Alta Mesa Reports First Quarter 2018 Results
22 Mai 2018 - 12:11AM
Alta Mesa Resources, Inc., (NASDAQ:AMR) (“Alta Mesa Resources”, the
“Company” or “Alta Mesa”) today announced first quarter 2018
unaudited financial and operational results for its wholly owned
subsidiaries, Alta Mesa Holdings, LP (“AMHLP”) and Kingfisher
Midstream, LLC (“Kingfisher”).
Financial Highlights
- Net Loss of $33.5 million in the Successor Period*; $13.2
million of which is attributable to the Company's Class A
Common Stockholders, and a Net Loss of $14.9 million in the 2018
Predecessor Period*
- Adjusted EBITDAX of $35.5 million in the Successor Period*, and
$14.2 million in the 2018 Predecessor Period*
- Increased Alta Mesa Holdings Upstream Borrowing Base by $50
million to $400 million
- Ended quarter with $261.1 million in cash for total liquidity
of $760 million; pro forma for increased Upstream Borrowing Base
liquidity was approximately $809.1 million
Hal Chappelle, Alta Mesa’s Chief Executive
Officer, stated, “From the first day of our announced business
combination we’ve been focused on creating value for our
stakeholders and our Q1 production and Adjusted EBITDAX reflects
that we have not skipped a beat in our STACK development program.”
Chappelle continued; “With the business combination behind us, we
are focused on driving our 2018 plan for both the upstream and
midstream businesses.”
First Quarter 2018 Financial and
Production Summary
Net loss for the Company's Class A Common
Stockholders during the Successor Period was $13.2 million, or
($0.08) per basic and diluted share. Net loss during the 2018
Predecessor Period was $14.9 million. Adjusted earnings
before interest, income taxes, depreciation, depletion and
amortization and exploration costs and other items ("Adjusted
EBITDAX") was $35.5 million for the Successor Period and $14.2
million for the Predecessor Period. Adjusted EBITDAX is a Non-GAAP
financial measure and is described in the attached table under
“Non-GAAP Financial Information and Reconciliation.”
Total production for the first quarter of 2018
was 2,163 MBOE, or an average of 24.0 MBOE per day, up 24%,
compared to 1,737 MBOE or 19.3 MBOE per day in the 2017 Predecessor
Period. The increase in production is primarily a result of the
continued successful development of AMHLP’s STACK play.
Total Exploration and Production Segment costs
for the Successor Period, which includes lease operating expense,
marketing and transportation costs, production and ad valorem taxes
and workover expenses, were $16.6 million, or $13.26 per BOE.
General and administrative costs for the
Successor Period were $34.6 million including non-recurring equity
based compensation expense of $3.5 million and business combination
organization expense of $25.3 million. When adjusted for these
non-recurring, non-cash items, general and administrative costs for
the Successor Period would have been $5.8 million.
Borrowing Base Increased
AMHLP’s recently completed its regularly
scheduled semi-annual redetermination process and its borrowing
base under the senior secured revolving credit facility increased
from $350 million to $400 million. This increase reflects the
reserve growth from the AMHLP’s existing STACK assets. AMHLP is in
compliance with all of the financial covenants associated with the
credit facility and the next scheduled redetermination of the
borrowing base is October 1, 2018.
About Alta Mesa Resources,
IncAlta Mesa Resources, Inc., is an independent energy
company focused on the development and acquisition of
unconventional oil and natural gas reserves in the Anadarko Basin
in Oklahoma, and through Kingfisher Midstream, LLC, provides
best-in-class midstream energy services, including crude oil and
gas gathering, processing and marketing to producers in the STACK
play.
