HighPoint Resources Corporation (the "Company" or "HighPoint")
(NYSE: HPR) today reported second quarter of 2019 financial and
operating results, including year-over-year increases in
production, oil volumes and EBITDAX, record Hereford field
production and positive well performance in both Hereford and NE
Wattenberg.
For the second quarter of 2019, the Company
reported a net loss of $1.9 million, or $0.01 per diluted share.
Adjusted net income for the second quarter of 2019 was a net loss
of $15.0 million, or $0.07 per diluted share. EBITDAX for the
second quarter of 2019 was $71.1 million. Adjusted net income
(loss) and EBITDAX are non-GAAP (Generally Accepted Accounting
Principles) measures. Please reference the reconciliations to GAAP
net income at the end of this release.
Chief Executive Officer and President Scot
Woodall commented, "We continue to execute on our operational plan
as evidenced by our second quarter results, which were firmly in
line with our plan and highlighted by year-over-year growth in
total production sales volumes, oil volumes and EBITDAX. We
delivered strong operational execution as we placed 30 wells on
initial flowback during the second quarter, giving us high
confidence in achieving a significantly higher production profile
that we have outlined for the second half of the year. We placed an
additional 20 wells on flowback in July and are currently producing
over 37,000 Boe/d. This has us firmly on track to meet our third
quarter production guidance, which was provided today."
"Our second quarter operational activity was
highlighted by the successful execution of our large-scale Hereford
optimization program, which we expect will deliver increased
capital efficiency, enhanced well performance and stronger per well
economics. We are extremely pleased with the immediate performance
insights gained during the execution of this program, which
confirms the quality and potential of this asset. We have
significantly advanced our geologic understanding of the field,
which is yielding early positive completion design enhancements.
This has also confirmed strong reservoir quality and a significant
resource of 30-40 MMBbls of original oil in place per section,
which is approximately 25% greater than our legacy NE Wattenberg
position. We continue to process early drilling and completion data
as the real-time integration of early learnings continues. All 23
wells within the program have been completed and were placed on
flowback in June and July utilizing controlled flowback. The wells
are performing as anticipated during initial flowback and we look
forward to providing further updates as the program wells achieve a
longer production profile."
"We also continue to see strong well performance
from our legacy NE Wattenberg asset as the initial high-fluid
intensity completions are averaging approximately 20% above base
type-curve expectations. Our most recent seven wells that are
located on the western flank of our acreage were placed on flowback
in June and are exhibiting strong performance as they are tracking
above our 1 MMBoe type-curve during early production, supporting
our enthusiasm for utilizing high-fluid intensity completions and
demonstrating our ability to continually enhance value from our
assets."
"Summit Midstream commissioned its new gas
processing plant in July, which increased Hereford gas processing
capacity to support our development plans and we continue to
produce our NE Wattenberg volumes unconstrained as our diversified
midstream outlets provide a strategic advantage that maximizes
optionality."
“Although crude oil prices continue to
fluctuate, we possess a very strong hedge position with more than
70% of our expected oil production hedged in the second half of
2019 and more than 50% of expected oil production in 2020 hedged at
an attractive level of greater than $59.00 per barrel. We will
maintain a disciplined approach to capital investment and are on
track to achieve our target of generating positive free cash flow
for the second half of the year beginning in the third
quarter."
OPERATING AND FINANCIAL RESULTS
The following table summarizes certain operating
and financial results for the second quarter of 2019 and 2018 and
for the first quarter of 2019:
|
Three Months Ended June 30, |
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
|
Change |
|
2019 |
|
Change |
Combined production sales
volumes (MBoe) |
2,841 |
|
|
2,409 |
|
|
18 |
% |
|
2,798 |
|
|
2 |
% |
Net cash provided by operating activities ($ millions) |
$ |
20.9 |
|
|
$ |
14.6 |
|
|
43 |
% |
|
$ |
77.7 |
|
|
(73 |
)% |
Discretionary cash flow ($
millions) (1) |
$ |
57.5 |
|
|
$ |
51.3 |
|
|
12 |
% |
|
$ |
64.2 |
|
|
(10 |
)% |
Combined realized prices with
hedging (per Boe) |
$ |
37.48 |
|
|
$ |
39.29 |
|
|
(5 |
)% |
|
$ |
38.01 |
|
|
(1 |
)% |
Net income (loss) ($
millions) |
$ |
(1.9 |
) |
|
$ |
(46.9 |
) |
|
96 |
% |
|
$ |
(96.2 |
) |
|
98 |
% |
Per share, basic |
$ |
(0.01 |
) |
|
$ |
(0.22 |
) |
|
95 |
% |
|
$ |
(0.46 |
) |
|
98 |
% |
Per share, diluted |
$ |
(0.01 |
) |
|
$ |
(0.22 |
) |
|
95 |
% |
|
$ |
(0.46 |
) |
|
98 |
% |
Adjusted net income (loss) ($
millions) (1) |
$ |
(15.0 |
) |
|
$ |
(3.2 |
) |
|
(369 |
)% |
|
$ |
(10.7 |
) |
|
(40 |
)% |
Per share, basic |
$ |
(0.07 |
) |
|
$ |
(0.02 |
) |
|
(250 |
)% |
|
$ |
(0.05 |
) |
|
(40 |
)% |
Per share, diluted |
$ |
(0.07 |
) |
|
$ |
(0.02 |
) |
|
(250 |
)% |
|
$ |
(0.05 |
) |
|
(40 |
)% |
Weighted average shares
outstanding, basic (in thousands) |
210,377 |
|
|
209,393 |
|
|
— |
% |
|
209,932 |
|
|
— |
% |
Weighted average shares
outstanding, diluted (in thousands) (1) |
210,377 |
|
|
209,393 |
|
|
— |
% |
|
209,932 |
|
|
— |
% |
EBITDAX ($ millions) (1) |
$ |
71.1 |
|
|
$ |
63.1 |
|
|
13 |
% |
|
$ |
76.9 |
|
|
(8 |
)% |
(1) Discretionary cash flow, adjusted net income (loss) and
EBITDAX are non-GAAP measures. Please reference the reconciliations
to GAAP financial statements at the end of this release.
