Midstates Petroleum Announces Second Quarter 2017 Results
Midstates Petroleum Company, Inc. (“Midstates” or the “Company”) (NYSE: MPO) today announced its second quarter 2017 results.
Second Quarter 2017 and Recent Highlights
- Reported Net Income of $13.7 million or $0.53 per share
- Generated Adjusted EBITDA of $29.1 million, before debt restructuring and advisory fees, which outpaced operational capital expenditures by approximately $3.2 million
- Amended the Company’s senior secured credit facility to provide additional liquidity and financial and operational flexibility
- Increased liquidity to approximately $126.0 million at June 30, 2017 from $84.5 million as of March 31, 2017
- Achieved net debt of approximately $42.1 million as of June 30, 2017
- Reported total Company production of 22,490 barrels of oil equivalent per day (BOEPD) in the second quarter of 2017, of which 81% was in the Mississippian Lime and the balance in the Anadarko Basin
- Added a second rig on its premier Mississippian Lime acreage
- Sold non-core Lincoln County, OK assets in July 2017 for $7.0 million; expected net proceeds of $2.9 million, after assumption of liabilities as well as standard closing and post-closing adjustments
- Hired SunTrust Robinson Humphrey to explore strategic alternatives for Anadarko Basin and NW STACK assets
Jake Brace, President and Chief Executive Officer, commented, “In the second quarter, we continued our solid, consistent performance, tracking slightly better than planned. Our cash flow performance was good with Adjusted EBITDA exceeding our capital expenditure spend. Due to our strong performance, we added a second rig to our premier Miss Lime acreage, which is achieving strong returns in excess of 35% in the current price environment. Overall, we are very pleased with our operational performance in the first half of 2017.”
Mr. Brace continued, “As we continue to focus on the future and maximizing shareholder value, we sold our non-core Lincoln County, Oklahoma assets for $7.0 million and we are working with SunTrust Robinson Humphrey to explore strategic alternatives for our stacked pay Anadarko Basin and NW STACK assets. This would allow us to become a pure play Miss Lime operator, with over 90,000 net acres in the core of the play in Woods and Alfalfa Counties, Oklahoma, a clean balance sheet and a significant amount of liquidity. We would then be able to use these assets to enhance shareholder value -- which is our constant focus.”
(Adjusted EBITDA, Cash Operating Expenses, and Adjusted Cash General and Administrative 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.)
Production and Pricing
Production during the second quarter of 2017 totaled 22,490 BOEPD, compared with 23,562 BOEPD during the first quarter of 2017. Production from the Company’s Mississippian Lime properties contributed approximately 81%, or 18,278 BOEPD, and the Anadarko Basin properties contributed approximately 19%, or 4,212 BOEPD. For the total Company, oil volumes comprised 29% of total production, natural gas liquids (NGLs) 25%, and natural gas 46% during the second quarter of 2017.
In the second quarter of 2017, Midstates’ average realized price per barrel of oil, before realized commodity derivatives, was $46.73 ($49.88 with realized derivatives), while its average realized price for NGL sales was $19.16 per barrel (there were no NGL hedges in place during the second quarter). Natural gas averaged $2.66 per thousand cubic feet (Mcf) before realized derivatives ($2.76 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 in the second quarter of 2017 were $52.3 million, before the impact of derivatives, a decrease of $7.0 million, or 12%, from $59.3 million in the first quarter of 2017. The decrease in the second quarter of 2017 versus the first quarter of 2017 was mainly due to natural production decline and lower commodity prices. The realized gain on derivatives for the second quarter of 2017 was $7.5 million, up from $4.9 million during the first quarter of 2017.
Hedging Update
To reduce downside commodity price risk and protect cash flow, Midstates has entered into a number of swaps, collars, and 3-way collars to hedge a portion of the Company’s oil and natural gas revenues into the first quarter of 2019. A summary of the Company’s hedges for the periods after June 30, 2017 is included in the below table.
