First Quarter 2018 and Other Highlights
- Met quarterly production guidance with 11.3 MBoe/d, and increased daily crude oil production 3% over prior quarter
-
Revenues of
$28.8 million , a 9% increase over the prior year quarter -
Net loss was
$7.4 million or$0.08 per diluted share. Adjusted net loss (non-GAAP) was$7.1 million , or$0.07 per diluted share -
Generated
$13.7 million of EBITDAX (non-GAAP) -
Bank group unanimously reaffirmed
$325 million borrowing base
Adjusted net loss and EBITDAX are non-GAAP measures. See “Supplemental Non-GAAP Financial and Other Measures” below for our definitions and reconciliations of adjusted net loss and EBITDAX to net loss.
Management Comment
“Looking forward we will continue to use our resources and experience to generate additional shareholder value. We see four key strategies that will add value to Approach: (1) continuing to improve recoveries in our core southern Midland Basin Wolfcamp shale acreage; (2) maintaining our industry-leading operating efficiencies and costs; (3) continuing to strengthen our balance sheet; and (4) pursuing mergers and acquisitions that are accretive to shareholders and can fuel balanced and sustained growth.”
First Quarter 2018 Results
Production for first quarter 2018 totaled 1,020 Mboe, or 11.3 MBoe/d,
made up of 27% oil, 34% NGLs and 39% natural gas. Average realized
commodity prices for first quarter 2018, before the effect of commodity
derivatives, were
Net loss for first quarter 2018 was
Lease operating expenses (“LOE”) averaged
Operations Update
During the second half of the first quarter 2018, we completed four
horizontal wells: two wells in the Wolfcamp A bench, one well in the
Wolfcamp B bench and one well in the Wolfcamp C bench. The two wells
completed in our Pangea area are tracking above our 700 MBoe type curve.
The two wells completed in our Pangea West area are currently in the
post-frac flowback and clean up stages. We are encouraged by the early
results of these two wells. At
Capital expenditures incurred during first quarter 2018 totaled
Liquidity Update
At
Commodity Derivatives Update
We enter into commodity derivatives positions to reduce the risk of commodity price fluctuations. The table below is a summary of our current derivatives positions.
| Commodity and Period |
Contract
Type |
Volume Transacted | Contract Price | |||||||||
| Crude Oil | ||||||||||||
| April 2018 – December 2018 | Swap | 300 Bbls/day | $50.00/Bbl | |||||||||
| April 2018 – June 2018 | Collar | 500 Bbls/day | $55.00/Bbl - $60.00/Bbl | |||||||||
| April 2018 – September 2018 | Swap | 1,500 Bbls/day | $60.50/Bbl | |||||||||
| CMA Roll | ||||||||||||
| May 2018 – December 2018 | Swap | 2,000 Bbls/day | $0.66/Bbl | |||||||||
| Natural Gas | ||||||||||||
| April 2018 – December 2018 | Swap | 200,000 MMBtu/month | $3.085/MMBtu | |||||||||
| April 2018 – December 2018 | Swap | 250,000 MMBtu/month | $3.084/MMBtu | |||||||||
| NGLs (C2 - Ethane) | ||||||||||||
| April 2018 – December 2018 | Swap | 1,000 Bbls/day | $11.424/Bbl | |||||||||
| NGLs (C3 - Propane) | ||||||||||||
| April 2018 – December 2018 | Swap | 600 Bbls/day | $32.991/Bbl | |||||||||
| NGLs (IC4 - Isobutane) | ||||||||||||
| April 2018 – December 2018 | Swap | 50 Bbls/day | $38.262/Bbl | |||||||||
| NGLs (NC4 - Butane) | ||||||||||||
| April 2018 – December 2018 | Swap | 200 Bbls/day | $38.22/Bbl | |||||||||
| NGLs (C5 - Pentane) | ||||||||||||
| April 2018 – December 2018 | Swap | 200 Bbls/day | $56.364/Bbl | |||||||||
Conference Call Information and Summary Presentation
The Company will host a conference call on
Those wishing to listen to the conference call, may do so by visiting the Events and Presentations page under the Investor Relations section of the Company’s website, www.approachresources.com, or by phone:
| Conference ID | 3869258 | |||
| Participant Toll-Free Dial-In Number: | (844) 884-9950 | |||
| Participant International Dial-In Number: | (661) 378-9660 | |||
A replay of the call will be available on the Company’s website or by dialing:
| Replay Toll-Free: | (855) 859-2056 | |||
| Replay International: | (404) 537-3406 | |||
| Conference ID: | 3869258 | |||
In addition, a first quarter 2018 summary presentation will be available on the Company’s website.