The Company reported oil, natural gas and
natural gas liquids ("NGL") production of 2.84 MMBoe for the
second quarter of 2019, which was an increase of 18% over the
second quarter of 2018. Oil volumes totaled 1.75 MMBbls or 62% of
total equivalent production sales volumes, which was an increase of
16% over the second quarter of 2018.
Production sales volumes for the second quarter
were comprised of approximately 62% oil, 21% natural gas and 17%
NGLs.
For the second quarter of 2019, WTI oil prices
averaged $59.81 per barrel, Northwest Pipeline ("NWPL") natural gas
prices averaged $2.08 per MMBtu and NYMEX natural gas prices
averaged $2.64 per MMBtu. Commodity price realizations to benchmark
pricing were WTI less $4.29 per barrel of oil and NWPL less $0.50
per Mcf of gas. The NGL price averaged approximately 16% of the WTI
price per barrel.
For the second quarter of 2019, the Company had
derivative commodity swaps in place for 17,250 barrels of oil per
day tied to WTI pricing at $59.18 per barrel, 7,000 MMBtu of
natural gas per day tied to NWPL regional pricing at $2.11 per
MMBtu, and no hedges in place for NGLs.
|
Three Months Ended June 30, |
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
|
Change |
|
2019 |
|
Change |
Average Realized Prices before
Hedging: |
|
|
|
|
|
|
|
|
|
Oil (per Bbl) |
$ |
55.46 |
|
|
$ |
65.07 |
|
|
(15 |
)% |
|
$ |
50.82 |
|
|
9 |
% |
Natural gas (per Mcf) |
1.58 |
|
|
1.29 |
|
|
22 |
% |
|
2.21 |
|
|
(29 |
)% |
NGLs (per Bbl) |
9.81 |
|
|
20.84 |
|
|
(53 |
)% |
|
13.29 |
|
|
(26 |
)% |
Combined (per Boe) |
37.83 |
|
|
45.71 |
|
|
(17 |
)% |
|
36.35 |
|
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Realized Prices with
Hedging: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil (per Bbl) |
$ |
54.88 |
|
|
$ |
54.59 |
|
|
1 |
% |
|
$ |
54.01 |
|
|
2 |
% |
Natural gas (per Mcf) |
1.59 |
|
|
1.40 |
|
|
14 |
% |
|
1.98 |
|
|
(20 |
)% |
NGLs (per Bbl) |
9.81 |
|
|
20.84 |
|
|
(53 |
)% |
|
13.29 |
|
|
(26 |
)% |
Combined (per Boe) |
37.48 |
|
|
39.29 |
|
|
(5 |
)% |
|
38.01 |
|
|
(1 |
)% |
Lease operating expense ("LOE") averaged $3.79
per Boe in the second quarter of 2019 compared to $3.15 per Boe in
the second quarter of 2018.