FOR MORE INFORMATION CONTACT:
Lance L. Weaver (281) 943-5597 lweaver@altamesa.net
|
ALTA MESA RESOURCES, INC. |
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) |
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Predecessor |
|
|
February 9, 2018 |
|
|
January 1, 2018 |
|
Three |
|
|
Through |
|
|
Through |
|
Months Ended |
|
|
March 31, 2018 |
|
|
February 8, 2018 |
|
March 31, 2017 |
|
OPERATING REVENUES AND
OTHER |
|
|
|
|
|
|
|
|
|
|
Oil |
$ |
40,278 |
|
|
|
$ |
30,972 |
|
|
$ |
46,940 |
|
|
Natural
gas |
|
5,210 |
|
|
|
|
4,276 |
|
|
|
9,591 |
|
|
Natural
gas liquids |
|
4,714 |
|
|
|
|
4,000 |
|
|
|
7,072 |
|
|
Product
sales |
|
8,369 |
|
|
|
|
— |
|
|
|
— |
|
|
Gathering
and processing revenue |
|
3,411 |
|
|
|
|
— |
|
|
|
— |
|
|
Other
revenues |
|
555 |
|
|
|
|
888 |
|
|
|
1,234 |
|
|
Total
operating revenues |
|
62,537 |
|
|
|
|
40,136 |
|
|
|
64,837 |
|
|
Gain on
sale of assets and other |
|
5,979 |
|
|
|
|
— |
|
|
|
— |
|
|
Gain
(loss) on derivative contracts |
|
(22,646 |
) |
|
|
|
7,298 |
|
|
|
30,242 |
|
|
Total
operating revenues and other |
|
45,870 |
|
|
|
|
47,434 |
|
|
|
95,079 |
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
Lease
operating expense |
|
8,317 |
|
|
|
|
4,485 |
|
|
|
11,010 |
|
|
Marketing
and transportation expense |
|
1,021 |
|
|
|
|
3,725 |
|
|
|
5,662 |
|
|
Plant
operating expense |
|
587 |
|
|
|
|
— |
|
|
|
— |
|
|
Product
expense |
|
8,220 |
|
|
|
|
— |
|
|
|
— |
|
|
Gathering
and processing expense |
|
2,338 |
|
|
|
|
— |
|
|
|
— |
|
|
Production taxes |
|
1,415 |
|
|
|
|
953 |
|
|
|
1,266 |
|
|
Workover
expense |
|
1,245 |
|
|
|
|
423 |
|
|
|
588 |
|
|
Exploration expense |
|
4,955 |
|
|
|
|
3,633 |
|
|
|
5,047 |
|
|
Depreciation, depletion, and amortization expense |
|
15,577 |
|
|
|
|
11,784 |
|
|
|
18,978 |
|
|
Impairment expense |
|
— |
|
|
|
|
— |
|
|
|
1,188 |
|
|
Accretion
expense |
|
102 |
|
|
|
|
39 |
|
|
|
96 |
|
|
General
and administrative expense |
|
34,557 |
|
|
|
|
24,352 |
|
|
|
9,736 |
|
|
Total
operating expenses |
|
78,334 |
|
|
|
|
49,394 |
|
|
|
53,571 |
|
|
INCOME (LOSS) FROM
OPERATIONS |
|
(32,464 |
) |
|
|
|
(1,960 |
) |
|
|
41,508 |
|
|
OTHER INCOME
(EXPENSE) |
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
(5,444 |
) |
|
|
|
(5,511 |
) |
|
|
(12,042 |
) |
|
Interest
income and other |
|
546 |
|
|
|
|
172 |
|
|
|
249 |
|
|
Total
other income (expense) |
|
(4,898 |
) |
|
|
|
(5,339 |
) |
|
|
(11,793 |
) |
|
INCOME (LOSS) FROM
CONTINUING OPERATIONS BEFORE INCOME TAXES |
|
(37,362 |
) |
|
|
|
(7,299 |
) |
|
|
29,715 |
|
|
Income
tax provision (benefit) |
|
(3,813 |
) |
|
|
|
— |
|
|
|
285 |
|
|
INCOME (LOSS) FROM
CONTINUING OPERATIONS |
|
(33,549 |
) |
|
|
|
(7,299 |
) |
|
|
29,430 |
|
|
Loss from
discontinued operations, net of tax |
|
— |
|
|
|
|
(7,593 |
) |
|
|
(4,515 |
) |
|
NET INCOME (LOSS) |
|
(33,549 |
) |
|
|
|
(14,892 |
) |
|
|
24,915 |
|
|
Net loss
attributable to noncontrolling interest |
|
(20,314 |
) |
|
|
|
— |
|
|
|
— |
|
|
NET INCOME (LOSS)
ATTRIBUTABLE TO ALTA MESA RESOURCES, INC. |
$ |
(13,235 |
