Mid-Con Energy Partners, LP (NASDAQ:MCEP) (“Mid-Con Energy” or the
“Partnership”) announces operating and financial results for the
third quarter ended September 30, 2017.
THIRD QUARTER 2017 SUMMARY AND
SUBSEQUENT HIGHLIGHTS
- Production averaged 3,500 Boe/d, a decrease of 1.7%
sequentially and a decrease of 11.5% year-over-year.
- Invested approximately $3.9 million in capital expenditures
advancing key waterflood projects in our Northeastern Oklahoma and
Permian core areas.
- Signed definitive agreement to divest oil and natural gas
assets in our Southern Oklahoma area for $25.0 million, subject to
customary post-closing adjustments.
- Received a limited waiver to our credit agreement, whereby the
existing lender group agreed to waive any events of default related
to breach of the total leverage financial covenant for the third
quarter of 2017.
- Received lender commitments for a forthcoming bank amendment,
subject to certain conditions being met, which would extend the
maturity of our credit facility, among other changes.
“We are pleased to report a number of pending
transactions that we believe will provide us with the flexibility
and liquidity necessary to take advantage of opportunities we see
in the market today, and benefit the Partnership for years to
come,” commented Jeff Olmstead, our President and Chief Executive
Officer. “From an operational perspective, our grassroots
waterflood projects in the Northeastern Oklahoma and Permian core
areas continued to yield positive results, which allowed us to
accelerate our development in those units and position us for
future growth.”
The following table reflects selected unaudited
operating and financial results for the third quarter of 2017,
compared to the second quarter of 2017 and the third quarter of
2016. Mid-Con Energy’s unaudited condensed consolidated financial
statements are included at the end of this press release.
|
|
|
|
|
|
Three Months Ended |
|
|
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
($ in thousands) |
|
2017 |
|
|
2017 |
|
|
2016 |
|
Average net daily
production (Boe/d)(1) |
|
|
3,500 |
|
|
|
3,560 |
|
|
|
3,957 |
|
Oil & natural gas
sales plus cash settlements from matured
derivatives, inclusive of premiums, net(2)(3) |
|
$ |
12,951 |
|
|
$ |
12,964 |
|
|
$ |
15,592 |
|
Net loss |
|
$ |
(7,921 |
) |
|
$ |
(15,199 |
) |
|
$ |
(2,421 |
) |
Adjusted EBITDA(4) |
|
$ |
3,899 |
|
|
$ |
5,474 |
|
|
$ |
11,873 |
|
Distributable Cash
Flow(4) |
|
$ |
215 |
|
|
$ |
2,878 |
|
|
$ |
9,104 |
|
(1) Production volumes in Boe equivalents calculated at a Btu
conversion rate of six Mcf per Bbl.(2) September 30, 2017 cash
settlements from matured derivatives does not include the $0.1
million settlement received and the $1.1 million of deferred
premiums paid upon early termination of previous oil derivative
contracts in September 2017.(3) Net premiums include those incurred
previously, or upon settlement, that are attributable to
instruments that settled during the period.(4) Non-GAAP financial
measure. Please refer to the related disclosure and reconciliation
of net (loss) income to Adjusted EBITDA and Distributable Cash Flow
included in this press release.
THIRD QUARTER 2017
RESULTSProduction - Production for the third quarter of
2017 was 322 MBoe, or 3,500 Boe/d. On a daily basis, this
represented a 1.7% decrease from the second quarter of 2017 and an
11.5% decrease year-over-year. The decrease in production volumes
was attributable to primary production declines at select
properties in the Permian core area, increasing water cuts at
select maturing waterflood properties in our Southern Oklahoma core
area, and July 2016 sale of our Hugoton properties. Lower
production volumes were partially offset by recent capital
investment and corresponding positive waterflood responses at key
properties in our Permian core area.