Production tax expense averaged $3.13 per Boe in
the second quarter of 2019 compared to $4.02 per Boe in the second
quarter of 2018. Production tax expense averaged 8.3% of revenues
in the second quarter of 2019 and is expected to average
approximately 8%-9% of revenues for the remainder of 2019.
|
Three Months Ended June 30, |
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
|
Change |
|
2019 |
|
Change |
Average Costs (per Boe): |
|
|
|
|
|
|
|
|
|
Lease operating expenses |
$ |
3.79 |
|
|
$ |
3.15 |
|
|
20 |
% |
|
$ |
4.03 |
|
|
(6 |
)% |
Gathering, transportation and processing expense |
0.61 |
|
|
0.42 |
|
|
45 |
% |
|
0.62 |
|
|
(2 |
)% |
Production tax expenses |
3.13 |
|
|
4.02 |
|
|
(22 |
)% |
|
1.39 |
|
|
125 |
% |
Depreciation, depletion and amortization |
25.56 |
|
|
21.66 |
|
|
18 |
% |
|
25.95 |
|
|
(2 |
)% |
General and administrative expense |
4.37 |
|
|
4.83 |
|
|
(10 |
)% |
|
4.52 |
|
|
(3 |
)% |
Debt and Liquidity
At June 30, 2019, the Company had cash and cash
equivalents of $16 million and $324 million available under its
$500 million credit facility, after taking into account a $26
million letter of credit, resulting in total liquidity of $340
million. Net debt totaled $758.9 million at June 30, 2019. The
Company completed its semiannual redetermination in May 2019 and
the borrowing base under the credit facility was reaffirmed at $500
million.
Capital Expenditures
Capital expenditures for the second quarter of
2019 totaled $124.4 million and capital projects included spudding
15 gross extended reach lateral ("XRL") wells and placing 30 gross
XRL wells on initial flowback.
Capital expenditures included $118.2 million for
drilling and completion operations, $0.4 million for leasehold, and
$5.8 million for infrastructure and corporate assets.
OPERATIONAL UPDATE
Hereford Field
Production sales volumes for the second quarter
of 2019 in Hereford averaged 7,145 Boe/d (75% oil) and current
field production has reached a record-high of over 10,000 Boe/d.
During the second quarter of 2019, 3 gross wells were spud and 13
gross wells were placed on flowback. The Company successfully
executed and completed its extensive reservoir and geologic
technical study within DSU 11-63-16 and DSU 11-63-17 with an
emphasis on immediately advancing several generations of
development improvements and optimizing all phases of drilling and
completion processes. The technical study area consisted of 23 XRL
wells within the two DSUs and encompassed over 1,860 total stages
of completions that evaluated every aspect of the completion
process including, fluid loading of 30-60 barrels per foot, sand
loading of 1,000-2,250 pounds per lateral foot, cluster spacing of
10-40 feet and stage spacing of 30-240 feet. Fiber optics were
incorporated on three wells, microseismic monitoring was utilized
across 18 square miles and well spacing assumptions of 8-16 wells
per DSU were used. All 23 XRL wells have been completed and were
placed on flowback during June and July.
The Company is pleased with the immediate
performance insights gained during the execution of the program
that are expected to provide definitive conclusions with respect to
optimal well density and completion design. In addition, thermal
maturity and saturation data gathered confirms strong reservoir
characteristics and a significant hydrocarbon resource of 30-40
MMBbls of original oil in place per section, which is approximately
25% greater than NE Wattenberg. Early drilling and completion data
is being processed and real-time integration of the data has
commenced. This has provided a significantly better geologic
understanding of the Hereford field that is contributing positive
development enhancements. Initial program conclusions include
identifying opportunities to improve fracture stimulation of the
Niobrara and Codell reservoirs, which is expected to positively
impact well performance, well economics and capital efficiency and
will be confirmed through production data.
The seven wells located on the eastern portion
of DSU 11-63-16 were placed on flowback in June. Development
consisted of increased well density of 16 wells per section,
incorporated higher intensity completions of approximately 30
barrels of fluid per lateral foot and approximately 1,500 pounds of
sand per lateral foot. The wells are performing as anticipated
during the initial 30-days of controlled flowback based on the
increased density spacing. The remaining four wells, which are
located on the western portion of the DSU, were placed on flowback
in July, utilized higher fluid intensity completions and were
drilled at a density of 8 wells per section. In addition, DSU
11-63-17 was placed on flowback in late July and included 12 XRL
wells and also utilized high-fluid intensity completions.
Summit Midstream commissioned its new gas
processing plant in July, which increased Hereford gas processing
capacity from 20 MMcf/d to 60 MMcf/d and supports the Company's
planned development.
NE Wattenberg
The Company produced an average of 24,072 Boe/d
(57% oil) in the second quarter of 2019 in NE Wattenberg and spud
12 gross wells and placed 17 gross wells on flowback. The Company
continues to see improved well performance through high-fluid
intensity completions as the initial 11 well program has
reached average cumulative production of approximately 100,000
barrels of oil (77% of equivalent volumes) per well after 270 days
of production and continue to track approximately 20% above the
base NE Wattenberg type-curve.
The Company also placed seven XRL wells on
flowback in DSU 4-63-5 on the western flank of its acreage in June.
These are the first wells completed by the Company in this area to
utilize high-fluid intensity completions. The wells are exhibiting
strong early performance and are currently tracking above a 1 MMBoe
type-curve after 30 days of production. These encouraging well
results further support the Company's enthusiasm for its high-fluid
intensity completions, which it has incorporated as the new
standard completion.
