HighPoint Resources Corporation ("we", "us", the "Company" or
"HighPoint") (NYSE: HPR) today reported second quarter of 2020
financial and operating results, including total production and oil
volumes above guidance and capital expenditures below guidance.
For the second quarter of 2020, the Company
reported a net loss of $68 million, or $0.32 per diluted share.
Adjusted net income for the second quarter of 2020 was $8 million,
or $0.04 per diluted share. EBITDAX for the second quarter of 2020
was $54 million. Excluding non-recurring employee severance and
other costs of approximately $4 million, reported EBITDAX would
have been approximately $58 million. Adjusted net income (loss) and
EBITDAX are non-GAAP (Generally Accepted Accounting Principles)
measures. Reconciliations of non-GAAP measures, including adjusted
net income and EBITDAX to GAAP net income can be found in the
tables at the end of this release.
Chief Executive Officer and President Scot
Woodall commented, "The second quarter was dominated by the
COVID-19 pandemic, its impact on global and macro markets and the
associated effect on oil prices. The health and safety of our
employees and the communities in which we operate remains our top
priority. I’m proud of our employees' professionalism, hard work
and dedication in quickly adapting to what has become a new
operating environment. Our strong second quarter results
demonstrate our ability to execute as we exceeded our objectives
despite the many macro challenges that the industry faced. In
addition, we took decisive steps in response to lower oil prices by
suspending drilling and completion activity and implementing cost
saving initiatives to better align our corporate cost structure to
the current operating environment." "As we plan
for the second half of the year, we continue to monitor current and
future crude oil prices along with a broader macroeconomic recovery
to determine the appropriate time to resume activity. We maintain
an inventory of DUCs that positions us to quickly resume completion
activity when warranted. We expect to generate positive free cash
flow in the second half of the year that will allow us to further
improve net debt and liquidity from current levels. Our hedge
position continues to bolster cash flows and provides some
near-term revenue protection from the impact of low oil
prices."
1 Controllable operating costs include lease
operating expense, G&A expense, and gathering, transportation
and processing expense
OPERATING AND FINANCIAL RESULTS
The following table summarizes certain operating
and financial results for the second quarter of 2020 and 2019 and
for the first quarter of 2020:
|
Three Months Ended June 30, |
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
Change |
Combined production sales
volumes (MBoe) |
2,871 |
|
|
2,841 |
|
|
1 |
% |
|
2,908 |
|
|
(1 |
)% |
Net cash provided by (used in)
operating activities ($ millions) |
$ |
(16.5 |
) |
|
$ |
20.9 |
|
|
*nm |
|
$ |
76.8 |
|
|
*nm |
Discretionary cash flow ($ millions) (1) |
$ |
40.8 |
|
|
$ |
57.5 |
|
|
(29 |
)% |
|
$ |
67.5 |
|
|
(40 |
)% |
Combined realized prices with
hedging (per Boe) (2) |
$ |
29.23 |
|
|
$ |
37.48 |
|
|
(22 |
)% |
|
$ |
37.28 |
|
|
(22 |
)% |
Net income (loss) ($
millions) |
$ |
(67.6 |
) |
|
$ |
(1.9 |
) |
|
*nm |
|
$ |
(1,015.6 |
) |
|
*nm |
Per share, basic |
$ |
(0.32 |
) |
|
$ |
(0.01 |
) |
|
*nm |
|
$ |
(4.81 |
) |
|
*nm |
Per share, diluted |
$ |
(0.32 |
) |
|
$ |
(0.01 |
) |
|
*nm |
|
$ |
(4.81 |
) |
|
*nm |
Adjusted net income (loss) ($
millions) (1) |
$ |
8.2 |
|
|
$ |
(15.0 |
) |
|
*nm |
|
$ |
(7.0 |
) |
|
*nm |
Per share, basic |
$ |
0.04 |
|
|
$ |
(0.07 |
) |
|
*nm |
|
$ |
(0.03 |
) |
|
*nm |
Per share, diluted |
$ |
0.04 |
|
|
$ |
(0.07 |
) |
|
*nm |
|
$ |
(0.03 |
) |
|
*nm |
Weighted average shares
outstanding, basic (in thousands) |
211,895 |
|
|
210,377 |
|
|
1 |
% |
|
211,112 |
|
|
— |
% |
Weighted average shares
outstanding, diluted (in thousands) (1) |
211,895 |
|
|
210,377 |
|
|
1 |
% |
|
211,112 |
|
|
— |
% |
EBITDAX ($ millions) (1) |
$ |
54.3 |
|
|
$ |
71.1 |
|
|
(24 |
)% |
|
$ |
81.5 |
|
|
(33 |
)% |
* Not meaningful.(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.(2) Includes $8.3 million (or $2.87 per Boe) of oil hedge
income for the three months ended March 31, 2020 associated with
monetizing certain future oil hedge contracts.