Price Realizations - Oil and natural gas sales
were $14.0 million in the third quarter of 2017, or $43.37/Boe. On
a per Boe basis, this represented a 0.8% increase from the second
quarter of 2017 and a 9.5% increase year-over-year. Cash
settlements paid for matured derivatives, inclusive of net
premiums, were $1.0 million in the third quarter of 2017, or
($3.15)/Boe. This figure does not include the early termination of
fourth quarter 2017 derivative contracts during September 2017 that
resulted in $0.1 million of cash settlements received and $1.1
million of net premiums paid upon early termination. Cash
settlements from matured derivatives, inclusive of net premiums,
were ($3.03)/Boe in the second quarter of 2017 and $3.25/Boe in the
third quarter of 2016. The resulting realized prices, after
incorporating cash settlements from matured derivatives, inclusive
of net premiums, were $40.22/Boe in the third quarter of 2017,
$40.01/Boe in the second quarter of 2017, and $42.84/Boe in the
third quarter of 2016.
Lease Operating Expenses (“LOE”) - LOE was $6.1
million in the third quarter of 2017, representing a 9.7% increase
from the second quarter of 2017 and a 7.2% increase from the third
quarter of 2016. The increase in aggregate LOE was attributable to
higher ad valorem taxes in the Permian core area and incremental
costs associated with properties acquired. On a per Boe basis, LOE
in the third quarter of 2017 of $19.01/Boe increased 10.3%
sequentially and 21.2% year-over-year.
Production Taxes - Production taxes in the third
quarter of 2017 were $0.9 million, or $2.66/Boe, for an effective
tax rate of 6.1%. Production taxes in the second quarter of 2017
were $0.7 million, or $2.18/Boe, for an effective tax rate of 5.1%.
Production taxes in the third quarter of 2016 were $0.8 million, or
$2.07/Boe, for an effective tax rate of 5.2%. The increase in the
effective production tax rate was primarily due to Oklahoma
legislation effective July 1, 2017, that discontinued the state’s
EOR tax credit and negatively impacted one of our Northeastern
Oklahoma units.
Impairment Expense - For the third quarter of
2017, we recorded approximately $4.9 million of non-cash impairment
expense related to one of our Permian projects. For the second
quarter of 2017, we recorded approximately $17.7 million of
non-cash impairment expense. There was no impairment expense
recorded for the third quarter 2016.
Depreciation, Depletion and Amortization
Expenses (“DD&A”) - DD&A for the third quarter of 2017 was
$4.4 million, or $13.51/Boe. On a per Boe basis, DD&A decreased
5.5% from the second quarter of 2017 and 13.2% from the third
quarter of 2016. The sequential and year-over-year decrease in
DD&A per Boe was largely due to lower depletion rates,
partially offset by the net impact of the acquisitions and
divestitures.
General and Administrative Expenses (“G&A”)
- G&A in the third quarter of 2017 was $1.2 million, or
$3.69/Boe, and included $0.1 million, or $0.23/Boe, in non-cash
equity-based compensation expense related to the Partnership’s
Long-Term Incentive Program. G&A for the second quarter of 2017
was $1.5 million, or $4.54/Boe, and included $0.1 million in
non-cash equity-based compensation expense. G&A for the third
quarter of 2016 was $1.7 million, or $4.71/Boe, and included $0.3
million in non-cash equity-based compensation expense. The
sequential decrease in aggregate G&A was due to lower payroll
expenses and professional fees.
Net Interest Expense – Net interest expense for
the third quarter of 2017 was $1.6 million compared to
approximately $1.5 million for the second quarter of 2017 and $1.7
million for the third quarter 2016. The effective interest rate
increased sequentially due to recent trends in the underlying
market rates.
Net Loss - For the third quarter of 2017,
Mid-Con Energy reported net loss of $7.9 million. Net loss per
limited partner unit was $0.29 (basic and diluted) based on the
weighted average limited partner units outstanding during the
period of 30.0 million (basic and diluted). Net loss for the second
quarter of 2017 was $15.2 million, or $0.52 per limited partner
unit (basic and diluted) based on the weighted average limited
partner units outstanding during the period of 29.9 million (basic
and diluted). Net loss for the third quarter of 2016 was $2.4
million, or $0.09 per limited partner unit (basic and diluted),
based on the weighted average limited partner units outstanding
during the period of 29.9 million (basic and diluted).