2019 OPERATING GUIDANCE
The Company is reiterating its 2019 capital
expenditure and production guidance and is providing updated
guidance as discussed below.
See "Forward-Looking Statements" below.
- Capital expenditures of approximately $350-$380 million,
unchanged -- Third quarter of 2019 capital expenditures are
expected to be approximately $70 -$80 million
- Production of 12.5-13.0 MMBoe, unchanged -- Third
quarter 2019 production is expected to approximate 3.3-3.4 MMBoe
(approximately 62% oil)
- Lease operating expense is expected to average $3.00-$3.25 per
Boe for full-year 2019
- Cash general and administrative expense of $3.00-$3.25 per Boe
for full-year 2019
- Gathering, transportation and processing costs of $0.75-$0.95
per Boe for full-year 2019
COMMODITY HEDGES UPDATE
The following table summarizes our current hedge
position as of August 5, 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 |
3Q19 |
16,731 |
|
|
$ |
59.00 |
|
|
3,000 |
|
|
$ |
55.00 |
|
|
$ |
77.56 |
|
|
7,000 |
|
|
$ |
2.11 |
|
4Q19 |
16,712 |
|
|
$ |
59.01 |
|
|
3,000 |
|
|
$ |
55.00 |
|
|
$ |
77.56 |
|
|
7,000 |
|
|
$ |
2.11 |
|
1Q20 |
15,000 |
|
|
$ |
60.13 |
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
— |
|
|
$ |
— |
|
2Q20 |
12,500 |
|
|
$ |
59.87 |
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
— |
|
|
$ |
— |
|
3Q20 |
11,000 |
|
|
$ |
58.62 |
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
— |
|
|
$ |
— |
|
4Q20 |
11,000 |
|
|
$ |
58.62 |
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
— |
|
|
$ |
— |
|
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
Second Quarter Conference Call and Webcast
The Company plans to host a conference call on
Tuesday, August 6, 2019, to discuss second quarter 2019
results. The call is scheduled at 10:00 a.m. Eastern time (8:00
a.m. Mountain time). Please join the webcast conference call live
or for replay via the Internet at www.hpres.com, accessible from
the home page. To join by telephone, call (855) 760-8152 ((631)
485-4979 international callers) with passcode 9896621. The webcast
will remain on the Company's website for approximately 7 days and a
replay of the call will be available through August 13, 2019
at (855) 859-2056 ((404) 537-3406 international) with passcode
9896621.
Investor Events
Members of the Company's management are
currently scheduled to participate in the following investor
events:
- August 12-13, 2019 - EnerCom's The Oil & Gas Conference in
Denver, CO
- August 27, 2019 - Seaport Global Energy & Industrials
Conference in Chicago, IL
- September 24-25, 2019 - Johnson Rice & Co. Energy
Conference in New Orleans, LA
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 third quarter and full-year 2019 operational and
financial metrics. Additional forward-looking statements in this
release relate to, among other things, future capital expenditures,
costs, projects and opportunities and the availability of
additional natural gas processing capacity.
These and other forward-looking statements in
this press release are based on management's judgment as of the
date of this release and are subject to numerous risks and
uncertainties. Actual results may vary significantly from those
indicated in the forward-looking statements. Please refer to the
HighPoint Resources' Annual Report on Form 10-K for the year ended
December 31, 2018 filed with the SEC, and other filings,
including our Current Reports on Form 8-K and Quarterly Reports on
Form 10-Q, all of which are incorporated by reference herein, for
further discussion of risk factors that may affect the
forward-looking statements. See our Quarterly Report on Form 10-Q
for the quarter ended June 30, 2019 for additional information. The
Company encourages you to consider the risks and uncertainties
associated with projections and other forward-looking statements
and to not place undue reliance on any such statements. In
addition, the Company assumes no obligation to publicly revise or
update any forward-looking statements based on future events or
circumstances.
ABOUT HIGHPOINT RESOURCES
CORPORATION
HighPoint Resources Corporation (NYSE: HPR) is a
Denver, Colorado based company focused on the development of oil
and natural gas assets located in the Denver-Julesburg Basin of
Colorado. Additional information about the Company may be found on
its website at www.hpres.com.