The Company reported oil, natural gas and
natural gas liquids ("NGL") production of 2.9 MMBoe for the
second quarter of 2020, which exceeded the high end of the guidance
range of 2.5-2.6 MMBoe. Oil volumes totaled 1.6 MMBbls, which
exceeded the high end of the guidance range of 1.4-1.5 MMBbls. The
outperformance relative to guidance was primarily due to a
combination of well performance, timing of completions and minimal
downtime.
Production sales volumes for the second quarter
were comprised of approximately 57% oil, 23% natural gas and 20%
NGLs.
For the second quarter of 2020, West Texas
Intermediate ("WTI") oil prices averaged $27.85 per barrel,
Northwest Pipeline ("NWPL") natural gas prices averaged $1.47 per
MMBtu and NYMEX natural gas prices averaged $1.71 per MMBtu.
Commodity price realizations to benchmark pricing were WTI less
$5.30 per barrel of oil and NWPL less $0.67 per Mcf of gas. The NGL
price averaged approximately 16% of the WTI price per barrel.
For the second quarter of 2020, the Company had
derivative commodity swaps in place for 14,000 barrels of oil per
day tied to WTI pricing at $59.43 per barrel, 11,703 MMBtu of
natural gas per day tied to a NWPL regional pricing of $1.82 per
MMBtu and no hedges in place for NGLs.
|
Three Months Ended June 30, |
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
Change |
Average Realized
Prices before Hedging: |
|
|
|
|
|
|
|
|
Oil (per Bbl) |
$ |
22.74 |
|
|
$ |
55.46 |
|
|
(59 |
)% |
|
$ |
42.69 |
|
|
(47 |
)% |
Natural gas (per Mcf) |
0.80 |
|
|
1.58 |
|
|
(49 |
)% |
|
1.31 |
|
|
(39 |
)% |
NGLs (per Bbl) |
5.07 |
|
|
9.81 |
|
|
(48 |
)% |
|
10.32 |
|
|
(51 |
)% |
Combined (per Boe) |
15.08 |
|
|
37.83 |
|
|
(60 |
)% |
|
27.36 |
|
|
(45 |
)% |
|
|
|
|
|
|
|
|
|
|
Average Realized Prices with
Hedging: |
|
|
|
|
|
|
|
|
|
Oil (per Bbl) (1) |
$ |
47.33 |
|
|
$ |
54.88 |
|
|
(14 |
)% |
|
$ |
60.87 |
|
|
(22 |
)% |
Natural gas (per Mcf) |
0.88 |
|
|
1.59 |
|
|
(45 |
)% |
|
1.31 |
|
|
(33 |
)% |
NGLs (per Bbl) |
5.07 |
|
|
9.81 |
|
|
(48 |
)% |
|
10.32 |
|
|
(51 |
)% |
Combined (per Boe) (1) |
29.23 |
|
|
37.48 |
|
|
(22 |
)% |
|
37.28 |
|
|
(22 |
)% |
(1) Includes $8.3 million (or
$5.26 per Bbl and $2.87 per Boe) of oil hedge income for the three
months ended March 31, 2020 associated with amending certain oil
hedge contracts to terminate future hedged volumes.
Lease operating expense ("LOE") averaged $3.16
per Boe in the second quarter of 2020 compared to $3.81 per Boe in
the first quarter of 2020. Second quarter LOE was lower compared to
the first quarter of 2020 as a result of a reduction in water
handling and disposal costs and other operational efficiencies.
Production tax expense averaged $0.50 per Boe in
the second quarter of 2020 compared to $(0.86) per Boe in the first
quarter of 2020. Production taxes for the first quarter of 2020
included an annual true-up of Colorado ad valorem tax based on
actual assessments and production taxes for the second quarter of
2020 included severance tax refunds of $1.8 million for the tax
period of 2015 to 2017. Excluding the severance tax refunds,
production taxes as a percentage of revenues were 7.5%. Production
tax expense is expected to average approximately 7%-8% of revenues
for the remainder of 2020.