) |
|
|
$ |
(14,892 |
) |
|
$ |
24,915 |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER
COMMON SHARE: |
|
|
|
|
|
|
|
|
|
|
Basic and
Diluted |
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE COMMON
SHARES OUTSTANDING |
|
|
|
|
|
|
|
|
|
|
Basic and
Diluted |
|
169,371,730 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALTA MESA RESOURCES, INC. |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) |
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Predecessor |
|
February 9, 2018 |
|
|
January 1, 2018 |
|
Three |
|
Through |
|
|
Through |
|
Months Ended |
|
March 31, 2018 |
|
|
February 8, 2018 |
|
March 31, 2017 |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
(33,549 |
) |
|
|
$ |
(14,892 |
) |
|
$ |
24,915 |
|
Adjustments to
reconcile net income (loss) to net cash (used in) provided by
operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation, depletion, and amortization expense |
|
15,577 |
|
|
|
|
12,414 |
|
|
|
24,804 |
|
Impairment expense |
|
— |
|
|
|
|
5,560 |
|
|
|
1,220 |
|
Accretion
expense |
|
102 |
|
|
|
|
140 |
|
|
|
572 |
|
Amortization of deferred financing costs |
|
— |
|
|
|
|
171 |
|
|
|
962 |
|
Amortization of debt premium |
|
(820 |
) |
|
|
|
— |
|
|
|
— |
|
Equity
based compensation expense |
|
3,466 |
|
|
|
|
— |
|
|
|
— |
|
Dry hole
expense |
|
— |
|
|
|
|
(45 |
) |
|
|
— |
|
Expired
leases |
|
4,189 |
|
|
|
|
1,250 |
|
|
|
3,333 |
|
(Gain)
loss on derivative contracts |
|
22,646 |
|
|
|
|
(7,298 |
) |
|
|
(30,242 |
) |
Settlements of derivative contracts |
|
(4,610 |
) |
|
|
|
(1,661 |
) |
|
|
(1,970 |
) |
Interest
converted into debt |
|
— |
|
|
|
|
103 |
|
|
|
298 |
|
Interest
on notes receivable due from related party |
|
(162 |
) |
|
|
|
(85 |
) |
|
|
(200 |
) |
Deferred
tax provision (benefit) |
|
(3,813 |
) |
|
|
|
— |
|
|
|
— |
|
Loss on
sale of assets and other |
|
— |
|
|
|
|
1,923 |
|
|
|
— |
|
Changes in assets and
liabilities: |
|
|
|
|
|
|
|
|
|
Accounts
receivable |
|
(3,189 |
) |
|
|
|
(20,895 |
) |
|
|
(5,374 |
) |
Other
receivables |
|
997 |
|
|
|
|
(9,887 |
) |
|
|
7,494 |
|
Receivables due from related party |
|
(2,067 |
) |
|
|
|
(117 |
) |
|
|
139 |
|
Prepaid
expenses and other non-current assets |
|
(2,194 |
) |
|
|
|
9,970 |
|
|
|
(9,543 |
) |
Advances
from related party |
|
(7,008 |
) |
|
|
|
24,116 |
|
|
|
(29,791 |
) |
Settlement of asset retirement obligation |
|
(166 |
) |
|
|
|
(63 |
) |
|
|
(2,394 |
) |
Accounts
payable, accrued liabilities, and other liabilities |
|
(75,960 |
) |
|
|
|
25,815 |
|
|
|
11,837 |
|
NET CASH
(USED IN) PROVIDED BY OPERATING ACTIVITIES |
|
(86,561 |
) |
|
|
|
26,519 |
|
|
|
(3,940 |
) |
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Capital
expenditures for property, plant and equipment |
|
(133,055 |
) |
|
|
|
(38,096 |
) |
|
|
(60,589 |
) |
Acquisitions of Alta Mesa and Kingfisher Midstream, net of cash
acquired |
|
(796,826 |
) |
|
|
|
— |
|
|
|
— |
|
Proceeds
withdrawn from Trust Account |
|
1,042,742 |
|
|
|
|
— |
|
|
|
— |
|
NET CASH
PROVIDED BY (USED IN) INVESTING ACTIVITIES |