Adjusted EBITDA - Adjusted EBITDA, a Non-GAAP
measure, for the third quarter of 2017 was $3.9 million, or
$12.11/Boe. Adjusted EBITDA was $16.90/Boe in the second quarter of
2017 and $32.62/Boe in the third quarter of 2016. The sequential
decrease in Adjusted EBITDA, in aggregate and per Boe, was
primarily due to the early termination of fourth quarter 2017
derivative positions in September 2017, lower production, and
higher LOE.
Distributable Cash Flow (“DCF”) - DCF, a
Non-GAAP measure, was $0.2 million for the third quarter of 2017
after subtracting $1.3 million in cash interest expense, $1.9
million in estimated maintenance capital expenditures, and $0.5
million in distributions to preferred unitholders from Adjusted
EBITDA.
SOUTHERN OKLAHOMA
DIVESTITUREMid-Con Energy announced that it had entered
into a definitive agreement to sell oil and natural gas assets
within its Southern Oklahoma core area to an unaffiliated buyer for
$25.0 million, subject to customary post-closing adjustments.
The effective date of the divestiture is October 1, 2017, and
closing is expected to occur on or before November 30, 2017.
Proceeds from the sale will be used to reduce borrowings
outstanding under the Partnership's revolving credit facility.
The Partnership will divest the entirety of its
Southern Oklahoma core area, which as of December 31, 2016, was
comprised of 89 gross oil and natural gas producing wells, 55 gross
injection wells, 5 gross water supply wells, and 36 gross inactive
wells. Estimated net total proved reserves at year end 2016
were 2.7 million barrels of oil equivalent (“MMBoe”) and average
net production during the third quarter of 2017 was approximately
540 Boe/d.
DEBT AND LIQUIDITY SUMMARYAt
September 30, 2017, Mid-Con Energy had debt outstanding of $122.0
million and total liquidity of $2.6 million in cash and cash
equivalents. The Partnership breached its total leverage financial
covenant in its credit agreement for the quarter ended as of such
date. As a result, on November 10, 2017, Mid-Con Energy entered
into a limited waiver, whereby the existing lender group agreed to
waive any events of default related to such breach for the quarter
ended September 30, 2017.
In conjunction with its Fall 2017 borrowing base
redetermination, the Partnership is in advanced discussions with
its lenders to amend the credit agreement to, among other things,
extend the maturity date. Mid-Con Energy has received
commitments from its lenders with respect to the amendment that are
subject to the satisfaction of certain conditions, including the
sale of certain oil and gas properties located in Southern
Oklahoma. We can provide no assurances that the amendment
will be signed or become effective or whether the lenders will
provide any future waivers of covenant violations.
HEDGING SUMMARYMid-Con Energy
enters into various commodity derivative contracts intended to
achieve more predictable cash flows by reducing the Partnership's
exposure to short-term fluctuations in the price of oil and natural
gas. We believe this risk management strategy will serve to secure
a portion of our revenues and, by retaining some opportunity to
participate in upward price movements, may also enable us to
realize higher revenues during periods when prices rise.
As of November 14, 2017, the following
unaudited table reflects volumes of Mid-Con Energy's
production hedged by commodity derivative contracts, with the
corresponding prices at which the production is hedged:
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OIL
HEDGES |
|
4Q17 |
|
|
1Q18 |
|
|
2Q18 |
|
|
3Q18 |
|
|
4Q18 |
|
|
1Q19 |
|
|
2Q19 |
|
|
3Q19 |
|
|
4Q19 |
|
|
Collar Volume
(Bbl/d) |
|
|
652 |
|
|
|
1,500 |
|
|
|
1,484 |
|
|
|
1,141 |
|
|
|
1,141 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Call
Strike Price ($/Bbl) |
|
$ |
52.35 |
|
|
$ |
57.39 |
|
|
$ |
57.91 |
|
|
$ |
52.42 |
|
|
$ |
53.13 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Put