General and administrative expense (“G&A”)
averaged $4.49 per Boe in the second quarter of 2020 compared to
$3.51 per Boe in the first quarter of 2020. Second quarter G&A
was higher compared to the first quarter of 2020 as a result of
non-recurring costs of approximately $4 million, which were
primarily associated with a workforce reduction that was completed
in May to align the Company's cost structure to the current
operating environment. Excluding the non-recurring costs, second
quarter of 2020 G&A was $3.13 per Boe or 11% lower than the
first quarter of 2020.
|
Three Months Ended June 30, |
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
Change |
Average Costs (per Boe): |
|
|
|
|
|
|
|
|
|
Lease operating expenses |
$ |
3.16 |
|
|
$ |
3.79 |
|
|
(17 |
)% |
|
$ |
3.81 |
|
|
(17 |
)% |
Gathering, transportation and processing expense ("GTP") (1) |
1.48 |
|
|
0.61 |
|
|
143 |
% |
|
1.52 |
|
|
(3 |
% |
Production tax expense |
0.50 |
|
|
3.13 |
|
|
(84 |
% |
|
(0.86 |
) |
|
*nm |
Depreciation, depletion and amortization |
8.68 |
|
|
25.56 |
|
|
(66 |
)% |
|
25.77 |
|
|
(66 |
)% |
General and administrative expense (2) |
4.49 |
|
|
4.37 |
|
|
3 |
% |
|
3.51 |
|
|
28 |
% |
* Not meaningful.(1) The increase in GTP per Boe for the three
months ended June 30, 2020 compared to the three months ended
June 30, 2019 was due to an increase in our production mix from the
Hereford Field under the existing contractual arrangement with a
primary term through April 2027.(2) Includes long-term cash and
equity incentive compensation of $0.54 per Boe and $0.81 per Boe
for the three months ended June 30, 2020 and 2019,
respectively, and $0.16 per Boe for the three months ended March
31, 2020. Includes non-recurring employee severance and other costs
of $1.36 per Boe for three months ended June 30, 2020.
Debt and Liquidity Update
At June 30, 2020, the Company had cash and cash
equivalents of $3 million and long-term debt of $795 million,
including $175 million outstanding on its credit facility. Working
capital changes during the second quarter included the payment of
regularly scheduled interest related to the Company's senior notes
and ad valorem tax payments. Subsequent to the end of the quarter,
bank debt was reduced by $20 million. The Company has a $22 million
letter of credit outstanding that reduces ratably per month until
it expires on August 31, 2021 and a $5 million letter of credit
agreement associated with a separate contractual obligation.
Including the letter of credit balances, the Company's current
liquidity is approximately $74 million, which is inclusive of the
$20 million reduction in bank debt. Given reduced capital
expenditures and expected operating cash flows, the Company expects
to generate free cash flow for the remainder of the year, which
will be used to further improve net debt and liquidity.
Capital Expenditures
Capital expenditures for the second quarter of
2020 totaled $25 million for drilling and completion operations.
During the second quarter, the Company spud 4 gross short reach
lateral wells and placed 14 gross wells on flowback. As previously
reported, due to oil price volatility, the Company suspended
drilling and completion activity during the second quarter and will
defer further activity until broader market conditions improve.
OPERATIONAL UPDATE
Northeast Wattenberg
The Company produced an average of 23,728 Boe/d
(53% oil) in the second quarter of 2020 in NE Wattenberg. Recent
activity includes nine XRL wells completed with high fluid
intensity completions that were placed on flowback in May and June
in DSU 1-64-5. After 75 days of production, the average per well
cumulative oil production was approximately 35,000 barrels of oil,
which compares favorably to the six wells placed on flowback in
February in DSU 4-61-5 and were the central area's highest
producing wells to date. Subsequent to the end of the quarter, two
additional wells in DSU 1-64-5 were placed on flowback in July.
Hereford Field
Production sales volumes for the second quarter
of 2020 in Hereford averaged 7,639 Boe/d (71% oil). During the
second quarter, the Company's completion activity was focused in
the Fox Creek area as flowback was initiated on three wells at DSU
12-63-34 and two wells at DSU 12-63-33. Including the two wells
that began initial flowback in March at DSU 12-63-27, the average
per well cumulative oil of the seven Fox Creek area wells placed on
flowback in 2020 is trending approximately 5% greater than the
offsetting Section 16 wells after 60 days, which are the economic
baseline for Hereford development. These wells continue to
demonstrate the Company's ability to positively impact well
performance utilizing high fluid intensity completions as the 2020
development program wells are the Company's highest performing
wells to date in Hereford.
THIRD QUARTER 2020 GUIDANCE
The Company continues to monitor current and
future crude oil prices along with the uncertainties and potential
impacts of broader macroeconomic effects on the oil sector to
determine the appropriate time to resume activity. Accordingly, the
Company is providing guidance for the third quarter of 2020.
