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Goodrich Lowers 2018 Guidance Due to 'Completion Delays'; Preps to Add Second Rig

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   |    Tuesday,May 15,2018

[Summary: Goodrich reported its Q1 2018 results.

Highlights:

- Q1 2018 production of 37,000 Mcfe/d (up +42% YOY and up +19% from 4Q17)

  • Lowers Production Guidance: Due to completion delays, the Company is revising its full year production guidance to an average of 65,000 to 75,000 Mcfe per day, but maintaining its 2018 Exit Rate of 100,000 Mcfe per day.

- Revenues totaled $11.8 million in the quarter, versus $9.4 million in the prior year period.

  • Operating Loss: Operating loss, defined as revenues minus operating expenses, totaled $1.3 million in the quarter, versus an operating loss of $3.5 million in the prior year period.

- Agreed to sell portion of TMS interests for $3.3 million

- Plans to add second rig

Drilling Activity

Red River Parish, LA

Cason-Dickson 14-23 1H well (92% WI):

  • 64 stage frac
  • 8,000' lateral length
  • 4,000 lbs proppant/ft

Cason-Dickson 14-23 2H well (86% WI):

  • 33 stage frac
  • 3,000' lateral length
  • 5,000 lbs proppant/ft

Both wells are expected to commence flowback today with initial production rates on both wells expected to be released within the next two weeks.

The Company is currently running one rig, which is drilling its Wurtsbaugh 35 No. 1 (72% WI) well in the Bethany-Longstreet field. The well, which will be an earn-in well under a farmout agreement, is planned for a 4,600 foot lateral with a frac date currently scheduled for June. A second rig is expected to commence operations in late June to drill the Harris-Dickson 14-23 3H (estimated 95% WI) well, which is planned as an approximate 7,000 foot lateral to re-drill the remainder of the lateral originally planned for the Cason-Dickson 14-23 2H well.]

 

 

 

 

 

 

ORIGINAL RELEASE:

Goodrich Petroleum Corporation (NYSE MKT: GDP) (the "Company") today announced financial results and an operational update for the first quarter ended March 31, 2018.

RECENT DEVELOPMENTS

The Company has entered into an agreement, subject to definitive documentation, to sell a portion of its interest in the western area of the Company's Tuscaloosa Marine Shale acreage position in East and West Feliciana Parishes, Louisiana for $3.3 million. The transaction is expected to close on or before June 15, 2018.

The Company has reached an agreement, subject to definitive documentation, with respect to an acreage swap on a portion of the Company's leasehold in the Bethany-Longstreet Field of Caddo Parish, Louisiana, which would add ten 10,000 foot laterals to its operated inventory.

In addition, the Company has reached an agreement, subject to definitive documentation, to amend a gas gathering agreement with the midstream provider on what has historically been its non-operated acreage in the Bethany-Longstreet Field which will reduce the gathering fees from $0.53 (operated) - $0.75 (non-operated) per Mcf to a range of $0.26 (operated) - $0.60 (non-operated) per Mcf, dependent on volumes. Gathering fees on the remainder of the Company's core Haynesville acreage in North Louisiana will continue to be $0.22 to $0.37 per Mcf, dependent on the area. This amended gathering agreement is expected to materially reduce future gathering and transportation expense as the Company grows production volumes from development of its Haynesville Shale acreage.

OPERATIONAL UPDATE

The Cason-Dickson 14-23 1H well (92% WI) and Cason-Dickson 14-23 2H well (86% WI) in Red River Parish, Louisiana were successfully fracture stimulated with 64 and 33 stages, respectively. The Cason-Dickson 14-23 1H well was completed with a lateral length of approximately 8,000 feet and stimulated with approximately 4,000 pounds of proppant per foot. The Cason-Dickson 14-23 2H well was completed with a lateral length of approximately 3,000 feet and stimulated with approximately 5,000 pounds of proppant per foot. The completed lateral length in the 2H well was reduced versus the planned lateral length due to a downhole equipment malfunction which obstructed a portion of the lateral. All future extended reach laterals will use a different system to prepare the lateral for completion to eliminate this issue going forward. In addition, the downhole malfunction created an additional delay in the completion of the Cason-Dickson 14-23 2H and flowback of the Cason-Dickson 14-23 1H, however both wells are expected to commence flowback today with initial production rates on both wells expected to be released within the next two weeks.

The Company is currently running one rig, which is drilling its Wurtsbaugh 35 No. 1 (72% WI) well in the Bethany-Longstreet field. The well, which will be an earn-in well under a farmout agreement, is planned for a 4,600 foot lateral with a frac date currently scheduled for June. A second rig is expected to commence operations in late June to drill the Harris-Dickson 14-23 3H (estimated 95% WI) well, which is planned as an approximate 7,000 foot lateral to re-drill the remainder of the lateral originally planned for the Cason-Dickson 14-23 2H well.