| NYMEX WTI | |||||||||||||||||||||||||||
| Fixed Swaps | Collars | Three Way Collars | |||||||||||||||||||||||||
|
Hedge |
Weighted |
Hedge |
Weighted |
Weighted |
Hedge |
Weighted |
Weighted |
Weighted Avg |
|||||||||||||||||||
| Quarter Ended: |
|
||||||||||||||||||||||||||
| June 30, 2017 | 227,500 | $ | 55.12 | 136,500 | $ | 59.73 | $ | 50.00 | — | $ | — | $ | — |
$ |
— |
||||||||||||
| September 30, 2017(1)(2) | 207,000 | $ | 55.29 | 46,000 | $ | 60.00 | $ | 50.00 | 115,000 | $ | 62.80 | $ | 50.00 |
$ |
40.00 |
||||||||||||
| December 31, 2017(1)(2) | 207,000 | $ | 55.29 | 46,000 | $ | 60.00 | $ | 50.00 | 115,000 | $ | 62.80 | $ | 50.00 |
$ |
40.00 |
||||||||||||
| March 31, 2018(1) | — | $ | — | — | $ | — | $ | — | 225,000 | $ | 62.14 | $ | 50.00 |
$ |
40.00 |
||||||||||||
| June 30, 2018(1) | — | $ | — | — | $ | — | $ | — | 182,000 | $ | 60.65 | $ | 50.00 |
$ |
40.00 |
||||||||||||
| September 30, 2018(1) | — | $ | — | — | $ | — | $ | — | 138,000 | $ | 61.00 | $ | 50.00 |
$ |
40.00 |
||||||||||||
| NYMEX HENRY HUB | |||||||||||||||||||||||||||
| Fixed Swaps | Collars | Three Way Collars | |||||||||||||||||||||||||
|
Hedge |
Weighted |
Hedge |
Weighted |
Weighted |
Hedge |
Weighted |
Weighted |
Weighted Avg |
|||||||||||||||||||
| Quarter Ended: | |||||||||||||||||||||||||||
| June 30, 2017 | 2,912,000 | $ | 3.38 | 244,000 | $ | 3.63 | $ | 3.15 | — | $ | — | $ | — |
$ |
— |
||||||||||||
| September 30, 2017(1) | 2,944,000 | $ | 3.38 | 368,000 | $ | 3.63 | $ | 3.15 | — | $ | — | $ | — | $ | — | ||||||||||||
| December 31, 2017(1) | 1,907,000 | $ | 3.43 | 551,000 | $ | 3.84 | $ | 3.23 | 610,000 | $ | 4.30 | $ | 3.25 | $ | 2.50 | ||||||||||||
| March 31, 2018(1)(3) | 1,350,000 | $ | 3.47 | — | $ | — | $ | — | 1,530,000 | $ | 4.38 | $ | 3.25 | $ | 2.50 | ||||||||||||
| June 30, 2018(1) | — | $ | — | — | $ | — | $ | — | 1,365,000 | $ | 3.40 | $ | 3.00 | $ | 2.50 | ||||||||||||
| September 30, 2018(1) | — | $ | — | — | $ | — | $ | — | 1,380,000 | $ | 3.40 | $ | 3.00 | $ | 2.50 | ||||||||||||
| December 31, 2018(1) | — | $ | — | — | $ | — | $ | — | 1,380,000 | $ | 3.40 | $ | 3.00 | $ | 2.50 | ||||||||||||
| March 31, 2019(1) | — | $ | — | — | $ | — | $ | — | 1,350,000 | $ | 3.40 | $ | 3.00 | $ | 2.50 | ||||||||||||
|
________________ |
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| (1) | Positions shown represent open commodity derivative contract positions as of June 30, 2017. The Company did not have any open commodity derivative contract positions as of December 31, 2016. | |
| (2) | During the second quarter, the Company entered into long call oil trades to offset its three way collar short calls for the second half of 2017. | |
| (3) | During the second quarter, the Company entered into natural gas three way collars with long call ceilings in order to offset its Q1 2018 natural gas fixed swaps. | |
Sale of Non-Core Lincoln Property Assets
In July 2017, Midstates entered into a definitive sales agreement to sell its properties in Lincoln County, Oklahoma for $7.0 million; with expected net proceeds of $2.9 million, after the buyer’s assumption of liabilities as well as standard closing and post-closing adjustments. The properties primarily produced natural gas with an average of 700 BOEPD in the second quarter of 2017 and were not within the Company’s core Mississippian Lime focus area. The effective date of the transaction is January 1, 2017.
Costs and Expenses
Adjusted Cash Operating Expenses (which excludes debt restructuring and advisory fees) for the second quarter of 2017 were $26.5 million, or $12.95 per Boe, compared with $26.0 million, or $12.28 per Boe, in the first quarter of 2017. The increase in per Boe cash costs in the second quarter of 2017 compared with the first quarter of 2017 was attributable to lower production and a non-recurring reduction in lease operating expense during the first quarter of 2017 related to an insurance recovery settlement of $1.9 million.
Lease operating and workover expenses (LOE) totaled $16.6 million, or $8.09 per Boe, in the second quarter of 2017, compared with $15.9 million, or $7.47 per Boe, in the first quarter of 2017. Second quarter 2017 LOE increased compared to first quarter of 2017 primarily due to a non-recurring reduction in LOE during the first quarter of 2017 related to an insurance recovery settlement of $1.9 million.
Severance and other taxes for the second quarter of 2017 were $1.7 million (3.2% of oil, NGL and natural gas sales revenue), compared to $2.1 million (3.6% of oil, NGL and natural gas sales revenue) in the first quarter of 2017.
General and administrative expenses for the second quarter of 2017 totaled $7.6 million, or $3.70 per Boe, compared to $8.3 million, or $3.90 per Boe, in the first quarter of 2017. Second quarter 2017 and first quarter 2017 general and administrative expenses included non-cash share-based compensation expense of $0.9 million, or $0.45 per Boe, and $3.3 million, or $1.57 per Boe, respectively. Adjusted cash general and administrative expenses, which excludes non-cash share-based compensation and certain non-recurring items, but includes capitalized general and administrative costs, totaled $5.5 million, or $2.69 per Boe for the second quarter of 2017, compared to $5.3 million, or $2.48 per Boe, in the first quarter of 2017. The increase in per Boe adjusted cash general and administrative expenses in the second quarter of 2017 compared with the first quarter of 2017 was attributable to lower production.