Strike Price ($/Bbl) |
|
$ |
45.00 |
|
|
$ |
45.00 |
|
|
$ |
45.00 |
|
|
$ |
43.57 |
|
|
$ |
43.57 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WTI Swap Volume
(Bbl/d) |
|
|
1,957 |
|
|
|
567 |
|
|
|
560 |
|
|
|
326 |
|
|
|
326 |
|
|
|
433 |
|
|
|
429 |
|
|
|
424 |
|
|
|
424 |
|
|
Swap
Price ($/Bbl) |
|
$ |
51.54 |
|
|
$ |
51.53 |
|
|
$ |
51.53 |
|
|
$ |
51.00 |
|
|
$ |
51.00 |
|
|
$ |
51.48 |
|
|
$ |
51.48 |
|
|
$ |
51.48 |
|
|
$ |
51.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Put Volume
(Bbl/d)(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
326 |
|
|
|
326 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Put
Strike Price ($/Bbl)(1) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
45.00 |
|
|
$ |
45.00 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Hedged Volume
(Bbl/d) |
|
|
2,609 |
|
|
|
2,067 |
|
|
|
2,044 |
|
|
|
1,793 |
|
|
|
1,793 |
|
|
|
433 |
|
|
|
429 |
|
|
|
424 |
|
|
|
424 |
|
|
Floor
Strike Price ($/Bbl) |
|
$ |
49.91 |
|
|
$ |
46.79 |
|
|
$ |
46.79 |
|
|
$ |
45.18 |
|
|
$ |
45.18 |
|
|
$ |
51.48 |
|
|
$ |
51.48 |
|
|
$ |
51.48 |
|
|
$ |
51.48 |
|
|
%
Hedged(2) |
|
|
78 |
% |
|
|
62 |
% |
|
|
61 |
% |
|
|
54 |
% |
|
|
54 |
% |
|
|
13 |
% |
|
|
13 |
% |
|
|
13 |
% |
|
|
13 |
% |
|
(1) Deferred premium puts include premiums that are to be paid
monthly as the contracts settle (refer to our SEC filing for
additional details).(2) Estimated percent hedged based on the
mid-point of annual 2017 Boe production guidance, multiplied by an
approximate 94% oil weighting based on third quarter 2017 reported
production volumes.
FISCAL YEAR 2017 GUIDANCEThe
following outlook is subject to all the cautionary statements and
limitations described under the “Forward-Looking Statements”
caption at the end of this press release. These estimates and
assumptions reflect management's best judgment based on current and
anticipated market conditions and other factors. Although we
believe such estimates and assumptions to be reasonable, they are
inherently uncertain and involve a number of risks and
uncertainties that are beyond our control.
|
|
|
FY2017 Guidance as of 11/14/17 |
|
2017 |
Net production
(Boe/d)(1) |
|
3,500
- 3,600 |
Lease operating
expenses per Boe(2) |
|
$16.25
- $17.50 |
Production taxes (% of
total revenue) |
|
5.5% -
5.7% |
Estimated capital
expenditures |
|
$10.0
MM |
(1) Production volumes in Boe equivalents calculated at a rate
of six Mcf per Bbl.(2) Lease operating expenses Include ad valorem
taxes.
QUARTERLY REPORT ON FORM
10-QCertain financial results included in this press
release and related footnotes are preliminary and are therefore
subject to change prior to filing Mid-Con Energy’s final unaudited
quarterly report on Form 10-Q, which will be filed on November 14,
2017.
THIRD QUARTER 2017 CONFERENCE
CALLMid-Con Energy’s management will host a conference
call on Tuesday, November 14, 2017, at 6:00 p.m. ET. Interested
parties are invited to participate via telephone by dialing
1-877-847-5946 (Conference ID: 7296548) at least five minutes prior
to the scheduled start time of the call, or via webcast by clicking
on “Events & Presentations” in the investor relations section
of the Mid-Con Energy website at www.midconenergypartners.com.
A replay of the conference call will be
available through November 21, 2017, by dialing 1-855-859-2056
(Conference ID: 7296548). Additionally, a webcast archive will be
available at www.midconenergypartners.com.
ABOUT MID-CON ENERGY PARTNERS,
LPMid-Con Energy is a publicly held Delaware limited
partnership formed in July 2011 to own, acquire, exploit and
develop producing oil and natural gas properties in North America,
with a focus on Enhanced Oil Recovery. Mid-Con Energy’s core areas
of operation are located in Southern Oklahoma, Northeastern
Oklahoma, and Texas within the Eastern Shelf of the Permian. For
more information, please visit Mid-Con Energy’s website at
www.midconenergypartners.com.