About
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, other than
statements of historical facts, included in this press release that
address activities, events or developments that the Company expects,
believes or anticipates will or may occur in the future are
forward-looking statements. Without limiting the generality of the
foregoing, forward-looking statements contained in this press release
specifically include expectations of anticipated financial and operating
results. These statements are based on certain assumptions made
by the Company based on management’s experience, perception of
historical trends and technical analyses, current conditions,
anticipated future developments and other factors believed to be
appropriate and reasonable by management. When used in this press
release, the words “will,” “potential,” “believe,” “estimate,” “intend,”
“expect,” “may,” “should,” “anticipate,” “could,” “plan,” “predict,”
“project,” “profile,” “model” or their negatives, other similar
expressions or the statements that include those words, are intended to
identify forward-looking statements, although not all forward-looking
statements contain such identifying words. Such statements are subject
to a number of assumptions, risks and uncertainties, 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. Further information on such assumptions, risks and
uncertainties is available in the Company’s
|
UNAUDITED RESULTS OF OPERATIONS |
||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2018 | 2017 | |||||||||
| Revenues (in thousands): | ||||||||||
| Oil | $ | 16,343 | $ | 13,694 | ||||||
| NGLs | 7,332 | 6,060 | ||||||||
| Gas | 5,097 | 6,601 | ||||||||
| Total oil, NGLs and gas sales | 28,772 | 26,355 | ||||||||
| Net cash payment on derivative settlements | (1,531 | ) | (961 | ) | ||||||
|
Total oil, NGLs and gas sales including derivative impact |
$ | 27,241 | $ | 25,394 | ||||||
| Production: | ||||||||||
| Oil (MBbls) | 272 | 278 | ||||||||
| NGLs (MBbls) | 352 | 352 | ||||||||
| Gas (MMcf) | 2,376 | 2,377 | ||||||||
| Total (MBoe) | 1,020 | 1,027 | ||||||||
| Total (MBoe/d) | 11.3 | 11.4 | ||||||||
| Average prices: | ||||||||||
| Oil (per Bbl) | $ | 60.04 | $ | 49.17 | ||||||
| NGLs (per Bbl) | 20.84 | 17.20 | ||||||||
| Gas (per Mcf) | 2.15 | 2.78 | ||||||||
| Total (per Boe) | 28.21 | 25.67 | ||||||||
| Net cash payment on derivative settlements (per Boe) | (1.50 | ) | (0.94 | ) | ||||||
| Total including derivative impact (per Boe) | $ | 26.71 | $ | 24.73 | ||||||
| Costs and expenses (per Boe): | ||||||||||
| Lease operating | $ | 5.16 | $ | 4.06 | ||||||
| Production and ad valorem taxes | 2.45 | 2.29 | ||||||||
| Exploration | — | 1.02 | ||||||||
| General and administrative (1) | 6.44 | 5.77 | ||||||||
| Depletion, depreciation and amortization | 15.37 | 17.49 | ||||||||