For the third quarter of 2020, capital
expenditures are anticipated to total approximately $10 million and
production is expected to approximate 2.5-2.6 MMBoe, of which
approximately 56% is anticipated to be oil. Third quarter guidance
assumes no additional drilling and completion activity.
See "Forward-Looking Statements" below.
COMMODITY HEDGES UPDATE
The following table summarizes the Company's
current hedge position as of August 3, 2020:
|
Oil (WTI) Swaps |
|
Natural Gas (CIG)
Swaps |
Period |
Volume Bbls/d |
|
Price $/Bbl |
|
Volume MMBtu/d |
|
Price $/MMBtu |
3Q20 |
15,750 |
|
|
$ |
56.86 |
|
|
20,000 |
|
|
$ |
1.83 |
|
4Q20 |
14,250 |
|
|
$ |
56.29 |
|
|
20,000 |
|
|
$ |
1.83 |
|
1Q21 |
10,000 |
|
|
$ |
54.23 |
|
|
10,000 |
|
|
$ |
2.14 |
|
2Q21 |
10,000 |
|
|
$ |
54.23 |
|
|
20,000 |
|
|
$ |
2.12 |
|
3Q21 |
7,000 |
|
|
$ |
54.39 |
|
|
20,000 |
|
|
$ |
2.12 |
|
4Q21 |
7,000 |
|
|
$ |
54.39 |
|
|
13,370 |
|
|
$ |
2.13 |
|
The Company has sold WTI swaptions of 3,000
bbl/d for calendar 2022 at an average strike price of $55.00/bbl.
Realized sales prices will reflect basis differentials from the
index prices to the sales location.
The Company has also entered into derivative
contracts to hedge its exposure to the WTI NYMEX calendar month
average roll, which is a contractual component associated with a
portion of its physical crude oil sales prices.
UPCOMING EVENTS
Second Quarter Conference Call and Webcast
The Company plans to host a conference call on
Tuesday, August 4, 2020, to discuss second quarter 2020
results. The call is scheduled at 9:00 a.m. Eastern time (7:00 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 5813538. The webcast will
remain on the Company's website for approximately 7 days and a
replay of the call will be available through August 11, 2020
at 855-859-2056 (404-537-3406 international) with passcode
5813538.
A slide presentation that will be referenced on
the conference call will be available on the “Investor Relations”
section of the Company’s website prior to the start of the
call.
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.
DISCLOSURE STATEMENTS
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
"Third Quarter 2020 Guidance", which contains projections for
certain operational and financial metrics. Additional
forward-looking statements in this release relate to, among other
things, future production, cash flows, capital expenditures, costs,
projects and opportunities.
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
HighPoint Resource's Annual Report on Form 10-K for the year ended
December 31, 2019 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. 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.
COVID-19 Disclosure
Employee Health and Safety
The health and safety of our employees and the
community is our highest priority. We are also cognizant that
supplying reliable energy to our communities and the nation is an
essential function. The federal government, through the
Cybersecurity and Infrastructure Security Administration, as well
as Colorado state and local "stay-at-home" orders, have provided
exemptions for oil and gas workers.
Under our business continuity plan, we were
rapidly able to switch to remote operations in response to the
COVID-19 pandemic in early March. Beginning March 16th, we
successfully transitioned to full remote access and operations, in
both the Denver headquarters office and at the field level. The
successful transition to remote operations was virtually seamless.
In late May, we began to transition back to increased office
presence on a staggered schedule so that approximately 50% of the
work force is in the office on a daily basis.
Supply Chain Issues
We have not experienced any recent challenges
with respect to obtaining oil field goods and services. However, as
oil service and supply companies cut work force and stack rigs and
frac fleets, there is a potential for challenges on this front when
activity begins to ramp up, although the related timing is highly
uncertain.
Access to Downstream Markets
We are not currently experiencing constraints
associated with midstream gas processing or crude oil
transportation. However, crude storage facilities are operating
close to maximum capacity, which could result in the need for
us to shut-in production. Accordingly, we have engaged in
contingency planning for that possibility.
Financial Considerations
The COVID-19 pandemic has resulted in
unprecedented demand destruction, especially for oil, on a
worldwide basis. This demand destruction greatly exacerbated
the already growing supply surplus after the failure of the OPEC+
process in early March. Although the recent supply curtailments
announced by Saudi Arabia, Russia and other oil producers will
reduce the supply surplus, demand recovery is likely to lag
significantly.