FORWARD-LOOKING STATEMENTSThis
press release includes “forward-looking statements” — that is,
statements related to future, not past, events within meaning of
the federal securities laws. Forward-looking statements are based
on current expectations and include any statement that does not
directly relate to a current or historical fact. In this context,
forward-looking statements often address expected future business
and financial performance, and often contain words such as
“anticipate,” “believe,” “estimate,” “intend,” “expect,” “plan,”
“project,” “should,” “goal,” “forecast,” “guidance,” “could,”
“may,” “continue,” “might,” “potential,” “scheduled,” “pursue,”
“target,” “will” and the negative of such terms or other comparable
terminology. These forward-looking statements involve certain risks
and uncertainties and ultimately may not prove to be accurate.
Actual results and future events could differ materially from those
anticipated in such statements. For further discussion of risks and
uncertainties, you should refer to Mid-Con Energy's filings with
the Securities and Exchange Commission (“SEC”) available at
www.midconenergypartners.com or www.sec.gov. Mid-Con Energy
undertakes no obligation and does not intend to update these
forward-looking statements to reflect events or circumstances
occurring after this press release. You are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date of this press release. All forward-looking
statements are qualified in their entirety by this cautionary
statement and our SEC filings. Please see the risks and
uncertainties detailed in the “Forward-Looking Statements” and
“Risk Factors” sections of our Annual Report on Form 10-K for the
year ended December 31, 2016, and in other documents and reports we
file from time to time with the SEC.
|
|
|
|
Mid-Con Energy Partners, LP and
subsidiaries |
Condensed Consolidated Balance
Sheets |
(in thousands, except number of units) |
(Unaudited) |
|
|
|
|
|
|
September 30,2017 |
|
|
December 31,2016 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
2,588 |
|
|
$ |
2,359 |
|
Accounts
receivable |
|
|
|
|
|
|
|
|
Oil and
natural gas sales |
|
|
4,605 |
|
|
|
5,302 |
|
Other |
|
|
83 |
|
|
|
233 |
|
Derivative financial instruments |
|
|
42 |
|
|
|
— |
|
Prepaids
and other |
|
|
149 |
|
|
|
512 |
|
Total
current assets |
|
|
7,467 |
|
|
|
8,406 |
|
Property and
equipment |
|
|
|
|
|
|
|
|
Proved
oil and natural gas properties, successful efforts method |
|
|
454,566 |
|
|
|
441,479 |
|
Other
property and equipment |
|
|
852 |
|
|
|
289 |
|
Accumulated depletion, depreciation, amortization and
impairment |
|
|
(212,922 |
) |
|
|
(176,551 |
) |
Total
property and equipment, net |
|
|
242,496 |
|
|
|
265,217 |
|
Derivative financial
instruments |
|
|
187 |
|
|
|
— |
|
Other assets |
|
|
1,640 |
|
|
|
2,663 |
|
Total
assets |
|
$ |
251,790 |
|
|
$ |
276,286 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES,
CONVERTIBLE PREFERRED UNITS AND EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
|
Accounts
payable |
|
|
|
|
|
|
|
|
Trade |
|
$ |
532 |
|
|
$ |
256 |
|
Related
parties |
|
|
3,759 |
|
|
|
3,431 |
|
Derivative financial instruments |
|
|
784 |
|
|
|
5,314 |
|
Accrued
liabilities |
|
|
897 |
|
|
|
146 |
|
Total
current liabilities |
|
|
5,972 |
|
|
|
9,147 |
|
Derivative financial
instruments |
|
|
— |
|
|
|
2,495 |
|
Long-term debt |
|
|
122,000 |
|
|
|
122,000 |
|
Other long term
liabilities |
|
|
75 |
|
|
|