| (1) Below is a summary of general and administrative expense: | ||||||||||
| General and administrative - cash component | $ | 5.63 | $ | 4.64 | ||||||
| General and administrative - noncash component (share-based compensation) | 0.81 | 1.13 | ||||||||
| APPROACH RESOURCES INC. AND SUBSIDIARIES | ||||||||||
| UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
| (In thousands, except shares and per-share amounts) | ||||||||||
|
Three Months Ended |
||||||||||
| 2018 | 2017 | |||||||||
| REVENUES: | ||||||||||
| Oil, NGLs and gas sales | $ | 28,772 | $ | 26,355 | ||||||
| EXPENSES: | ||||||||||
| Lease operating | 5,268 | 4,170 | ||||||||
| Production and ad valorem taxes | 2,500 | 2,357 | ||||||||
| Exploration | — | 1,043 | ||||||||
| General and administrative (1) | 6,567 | 5,928 | ||||||||
| Depletion, depreciation and amortization | 15,680 | 17,962 | ||||||||
| Total expenses | 30,015 | 31,460 | ||||||||
| OPERATING LOSS | (1,243 | ) | (5,105 | ) | ||||||
| OTHER: | ||||||||||
| Interest expense, net | (5,886 | ) | (5,463 | ) | ||||||
| Gain on debt extinguishment | — | 5,053 | ||||||||
| Commodity derivative (loss) gain | (1,928 | ) | 3,444 | |||||||
| Other income | 1 | 3 | ||||||||
| LOSS BEFORE INCOME TAX PROVISION (BENEFIT) | (9,056 | ) | (2,068 | ) | ||||||
| INCOME TAX PROVISION (BENEFIT) | (1,610 | ) | 138,700 | |||||||
| NET LOSS | $ | (7,446 | ) | $ | (140,768 | ) | ||||
| LOSS PER SHARE: | ||||||||||
| Basic | $ | (0.08 | ) | $ | (2.00 | ) | ||||
| Diluted | $ | (0.08 | ) | $ | (2.00 | ) | ||||
| WEIGHTED AVERAGE SHARES OUTSTANDING: | ||||||||||
| Basic | 94,516,280 | 70,409,303 | ||||||||
| Diluted | 94,516,280 | 70,409,303 | ||||||||
| (1) Includes non-cash share-based compensation expense as follows: | 828 | 1,159 | ||||||||
|
Unaudited Consolidated Balance Sheet Data
(in thousands) |
March 31, 2018 | December 31, 2017 | ||||||
| Cash and cash equivalents | $ | 22 | $ | 21 | ||||
| Other current assets | 12,522 | 16,679 | ||||||
| Property and equipment, net, successful efforts method | 1,081,154 | 1,082,876 | ||||||
| Total assets | $ | 1,093,698 | $ | 1,099,576 | ||||
| Current liabilities | $ | 26,657 | $ | 25,067 | ||||
| Long-term debt (1) | 374,709 | 373,460 | ||||||
| Deferred income taxes | 80,492 | 82,102 | ||||||
| Other long-term liabilities | 11,646 | 11,531 | ||||||
| Stockholders' equity | 600,194 | 607,416 | ||||||
| Total liabilities and stockholders' equity | $ | 1,093,698 | $ | 1,099,576 | ||||
(1) Long-term debt at
Supplemental Non-GAAP Financial and Other Measures
This release contains certain financial measures that are non-GAAP measures. We have provided reconciliations below of the non-GAAP financial measures to the most directly comparable GAAP financial measures and on the Non-GAAP Financial Information page in the Investor Relations section of our website at www.approachresources.com.