As described in more detail in this release, the
Company has acted to protect its balance sheet and preserve
liquidity in this environment. For example, we have hedges in-place
for approximately 92% of our remaining 2020 oil production at a
price of $57 per barrel, and a significant amount of our
anticipated 2021 oil production at $54 per barrel (see full hedge
update elsewhere in this release). On March 19, we issued a release
indicating that drilling and completion activities would wind down
in the second quarter, and be suspended in the second half of 2020,
pending improvement in commodity prices. That strategy remains
in-place for the foreseeable future. In the interim, the Company
will proactively seek opportunities to further protect and enhance
its financial position.
Risk Management
The Company has fully incorporated ongoing risk
assessments related to COVID-19, across a range of parameters, at
the senior management level. The focus of Internal Audit has been
adjusted to address these issues. The Audit Committee, as well as
the full Board, will continue to exercise appropriate oversight of
these matters.
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, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Production Data: |
|
|
|
|
|
|
|
Oil (MBbls) |
1,638 |
|
|
1,748 |
|
|
3,224 |
|
|
3,468 |
|
Natural gas (MMcf) |
3,948 |
|
|
3,558 |
|
|
8,304 |
|
|
7,308 |
|
NGLs (MBbls) |
575 |
|
|
500 |
|
|
1,170 |
|
|
953 |
|
Combined volumes (MBoe) |
2,871 |
|
|
2,841 |
|
|
5,778 |
|
|
5,639 |
|
Daily combined volumes (Boe/d) |
31,549 |
|
|
31,220 |
|
|
31,747 |
|
|
31,155 |
|
|
|
|
|
|
|
|
|
Average Sales
Prices (before the effects of realized hedges): |
Oil (per Bbl) |
$ |
22.74 |
|
|
$ |
55.46 |
|
|
$ |
32.56 |
|
|
$ |
53.16 |
|
Natural gas (per Mcf) |
0.80 |
|
|
1.58 |
|
|
1.06 |
|
|
1.90 |
|
NGLs (per Bbl) |
5.07 |
|
|
9.81 |
|
|
7.74 |
|
|
11.47 |
|
Combined (per Boe) |
15.08 |
|
|
37.83 |
|
|
21.26 |
|
|
37.10 |
|
|
|
|
|
|
|
|
|
Average Realized
Sales Prices (after the effects of realized hedges): |
Oil (per Bbl) |
$ |
47.33 |
|
|
$ |
54.88 |
|
|
$ |
53.99 |
|
|
$ |
54.45 |
|
Natural gas (per Mcf) |
0.88 |
|
|
1.59 |
|
|
1.11 |
|
|
1.79 |
|
NGLs (per Bbl) |
5.07 |
|
|
9.81 |
|
|
7.74 |
|
|
11.47 |
|
Combined (per Boe) |
29.23 |
|
|
37.48 |
|
|
33.28 |
|
|
37.75 |
|
|
|
|
|
|
|
|
|
Average Costs (per Boe): |
|
|
|
|
|
|
|
Lease operating expenses |
$ |
3.16 |
|
|
$ |
3.79 |
|
|
$ |
3.49 |
|
|
$ |
3.91 |
|
Gathering, transportation and processing expense |
1.48 |
|
|
0.61 |
|
|
1.50 |
|
|
0.61 |
|
Production tax expenses |
0.50 |
|
|
3.13 |
|
|
(0.18 |
) |
|
2.27 |
|
Depreciation, depletion and amortization |
8.68 |
|
|
25.56 |
|
|
17.28 |
|
|
25.75 |
|
General and administrative expense (1) |
4.49 |
|
|
4.37 |
|
|
4.00 |
|
|
4.44 |
|
(1) Includes long-term cash
and equity incentive compensation of $0.54 per Boe and $0.81 per
Boe for the three months ended June 30, 2020 and 2019,
respectively, and $0.35 per Boe and $0.89 per Boe for the six
months ended June 30, 2020 and 2019, respectively.
