News Releases

Goodrich Petroleum Announces Third Quarter 2018 Financial Results

Nov 8, 2018

HOUSTON, Nov. 8, 2018 /PRNewswire/ -- Goodrich Petroleum Corporation (NYSE American: GDP) (the "Company") today announced financial results for the third quarter ended September 30, 2018.

QUARTER HIGHLIGHTS

  • Production grew 113% over the previous year period and 41% sequentially to an average of 84,700 Mcfe per day. The Company expects to average 95,000 – 105,000 Mcfe per day in the fourth quarter after deferring the completion of 1.0 gross (0.94 net) well until the first quarter of 2019 in order to take advantage of synergies from batch completing multiple wells.
  • Adjusted EBITDA increased to $14.3 million and Discretionary Cash Flow ("DCF"), defined as net cash provided by operating activities before changes in working capital, increased to $13.8 million in the quarter. The quarter over quarter increase in Adjusted EBITDA and DCF was driven by significantly higher production volumes and a 20% reduction in per unit cash operating expenses.
  • Net income was $1.7 million for the quarter, or $0.14 per basic ($0.12 per fully diluted) share.

(See accompanying tables at the end of this press release that reconcile Adjusted EBITDA and Discretionary Cash Flow, which are non-US GAAP financial measures, to their most directly comparable US GAAP financial measures.)

THE COMPANY HAS POSTED A NEW PRESENTATION ON THE COMPANY'S WEBSITE WHICH WILL BE REVIEWED ON THE EARNINGS CONFERENCE CALL. INVESTORS CAN ACCESS THE SLIDES AT: http://goodrichpetroleum.investorroom.com/events-and-presentations 

3Q18 FINANCIAL RESULTS

REVENUES

Revenues totaled $24.4 million in the quarter, versus $13.2 million in the prior year period. Average realized price per unit was $3.12 per Mcfe ($2.75 per Mcf of gas and $72.29 per barrel of oil) in the quarter, versus $3.54 per Mcfe in the prior year period ($2.96 per Mcf of gas and $47.85 per barrel of oil).    

PRODUCTION

Production totaled 7.8 Bcfe in the quarter, or an average of approximately 84,700 Mcfe per day, versus 3.7 Bcfe, or an average of approximately 39,800 Mcfe per day, in the prior year period. Natural gas production totaled 7.5 Bcf in the quarter (96% of total production), versus 3.2 Bcf (88% of total production) during the prior year period.     

CASH FLOW

Adjusted EBITDA was $14.3 million in the quarter and discretionary cash flow ("DCF"), defined as net cash provided by operating activities before changes in working capital, was $13.8 million in the quarter versus Adjusted EBITDA of $8.8 million and DCF of $8.3 million in the prior year period.

(See accompanying tables at the end of this press release that reconcile Adjusted EBITDA and DCF, which are non-US GAAP financial measures, to their most directly comparable US GAAP financial measures.)

NET INCOME

The Company announced net income of $1.7 million in the quarter ($0.14 per basic and $0.12 per fully diluted share), versus net income of $0.7 million ($0.07 per basic and $0.05 per fully diluted share) in the prior year period. 

OPERATING EXPENSES

Lease operating expense ("LOE") was $2.6 million ($0.33/Mcfe) in the quarter, versus $2.2 million ($0.60/Mcfe) in the prior year period. LOE for the quarter included $0.3 million ($0.04/Mcfe) for workovers, versus $0.2 million ($0.05/Mcfe) in the prior year period. Lease operating expense for the quarter excluding workovers was $2.3 million ($0.29/Mcfe) versus $2.0 million ($0.55/Mcfe) in the prior year period. Per unit LOE is expected to continue to fall as we increase production from the Haynesville which carries a very low per unit LOE.

Production and other taxes were $1.0 million in the quarter ($0.12/Mcfe), versus a negligible credit in the prior year period as the result of refunds for both severance and ad valorem taxes during that quarter.  

Transportation and processing expense was $3.3 million ($0.43/Mcfe) in the quarter, versus $1.6 million ($0.44/Mcfe) in the prior year period.

Depreciation, depletion and amortization ("DD&A") expense was $7.9 million ($1.02/Mcfe) in the quarter, versus $3.5 million ($0.96/Mcfe) in the prior year period.   