Interest expense totaled $1.2 million (net of amounts capitalized) for the second quarter of 2017 as compared to $1.0 million in the first quarter of 2017. The Company capitalized $0.7 million in interest to unproved properties during the second quarter of 2017 as compared to $0.9 million in the first quarter of 2017.
During the second quarter of 2017, the Company did not record an income tax expense or benefit, and had an effective tax rate of 0%.
Capital Expenditures
In the second quarter of 2017, the Company invested $25.9 million of operating capital, predominantly devoted to the Mississippian Lime assets.
The following table provides operational capital spending by area, which excludes capitalized interest, capitalized internal costs, asset retirement costs incurred, and expenditures related to other property, plant and equipment, such as furniture and fixtures and capitalized software costs (in thousands):
|
For the Three Months Ended June 30, 2017 |
For the Six Months Ended June 30, 2017 |
||||||||
| Drilling and completion activities | $ | 25,065 | $ | 53,706 | |||||
| Acquisition of acreage and seismic data | 800 | 3,903 | |||||||
| Operational capital expenditures incurred | $ | 25,865 | $ | 57,609 | |||||
| Capitalized G&A, office, ARO & other | 1,764 | 3,656 | |||||||
| Capitalized interest | 723 | 1,646 | |||||||
| Total capital expenditures incurred | $ | 28,352 | $ | 62,911 | |||||
|
For the Three Months Ended June 30, 2017 |
For the Six Months Ended June 30, 2017 |
||||||||
| Mississippian Lime | $ | 26,166 | $ | 55,690 | |||||
| Anadarko Basin(1) |
(301 |
) |
1,919 |
||||||
| Total operational capital expenditures incurred | $ | 25,865 | $ | 57,609 | |||||
|
________________ |
|||||||||
| (1) | Reflects the receipt of a $0.7 million lease extension refund during the second quarter of 2017. | |
Operational Update
Mississippian Lime Update
Key Highlights:
- Produced an average of 18,278 BOEPD in the second quarter of 2017, of which 27% was oil, 24% NGLs, and 49% natural gas
- Spud seven wells and placed four wells online during the second quarter of 2017
- Incurred average drilling, completion and facility costs of $2.8 million for wells brought online during the first half of 2017
- Achieved average drilling cycle time during the first half of 2017 of 15 days (rig release to rig release)
- Midstates’ Mississippian Lime type curve generates returns of greater than 35% with AFE well cost (drilling, completion, and facilities) of $2.8 million and strip pricing as of July 26, 2017
During the second quarter of 2017, the Company added a second drilling rig to its Mississippian Lime development program and transitioned its 2017 drilling program to focus on high-graded opportunities in proven areas that will deliver superior cash on cash returns in current depressed commodity price environment, stimulate production growth, and increase the Company’s future cash flows.
Anadarko Basin Update
The Company averaged production of 4,212 BOEPD in the second quarter of 2017, of which 35% was oil, 26% NGLs, and 39% natural gas.
The Company does not plan to operate any rigs in the Anadarko Basin in the near term. The Company’s immediate-term focus in the basin will continue to be on production optimization and minimizing lease operating costs. Additionally, the Company continues to assess the NW Stack potential under a farm-out agreement it signed for a portion of its primary-term Anadarko Basin acreage in western Oklahoma. Midstates recently engaged SunTrust Robinson Humphrey to explore strategic alternatives for its Anadarko Basin and NW STACK assets.
Balance Sheet and Liquidity
On June 30, 2017, the Company’s liquidity was approximately $126.0 million, consisting of cash and cash equivalents of $86.0 million and $40.0 million available under its credit facility. Its long-term debt was $128.1 million, resulting in net debt of approximately $42.1 million.
Midstates’ credit facility was amended in May 2017 as part of the Company’s efforts to ease certain restrictions and covenants. Several key non-standard covenants, such as a $40.0 million liquidity block on its borrowing base availability and certain limitations on capital expenditures, were removed, among various other restrictions in the credit facility’s provisions.
Fresh Start Accounting
The Company adopted fresh start accounting as of October 21, 2016, the date the Company emerged from its Chapter 11 reorganization. Adopting fresh start accounting results in a new reporting entity for financial reporting purposes and as a result, the Company allocated its reorganization value to its individual assets, including oil and gas property, plant and equipment, based upon their estimated fair values as of that date, and its historical retained deficit was eliminated. Due to the application of fresh start accounting, the Company’s consolidated financial statements on or after October 21, 2016 are not comparable with its consolidated financial statements prior to that date. References to “Successor” refer to the Company after the adoption of fresh start accounting, while references to “Predecessor” refer to the Company prior to adoption. Please refer to the Company’s Annual Report on Form 10-K filed on March 30, 2017 for further information regarding Midstates’ emergence from Chapter 11 restructuring and its application of fresh start accounting.