HIGHPOINT RESOURCES
CORPORATIONConsolidated Condensed Balance
Sheets(Unaudited)
|
As of June 30, |
|
As of December 31, |
|
2020 |
|
2019 |
|
(in thousands) |
Assets: |
|
|
|
Cash and cash equivalents |
$ |
2,736 |
|
|
$ |
16,449 |
|
Other current assets (1) |
137,475 |
|
|
69,988 |
|
Property and equipment, net |
787,856 |
|
|
2,064,174 |
|
Other noncurrent assets (1) |
23,921 |
|
|
5,441 |
|
Total assets |
$ |
951,988 |
|
|
$ |
2,156,052 |
|
|
|
|
|
Liabilities and Stockholders'
Equity: |
|
|
|
Current liabilities |
$ |
114,288 |
|
|
$ |
175,478 |
|
Long-term debt, net of debt issuance costs |
794,673 |
|
|
758,911 |
|
Other long-term liabilities |
40,848 |
|
|
138,345 |
|
Stockholders' equity |
2,179 |
|
|
1,083,318 |
|
Total liabilities and stockholders' equity |
$ |
951,988 |
|
|
$ |
2,156,052 |
|
(1) At June 30, 2020, the
estimated fair value of all of the Company's commodity derivative
instruments was an asset of $87.8 million, comprised of $72.3
million of current assets and $15.5 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, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
(in thousands, except per share amounts) |
Operating Revenues: |
|
|
|
|
|
|
|
Oil, gas and NGL production |
$ |
43,300 |
|
|
$ |
107,486 |
|
|
$ |
122,866 |
|
|
$ |
209,191 |
|
Other operating revenues, net |
— |
|
|
98 |
|
|
— |
|
|
373 |
|
Total operating revenues |
43,300 |
|
|
107,584 |
|
|
122,866 |
|
|
209,564 |
|
Operating Expenses: |
|
|
|
|
|
|
|
Lease operating |
9,074 |
|
|
10,772 |
|
|
20,155 |
|
|
22,049 |
|
Gathering, transportation and processing |
4,254 |
|
|
1,742 |
|
|
8,666 |
|
|
3,465 |
|
Production tax |
1,449 |
|
|
8,905 |
|
|
(1,059 |
) |
|
12,798 |
|
Exploration |
21 |
|
|
12 |
|
|
52 |
|
|
37 |
|
Impairment and abandonment |
810 |
|
|
995 |
|
|
1,266,236 |
|
|
1,317 |
|
(Gain) Loss on sale of properties |
4,779 |
|
|
2,906 |
|
|
4,779 |
|
|
2,901 |
|
Depreciation, depletion and amortization |
24,908 |
|
|
72,612 |
|
|
99,833 |
|
|
145,222 |
|
Unused commitments |
4,378 |
|
|
4,352 |
|
|
8,836 |
|
|
8,821 |
|
General and administrative (1) |
12,890 |
|
|
12,401 |
|
|
23,105 |
|
|
25,061 |
|
Merger transaction expense |
— |
|
|
— |
|
|
— |
|
|
2,414 |
|
Other operating expenses, net |
(557 |
) |
|
4 |
|
|
(502 |
) |
|
(20 |
) |
Total operating expenses |
62,006 |
|
|
114,701 |
|
|
1,430,101 |
|
|
224,065 |
|
Operating Income (Loss) |
(18,706 |
) |
|
(7,117 |
) |
|
(1,307,235 |
) |
|
(14,501 |
) |
Other Income and Expense: |
|
|
|
|
|
|
|
Interest and other income |
259 |
|
|
154 |
|
|
64 |
|
|
468 |
|
Interest expense |
(15,388 |
) |
|
(14,381 |
) |
|
(29,771 |
) |
|
(28,060 |
) |
Commodity derivative gain (loss) (2) |
(33,793 |
) |
|
19,544 |
|
|
158,395 |
|
|
(85,647 |
) |
Total other income and expense |
(48,922 |
) |
|
5,317 |
|
|
128,688 |
|
|
(113,239 |
) |
Income (Loss) before Income
Taxes |
(67,628 |
) |
|
(1,800 |
) |
|
(1,178,547 |
) |
|
(127,740 |
) |
(Provision for) Benefit from
Income Taxes |
— |
|
|
(110 |
) |
|
95,280 |
|
|
29,601 |
|
Net Income (Loss) |
$ |
(67,628 |
) |
|
$ |
(1,910 |
) |
|
$ |
(1,083,267 |
) |
|
$ |
(98,139 |
) |
|
|
|
|
|
|
|
|
Net Income (Loss) per Common
Share |
|
|
|
|
|
|
|
Basic |
$ |
(0.32 |
) |
|
$ |
(0.01 |
) |
|
$ |
(5.12 |
) |
|
$ |
(0.47 |
) |
Diluted |
$ |
(0.32 |
) |
|
$ |
(0.01 |
) |
|
$ |
(5.12 |
) |
|
$ |
(0.47 |
) |
Weighted Average
Common Shares Outstanding |
|
|
|
|
|
|
Basic |
211,895 |
|
|
210,377 |
|
|
211,503 |
|
|
210,156 |
|
Diluted |
211,895 |
|
|
210,377 |
|
|
211,503 |
|
|
210,156 |
|
(1) Includes long-term cash and equity incentive compensation of
$1.6 million and $2.3 million for the three months ended
June 30, 2020 and 2019, respectively, and $2.0 million and
$5.0 million for the six months ended June 30, 2020 and 2019,
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 June 30, |
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
(in thousands) |
Included in commodity
derivative gain (loss): |
|
|
|
|
|
|
|
Realized gain (loss) on derivatives (1) |
$ |
40,611 |
|
|
$ |
(993 |
) |
|
$ |
69,447 |
|
|
$ |
3,656 |
|
Prior year unrealized (gain)
loss transferred to realized (gain) loss (1) |
(225 |
) |
|
(20,933 |
) |
|
1,104 |
|
|
(57,073 |
) |
Unrealized gain (loss) on
derivatives (1) |
(74,179 |
) |
|
41,470 |
|
|
87,844 |
|
|
(32,230 |
) |
Total commodity derivative gain (loss) |
$ |
(33,793 |
) |
|
$ |
19,544 |
|
|
$ |
158,395 |
|
|
$ |
(85,647 |
) |
(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 meaningful
comparison to its peers.
