People | Job Cuts / Downsize / Layoff | Capital Markets | Capital Expenditure | Drilling Program - Wells | Drilling Program-Rig Count | Capital Expenditure - 2019

Alta Mesa Cuts All Rigs in Q1 2019, Details Capital Plans; Cuts Workforce

By: Alta Mesa Resources, Inc

Share Print Bookmark    |    Monday,February 25,2019

Alta Mesa Resources, Inc. has detailed its 2019 capital plan as well as announced a reduction in its workforce as it looks to cut costs.

The company did not disclose how many cuts had been made to its workforce, however, multiple reports estimate over 50 employees were cut.

2019 Outlook - Cuts All Rigs in Q1; Will Reactivate Rigs Starting in Q2

• 2019 Capex: $190-210 million (down -73% from ~$750 million for 2018)

• 2019 Production: 29.5-31.5 MBOEPD (down -14% from ~35 MBOEPD in 2018)

Alta Mesa Upstream entered 2019 with six rigs actively working but reduced the active rig count to zero by the end of January. 

In late February, Alta Mesa Upstream began taking steps to resume drilling operations. Alta Mesa Upstream expects to utilize two rigs for March, April and May of 2019 and three rigs from June through December of 2019.

Year-to-date in 2019, Alta Mesa Upstream has brought eight wells on production. These came on production during January and February as completions activity focused on wells that were in process at year-end 2018. We have identified an additional 16 drilled and uncompleted wells that we intend to have on production by the end of the second quarter of 2019.The capital forecasts and production outlook in the table below reflect these assumptions. The Company continues to monitor well costs, well productivity and commodity prices and has significant flexibility to modify the drilling plans going forward. The overhead guidance below does not reflect any potential severance or other costs associated with our recent reduction in force.

2019 upstream activity will be focused on drilling and completing wells at a density of four to five wells per section. Alta Mesa Upstream will target drilling three infill wells in sections with an existing unit well and five wells in sections with no wells yet drilled. The drilling and completion designs for 2019 are targeting $3.2 to $3.5 million per developed well. The lower costs compared to 2018 will be driven by returning to gas lift as the primary lift method, reverting to a completions design more in line with our 2017 well designs, which had fewer stages, and capturing service cost savings from the re-bidding of services in the current market.