Conference Call Information
The Company will host a conference call to discuss second quarter 2017 results on Wednesday, August 9, at 11:00 a.m. Eastern time (10:00 a.m. Central time). Participants may join the conference call by dialing (877) 645-4610 (for U.S. and Canada) or (707) 595-2723 (International). The conference call access code is 62354089 for all participants. To listen via live web cast, please visit the Investor Relations section of the Company’s website, www.midstatespetroleum.com.
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 midnight on September 9 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 62354089 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 30 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, are considered forward-looking statements. 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; 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.
About Midstates Petroleum Company, Inc.
Midstates Petroleum Company, Inc. is an independent exploration and production company focused on the application of modern drilling and completion techniques in oil and liquids-rich basins in the onshore U.S. The Company’s operations are currently focused on oilfields in the Mississippian Lime play in Oklahoma and the Anadarko Basin in Texas and Oklahoma.
| MIDSTATES PETROLEUM COMPANY, INC. | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| (In thousands, except share amounts) | ||||||||||
| (Unaudited) | ||||||||||
|
|
||||||||||
|
June 30, |
December 31, |
|||||||||
| ASSETS | ||||||||||
| CURRENT ASSETS: | ||||||||||
| Cash and cash equivalents | $ | 85,999 | $ | 76,838 | ||||||
| Accounts receivable: | ||||||||||
| Oil and gas sales | 29,112 | 36,988 | ||||||||
| Joint interest billing | 4,425 | 4,281 | ||||||||
| Other | 1,218 | 2,456 | ||||||||
| Commodity derivative contracts | 8,706 | — | ||||||||
| Other current assets | 2,132 | 3,326 | ||||||||
| Total current assets | 131,592 | 123,889 | ||||||||
| PROPERTY AND EQUIPMENT: | ||||||||||
| Oil and gas properties, on the basis of full-cost accounting | ||||||||||
| Proved properties | 672,925 | 573,150 | ||||||||
| Unproved properties not being amortized | 28,280 | 65,080 | ||||||||
| Other property and equipment | 6,500 | 6,339 | ||||||||
| Less accumulated depreciation, depletion and amortization | (44,274 | ) | (12,974 | ) | ||||||
| Net property and equipment | 663,431 | 631,595 | ||||||||
| OTHER NONCURRENT ASSETS: | ||||||||||
| Commodity derivative assets | 412 | — | ||||||||
| Other noncurrent assets | 6,213 | 5,455 | ||||||||
| Total other noncurrent assets | 6,625 | 5,455 | ||||||||
| TOTAL | $ | 801,648 | $ | 760,939 | ||||||
| LIABILITIES AND EQUITY | ||||||||||
| CURRENT LIABILITIES: | ||||||||||
| Accounts payable | $ | 6,568 | $ | 2,521 | ||||||
| Accrued liabilities | 52,903 | 53,731 | ||||||||
| Total current liabilities | 59,471 | 56,252 | ||||||||
| LONG-TERM LIABILITIES: | ||||||||||
| Asset retirement obligations | 14,841 | 14,200 | ||||||||
| Long-term debt | 128,059 | 128,059 | ||||||||
| Other long-term liabilities | 606 | 614 | ||||||||
| Total long-term liabilities | 143,506 | 142,873 | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||
| STOCKHOLDERS’ EQUITY: | ||||||||||
| Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued or outstanding at June 30, 2017 and December 31, 2016 | — | — | ||||||||
| Warrants, 6,625,554 warrants outstanding at June 30, 2017 and December 31, 2016 | 37,329 | 37,329 | ||||||||
| Common stock, $0.01 par value, 250,000,000 shares authorized; 25,098,168 shares issued and 25,065,009 shares outstanding at June 30, 2017 and 24,994,867 shares issued and outstanding at December 31, 2016 | 251 | 250 | ||||||||
| Treasury stock | (622 | ) | — | |||||||
| Additional paid-in-capital | 519,556 | 514,305 | ||||||||
| Retained earnings | 42,157 | 9,930 | ||||||||
| Total stockholders’ equity | 598,671 | 561,814 | ||||||||
| TOTAL | $ | 801,648 | $ | 760,939 | ||||||
| MIDSTATES PETROLEUM COMPANY, INC. | |||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| Successor | Predecessor | Successor | Predecessor | ||||||||||||||||||
|
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
||||||||||||||||||||
|
2017 |
2016 |
2017 |
2016 |
||||||||||||||||||
| REVENUES: | |||||||||||||||||||||
| Oil sales | $ | 27,271 | $ | 39,110 | $ | 58,307 | $ | 69,248 | |||||||||||||