HIGHPOINT RESOURCES
CORPORATIONConsolidated Statements of Cash
Flows(Unaudited)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
(in thousands) |
Operating Activities: |
|
|
|
|
|
|
|
Net income (loss) |
$ |
(67,628 |
) |
|
$ |
(1,910 |
) |
|
$ |
(1,083,267 |
) |
|
$ |
(98,139 |
) |
Adjustments to reconcile to net cash provided by operations: |
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
24,908 |
|
|
72,612 |
|
|
99,833 |
|
|
145,222 |
|
Impairment and abandonment |
810 |
|
|
995 |
|
|
1,266,236 |
|
|
1,317 |
|
Unrealized derivative (gain) loss |
74,404 |
|
|
(20,537 |
) |
|
(88,948 |
) |
|
89,303 |
|
Deferred income taxes |
— |
|
|
110 |
|
|
(95,280 |
) |
|
(29,601 |
) |
Incentive compensation and other non-cash charges |
1,880 |
|
|
2,662 |
|
|
2,645 |
|
|
6,980 |
|
Amortization of deferred financing costs |
1,647 |
|
|
635 |
|
|
2,287 |
|
|
1,275 |
|
(Gain) loss on sale of properties |
4,779 |
|
|
2,906 |
|
|
4,779 |
|
|
2,901 |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
(10,937 |
) |
|
3,005 |
|
|
(2,413 |
) |
|
18,475 |
|
Prepayments and other assets |
(2,832 |
) |
|
(1,391 |
) |
|
(1,905 |
) |
|
(1,463 |
) |
Accounts payable, accrued and other liabilities |
(13,238 |
) |
|
(14,037 |
) |
|
(16,441 |
) |
|
(6,733 |
) |
Amounts payable to oil and gas property owners |
(18,778 |
) |
|
(12,017 |
) |
|
(12,696 |
) |
|
(22,923 |
) |
Production taxes payable |
(11,470 |
) |
|
(12,171 |
) |
|
(14,522 |
) |
|
(8,069 |
) |
Net cash provided by (used in) operating activities |
$ |
(16,455 |
) |
|
$ |
20,862 |
|
|
$ |
60,308 |
|
|
$ |
98,545 |
|
Investing Activities: |
|
|
|
|
|
|
|
Additions to oil and gas properties, including acquisitions |
(71,631 |
) |
|
(127,291 |
) |
|
(110,841 |
) |
|
(258,153 |
) |
Additions of furniture, equipment and other |
(179 |
) |
|
(2,265 |
) |
|
(653 |
) |
|
(3,574 |
) |
Other investing activities |
(121 |
) |
|
175 |
|
|
3,189 |
|
|
(98 |
) |
Net cash provided by (used in) investing activities |
$ |
(71,931 |
) |
|
$ |
(129,381 |
) |
|
$ |
(108,305 |
) |
|
$ |
(261,825 |
) |
Financing Activities: |
|
|
|
|
|
|
|
Proceeds from debt |
105,000 |
|
|
80,000 |
|
|
120,000 |
|
|
150,000 |
|
Principal payments on debt |
(25,000 |
) |
|
— |
|
|
(85,000 |
) |
|
(1,859 |
) |
Other financing activities |
(81 |
) |
|
(27 |
) |
|
(716 |
) |
|
(1,523 |
) |
Net cash provided by (used in) financing activities |
$ |
79,919 |
|
|
$ |
79,973 |
|
|
$ |
34,284 |
|
|
$ |
146,618 |
|
Increase (Decrease) in Cash
and Cash Equivalents |
(8,467 |
) |
|
(28,546 |
) |
|
(13,713 |
) |
|
(16,662 |
) |
Beginning Cash and Cash
Equivalents |
11,203 |
|
|
44,658 |
|
|
16,449 |
|
|
32,774 |
|
Ending Cash and Cash
Equivalents |
$ |
2,736 |
|
|
$ |
16,112 |
|
|
$ |
2,736 |
|
|
$ |
16,112 |
|
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, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
(in thousands) |
Net Cash Provided by (Used in) Operating Activities |
$ |
(16,455 |
) |
|
$ |
20,862 |
|