HIGHPOINT RESOURCES
CORPORATIONSelected Operating
Highlights(Unaudited)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Production Data: |
|
|
|
|
|
|
|
Oil (MBbls) |
1,748 |
|
|
1,507 |
|
|
3,468 |
|
|
2,644 |
|
Natural gas (MMcf) |
3,558 |
|
|
3,096 |
|
|
7,308 |
|
|
5,652 |
|
NGLs (MBbls) |
500 |
|
|
386 |
|
|
953 |
|
|
737 |
|
Combined volumes (MBoe) |
2,841 |
|
|
2,409 |
|
|
5,639 |
|
|
4,323 |
|
Daily combined volumes (Boe/d) |
31,220 |
|
|
26,473 |
|
|
31,155 |
|
|
23,884 |
|
|
|
|
|
|
|
|
|
Average Sales
Prices (before the effects of realized hedges): |
Oil (per Bbl) |
$ |
55.46 |
|
|
$ |
65.07 |
|
|
$ |
53.16 |
|
|
$ |
63.09 |
|
Natural gas (per Mcf) |
1.58 |
|
|
1.29 |
|
|
1.90 |
|
|
1.59 |
|
NGLs (per Bbl) |
9.81 |
|
|
20.84 |
|
|
11.47 |
|
|
20.59 |
|
Combined (per Boe) |
37.83 |
|
|
45.71 |
|
|
37.10 |
|
|
44.18 |
|
|
|
|
|
|
|
|
|
Average Realized
Sales Prices (after the effects of realized hedges): |
Oil (per Bbl) |
$ |
54.88 |
|
|
$ |
54.59 |
|
|
$ |
54.45 |
|
|
$ |
53.91 |
|
Natural gas (per Mcf) |
1.59 |
|
|
1.40 |
|
|
1.79 |
|
|
1.66 |
|
NGLs (per Bbl) |
9.81 |
|
|
20.84 |
|
|
11.47 |
|
|
20.59 |
|
Combined (per Boe) |
37.48 |
|
|
39.29 |
|
|
37.75 |
|
|
38.66 |
|
|
|
|
|
|
|
|
|
Average Costs (per Boe): |
|
|
|
|
|
|
|
Lease operating expenses |
$ |
3.79 |
|
|
$ |
3.15 |
|
|
$ |
3.91 |
|
|
$ |
3.20 |
|
Gathering, transportation and processing expense |
0.61 |
|
|
0.42 |
|
|
0.61 |
|
|
0.33 |
|
Production tax expenses |
3.13 |
|
|
4.02 |
|
|
2.27 |
|
|
3.44 |
|
Depreciation, depletion and amortization |
25.56 |
|
|
21.66 |
|
|
25.75 |
|
|
21.55 |
|
General and administrative expense (1) |
4.37 |
|
|
4.83 |
|
|
4.44 |
|
|
5.03 |
|
(1) Includes long-term cash and equity incentive compensation of
$0.81 per Boe and $0.93 per Boe for the three months ended
June 30, 2019 and 2018, respectively, and $0.89 per Boe and
$0.85 per Boe for the six months ended June 30, 2019 and 2018,
respectively.
HIGHPOINT RESOURCES
CORPORATIONConsolidated Condensed Balance
Sheets(Unaudited)
|
As of June 30, |
|
As of December 31, |
|
2019 |
|
2018 |
|
|
|
(in thousands) |
Assets: |
|
|
|
Cash and cash equivalents |
$ |
16,112 |
|
|
$ |
32,774 |
|
Other current assets |
71,603 |
|
|
157,007 |
|
Property and equipment, net |
2,137,664 |
|
|
2,029,523 |
|
Other noncurrent assets |
13,309 |
|
|
33,156 |
|
Total assets |
$ |
2,238,688 |
|
|
$ |
2,252,460 |
|
|
|
|
|
Liabilities and Stockholders'
Equity: |
|
|
|
Current liabilities (1) |
$ |
203,764 |
|
|
$ |
248,185 |
|
Long-term debt, net of debt issuance costs |
768,149 |
|
|
617,387 |
|
Other long-term liabilities (1) |
150,382 |
|
|
174,790 |
|
Stockholders' equity |
1,116,393 |
|
|
1,212,098 |
|
Total liabilities and stockholders' equity |
$ |
2,238,688 |
|
|
$ |
2,252,460 |
|
|
|
|
|
|
|
|
|
(1) At June 30, 2019, the estimated fair value of all of
the Company's commodity derivative instruments was an asset of
$19.2 million, comprised of $12.1 million of current assets and
offset by $7.1 million of non-current assets. This amount will
fluctuate based on estimated future commodity prices and the
current hedge position.