| Natural gas liquid sales | 9,730 | 9,071 | 20,924 | 16,134 | |||||||||||||||||
| Natural gas sales | 15,253 | 12,868 | 32,351 | 26,810 | |||||||||||||||||
| Gains on commodity derivative contracts—net | 7,493 | — | 12,358 | — | |||||||||||||||||
| Other | 932 | 1,510 | 1,754 | 2,328 | |||||||||||||||||
| Total revenues | 60,679 | 62,559 | 125,694 | 114,520 | |||||||||||||||||
| EXPENSES: | |||||||||||||||||||||
| Lease operating and workover | 16,559 | 16,109 | 32,411 | 31,870 | |||||||||||||||||
| Gathering and transportation | 3,641 | 4,711 | 7,328 | 9,132 | |||||||||||||||||
| Severance and other taxes | 1,695 | 1,484 | 3,816 | 2,988 | |||||||||||||||||
| Asset retirement accretion | 283 | 444 | 559 | 864 | |||||||||||||||||
| Depreciation, depletion, and amortization | 15,959 | 18,638 | 31,301 | 43,473 | |||||||||||||||||
| Impairment in carrying value of oil and gas properties | — | 62,963 | — | 190,697 | |||||||||||||||||
| General and administrative | 7,572 | 4,497 | 15,847 | 15,785 | |||||||||||||||||
| Debt restructuring costs and advisory fees | — | 6,472 | — | 7,589 | |||||||||||||||||
| Total expenses | 45,709 | 115,318 | 91,262 | 302,398 | |||||||||||||||||
| OPERATING INCOME (LOSS) | 14,970 | (52,759 | ) | 34,432 | (187,878 | ) | |||||||||||||||
| OTHER INCOME (EXPENSE): | |||||||||||||||||||||
| Interest income | — | 24 | — | 81 | |||||||||||||||||
| Interest expense—net of amounts capitalized (excludes interest expense of $31.7 million on senior and secured notes subject to compromise for the three and six months ended June 30, 2016) | (1,228 | ) | (18,839 | ) | (2,205 | ) | (63,051 | ) | |||||||||||||
| Reorganization items, net | — | 80,536 | — | 80,536 | |||||||||||||||||
| Total other income (expense) | (1,228 | ) | 61,721 | (2,205 | ) | 17,566 | |||||||||||||||
| INCOME (LOSS) BEFORE TAXES | 13,742 | 8,962 | 32,227 | (170,312 | ) | ||||||||||||||||
| Income tax expense | — | — | — | — | |||||||||||||||||
| NET INCOME (LOSS) | $ | 13,742 | $ | 8,962 | $ | 32,227 | $ | (170,312 | ) | ||||||||||||
| Successor participating securities—non-vested restricted stock | (360 | ) | — | (897 | ) | — | |||||||||||||||
| Predecessor participating securities—non-vested restricted stock | — | (98 | ) | — | — | ||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 13,382 | $ | 8,864 | $ | 31,330 | $ | (170,312 | ) | ||||||||||||
| Basic and diluted net income (loss) per share attributable to common shareholders | $ | 0.53 | $ | 0.83 | $ | 1.25 | $ | (16.01 | ) | ||||||||||||
| Basic and diluted weighted average number of common shares outstanding | 25,093 | 10,653 | 25,053 | 10,637 | |||||||||||||||||
| MIDSTATES PETROLEUM COMPANY, INC. | |||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||
|
(Unaudited) |
|||||||||||||||||||||||||||||||
|
Series A Preferred Stock |
Common Stock |
Warrants |
Treasury Stock |
Additional Paid-in-Capital |
Retained Earnings |
Total Stockholders’ Equity |
|||||||||||||||||||||||||
| Balance as of December 31, 2016 (Successor) | $ | — | $ | 250 | $ | 37,329 | $ | — | $ | 514,305 | $ | 9,930 | $ | 561,814 | |||||||||||||||||
| Share-based compensation | — | 1 | — | — | 5,251 | — | 5,252 | ||||||||||||||||||||||||
| Acquisition of treasury stock | — | — | — | (622 | ) | — | — | (622 | ) | ||||||||||||||||||||||
| Net income | — | — | — | — | — | 32,227 | 32,227 | ||||||||||||||||||||||||
| Balance as of June 30, 2017 (Successor) | $ | — | $ | 251 | $ | 37,329 | $ | (622 | ) | $ | 519,556 | $ | 42,157 | $ | 598,671 | ||||||||||||||||
|
Series A Preferred Stock |
Common Stock |
Warrants |
Treasury Stock |
Additional Paid-in-Capital |
Retained Deficit |
Total Stockholders’ Deficit |
|||||||||||||||||||||||||
| Balance as of December 31, 2015 (Predecessor) | $ | — | $ | 110 | $ | — | $ | (3,081 | ) | $ | 888,247 | $ | (2,211,342 | ) | $ | (1,326,066 | ) | ||||||||||||||
| Share-based compensation | — | (1 | ) | — | — | 1,325 | — | 1,324 | |||||||||||||||||||||||
| Acquisition of treasury stock | — | — | — | (53 | ) | — | — | (53 | ) | ||||||||||||||||||||||
| Net loss | — | — | — | — | — | (170,312 | ) | (170,312 | ) | ||||||||||||||||||||||
| Balance as of June 30, 2016 (Predecessor) | $ | — | $ | 109 | $ | — | $ | (3,134 | ) | $ | 889,572 | $ | (2,381,654 | ) | $ | (1,495,107 | ) | ||||||||||||||
| MIDSTATES PETROLEUM COMPANY, INC. | ||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
| (In thousands) | ||||||||||