|
112,861 |
|
|
|
|
(38,096 |
) |
|
|
(60,589 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Proceeds
from long-term debt |
|
9,000 |
|
|
|
|
60,000 |
|
|
|
55,065 |
|
Repayments of long-term debt |
|
(134,065 |
) |
|
|
|
(43,000 |
) |
|
|
— |
|
Additions
to deferred financing costs |
|
(1,007 |
) |
|
|
|
— |
|
|
|
(64 |
) |
Capital
distributions |
|
— |
|
|
|
|
(68 |
) |
|
|
— |
|
Capital
contributions |
|
— |
|
|
|
|
— |
|
|
|
7,875 |
|
Proceeds
from issuance of Class A shares |
|
400,000 |
|
|
|
|
— |
|
|
|
— |
|
Repayment
of sponsor note |
|
(2,000 |
) |
|
|
|
— |
|
|
|
— |
|
Repayment
of deferred underwriting compensation |
|
(36,225 |
) |
|
|
|
— |
|
|
|
— |
|
Redemption of Class A common shares |
|
(33 |
) |
|
|
|
— |
|
|
|
— |
|
NET
CASH PROVIDED BY FINANCING ACTIVITIES |
|
235,670 |
|
|
|
|
16,932 |
|
|
|
62,876 |
|
NET INCREASE (DECREASE)
IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
261,970 |
|
|
|
|
5,355 |
|
|
|
(1,653 |
) |
CASH AND
CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period |
|
388 |
|
|
|
|
4,990 |
|
|
|
7,618 |
|
CASH AND
CASH EQUIVALENTS AND RESTRICTED CASH, end of period |
$ |
262,358 |
|
|
|
$ |
10,345 |
|
|
$ |
5,965 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALTA MESA RESOURCES, INC. |
CONSOLIDATED BALANCE SHEETS
(Unaudited) |
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
|
Successor |
|
|
Predecessor |
|
March 31, |
|
|
December 31, |
|
2018 |
|
|
|
2017 |
ASSETS |
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
261,063 |
|
|
|
$ |
3,660 |
Short-term restricted cash |
|
1,295 |
|
|
|
|
1,269 |
Accounts
receivable, net of allowance of $65 and $415, respectively |
|
109,825 |
|
|
|
|
76,161 |
Other
receivables |
|
225 |
|
|
|
|
1,388 |
Receivables due from related party |
|
7,892 |
|
|
|
|
790 |
Note
receivable due from related party |
|
1,578 |
|
|
|
|
— |
Prepaid
expenses and other current assets |
|
5,903 |
|
|
|
|
2,932 |
Current
assets — discontinued operations |
|
— |
|
|
|
|
5,195 |
Derivative financial instruments |
|
— |
|
|
|
|
216 |
Total
current assets |
|
387,781 |
|
|
|
|
91,611 |
PROPERTY, PLANT AND
EQUIPMENT |
|
|
|
|
|
|
Oil and
natural gas properties, successful efforts method, net |
|
2,389,522 |
|
|
|
|
920,563 |
Other
property, plant and equipment, net |
|
322,122 |
|
|
|
|
6,207 |
Total
property, plant and equipment, net |
|
2,711,644 |
|
|
|
|
926,770 |
OTHER ASSETS |
|
|
|
|
|
|
Deferred
financing costs, net |
|
1,007 |
|
|
|
|
1,787 |
Notes
receivable due from related party |
|
11,039 |
|
|
|
|
12,369 |
Goodwill |
|
650,663 |
|
|
|
|
— |
Intangible assets, net |
|
468,913 |
|
|
|
|
— |
Deposits
and other long-term assets |
|
8,630 |
|
|
|
|
9,067 |
Non-current assets — discontinued operations |
|
— |
|
|
|
|
43,785 |
Deferred
tax asset |
|
3,813 |
|
|
|
|
— |
Derivative financial instruments |
|
49 |
|
|
|
|
8 |
Total
other assets |
|
1,144,114 |
|
|
|
|
67,016 |
TOTAL ASSETS |
$ |
4,243,539 |
|
|
|
$ |
1,085,397 |
LIABILITIES,
PARTNERS' CAPITAL AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