93 |
|
Asset retirement
obligations |
|
|
12,384 |
|
|
|
11,331 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
Class A convertible
preferred units - 11,627,906 issued and outstanding,
respectively |
|
|
20,253 |
|
|
|
19,570 |
|
Equity, per
accompanying statements |
|
|
|
|
|
|
|
|
Partnership equity |
|
|
|
|
|
|
|
|
General
partner interest |
|
|
(470 |
) |
|
|
(248 |
) |
Limited
partners - 30,091,463 and 29,912,230 units issued and outstanding,
respectively |
|
|
91,576 |
|
|
|
111,898 |
|
Total
equity |
|
|
91,106 |
|
|
|
111,650 |
|
Total
liabilities, convertible preferred units and equity |
|
$ |
251,790 |
|
|
$ |
276,286 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mid-Con Energy Partners, LP and
subsidiaries |
Condensed Consolidated Statements of
Operations |
(in thousands, except per unit data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
sales |
|
$ |
13,731 |
|
|
$ |
14,012 |
|
|
$ |
42,343 |
|
|
$ |
39,565 |
|
Natural
gas sales |
|
|
233 |
|
|
|
398 |
|
|
|
917 |
|
|
|
891 |
|
(Loss)
gain on derivatives, net |
|
|
(2,749 |
) |
|
|
(444 |
) |
|
|
2,916 |
|
|
|
(7,964 |
) |
Total
revenues |
|
|
11,215 |
|
|
|
13,966 |
|
|
|
46,176 |
|
|
|
32,492 |
|
Operating costs and
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease
operating expenses |
|
|
6,122 |
|
|
|
5,709 |
|
|
|
16,695 |
|
|
|
17,551 |
|
Oil and
natural gas production taxes |
|
|
857 |
|
|
|
753 |
|
|
|
2,366 |
|
|
|
2,077 |
|
Impairment of proved oil and natural gas properties |
|
|
4,850 |
|
|
|
— |
|
|
|
22,522 |
|
|
|
895 |
|
Impairment of proved oil and natural gas properties sold |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,578 |
|
Depreciation, depletion and amortization |
|
|
4,350 |
|
|
|
5,665 |
|
|
|
13,850 |
|
|
|
17,550 |
|
Accretion
of discount on asset retirement obligations |
|
|
142 |
|
|
|
127 |
|
|
|
386 |
|
|
|
443 |
|
General
and administrative |
|
|
1,188 |
|
|
|
1,715 |
|
|
|
4,485 |
|
|
|
5,281 |
|
Total
operating costs and expenses |
|
|
17,509 |
|
|
|
13,969 |
|
|
|
60,304 |
|
|
|
47,375 |
|
Loss on sales of oil
and natural gas properties, net |
|
|
— |
|
|
|
(530 |
) |
|
|
— |
|
|
|
(517 |
) |
Loss from
operations |
|
|
(6,294 |
) |
|
|
(533 |
) |
|
|
(14,128 |
) |
|
|
(15,400 |
) |
Other (expense)
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
3 |
|
|
|
4 |
|
|
|
8 |
|
|
|
9 |
|
Interest
expense |
|
|
(1,626 |
) |
|
|
(1,728 |
) |
|
|
(4,615 |
) |
|
|
(5,981 |
) |
Other
income (expense) |
|
|
4 |
|
|
|
(164 |
) |
|
|
70 |
|
|
|
(131 |
) |
Loss on
settlements of asset retirement obligations |
|
|
(8 |
) |
|
|
— |
|
|
|
(13 |
) |
|
|
— |
|
Total
other expense |
|
|
(1,627 |
) |
|
|
(1,888 |
) |
|
|
(4,550 |
) |
|
|
(6,103 |
) |
Net loss |
|
|
(7,921 |
) |
|
|
(2,421 |
) |
|
|
(18,678 |
) |
|
|
(21,503 |
) |
Less:
Distributions to preferred unitholders |
|
|
783 |
|
|
|
440 |
|
|
|
2,275 |
|
|
|
440 |
|
Less:
General partner's interest in net loss |
|
|
(94 |
) |
|
|
(29 |
) |
|
|
(222 |
) |
|
|
(256 |
) |
Limited partners'
interest in net loss |
|
$ |
(8,610 |
) |
|
$ |
(2,832 |
) |
|
$ |
(20,731 |
) |
|
$ |
(21,687 |
) |
Limited partners'
interest in net loss per unit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
$ |
(0.29 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.69 |
) |
|
$ |
(0.73 |
) |
Weighted average
limited partner units outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited
partner units (basic and diluted) |
|
|
30,042 |
|
|
|