| (Unaudited) | ||||||||||
| Successor | Predecessor | |||||||||
| For the Six Months Ended | For the Six Months Ended | |||||||||
| June 30, 2017 | June 30, 2016 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
| Net income (loss) | $ | 32,227 | $ | (170,312 | ) | |||||
| Adjustments to reconcile net income/(loss) to net cash provided by operating activities: | ||||||||||
| Gains on commodity derivative contracts—net | (12,358 | ) | — | |||||||
| Net cash received for commodity derivative contracts not designated as hedging instruments | 3,240 | — | ||||||||
| Asset retirement accretion | 559 | 864 | ||||||||
| Depreciation, depletion, and amortization | 31,301 | 43,473 | ||||||||
| Impairment in carrying value of oil and gas properties | — | 190,697 | ||||||||
| Share-based compensation, net of amounts capitalized to oil and gas properties | 4,267 | 998 | ||||||||
| Amortization of deferred financing costs | 169 | 4,069 | ||||||||
| Paid-in-kind interest expense | — | 3,531 | ||||||||
| Amortization of deferred gain on debt restructuring | — | (8,246 | ) | |||||||
| Operating lease abandonment | — | 2,904 | ||||||||
| Noncash reorganization items | — | (81,724 | ) | |||||||
| Change in operating assets and liabilities: | ||||||||||
| Accounts receivable—oil and gas sales | 5,519 | (1,405 | ) | |||||||
| Accounts receivable—JIB and other | 1,310 | 20,860 | ||||||||
| Other current and noncurrent assets | 642 | (6,739 | ) | |||||||
| Accounts payable | 809 | 2,936 | ||||||||
| Accrued liabilities | (4,466 | ) | 50,589 | |||||||
| Other | (42 | ) | (934 | ) | ||||||
| Net cash provided by operating activities | $ | 63,177 | $ | 51,561 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
| Investment in property and equipment | $ | (54,369 | ) | $ | (100,424 | ) | ||||
| Proceeds from the sale of oil and gas equipment | 1,350 | — | ||||||||
| Net cash used in investing activities | $ | (53,019 | ) | $ | (100,424 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
| Proceeds from revolving credit facility | $ | — | $ | 249,384 | ||||||
| Deferred financing costs | (375 | ) | — | |||||||
| Acquisition of treasury stock | (622 | ) | (53 | ) | ||||||
| Net cash (used in) provided by financing activities | $ | (997 | ) | $ | 249,331 | |||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | $ | 9,161 | $ | 200,468 | ||||||
| Cash and cash equivalents, beginning of period | $ | 76,838 | $ | 81,093 | ||||||
| Cash and cash equivalents, end of period | $ | 85,999 | $ | 281,561 | ||||||
| SUPPLEMENTAL INFORMATION: | ||||||||||
| Non-cash transactions – investments in property and equipment accrued – not paid | $ | 17,055 | $ | 18,766 | ||||||
| Cash paid for interest, net of capitalized interest of $1.6 million for the six months ended June 30, 2017 (no capitalized interest for the six months ended June 30, 2016) | 2,107 | 3,539 | ||||||||
| Cash paid for reorganization items | $ | — | $ | 1,188 | ||||||
| MIDSTATES PETROLEUM COMPANY, INC. | ||||||||||||||||||||||
| SELECTED FINANCIAL AND OPERATING STATISTICS | ||||||||||||||||||||||
|
For the Three Months Ended |
For the Six Months Ended |
For the Three Months Ended |
||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2017 | ||||||||||||||||||
| Operating Data – Mississippian Lime: | ||||||||||||||||||||||
| Net production volumes: | ||||||||||||||||||||||
| Oil (Bbls/day) | 4,938 | 8,386 | 5,269 | 8,790 | 5,605 | |||||||||||||||||
| NGLs (Bbls/day) | 4,466 | 5,258 | 4,526 | 5,422 | 4,588 | |||||||||||||||||
| Natural gas (Mcf/day) | 53,246 | 69,171 | 54,653 | 70,293 | 56,075 | |||||||||||||||||
| Total oil equivalents (MBoe) | 1,663 | 2,291 | 3,422 | 4,719 | 1,759 | |||||||||||||||||
| Average daily production (Boe/day) | 18,278 | 25,172 | 18,905 | 25,928 | 19,539 | |||||||||||||||||
| Operating Data – Anadarko Basin: | ||||||||||||||||||||||
| Net production volumes: | ||||||||||||||||||||||
| Oil (Bbls/day) | 1,475 | 1,926 | 1,420 | 2,057 | 1,364 | |||||||||||||||||
| NGLs (Bbls/day) | 1,115 | 1,262 | 1,104 | 1,273 | 1,093 | |||||||||||||||||
| Natural gas (MMcf) | 9,735 | 10,818 | 9,565 | 10,997 | 9,394 | |||||||||||||||||
| Total oil equivalents (MBoe) | 383 | 454 | 745 | 940 | 362 | |||||||||||||||||
| Average daily production (Boe/day) | 4,212 | 4,991 | 4,118 | 5,163 | 4,023 | |||||||||||||||||
| Operating Data - Combined: | ||||||||||||||||||||||