CURRENT
LIABILITIES |
|
|
|
|
|
|
Accounts
payable and accrued liabilities |
$ |
159,110 |
|
|
|
$ |
170,489 |
Accounts
payable — affiliate |
|
— |
|
|
|
|
5,476 |
Advances
from non-operators |
|
1,312 |
|
|
|
|
5,502 |
Advances
from related party |
|
40,498 |
|
|
|
|
23,390 |
Asset
retirement obligations |
|
622 |
|
|
|
|
69 |
Current
liabilities — discontinued operations |
|
— |
|
|
|
|
15,419 |
Derivative financial instruments |
|
26,401 |
|
|
|
|
19,303 |
Total
current liabilities |
|
227,943 |
|
|
|
|
239,648 |
LONG-TERM
LIABILITIES |
|
|
|
|
|
|
Asset
retirement obligations, net of current portion |
|
6,033 |
|
|
|
|
10,400 |
Long-term
debt, net |
|
584,815 |
|
|
|
|
607,440 |
Noncurrent liabilities — discontinued operations |
|
— |
|
|
|
|
66,862 |
Derivative financial instruments |
|
2,916 |
|
|
|
|
1,114 |
Other
long-term liabilities |
|
1,934 |
|
|
|
|
5,488 |
Total
long-term liabilities |
|
595,698 |
|
|
|
|
691,304 |
TOTAL
LIABILITIES |
|
823,641 |
|
|
|
|
930,952 |
PREFERRED STOCK,
$0.0001 par value, 1,000,000 shares authorized |
|
|
|
|
|
|
Class A:
3 shares issued and outstanding |
|
— |
|
|
|
|
— |
Class B:
1 share issued and outstanding |
|
— |
|
|
|
|
— |
Commitments and
Contingencies (Note 13) |
|
|
|
|
|
|
PARTNERS' CAPITAL |
|
— |
|
|
|
|
154,445 |
STOCKHOLDERS'
EQUITY |
|
|
|
|
|
|
Common
stock, $0.0001 par value |
|
|
|
|
|
|
Class A:
1,200,000,000 shares authorized, 169,371,730 shares issued and
outstanding |
|
17 |
|
|
|
|
— |
Class C:
280,000,000 shares authorized, 213,402,398 shares issued and
outstanding |
|
21 |
|
|
|
|
— |
Additional paid in capital |
|
1,402,888 |
|
|
|
|
— |
Retained
earnings (accumulated deficit) |
|
(21,349 |
) |
|
|
|
— |
Total
stockholders' equity/partners' capital |
|
1,381,577 |
|
|
|
|
154,445 |
Non-controlling interest |
|
2,038,321 |
|
|
|
|
— |
Total
equity |
|
3,419,898 |
|
|
|
|
154,445 |
TOTAL LIABILITIES,
PARTNERS' CAPITAL AND STOCKHOLDERS' EQUITY |
$ |
4,243,539 |
|
|
|
$ |
1,085,397 |
|
|
|
|
|
|
|
|
*Non-GAAP Financial Information and
ReconciliationAlta Mesa Reconciliation of Net Loss to
Adjusted EBITDAX. Adjusted EBITDAX is a non-GAAP financial
measure and as used herein represents net income (loss) before
interest expense, exploration expense, depletion, depreciation and
amortization, impairment of oil and natural gas properties,
accretion of asset retirement obligations, tax expense, gain (loss)
on sale of assets and the non-cash portion of gain/loss on oil,
natural gas and natural gas liquids derivative contracts. Alta
Mesa’s management believes Adjusted EBITDAX is useful because it
allows external users of our consolidated financial statements,
such as industry analysts, investors, lenders and rating agencies,
to more effectively evaluate our operating performance, compare the
results of our operations from period to period and against our
peers without regard to our financing methods or capital structure
and because it highlights trends in our business that may not
otherwise be apparent when relying solely on GAAP measures.