The Company has participated for an approximate 7.5% working interest in two non-operated wells in the Bethany-Longstreet field of Caddo Parish, Louisiana that were completed in April at a blended average peak rate of approximately 35,000 Mcfe per day from an average of approximately 9,700 feet of lateral.

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

1Q18 FINANCIAL RESULTS

REVENUES

Revenues totaled $11.8 million in the quarter, versus $9.4 million in the prior year period. Average realized price per unit was $3.57per Mcfe ($2.68 per Mcf of gas and $65.00 per barrel of oil) in the quarter, versus $4.05 per Mcfe in the prior year period ($2.89 per Mcf of gas and $50.12 per barrel of oil).

PRODUCTION

Production totaled approximately 3.3 Bcfe in the quarter, or an average of approximately 37,000 Mcfe per day, versus 2.3 Bcfe, or average daily production of approximately 26,000 Mcfe per day, in the prior year period. Natural gas production totaled 3.0 Bcf in the quarter (89% of total production), versus 1.8 Bcf (79% of total production) during the prior year period. Natural gas production for the quarter was positively impacted by three operated Haynesville Shale Trend wells completed late in the first quarter, but negatively impacted by shut-ins due to offset fracs of approximately 4,300 Mcfe per day for the quarter, as well as frac delays. Production for the second quarter to date has averaged 47,000 Mcfe per day (92% natural gas) prior to production additions from the Cason-Dickson wells which are expected to increase Company production to in excess of 70,000 Mcfe per day. Due to completion delays described herein, the Company is revising its full year production guidance to an average of 65,000 to 75,000 Mcfe per day, but maintaining its 2018 Exit Rate of 100,000 Mcfe per day. The Company is raising its 2019 guidance to growth of 100-120% over the midpoint of 2018 guidance.

CAPITAL EXPENDITURES

Capital expenditures totaled $21.0 million in the quarter, of which $20.6 million was spent on drilling and completion costs and $0.4on other expenditures, versus $6.2 million in the prior year period of which $6.0 million was spent on drilling and completion costs and $0.2 million on other expenditures. All of the quarter's total capital expenditures were spent in the Haynesville Shale Trend. The Company anticipates capital expenditures of approximately $30 million in the second quarter and reaffirms its full year preliminary capital budget of $85-95 million. Preliminary capital expenditure plans for 2019 also remain unchanged at a range of $125 - $150 million and focused on the Core of the Haynesville Shale.

CASH FLOW

Adjusted EBITDA was $3.4 million in the quarter and discretionary cash flow ("DCF"), defined as net cash provided by operating activities before changes in working capital, was $3.2 million in the quarter versus Adjusted EBITDA of $0.7 million and DCF of $0.4 million in the prior year period.

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

NET LOSS

The Company announced a net loss of $5.3 million in the quarter, or $0.47 per basic share, versus a net loss of $5.7 million or $0.63per basic share in the prior year period.

OPERATING EXPENSES

Lease operating expense ("LOE") was $2.6 million in the quarter or $0.77 per Mcfe, versus $4.3 million, or $1.86 per Mcfe in the prior year period. LOE for the quarter included $0.3 million, or $0.10 per Mcfe, for workovers, versus $2.1 million or $0.92 per Mcfe in the prior year period. Lease operating expense for the quarter excluding workovers was $2.2 million or $0.67 per Mcfe versus $2.2 millionor $0.94 per Mcfe in the prior year period. Per unit LOE is expected to continue to fall as we increase production from the Haynesvillewhich carries a very low per unit LOE.

Production and other taxes were $0.6 million in the quarter or $0.19 per Mcfe, versus $0.7 million, or $0.28 per Mcfe in the prior year period.

Transportation and processing expense was $1.3 million in the quarter, or $0.40 per Mcfe, versus $1.2 million or $0.51 per Mcfe in the prior year period.

Depreciation, depletion and amortization ("DD&A") expense was $3.5 million in the quarter or $1.04 per Mcfe, versus $2.3 million, or $0.99 per Mcfe in the prior year period.

General and administrative expense was $5.2 million in the quarter, or $1.57 per Mcfe, which includes non-cash expense of $1.7 million, or $0.51 per Mcfe, for stock based compensation versus $4.5 million, or $1.92 per Mcfe, in the prior year period which included $1.0 million for stock based compensation.

OPERATING LOSS

Operating loss, defined as revenues minus operating expenses, totaled $1.3 million in the quarter, versus an operating loss of $3.5 million in the prior year period.

INTEREST EXPENSE

Interest expense totaled $2.7 million in the quarter, or $0.81 per Mcfe, which includes cash interest of $0.2 million incurred on the credit facility and non-cash interest of $2.5 million incurred on the Company's second lien notes, which includes $1.6 million paid in-kind interest and $0.9 million amortization of debt discount. Interest expense for the prior year period totaled $2.2 million, which included cash interest of $0.3 million incurred on the credit facility and non-cash interest of $1.9 million incurred on the Company's second lien notes, which included $1.4 million paid in-kind interest and $0.5 million amortization of debt discount.