General and administrative expense was $4.6 million ($0.60/Mcfe) in the quarter, which includes non-cash expense of $1.5 million ($0.20/Mcfe) versus $3.7 million ($1.02/Mcfe) in the prior year period, which included non-cash expense of $1.9 million ($0.51/Mcfe). G&A Payable in Cash was $3.1 million ($0.40/Mcfe) in the quarter.

(See accompanying table at the end of this press release that reconciles G&A Payable in Cash, which is a non-US GAAP financial measure, to its most directly comparable US GAAP financial measure.)

OPERATING INCOME

Operating income, defined as revenues minus operating expenses, totaled $5.0 million in the quarter, versus $2.2 million in the prior year period.    

CAPITAL EXPENDITURES

Capital expenditures totaled $38.3 million in the quarter, of which $37.5 million was spent on drilling and completion costs and $0.8 million on other expenditures, versus $5.4 million in the prior year period of which the majority was spent on drilling and completion costs. A majority of the quarter's total drilling and completion capital expenditures were spent in the Haynesville Shale Trend. Capital expenditures for the fourth quarter are expected to be $8.0 – 10.0 million.

INTEREST EXPENSE

Interest expense totaled $3.1 million ($0.40/Mcfe) in the quarter, which includes cash interest of $0.3 million incurred on the credit facility and non-cash interest of $2.8 million incurred on the Company's second lien notes, which includes $1.7 million paid in-kind interest and $1.1 million amortization of debt discount. Interest expense for the prior year period totaled $2.5 million, which included cash interest of $0.4 million incurred on the first lien term loan and non-cash interest of $2.1 million incurred on the Company's second lien notes, which included $1.4 million paid in-kind interest and $0.7 million amortization of debt discount.

CRUDE OIL AND NATURAL GAS DERIVATIVES

The Company had a loss of $0.2 million on its derivatives not designated as hedges in the quarter, which is comprised of a negligible change of the fair value of our open natural gas and oil derivative contracts as well as a $0.2 million loss on cash settlement, versus a total loss of $0.3 million on its derivatives not designated as hedges in the prior year period, representing the change in fair value of our natural gas and oil derivative contracts and a small realized gain on cash settlement. Subsequent to the end of the third quarter, the Company increased the amount of natural gas derivatives for 2019 by 30,000 Mmbtu per day at an average price of $2.87 per Mmbtu.

BALANCE SHEET

The Company exited the quarter with $1.9 million of cash, $15.0 million outstanding under the Company's senior credit facility, which has an upwardly revised borrowing base of $75 million (subject to first and second lien covenants), and total principal debt outstanding, including the senior credit facility and second lien notes of $66.9 million.

OTHER INFORMATION

In this press release, the Company refers to several non-US GAAP financial measures, including Adjusted EBITDA, DCF and G&A Payable in Cash. Management believes Adjusted EBITDA and DCF are good financial indicators of the Company's performance and ability to internally generate operating funds. DCF should not be considered an alternative to net cash provided by operating activities, as defined by US GAAP. Adjusted EBITDA should not be considered an alternative to net loss applicable to common stock, as defined by US GAAP. G&A Payable in Cash should not be considered an alternative to general and administrative expense, as defined by US GAAP. Management believes that all of these non-US GAAP financial measures provide useful information to investors because they are monitored and used by Company management and widely used by professional research analysts in the valuation and investment recommendations of companies within the oil and gas exploration and production industry. 

Certain statements in this news release regarding future expectations and plans for future activities may be regarded as "forward looking statements" within the meaning of the Securities Litigation Reform Act.  They are subject to various risks, such as financial market conditions, changes in commodities prices and costs of drilling and completion, operating hazards, drilling risks, and the inherent uncertainties in interpreting engineering data relating to underground accumulations of oil and gas, as well as other risks discussed in detail in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 and other subsequent filings with the Securities and Exchange Commission. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.

Goodrich Petroleum is an independent oil and natural gas exploration and production company listed on the NYSE American under the symbol "GDP".

