDA is not a measure of net income or cash flows as
determined by United States generally accepted accounting
principles, or GAAP.
The following tables present a
reconciliation of the non-GAAP financial measure of Adjusted EBITDA
to the GAAP financial measures of net income (loss) and net cash
provided by operating activities, respectively.
Midstates Petroleum Company,
Inc.Adjusted EBITDA(In
thousands)(Unaudited)
For the Three Months
Ended June 30,
For the Six Months
Ended June 30,
For the Three Months
Ended March 31,
2015 2014 2015
2014 2015 Adjusted EBITDA
reconciliation to net loss:
Net loss $ (598,437 ) $ (2,098 ) $ (791,989 ) $ (85,743 ) $
(193,554 ) Depreciation, depletion and amortization 55,255 71,074
113,683 137,975 58,428 Impairment of oil and gas properties 498,389
- 673,056 86,471 174,667 Loss on sale/impairment of inventory
-
-
97
-
97 (Gains) losses on commodity derivative contracts — net 19,293
31,467 (2,079 ) 54,140 (21,372 )
Net cash (paid) received for commodity
derivative contracts not designated as hedging instruments
42,189 (17,138 ) 94,797 (31,948 ) 52,608 Income tax benefit - (41 )
(9,041 ) (2,311 ) (9,041 ) Interest income (27 ) (9 ) (36 ) (19 )
(9 ) Interest expense, net of amounts capitalized 44,880 33,813
81,382 67,760 36,503 Asset retirement obligation accretion 390 432
835 929 445 Share-based compensation, net of amounts capitalized
2,096 2,127 2,897
3,668 801
Adjusted EBITDA
$ 64,028 $ 119,627
$ 163,602 $ 230,922
$ 99,573 Adjusted EBITDA reconciliation
to net cash provided by operating activities: Net cash provided by
operating activities 25,633 79,615 138,650 177,047 113,017
Changes in working capital(1)
(559 ) 8,019 (48,626 ) (9,669 ) (48,069 ) Interest income (27 ) (9
) (36 ) (19 ) (9 ) Interest expense, net of amounts capitalized and
accrued but not paid(2) 45,468 33,813 81,970 67,760 36,503
Amortization of deferred financing costs (6,487 )
(1,811 ) (8,356 ) (4,197 ) (1,869 )
Adjusted EBITDA $ 64,028 $
119,627 $ 163,602
$ 230,922 $ 99,573
Acquisition and transaction costs 251 2,483 251 2,611 - Debt
restructuring costs 34,398 - 36,141 - 1,743
Adjusted EBITDA, before acquisition and
transaction costs and debt restructuring costs
$ 98,677 $ 122,110
$ 199,994 $ 233,533
$ 101,316
Adjusted EBITDA, before acquisition and
transaction costs and debt restructuring costs per Boe
$ 32.00 $ 42.05 $ 32.47
$ 42.35 $ 32.95
(1) Changes in working capital for all
periods have been adjusted for the loss on sale of field equipment
inventory and current taxes.
(2) Interest expense includes $1.2 million
of paid-in-kind interest on the Third Lien Notes in the three and
six month periods ended June 30, 2015, as well as a $1.7 million
reduction in interest expense from amortization of the deferred
gain related to the debt restructuring.
NON-GAAP FINANCIAL MEASURES
The following table provides information
that the Company believes may be useful to investors who follow the
practice of some industry analysts who adjust reported Company
earnings to exclude certain non-cash items. Adjusted net income is
not a measure of net income as determined by United States
generally accepted accounting principles, or GAAP.
The following table provides a
reconciliation of net income (GAAP) to adjusted net income
(non-GAAP) (unaudited and in thousands).
For the Three Months
Ended June 30,
For the Six Months
Ended June 30,
For the Three Months
Ended March 31,
2015 2014 2015
2014 2015 Net income (loss) - GAAP $ (598,437
) $ (2,098 ) $ (791,989 ) $ (85,743 ) $ (193,554 ) Adjustments for
certain non-cash items:
Unrealized mark-to-market (gains) losses
on commodity derivative contracts
61,482 14,329 92,718 22,192 31,236 Impairment on oil and gas
properties 498,389 - 673,056 86,471 174,667 Acquisition and
transaction costs 251 2,483 251 2,611 - Debt restructuring costs
34,398 - 36,141 - 1,743
Tax impact(1)
- (322 ) (8,646 ) (2,920
) (9,189 )
Adjusted net income (loss) - non-GAAP $ (3,917
) $ 14,392 $ 1,531
$ 22,611 $ 4,903
(1) The tax impact is computed utilizing
the Company’s effective federal and state income tax rates. The
income tax rate for the three months ended June 30, 2015 was
approximately 0.0%.
NON-GAAP FINANCIAL MEASURES
The following table provides information
that the Company believes may be useful to investors who follow the
practice of some industry analysts who adjust operating expenses to
exclude certain non-cash items. Cash Operating Expenses is not a
measure of operating expenses as determined by United States
generally accepted accounting principles, or GAAP.
The following table provides a
reconciliation of Operating Expenses (GAAP) to Cash Operating
Expenses (non-GAAP) (unaudited and in thousands).
For the Three Months
Ended June 30,
For the Six Months
Ended June 30,
For the Three Months
Ended March 31,
2015 2014 2015
2014 2015 Operating Expenses - GAAP $
628,338 $ 116,325 $ 905,612 $ 312,965 $ 277,299 Adjustments for
certain non-cash items: Asset retirement accretion (390 ) (432 )
(835 ) (929 ) (445 ) Share-based compensation, net of amounts
capitalized (2,096 ) (2,127 ) (2,897 ) (3,668 ) (801 )
Depreciation, depletion, and amortization (55,255 ) (71,074 )
(113,683 ) (137,975 ) (58,428 ) Impairment on oil and gas
properties (498,389 ) - (673,056 ) (86,471 ) (174,667 ) Other
- (609 ) 73 (939 )
(97 )
Cash Operating Expenses - Non-GAAP
$ 72,208 $ 42,083 $
115,214 $ 82,983 $ 42,861
Cash Operating Expenses - Non-GAAP, per Boe $
23.41 $ 14.49 $ 18.71 $
15.05 $ 13.94 Acquisition,
transaction costs and debt restructuring costs $
34,649 $ 2,483 $ 36,392 $
2,611 $ 1,743 Acquisition, transaction
costs and debt restructuring costs, per Boe $
11.24 $ 0.86 $ 5.91 $
0.47 $ 0.57 Severance and other
costs associated with the Houston office closure $
1,280 $ - $ 2,966 $
- $ 1,686 Severance and other costs
associated with the Houston office closure, per Boe $
0.42 $ - $ 0.48 $
- $ 0.55 Adjusted Cash Operating
Expenses - Non-GAAP $ 36,279 $
39,600 $ 75,856 $ 80,372
$ 39,432 Adjusted Cash Operating Expenses -
Non-GAAP, per Boe $ 11.75 $ 13.63
$ 12.31 $ 14.57 $ 12.81
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Midstates Petroleum Company, Inc.Investor Relations:Jason
McGlynn, 918-947-4614Jason.McGlynn@midstatespetroleum.comorAl
Petrie, 713-595-9427Al.Petrie@midstatespetroleum.com