| Net production volumes: | ||||||||||||||||||||||
| Oil (Bbls/day) | 6,413 | 10,312 | 6,689 | 10,847 | 6,969 | |||||||||||||||||
| NGLs (Bbls/day) | 5,581 | 6,520 | 5,630 | 6,695 | 5,681 | |||||||||||||||||
| Natural gas (Mcf/day) | 62,981 | 79,989 | 64,218 | 81,290 | 65,469 | |||||||||||||||||
| Total oil equivalents (MBoe) | 2,046 | 2,745 | 4,167 | 5,659 | 2,121 | |||||||||||||||||
| Average daily production (Boe/day) | 22,490 | 30,163 | 23,023 | 31,091 | 23,562 | |||||||||||||||||
| Average Sales Prices: | ||||||||||||||||||||||
| Oil, without realized derivatives (per Bbl) | $ | 46.73 | $ | 41.68 | $ | 48.16 | $ | 35.07 | $ | 49.48 | ||||||||||||
| Oil, with realized derivatives (per Bbl) | $ | 49.88 | $ | 41.68 | $ | 50.08 | $ | 35.07 | $ | 50.26 | ||||||||||||
| Natural gas liquids, without realized derivatives (per Bbl) | $ | 19.16 | $ | 15.29 | $ | 20.53 | $ | 13.24 | $ | 21.89 | ||||||||||||
| Natural gas liquids, with realized derivatives (per Bbl) | $ | 19.16 | $ | 15.29 | $ | 20.53 | $ | 13.24 | $ | 21.89 | ||||||||||||
| Natural gas, without realized derivatives (per Mcf) | $ | 2.66 | $ | 1.77 | $ | 2.78 | $ | 1.81 | $ | 2.90 | ||||||||||||
| Natural gas, with realized derivatives (per Mcf) | $ | 2.76 | $ | 1.77 | $ | 2.86 | $ | 1.81 | $ | 2.96 | ||||||||||||
| Costs and Expenses (per Boe of production): | ||||||||||||||||||||||
| Lease operating and workover | $ | 8.09 | $ | 5.86 | $ | 7.78 | $ | 5.63 | $ | 7.47 | ||||||||||||
| Gathering and transportation | $ | 1.78 | $ | 1.72 | $ | 1.76 | $ | 1.61 | $ | 1.74 | ||||||||||||
| Severance and other taxes | $ | 0.83 | $ | 0.54 | $ | 0.92 | $ | 0.53 | $ | 1.00 | ||||||||||||
| Asset retirement accretion | $ | 0.14 | $ | 0.16 | $ | 0.13 | $ | 0.15 | $ | 0.13 | ||||||||||||
| Depreciation, depletion and amortization | $ | 7.80 | $ | 6.79 | $ | 7.51 | $ | 7.68 | $ | 7.23 | ||||||||||||
| Impairment of oil and gas properties | — | $ | 22.94 | — | $ | 33.70 | — | |||||||||||||||
| General and administrative | $ | 3.70 | $ | 1.63 | $ | 3.80 | $ | 2.79 | $ | 3.90 | ||||||||||||
| Acquisition and transaction costs | — | — | — | — | — | |||||||||||||||||
| Debt restructuring costs and advisory fees | — | $ | 2.36 | — | $ | 1.34 | — | |||||||||||||||
| Other | — | — | — | — | — | |||||||||||||||||
| MIDSTATES PETROLEUM COMPANY, INC. | |||||||||||||||||||||||||||
| ADJUSTED EBITDA | |||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||
|
For the Three Months Ended |
For the Six Months Ended |
For the Three Months Ended |
|||||||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2017 | |||||||||||||||||||||||
| Adjusted EBITDA to net income (loss) reconciliation: | |||||||||||||||||||||||||||
| Net income (loss) | $ | 13,742 | $ | 8,962 | $ | 32,227 | $ | (170,312 | ) | $ | 18,485 | ||||||||||||||||
| Depreciation, depletion and amortization | 15,959 | 18,638 | 31,301 | 43,473 | 15,342 | ||||||||||||||||||||||
| Impairment in carrying value of oil and gas properties | — | 62,963 | — | 190,697 | — | ||||||||||||||||||||||
| Gains on commodity derivative contracts—net | (7,493 | ) | — | (12,358 | ) | — | (4,865 | ) | |||||||||||||||||||
| Net cash received (paid) for commodity derivative contracts not designated as hedging instruments | 2,429 | — | 3,240 | — | 811 | ||||||||||||||||||||||
| Income tax expense | — | — | — | — | — | ||||||||||||||||||||||
| Interest income | — | (24 | ) | — | (81 | ) | — | ||||||||||||||||||||
| Interest expense, net of amounts capitalized | 1,228 | 18,839 | 2,205 | 63,051 | 977 | ||||||||||||||||||||||
| Asset retirement obligation accretion | 283 | 444 | 559 | 864 | 276 | ||||||||||||||||||||||
| Reorganization items, net | — | (80,536 | ) | — | (80,536 | ) | — | ||||||||||||||||||||
| Share-based compensation, net of amounts capitalized | 930 | 311 | 4,267 | 998 | 3,337 | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 27,078 | $ | 29,597 | $ | 61,441 | $ | 48,154 | $ | 34,363 | |||||||||||||||||
| Debt restructuring costs and advisory fees* | 2,034 | 6,472 | 2,591 | 7,589 | 557 | ||||||||||||||||||||||
| Adjusted EBITDA before restructuring and advisory costs | $ | 29,112 | $ | 36,069 | $ | 64,032 | $ | 55,743 | $ | 34,920 | |||||||||||||||||
* Debt restructuring costs and advisory fees for the three and six months ended June 30, 2017 and for the three months ended March 31, 2017 are included within general and administrative expenses.