GOODRICH PETROLEUM CORPORATION

SELECTED INCOME AND PRODUCTION DATA

(In thousands, except per share amounts) (Unaudited)












Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended



September 30, 2018


September 30, 2017


September 30, 2018


September 30, 2017

Volumes









Natural gas (MMcf)

7,479


3,235


15,601


7,863


Oil and condensate (MBbls)

52


71


169


237


Mmcfe - Total

7,789


3,661


16,617


9,285











Mcfe per day

84,663


39,793


60,868


34,011










Oil and natural gas revenues

$                     24,331


$                     12,964


$                    53,958


$                    34,490

Other

89


255


131


607



$                     24,420


$                     13,219


$                    54,089


$                    35,097










Operating Expenses









Lease operating expense (LOE excluding workovers - $2,267, $1,999, $6,659, $6,383, respectively)

2,588


2,184


7,619


9,445


Production and other taxes

959


(15)


2,268


1,068


Transportation and processing

3,344


1,624


6,742


4,668


Depreciation, depletion and amortization

7,922


3,516


16,934


8,893


General and administrative (payable in cash - $3,095, $1,885, $10,024, $6,444, respectively)

4,644


3,749


14,643


11,984


Other

(60)


(43)


105


(43)

Operating income (loss)

5,023


2,204


5,778


(918)










Other income (expense)









Interest expense (payable in cash - $281, $352, $529, $883, respectively)

(3,105)


(2,529)


(8,510)


(7,068)


Interest income (expense) and other

1


1,250


110


1,271


Loss (gain) on commodity derivatives not designated as hedges

(237)


(313)


(3,392)


193



(3,341)


(1,592)


(11,792)


(5,604)










Reorganization gain (loss), net

(16)


108


(305)


303










Income (loss) before income taxes

1,666


720


(6,319)


(6,219)

Income tax expense 

-


-


-


-

Net income (loss)

$                       1,666


$                          720


$                    (6,319)


$                    (6,219)





























Discretionary cash flow (see non-US GAAP reconciliation) (1)

$                     13,825


$                       8,339


$                    26,297


$                    13,621











Adjusted EBITDA (see calculation and non-US GAAP reconciliation) (2)

$                     14,286


$                       8,798


$                    26,597


$                    14,578










Weighted average common shares outstanding - basic

11,762


10,522


11,538


9,765

Weighted average common shares outstanding - diluted (3)

14,046


13,274


11,538


9,765










Income (loss) per share









Net income (loss) - basic

$                         0.14


$                         0.07


$                       (0.55)


$                       (0.64)


Net income (loss) - diluted

$                         0.12


$                         0.05


$                       (0.55)


$                       (0.64)


(1) Discretionary cash flow is defined as net cash provided by operating activities before changes in operating assets and liabilities. Management believes that the non-US GAAP measure of discretionary cash flow is useful as an indicator of an oil and natural gas exploration and production company's ability to internally fund exploration and development activities and to service or incur additional debt. The company has also included this information because changes in operating assets and liabilities relate to the timing of cash receipts and disbursements which the company may not control and may not relate to the period in which the operating activities occurred. Operating cash flow should not be considered in isolation or as a substitute for net cash provided by operating activities prepared in accordance with US GAAP. 


(2) Adjusted EBITDA is defined as earnings before interest expense, income and similar taxes, DD&A, share based compensation expense and impairment of oil and natural gas properties. In calculating adjusted EBITDA, gains on reorganization, gains/losses on commodity derivatives not designated as hedges net of cash received or paid in settlement of derivative instruments are also excluded. Other excluded items include interest income and other, reorganization and any other non-recurring non-cash gains or losses.


(3) Fully diluted shares excludes approximately 1.9 million and 4.0 million potentially dilutive instruments that were anti-dilutive for the three and nine months ended September 30, 2018, respectively, and 1.9 million and 4.6 million potentially dilutive instruments that were anti-dilutive for the three and nine months ended September 30, 2017. 

 

GOODRICH PETROLEUM CORPORATION

Per Unit Sales Prices and Costs (Unaudited)












Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended



September 30, 2018


September 30, 2017


September 30, 2018


September 30, 2017










Average sales price per unit:









Oil (per Bbl)









     Including net cash received from/paid to settle oil derivatives 

$                       61.37


$                       47.85


$                      59.25


$                      48.67


     Excluding net cash received from/paid to settle oil derivatives

$                       72.29


$                       47.85


$                      69.05


$                      48.67


Natural gas (per Mcf)









     Including net cash received from/paid to settle natural gas derivatives

$                         2.80


$                         3.01


$                        2.77


$                        2.96


     Excluding net cash received from/paid to settle natural gas derivatives

$                         2.75


$                         2.96


$                        2.71


$                        2.92


Oil and natural gas (per Mcfe)