|
$ |
60,308 |
|
|
$ |
98,545 |
|
Adjustments to reconcile to
discretionary cash flow: |
|
|
|
|
|
|
|
Exploration expense |
21 |
|
|
12 |
|
|
52 |
|
|
37 |
|
Merger transaction expense |
— |
|
|
— |
|
|
— |
|
|
2,414 |
|
Changes in working capital |
57,255 |
|
|
36,611 |
|
|
47,977 |
|
|
20,713 |
|
Discretionary Cash Flow |
$ |
40,821 |
|
|
$ |
57,485 |
|
|
$ |
108,337 |
|
|
$ |
121,709 |
|
Adjusted Net Income (Loss) Reconciliation
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
(in thousands, except per share amounts) |
Net Income (Loss) |
$ |
(67,628 |
) |
|
$ |
(1,910 |
) |
|
$ |
(1,083,267 |
) |
|
$ |
(98,139 |
) |
Provision for (Benefit from) income taxes |
— |
|
|
110 |
|
|
(95,280 |
) |
|
(29,601 |
) |
Income (Loss) before income
taxes |
(67,628 |
) |
|
(1,800 |
) |
|
(1,178,547 |
) |
|
(127,740 |
) |
|
|
|
|
|
|
|
|
Adjustments to net income
(loss): |
|
|
|
|
|
|
|
Unrealized derivative (gain) loss |
74,404 |
|
|
(20,537 |
) |
|
(88,948 |
) |
|
89,303 |
|
Impairment expense |
— |
|
|
— |
|
|
1,264,864 |
|
|
— |
|
(Gain) loss on sale of properties |
4,779 |
|
|
2,906 |
|
|
4,779 |
|
|
2,901 |
|
One-time item: |
|
|
|
|
|
|
|
Merger transaction expense |
— |
|
|
— |
|
|
— |
|
|
2,414 |
|
(Income) expense related to properties sold |
(556 |
) |
|
27 |
|
|
(502 |
) |
|
(272 |
) |
Adjusted Income (Loss) before
income taxes |
10,999 |
|
|
(19,404 |
) |
|
1,646 |
|
|
(33,394 |
) |
Adjusted (provision for) benefit from income taxes (1) |
(2,805 |
) |
|
4,437 |
|
|
(420 |
) |
|
7,737 |
|
Adjusted Net Income
(Loss) |
$ |
8,194 |
|
|
$ |
(14,967 |
) |
|
$ |
1,226 |
|
|
$ |
(25,657 |
) |
Per share, diluted |
$ |
0.04 |
|
|
$ |
(0.07 |
) |
|
$ |
0.01 |
|
|
$ |
(0.12 |
) |
(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, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
(in thousands) |
Net Income (Loss) |
$ |
(67,628 |
) |
|
$ |
(1,910 |
) |
|
$ |
(1,083,267 |
) |
|
$ |
(98,139 |
) |
Adjustments to reconcile to
EBITDAX: |
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
24,908 |
|
|
72,612 |
|
|
99,833 |
|
|
145,222 |
|
Impairment and abandonment expense |
810 |
|
|
995 |
|
|
1,266,236 |
|
|
1,317 |
|
Exploration expense |
21 |
|
|
12 |
|
|
52 |
|
|
37 |
|
Unrealized derivative (gain) loss |
74,404 |
|
|
(20,537 |
) |
|
(88,948 |
) |
|
89,303 |
|
Incentive compensation and other non-cash charges |
1,880 |
|
|
2,662 |
|
|
2,645 |
|
|
6,980 |
|
Merger transaction expense |
— |
|
|
— |
|
|
— |
|
|
2,414 |
|
(Gain) loss on sale of properties |
4,779 |
|
|
2,906 |
|
|
4,779 |
|
|
2,901 |
|
Interest and other income |
(259 |
) |
|
(154 |
) |
|
(64 |
) |
|
(468 |
) |
Interest expense |
15,388 |
|
|
14,381 |
|
|
29,771 |
|
|
28,060 |
|
Provision for (benefit from) income taxes |
— |
|
|
110 |
|
|
(95,280 |
) |
|
(29,601 |
) |
EBITDAX |
$ |
54,303 |
|
|
$ |
71,077 |
|
|
$ |
135,757 |
|
|
$ |
148,026 |
|
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
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