| MIDSTATES PETROLEUM COMPANY, INC. | |||||||||||||||||||||||
| CASH OPERATING EXPENSES | |||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
|
For the Three Months |
For the Six Months |
For the Three Months |
|||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2017 | |||||||||||||||||||
| Operating Expenses – GAAP | $ | 45,709 | $ | 115,318 | $ | 91,262 | $ | 302,398 | $ | 45,553 | |||||||||||||
| Adjustments for certain non-cash items: | |||||||||||||||||||||||
| Asset retirement accretion | 283 | 444 | 559 | 864 | 276 | ||||||||||||||||||
| Share-based compensation, net | 930 | 311 | 4,267 | 998 | 3,337 | ||||||||||||||||||
| Depreciation, depletion and amortization | 15,959 | 18,638 | 31,301 | 43,473 | 15,342 | ||||||||||||||||||
| Impairment of oil and gas properties | — | 62,963 | — | 190,697 | — | ||||||||||||||||||
| Other | — | — | — | — | — | ||||||||||||||||||
| Cash Operating Expenses – Non-GAAP | $ | 28,537 | $ | 32,962 | $ | 55,135 | $ | 66,366 | $ | 26,598 | |||||||||||||
| Cash Operating Expenses – Non-GAAP per BOE | $ | 13.94 | $ | 12.01 | $ | 13.23 | $ | 11.73 | $ | 12.55 | |||||||||||||
| Debt restructuring costs and advisory fees* | $ | 2,034 | $ | 6,472 | $ | 2,591 | $ | 7,589 | $ | 557 | |||||||||||||
| Debt restructuring costs and advisory fees, per BOE | $ | 0.99 | $ | 2.36 | $ | 0.62 | $ | 1.34 | $ | 0.26 | |||||||||||||
| Severance and Houston lease abandonment costs | $ | — | $ | (406 | ) | $ | — | $ | 4,535 | $ | — | ||||||||||||
| Severance and Houston lease abandonment costs, per BOE | $ | — | $ | (0.15 | ) | $ | — | $ | 0.80 | $ | — | ||||||||||||
| Adjusted Cash Operating Expenses – Non-GAAP | $ | 26,503 | $ | 26,896 | $ | 52,544 | $ | 54,242 | $ | 26,041 | |||||||||||||
| Adjusted Cash Operating Expenses – Non-GAAP per BOE | $ | 12.95 | $ | 9.80 | $ | 12.61 | $ | 9.59 | $ | 12.28 | |||||||||||||
* Debt restructuring costs and advisory fees for the three and six months ended June 30, 2017 and for the three months ended March 31, 2017 are included within general and administrative expenses.
| MIDSTATES PETROLEUM COMPANY, INC. | |||||||||||||||||||||||||||
| ADJUSTED CASH GENERAL AND ADMINISTRATIVE EXPENSES | |||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||
|
For the Three Months Ended |
For the Six Months Ended |
For the Three Months Ended |
|||||||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2017 | |||||||||||||||||||||||
| General and Administrative Expenses – GAAP | $ | 7,572 | $ | 4,497 | $ | 15,847 | $ | 15,785 | $ | 8,275 | |||||||||||||||||
| Adjustments for certain non-cash and non-recurring items: | |||||||||||||||||||||||||||
| Share-based compensation, net | (930 | ) | (311 | ) | (4,267 | ) | (998 | ) | (3,337 | ) | |||||||||||||||||
| Capitalized general and administrative expenses | 893 | 863 | 1,766 | 1,936 | 873 | ||||||||||||||||||||||
| Severance and other costs | — | — | — | (1,631 | ) | — | |||||||||||||||||||||
| Houston office lease abandonment costs | — | 406 | — | (2,904 | ) | — | |||||||||||||||||||||
| Advisory costs included in general and administrative expenses | (2,034 | ) | — | (2,591 | ) | — | (557 | ) | |||||||||||||||||||
|
Adjusted Cash General and Administrative Expenses – Non-GAAP |
$ | 5,501 | $ | 5,455 | $ | 10,755 | $ | 12,188 | $ | 5,254 | |||||||||||||||||
|
Adjusted Cash General and Administrative Expenses – Non-GAAP per BOE |
$ | 2.69 | $ | 1.99 | $ | 2.58 | $ | 2.15 | $ | 2.48 | |||||||||||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20170808006489/en/