     Including net cash received from/paid to settle oil and natural gas derivatives

$                         3.10


$                         3.59


$                        3.20


$                        3.75


     Excluding net cash received from/paid to settle oil and natural gas derivatives

$                         3.12


$                         3.54


$                        3.25


$                        3.71



















Costs Per Mcfe









Lease operating expense ($0.29, $0.55, $0.40 and $0.69 Per Mcfe excluding workovers, respectively)

$                         0.33


$                         0.60


$                        0.46


$                        1.02


Production and other taxes

$                         0.12


$                              -


$                        0.14


$                        0.12


Transportation and processing

$                         0.43


$                         0.44


$                        0.41


$                        0.50


Depreciation, depletion and amortization

$                         1.02


$                         0.96


$                        1.02


$                        0.96


General and administrative (payable in cash - $0.40, $0.51, $0.60, and $0.69, respectively)

$                         0.60


$                         1.02


$                        0.88


$                        1.29


Other

$                        (0.01)


$                        (0.01)


$                        0.01


$                             -



$                         2.49


$                         3.01


$                        2.91


$                        3.88


Note: Amounts on a per Mcfe basis may not total due to rounding.

 

GOODRICH PETROLEUM CORPORATION

Cash Flow Data (In Thousands) (Unaudited)









Reconciliation of discretionary cash flow and net cash provided by operating activities










Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended


September 30, 2018


September 30, 2017


September 30, 2018


September 30, 2017









Net cash provided by operating activities (US GAAP)

24,080


285


36,735


16,413

Net changes in working capital

10,255


(8,054)


10,438


2,792

Discretionary cash flow (1)

$                     13,825


$                       8,339


$                    26,297


$                    13,621


























Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended


September 30, 2018


September 30, 2017


September 30, 2018


September 30, 2017

CASH FLOWS FROM OPERATING ACTIVITIES:








Net income (loss)

$                       1,666


$                          720


$                    (6,319)


$                    (6,219)

Adjustments to reconcile net loss to net cash provided by operating activities








Depletion, depreciation and amortization

7,922


3,516


16,934


8,893

(Gain) loss on derivatives not designated as hedges

237


313


3,392


(193)

Net cash received (paid) for settlement of derivative instruments

(196)


166


(737)


313

Share based compensation (non-cash) 

1,597


1,715


4,764


5,093

Amortization of finance cost, debt discount, paid in-kind interest and accretion

2,824


2,159


7,981


6,134

Gain from material transfers & inventory write-downs

(241)


(141)


(23)


(214)

Reorganization items, net

16


(108)


305


(186)

Change in assets and liabilities:








Accounts receivable, trade and other, net of allowance

1,063


(1,476)


465


281

Accrued oil and gas revenue

(1,938)


1,106


(4,297)


(1,520)

Prepaid expenses and other

(211)


649


(231)


250

Accounts payable

9,028


(7,907)


12,964


3,304

Accrued liabilities

2,313


(427)


1,537


477

 Net cash provided by operating activities

24,080


285


36,735


16,413

CASH FLOWS FROM INVESTING ACTIVITIES:








Capital expenditures

(32,005)


(4,179)


(85,105)


(21,698)

Proceeds from sale of assets

-


463


26,920


463

 Net cash used in investing activities

(32,005)


(3,716)


(58,185)


(21,235)

CASH FLOWS FROM FINANCING ACTIVITIES:








Principal payments of bank borrowings

-


-


(16,723)


-

Proceeds from bank borrowings

9,000


-


15,000


-

Net receipts (payments) related to Convertible Second Lien Notes

-


2


3


(168)

Issuance cost, net

(43)


104


(53)


(174)

Other

(830)


-


(838)


-

 Net cash provided by (used in) financing activities

8,127


106


(2,611)


(342)

Net increase (decrease) in cash and cash equivalents

202


(3,325)


(24,061)


(5,164)

Cash and cash equivalents, beginning of period

1,729


35,011


25,992


36,850

Cash and cash equivalents, end of period

$                       1,931


$                     31,686


$                      1,931


$                    31,686

 

GOODRICH PETROLEUM CORPORATION

Other Information and Reconciliations (In Thousands) (Unaudited)