29,868 |
|
|
|
29,972 |
|
|
|
29,807 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mid-Con Energy Partners, LP and
subsidiaries |
Condensed Consolidated Statements of Cash
Flows |
(in thousands) |
(Unaudited) |
|
|
|
Nine Months Ended
September 30, |
|
|
|
2017 |
|
|
2016 |
|
Cash Flows from
Operating Activities |
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(18,678 |
) |
|
$ |
(21,503 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities |
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
13,850 |
|
|
|
17,550 |
|
Debt
issuance costs amortization |
|
|
1,023 |
|
|
|
1,019 |
|
Accretion
of discount on asset retirement obligations |
|
|
386 |
|
|
|
443 |
|
Impairment of proved oil and natural gas properties |
|
|
22,522 |
|
|
|
895 |
|
Impairment of proved oil and natural gas properties sold |
|
|
— |
|
|
|
3,578 |
|
Loss on
settlements of asset retirement obligations |
|
|
13 |
|
|
|
— |
|
Cash paid
for settlements of asset retirement obligations |
|
|
(30 |
) |
|
|
— |
|
Mark to
market on derivatives |
|
|
|
|
|
|
|
|
(Gain) loss on derivatives, net |
|
|
(2,916 |
) |
|
|
7,964 |
|
Cash settlements received for matured
derivatives |
|
|
524 |
|
|
|
18,467 |
|
Cash settlements received from early termination of
derivatives |
|
|
147 |
|
|
|
5,820 |
|
Cash
premiums paid for derivatives |
|
|
(5,009 |
) |
|
|
(3,766 |
) |
Loss on
sale of oil and natural gas properties |
|
|
— |
|
|
|
517 |
|
Non-cash
equity-based compensation |
|
|
409 |
|
|
|
961 |
|
Changes
in operating assets and liabilities |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
697 |
|
|
|
(160 |
) |
Other
receivables |
|
|
150 |
|
|
|
4,805 |
|
Prepaids
and other |
|
|
363 |
|
|
|
326 |
|
Accounts
payable - trade and accrued liabilities |
|
|
1,009 |
|
|
|
80 |
|
Accounts
payable - related parties |
|
|
(557 |
) |
|
|
(1,368 |
) |
Net cash provided by operating activities |
|
|
13,903 |
|
|
|
35,628 |
|
Cash Flows from
Investing Activities |
|
|
|
|
|
|
|
|
Acquisitions of oil and natural gas properties |
|
|
(4,668 |
) |
|
|
(19,055 |
) |
Additions
to oil and natural gas properties |
|
|
(7,281 |
) |
|
|
(5,111 |
) |
Additions
to other property and equipment |
|
|
(133 |
) |
|
|
(124 |
) |
Proceeds
from sale of oil and natural gas properties |
|
|
— |
|
|
|
17,312 |
|
Net cash used in investing activities |
|
|
(12,082 |
) |
|
|
(6,978 |
) |
Cash Flows from
Financing Activities |
|
|
|
|
|
|
|
|
Proceeds
from line of credit |
|
|
6,000 |
|
|
|
— |
|
Payments
on line of credit |
|
|
(6,000 |
) |
|
|
(52,100 |
) |
Offering
costs |
|
|
(92 |
) |
|
|
(16 |
) |
Debt
issuance costs |
|
|
— |
|
|
|
(9 |
) |
Proceeds
from sale of convertible preferred units, net of offering
costs |
|
|
— |
|
|
|
24,975 |
|
Distributions to Class A convertible preferred units |
|
|
(1,500 |
) |
|
|
— |
|
Net cash used in financing activities |
|
|
(1,592 |
) |
|
|
(27,150 |
) |
Net increase in cash and cash equivalents |
|
|
229 |
|
|
|
1,500 |
|
Beginning cash and cash
equivalents |
|
|
2,359 |
|
|
|
615 |
|
Ending cash and cash
equivalents |
|
$ |
2,588 |
|
|
$ |
2,115 |
|
|
|
|
|
|
|
|
|
|
NON-GAAP FINANCIAL MEASURESThis
press release, the financial tables and other supplemental
information include “Adjusted EBITDA” and “Distributable Cash
Flow”, each of which are non-generally accepted accounting
principles (“Non-GAAP”) measures used by our management to describe
financial performance with external users of our financial
statements.