HIGHPOINT RESOURCES
CORPORATIONConsolidated Statements of
Operations(Unaudited)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
(in thousands, except per share amounts) |
Operating Revenues: |
|
|
|
|
|
|
|
Oil, gas and NGL production |
$ |
107,486 |
|
|
$ |
110,118 |
|
|
$ |
209,191 |
|
|
$ |
190,949 |
|
Other operating revenues, net |
98 |
|
|
280 |
|
|
373 |
|
|
259 |
|
Total operating revenues |
107,584 |
|
|
110,398 |
|
|
209,564 |
|
|
191,208 |
|
Operating Expenses: |
|
|
|
|
|
|
|
Lease operating |
10,772 |
|
|
7,594 |
|
|
22,049 |
|
|
13,845 |
|
Gathering, transportation and processing |
1,742 |
|
|
1,012 |
|
|
3,465 |
|
|
1,431 |
|
Production tax |
8,905 |
|
|
9,684 |
|
|
12,798 |
|
|
14,859 |
|
Exploration |
12 |
|
|
7 |
|
|
37 |
|
|
20 |
|
Impairment, dry hole costs and abandonment |
995 |
|
|
108 |
|
|
1,317 |
|
|
425 |
|
(Gain) Loss on sale of properties |
2,906 |
|
|
564 |
|
|
2,901 |
|
|
972 |
|
Depreciation, depletion and amortization |
72,612 |
|
|
52,175 |
|
|
145,222 |
|
|
93,160 |
|
Unused commitments |
4,352 |
|
|
4,572 |
|
|
8,821 |
|
|
9,110 |
|
General and administrative (1) |
12,401 |
|
|
11,624 |
|
|
25,061 |
|
|
21,731 |
|
Merger transaction expense |
— |
|
|
1,277 |
|
|
2,414 |
|
|
6,040 |
|
Other operating expenses, net |
4 |
|
|
9 |
|
|
(20 |
) |
|
48 |
|
Total operating expenses |
114,701 |
|
|
88,626 |
|
|
224,065 |
|
|
161,641 |
|
Operating Income (Loss) |
(7,117 |
) |
|
21,772 |
|
|
(14,501 |
) |
|
29,567 |
|
Other Income and Expense: |
|
|
|
|
|
|
|
Interest and other income |
154 |
|
|
701 |
|
|
468 |
|
|
1,392 |
|
Interest expense |
(14,381 |
) |
|
(13,093 |
) |
|
(28,060 |
) |
|
(26,183 |
) |
Commodity derivative gain (loss) (2) |
19,544 |
|
|
(56,286 |
) |
|
(85,647 |
) |
|
(76,619 |
) |
Total other income and expense |
5,317 |
|
|
(68,678 |
) |
|
(113,239 |
) |
|
(101,410 |
) |
Income (Loss) before Income
Taxes |
(1,800 |
) |
|
(46,906 |
) |
|
(127,740 |
) |
|
(71,843 |
) |
(Provision for) Benefit from
Income Taxes |
(110 |
) |
|
— |
|
|
29,601 |
|
|
— |
|
Net Income (Loss) |
$ |
(1,910 |
) |
|
$ |
(46,906 |
) |
|
$ |
(98,139 |
) |
|
$ |
(71,843 |
) |
|
|
|
|
|
|
|
|
Net Income (Loss) per Common
Share |
|
|
|
|
|
|
|
Basic |
$ |
(0.01 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.47 |
) |
|
$ |
(0.43 |
) |
Diluted |
$ |
(0.01 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.47 |
) |
|
$ |
(0.43 |
) |
Weighted Average Common Shares
Outstanding |
|
|
|
|
|
|
|
Basic |
210,377 |
|
|
209,393 |
|
|
210,156 |
|
|
166,731 |
|
Diluted |
210,377 |
|
|
209,393 |
|
|
210,156 |
|
|
166,731 |
|
(1) Includes long-term cash and equity incentive compensation of
$2.3 million and $2.2 million for the three months ended
June 30, 2019 and 2018, respectively, and $5.0 million and
$3.7 million for the six months ended June 30, 2019 and 2018,
respectively.
(2) The table below summarizes the realized and unrealized gains
and losses the Company recognized related to its oil and natural
gas derivative instruments for the periods indicated:
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
(in thousands) |
Included in commodity derivative
gain (loss): |
|
|
|
|
|
|
|
Realized gain (loss) on derivatives (1) |
$ |
(993 |
) |
|
$ |
(15,460 |
) |
|
$ |
3,656 |
|
|
$ |
(23,848 |
) |
Prior year unrealized (gain) loss transferred to realized (gain)
loss (1) |
(20,933 |
) |
|
5,788 |
|
|
(57,073 |
) |
|
20,940 |
|
Unrealized gain (loss) on derivatives (1) |
41,470 |
|
|
(46,614 |
) |
|
(32,230 |
) |
|
(73,711 |
) |
Total commodity derivative gain (loss) |
$ |
19,544 |
|
|
$ |
(56,286 |
) |
|
$ |
(85,647 |
) |
|
$ |
(76,619 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Realized and unrealized gains and losses on commodity
derivatives are presented herein as separate line items but are
combined for a total commodity derivative gain (loss) in the
Consolidated Statements of Operations. This separate presentation
is a non-GAAP measure. Management believes the separate
presentation of the realized and unrealized commodity derivative
gains and losses is useful because the realized cash settlement
portion provides a better understanding of the Company's hedge
position. The Company also believes that this disclosure
allows for a more accurate comparison to its peers.