Supplemental Balance Sheet Data



As of









September 30, 2018

















Cash and cash equivalents

$                       1,931

















Long-term debt, net

$                     61,861








Unamortized debt discount and issuance cost

5,077








Total principal amount of debt

$                     66,938
















Reconciliation of Net income (loss) to Adjusted EBITDA












Three Months Ended


Pro Forma Three
Months Ended


Nine Months Ended


Pro Forma Nine
Months Ended



September 30, 2018


September 30, 2017


September 30, 2018


September 30, 2017











Net income (loss) (US GAAP)

$                       1,666


$                          720


$                    (6,319)


$                    (6,219)


Depreciation, depletion and amortization ("DD&A")

7,922


3,516


16,934


8,893


Stock compensation expense (non-cash)

1,597


1,715


4,763


5,093


Interest expense

3,105


2,529


8,510


7,068


(Gain) loss on derivatives not designated as hedges

237


313


3,392


(193)


Net cash received in (paid for) settlement of derivative instruments

(196)


166


(737)


313


Other excluded items **

(45)


(161)


54


(377)


     Adjusted EBITDA (2)

$                     14,286


$                       8,798


$                    26,597


$                    14,578











**  Other excluded items include interest income, reorganization items and other non-recurring income and expense.










Derivative Activity












Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended



September 30, 2018


September 30, 2017


September 30, 2018


September 30, 2017


Change in fair value of derivatives not designated as hedges

$                           (41)


$                         (479)


$                    (2,655)


$                        (120)


Net cash received in (paid for) settlement of derivative instruments

(196)


166


(737)


313


Net gain (loss) on derivatives not designated as hedges

$                         (237)


$                         (313)


$                    (3,392)


$                         193










Reconciliation of interest payable in cash to interest expense












Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended



September 30, 2018


September 30, 2017


September 30, 2018


September 30, 2017











Interest expense (GAAP)

$                       3,105


$                       2,529


$                      8,510


$                      7,068


Amortization of debt discount and paid-in-kind interest

(2,824)


(2,177)


(7,981)


(6,185)


Interest payable in cash

$                          281


$                          352


$                         529


$                         883

 

GOODRICH PETROLEUM CORPORATION

Other Information and Reconciliations continued (In Thousands) (Unaudited)










Reconciliation of capital expenditures











Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended


September 30, 2018


September 30, 2017


September 30, 2018


September 30, 2017

Net cash used in investing activities (US GAAP)

$                   (32,005)


$                     (3,716)


$                  (58,185)


$                  (21,235)

Cash calls utilized

(482)


-


(1,193)


(415)

Inventory utilized

(1,234)


(398)


(1,720)


(972)

Cash proceeds from sale of assets

-


(463)


(26,920)


(463)

Miscellaneous capitalized costs & ARO adjustments

(288)


(29)


(779)


(93)

Cost incurred in prior period and paid in current period

7,706


2,505


10,511


648

Capital accrual at period end

(12,038)


(3,266)


(12,038)


(3,266)

Total capital expenditures

$                   (38,341)


$                     (5,367)


$                  (90,324)


$                  (25,796)



















Reconciliation of drilling and completion capital expenditures used in finding and development cost per Mcfe calculations












Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended



September 30, 2018


September 30, 2017


September 30, 2018


September 30, 2017

Total capital expenditures (per above)

$                   (38,341)


$                     (5,367)


$                  (90,324)


$                  (25,796)

Capitalized internal costs

841


781


2,483


2,305

Total capital expenditures, net of internal costs

$                   (37,500)


$                     (4,586)


$                  (87,841)


$                  (23,491)










Reconciliation of general & administrative expense payable in cash to general and administrative expense (unaudited)












Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended



September 30, 2018


September 30, 2017


September 30, 2018


September 30, 2017

General & administrative expense (GAAP)

$                       4,644


$                       3,749


$                    14,643


$                    11,984

Share based compensation

(1,573)


(986)


(4,692)


(2,969)

Bonus share based compensation

-


(729)


-


(2,124)

Non-cash rent expense

24


(149)


73


(447)

General & administrative expense payable in cash

$                       3,095


$                       1,885


$                    10,024


$                      6,444


Oil and natural gas production (Mcfe)

7,789


3,661


16,617


9,285


General and administrative expense payable in cash per Mcfe

$                      0.40


$                      0.51


$                     0.60


$                     0.69

 

SOURCE Goodrich Petroleum Corporation

For further information: Robert Turnham, (713) 780-9494


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