Adjusted Net Loss
This release contains the non-GAAP financial measures adjusted net loss
and adjusted net loss per diluted share, which exclude (1) non-cash fair
value loss (gain) on derivatives, (2) gain on debt extinguishment, (3)
write-off of deferred tax assets, (4) tax effect and other discrete tax
items. The amounts included in the calculation of adjusted net loss and
adjusted net loss per diluted share below were computed in accordance
with GAAP. We believe adjusted net loss and adjusted net loss per
diluted share are useful to investors because they provide readers with
a meaningful measure of our profitability before recording certain items
whose timing or amount cannot be reasonably determined. However, these
measures are provided in addition to, and not as an alternative for, and
should be read in conjunction with, the information contained in our
financial statements prepared in accordance with GAAP (including the
notes), included in our
The table below provides a reconciliation of adjusted net loss to net
loss for the three months ended
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2018 | 2017 | |||||||||
| Net Loss | $ | (7,446 | ) | $ | (140,768 | ) | ||||
| Adjustments for certain items: | ||||||||||
| Non-cash fair value loss (gain) on derivatives | 397 | (4,405 | ) | |||||||
| Gain on debt extinguishment | — | (5,053 | ) | |||||||
| Write-off of deferred tax assets | — | 139,090 | ||||||||
| Tax effect and other discrete tax items (1) | (13 | ) | 3,600 | |||||||
| Adjusted net loss | $ | (7,062 | ) | $ | (7,536 | ) | ||||
| Adjusted net loss per diluted share | $ | (0.07 | ) | $ | (0.11 | ) | ||||
(1) The estimated income tax impacts on adjustments to net loss are
computed based upon a statutory rate of 21% and 35%, for the three
months ended
EBITDAX
We define EBITDAX as net loss, plus (1) exploration expense, (2)
depletion, depreciation and amortization expense, (3) share-based
compensation expense, (4) non-cash fair value loss (gain) on
derivatives, (5) gain on debt extinguishment, (6) interest expense, net,
and (7) income tax (benefit) provision. EBITDAX is not a measure of net
income or cash flow as determined by GAAP. The amounts included in the
calculation of EBITDAX were computed in accordance with GAAP. EBITDAX is
presented herein and reconciled to the GAAP measure of net loss because
of its wide acceptance by the investment community as a financial
indicator of a company's ability to internally fund development and
exploration activities. This measure is provided in addition to, and not
as an alternative for, and should be read in conjunction with, the
information contained in our financial statements prepared in accordance
with GAAP (including the notes), included in our
The table below provides a reconciliation of EBITDAX to net loss for the
three months ended
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2018 | 2017 | |||||||||
| Net Loss | $ | (7,446 | ) | $ | (140,768 | ) | ||||
| Exploration | — | 1,043 | ||||||||
| Depletion, depreciation and amortization | 15,680 | 17,962 | ||||||||
| Share-based compensation | 828 | 1,159 | ||||||||
| Non-cash fair value loss (gain) on derivatives | 397 | (4,405 | ) | |||||||
| Gain on debt extinguishment | — | (5,053 | ) | |||||||
| Interest expense, net | 5,886 | 5,463 | ||||||||
| Income tax (benefit) provision | (1,610 | ) | 138,700 | |||||||
| EBITDAX | $ | 13,735 | $ | 14,101 | ||||||
Liquidity
Liquidity is calculated by adding the net funds available under our
revolving credit facility and cash and cash equivalents. We use
liquidity as an indicator of the Company’s ability to fund development
and exploration activities. However, this measurement has limitations.
This measurement can vary from year-to-year for the Company and can vary
among companies based on what is or is not included in the measurement
on a company’s financial statements and may further be subject to
covenants in a company’s loan agreements. This measurement is provided
in addition to, and not as an alternative for, and should be read in
conjunction with, the information contained in our financial statements
prepared in accordance with GAAP (including the notes), included in our
The table below summarizes our liquidity at
| Liquidity at | ||||
| March 31, | ||||
| 2018 | ||||
| Borrowing base | $ | 325,000 | ||
| Cash and cash equivalents | 22 | |||
| Long-term debt – Credit Facility | (292,000 | ) | ||
| Undrawn letters of credit | (325 | ) | ||
| Liquidity | $ | 32,697 | ||
View source version on businesswire.com: https://www.businesswire.com/news/home/20180502006833/en/
Source:
Approach Resources Inc.
Suzanne Ogle, 817-989-9000
Vice
President – Investor Relations & Corporate Communications
[email protected]