HIGHPOINT RESOURCES
CORPORATIONConsolidated Statements of Cash
Flows(Unaudited)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
(in thousands) |
Operating Activities: |
|
|
|
|
|
|
|
Net income (loss) |
$ |
(1,910 |
) |
|
$ |
(46,906 |
) |
|
$ |
(98,139 |
) |
|
$ |
(71,843 |
) |
Adjustments to reconcile to net cash provided by operations: |
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
72,612 |
|
|
52,175 |
|
|
145,222 |
|
|
93,160 |
|
Impairment, dry hole costs and abandonment |
995 |
|
|
108 |
|
|
1,317 |
|
|
425 |
|
Unrealized derivative (gain) loss |
(20,537 |
) |
|
40,826 |
|
|
89,303 |
|
|
52,771 |
|
Deferred income tax benefit |
110 |
|
|
— |
|
|
(29,601 |
) |
|
— |
|
Incentive compensation and other non-cash charges |
2,662 |
|
|
2,655 |
|
|
6,980 |
|
|
3,490 |
|
Amortization of deferred financing costs |
635 |
|
|
568 |
|
|
1,275 |
|
|
1,131 |
|
(Gain) loss on sale of properties |
2,906 |
|
|
564 |
|
|
2,901 |
|
|
972 |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
3,005 |
|
|
(13,363 |
) |
|
18,475 |
|
|
(4,197 |
) |
Prepayments and other assets |
(1,391 |
) |
|
(978 |
) |
|
(1,463 |
) |
|
(1,089 |
) |
Accounts payable, accrued and other liabilities |
(14,037 |
) |
|
(36,855 |
) |
|
(6,733 |
) |
|
(36,033 |
) |
Amounts payable to oil and gas property owners |
(12,017 |
) |
|
15,923 |
|
|
(22,923 |
) |
|
25,532 |
|
Production taxes payable |
(12,171 |
) |
|
(147 |
) |
|
(8,069 |
) |
|
4,568 |
|
Net cash provided by (used in) operating activities |
$ |
20,862 |
|
|
$ |
14,570 |
|
|
$ |
98,545 |
|
|
$ |
68,887 |
|
Investing Activities: |
|
|
|
|
|
|
|
Additions to oil and gas properties, including acquisitions |
(127,291 |
) |
|
(131,962 |
) |
|
(258,153 |
) |
|
(220,816 |
) |
Additions of furniture, equipment and other |
(2,265 |
) |
|
(348 |
) |
|
(3,574 |
) |
|
(470 |
) |
Repayment of debt associated with merger, net of cash acquired |
— |
|
|
— |
|
|
— |
|
|
(53,357 |
) |
Proceeds from sale of properties |
1,312 |
|
|
219 |
|
|
1,334 |
|
|
194 |
|
Other investing activities |
(1,137 |
) |
|
468 |
|
|
(1,432 |
) |
|
336 |
|
Net cash provided by (used in) investing activities |
$ |
(129,381 |
) |
|
$ |
(131,623 |
) |
|
$ |
(261,825 |
) |
|
$ |
(274,113 |
) |
Financing Activities: |
|
|
|
|
|
|
|
Proceeds from debt |
80,000 |
|
|
— |
|
|
150,000 |
|
|
— |
|
Principal payments on debt |
— |
|
|
(116 |
) |
|
(1,859 |
) |
|
(232 |
) |
Other financing activities |
(27 |
) |
|
(144 |
) |
|
(1,523 |
) |
|
(1,629 |
) |
Net cash provided by (used in) financing activities |
$ |
79,973 |
|
|
$ |
(260 |
) |
|
$ |
146,618 |
|
|
$ |
(1,861 |
) |
Increase (Decrease) in Cash
and Cash Equivalents |
(28,546 |
) |
|
(117,313 |
) |
|
(16,662 |
) |
|
(207,087 |
) |
Beginning Cash and Cash
Equivalents |
44,658 |
|
|
224,692 |
|
|
32,774 |
|
|
314,466 |
|
Ending Cash and Cash
Equivalents |
$ |
16,112 |
|
|
$ |
107,379 |
|
|
$ |
16,112 |
|
|
$ |
107,379 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HIGHPOINT RESOURCES
CORPORATIONReconciliation of Discretionary Cash
Flow, Adjusted Net Income (Loss) and
EBITDAX(Unaudited)
Discretionary Cash Flow Reconciliation
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
(in thousands) |
Net Cash Provided by (Used in) Operating Activities |
$ |
20,862 |
|
|
$ |
14,570 |
|
|
$ |
98,545 |
|
|
$ |
68,887 |
|
Adjustments to reconcile to
discretionary cash flow: |
|
|
|
|
|
|
|
Exploration expense |
12 |
|
|
7 |
|
|
37 |
|
|
20 |
|
Merger transaction expense |
— |
|
|
1,277 |
|
|
2,414 |
|
|
6,040 |
|
Changes in working capital |
36,611 |
|
|
35,420 |
|
|
20,713 |
|
|
11,219 |
|
Discretionary Cash Flow |
$ |
57,485 |
|
|
$ |
51,274 |
|
|
$ |
121,709 |
|
|
$ |
86,166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income (Loss) Reconciliation