Adjusted EBITDAX is not a measurement of Alta Mesa’s financial
performance under GAAP, and should not be considered as an
alternative to net income (loss), operating income (loss) or any
other performance measure derived in accordance with GAAP or as an
alternative to net cash provided by operating activities as a
measure of Alta Mesa’s profitability or liquidity. Adjusted EBITDAX
has significant limitations, including that it does not reflect
Alta Mesa’s cash requirements for capital expenditures, contractual
commitments, working capital or debt service. In addition, other
companies may calculate Adjusted EBITDAX differently than Alta Mesa
does, limiting its usefulness as a comparative measure. The
following table sets forth a reconciliation of net income (loss) as
determined in accordance with GAAP to Adjusted EBITDAX for the
periods indicated (unaudited in thousands).
|
|
|
EBITDAX Calculation
(Non-GAAP Measure) |
Feb 9 –Mar 31,2018Successor |
Jan 1 – Feb 8, 2018Predecessor |
|
|
|
Net Loss
attributable to Alta Mesa Resources, Inc. |
$ |
(13,235 |
) |
$ |
(14,892 |
) |
Net Loss attributable
to Noncontrolling Interest |
|
(20,314 |
) |
|
- |
|
Taxes |
|
(3,813 |
) |
|
- |
|
Interest |
|
5,444 |
|
|
5,511 |
|
(Gain) loss on
derivative contracts |
|
22,646 |
|
|
(7,298 |
) |
Settlements of
derivative contracts |
|
(4,610 |
) |
|
(1,661 |
) |
Exploration |
|
4,955 |
|
|
3,633 |
|
Depreciation, depletion
and amortization |
|
15,577 |
|
|
11,784 |
|
Accretion expense |
|
102 |
|
|
39 |
|
Stock Compensation
expense |
|
3,466 |
|
|
- |
|
EBITDAX |
|
10,218 |
|
|
(2,884 |
) |
Non-recurring Business
Combination Expense |
|
25,291 |
|
|
17,040 |
|
Adjusted
EBITDAX |
$ |
35,509 |
|
$ |
14,156 |
|
|
|
|
|
|
|
|
*Successor Company and Period:The financial
statements and certain footnote presentations separate the
Company’s presentations into two distinct periods, the period
before the consummation of the Business Combination, which is from
January 1, 2018 to February 8, 2018 (“2018 Predecessor Period”) and
the period after the consummation of the Business Combination,
which is from February 9, 2018 to March 31, 2018 (“Successor
Period”), to indicate the application of the different basis of
accounting between the periods presented. The three months
ended March 31, 2017 is referred to as the “2017 Predecessor
Period”. AMHLP is the “Predecessor” for periods prior to the
Business Combination, which do not include the consolidation of the
Company and Kingfisher. For the periods after the Business
Combination, Alta Mesa Resources, including the consolidation of
AMHLP and Kingfisher, is the “Successor”.
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