The Partnership believes the Non-GAAP financial
measures described above are useful to investors because these
measurements are used by many companies in its industry as a
measurement of financial performance and are commonly employed by
financial analysts and others to evaluate the financial performance
of the Partnership and to compare the financial performance of the
Partnership with the performance of other publicly traded
partnerships within its industry.
Adjusted EBITDA and Distributable Cash Flow
should not be considered an alternative to net income (loss), net
cash provided by operating activities or any other measure of
financial performance or liquidity presented in accordance with
GAAP.
Adjusted EBITDA is defined as net income (loss)
plus:
- Interest expense, net;
- Depreciation, depletion and amortization;
- Accretion of discount on asset retirement obligations;
- (Gain) loss on derivatives, net;
- Cash settlements received (paid) for matured derivatives,
net;
- Cash settlements received for early terminations of
derivatives, net;
- Cash premiums received (paid) for derivatives, net;
- Cash premiums paid at inception of derivatives, net;
- Impairment of proved oil and natural gas properties;
- Non-cash equity-based compensation; and
- (Gain) loss on sales of oil and natural gas properties,
net.
Distributable Cash Flow is defined as Adjusted
EBITDA less:
- Cash interest expense;
- Estimated maintenance capital expenditures;
- Distributions to preferred unitholders; and
- Other non-operating cash (income) expense.
|
Mid-Con Energy Partners, LP and
subsidiaries |
Reconciliation of Net Loss to Adjusted EBITDA
and Distributable Cash Flow |
(in thousands) |
(Unaudited) |
|
|
|
Three Months Ended |
|
|
|
September 30, |
|
|
June 30, |
|
|
September 30, |
|
|
|
2017 |
|
|
2017 |
|
|
2016 |
|
Net loss |
|
$ |
(7,921 |
) |
|
$ |
(15,199 |
) |
|
$ |
(2,421 |
) |
Interest
expense, net |
|
|
1,623 |
|
|
|
1,537 |
|
|
|
1,724 |
|
Depreciation, depletion and amortization |
|
|
4,350 |
|
|
|
4,631 |
|
|
|
5,665 |
|
Accretion
of discount on asset retirement obligations |
|
|
142 |
|
|
|
136 |
|
|
|
127 |
|
Impairment of proved oil & natural gas properties |
|
|
4,850 |
|
|
|
17,672 |
|
|
|
— |
|
Loss
(gain) on derivatives, net |
|
|
2,749 |
|
|
|
(2,533 |
) |
|
|
444 |
|
Cash
settlements received (paid) for matured derivatives, net |
|
|
323 |
|
|
|
357 |
|
|
|
1,182 |
|
Cash
settlements received for early termination of derivatives |
|
|
147 |
|
|
|
— |
|
|
|
5,820 |
|
Cash
premiums paid for derivatives, net |
|
|
(2,438 |
) |
|
|
(1,297 |
) |
|
|
(1,509 |
) |
Non-cash
equity-based compensation |
|
|
74 |
|
|
|
170 |
|
|
|
311 |
|
Loss on
sales of oil and natural gas properties |
|
|
— |
|
|
|
— |
|
|
|
530 |
|
Adjusted EBITDA |
|
|
3,899 |
|
|
|
5,474 |
|
|
|
11,873 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
interest expense |
|
|
1,261 |
|
|
|
1,187 |
|
|
|
1,363 |
|
Estimated
maintenance capital expenditures |
|
|
1,923 |
|
|
|
843 |
|
|
|
1,129 |
|
Distributions to preferred unitholders |
|
|
500 |
|
|
|
500 |
|
|
|
277 |
|
Other
income |
|
|
— |
|
|
|
66 |
|
|
|
— |
|
Distributable Cash
Flow |
|
$ |
215 |
|
|
$ |
2,878 |
|
|
$ |
9,104 |
|
|
INVESTOR RELATIONS
CONTACTIR@midcon-energy.com(918) 743-7575
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