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
(in thousands, except per share amounts) |
Net Income (Loss) |
$ |
(1,910 |
) |
|
$ |
(46,906 |
) |
|
$ |
(98,139 |
) |
|
$ |
(71,843 |
) |
Provision for (Benefit from) income taxes |
110 |
|
|
— |
|
|
(29,601 |
) |
|
— |
|
Income (Loss) before income
taxes |
(1,800 |
) |
|
(46,906 |
) |
|
(127,740 |
) |
|
(71,843 |
) |
|
|
|
|
|
|
|
|
Adjustments to net income
(loss): |
|
|
|
|
|
|
|
Unrealized derivative (gain) loss |
(20,537 |
) |
|
40,826 |
|
|
89,303 |
|
|
52,771 |
|
(Gain) loss on sale of properties |
2,906 |
|
|
564 |
|
|
2,901 |
|
|
972 |
|
One-time item: |
|
|
|
|
|
|
|
Merger transaction expense |
— |
|
|
1,277 |
|
|
2,414 |
|
|
6,040 |
|
(Income) expense related to properties sold |
27 |
|
|
9 |
|
|
(272 |
) |
|
48 |
|
Adjusted Income (Loss) before
income taxes |
(19,404 |
) |
|
(4,230 |
) |
|
(33,394 |
) |
|
(12,012 |
) |
Adjusted (provision for) benefit from income taxes (1) |
4,437 |
|
|
1,047 |
|
|
7,737 |
|
|
2,959 |
|
Adjusted Net Income
(Loss) |
$ |
(14,967 |
) |
|
$ |
(3,183 |
) |
|
$ |
(25,657 |
) |
|
$ |
(9,053 |
) |
Per share, diluted |
$ |
(0.07 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.05 |
) |
(1) Adjusted (provision for) benefit from
income taxes is calculated using the Company's current effective
tax rate prior to applying the valuation allowance against deferred
tax assets.
EBITDAX Reconciliation
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
(in thousands) |
Net Income (Loss) |
$ |
(1,910 |
) |
|
$ |
(46,906 |
) |
|
$ |
(98,139 |
) |
|
$ |
(71,843 |
) |
Adjustments to reconcile to
EBITDAX: |
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
72,612 |
|
|
52,175 |
|
|
145,222 |
|
|
93,160 |
|
Impairment, dry hole and abandonment expense |
995 |
|
|
108 |
|
|
1,317 |
|
|
425 |
|
Exploration expense |
12 |
|
|
7 |
|
|
37 |
|
|
20 |
|
Unrealized derivative (gain) loss |
(20,537 |
) |
|
40,826 |
|
|
89,303 |
|
|
52,771 |
|
Incentive compensation and other non-cash charges |
2,662 |
|
|
2,655 |
|
|
6,980 |
|
|
3,490 |
|
Merger transaction expense |
— |
|
|
1,277 |
|
|
2,414 |
|
|
6,040 |
|
(Gain) loss on sale of properties |
2,906 |
|
|
564 |
|
|
2,901 |
|
|
972 |
|
Interest and other income |
(154 |
) |
|
(701 |
) |
|
(468 |
) |
|
(1,392 |
) |
Interest expense |
14,381 |
|
|
13,093 |
|
|
28,060 |
|
|
26,183 |
|
Provision for (benefit from) income taxes |
110 |
|
|
— |
|
|
(29,601 |
) |
|
— |
|
EBITDAX |
$ |
71,077 |
|
|
$ |
63,098 |
|
|
$ |
148,026 |
|
|
$ |
109,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discretionary cash flow, adjusted net income
(loss) and EBITDAX are non-GAAP measures. These measures are
presented because management believes that they provide useful
additional information to investors for analysis of the Company's
performance and, in the case of discretionary cash flow, liquidity.
In addition, the Company believes that these measures are widely
used by professional research analysts and others in the valuation,
comparison and investment recommendations of companies in the oil
and gas exploration and production industry, and that many
investors use the published research of industry research analysts
in making investment decisions.
These measures should not be considered in
isolation or as a substitute for net income, income from
operations, net cash provided by operating activities or other
income, profitability, cash flow or liquidity measures prepared in
accordance with GAAP. The definition of these measures may vary
among companies, and, therefore, the amounts presented may not be
comparable to similarly titled measures of other companies.
Company contact: Larry C. Busnardo, Vice
President, Investor Relations, 303-312-8514
HighPoint Resources (NYSE:HPR)
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