CRUDE OIL AND NATURAL GAS DERIVATIVES

The Company had a loss of $1.0 million on its derivatives not designated as hedges in the quarter, which is comprised of a loss of $0.6 million representing the change of the fair value of our open natural gas and oil derivative contracts as well as a $0.4 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, which was comprised of a loss of $0.4 million representing the change in fair value of our open natural gas and oil derivative contracts, offset by a $0.2 million realized gain on cash settlement.

The Company has added natural gas swaps through March 31, 2020 at $2.81 per Mcf, with new hedges shown on the accompanying table at the end of this press release.

BALANCE SHEET

The Company exited the quarter with $9.7 million of cash, no borrowings under the Company's senior credit facility (which has a current borrowing base of $40 million), and $48.6 million of funded debt. The Company expects a higher borrowing base upon redetermination prior to the mid-year review.

OTHER INFORMATION

In this press release, the Company refers to several non-US GAAP financial measures, including Adjusted EBITDA and DCF. 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. 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.

Initial production rates are subject to decline over time and should not be regarded as reflective of sustained production levels. In particular, production from horizontal drilling in shale oil and natural gas resource plays and tight natural gas plays that are stimulated with extensive pressure fracturing are typically characterized by significant early declines in production rates.

Unless otherwise stated, oil production volumes include condensate.

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 MKT under the symbol "GDP".

GOODRICH PETROLEUM CORPORATION

SELECTED INCOME AND PRODUCTION DATA

(In thousands, except per share amounts)

         
   

Three Months Ended

 

Three Months Ended

   

March 31, 2018

 

March 31, 2017

Volumes

     
 

Natural gas (MMcf)

2,952

 

1,833

 

Oil and condensate (MBbls)

61

 

82

 

Mmcfe - Total

3,316

 

2,324

         
 

Mcfe per day

36,844

 

25,822

         

Oil and natural gas revenues

$ 11,843

 

$ 9,411

Other

(9)

 

2

   

$ 11,834

 

$ 9,413

         

Operating Expenses

     
 

Lease operating expense (LOE excluding workovers - $2,218 and $2,163, respectively)

2,566

 

4,311

 

Production and other taxes

640

 

659

 

Transportation and processing

1,312

 

1,176

 

Depreciation, depletion and amortization

3,452

 

2,294

 

General and administrative (non-cash stock compensation - $1,675 and $1,728)

5,196

 

4,463

Operating loss

(1,332)

 

(3,490)

         

Other income (expense)

     
 

Interest expense (payable in cash - $173 and $252, respectively)

(2,673)

 

(2,179)

 

Interest income (expense) and other

(7)

 

9

 

Loss on commodity derivatives not designated as hedges

(981)

 

(260)

   

(3,661)

 

(2,430)

         

Reorganization gain (loss), net

(331)

 

195

         

Loss before income taxes

(5,324)

 

(5,725)

Income tax expense

-

 

-

Net loss

$ (5,324)

 

$ (5,725)

         
         
         
 

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

$ 3,232

 

$ 445

         
 

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

$ 3,411

 

$ 674

         

Weighted average common shares outstanding - basic

11,218

 

9,109

Weighted average common shares outstanding - diluted (3)

11,218

 

9,109

         

Loss per share

     
 

Net loss - basic

$ (0.47)

 

$ (0.63)

 

Net loss - diluted

$ (0.47)

 

$ (0.63)

 

(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 and net cash received or paid in settlement of derivative instruments are also excluded. Other excluded items include interest income and other, and any non-recurring non-cash gains or losses.

 

(3) Fully diluted shares excludes approximately 4.0 million potentially dilutive instruments that were anti-dilutive for the three months ended March 31, 2018 and 6.0 million potentially dilutive instruments that were anti-dilutive for the three months ended March 31, 2017.

GOODRICH PETROLEUM CORPORATION

Per Unit Sales Prices and Costs

         
   

Three Months Ended

 

Three Months Ended

   

March 31, 2018

 

March 31, 2017

         

Average sales price per unit:

     
 

Oil (per Bbl)

     
 

Including net cash received from/paid to settle oil derivatives

$ 57.99

 

$ 50.12

 

Excluding net cash received from/paid to settle oil derivatives

$ 65.00

 

$ 50.12

 

Natural gas (per Mcf)

     
 

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

$ 2.69

 

$ 2.97

 

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

$ 2.68

 

$ 2.89

 

Oil and natural gas (per Mcfe)

     
 

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

$ 3.45

 

$ 4.11

 

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

$ 3.57

 

$ 4.05

         
         

Costs Per Mcfe

     
 

Lease operating expense ($0.67 and $0.94 Per Mcfe excluding Workovers, respectively)

$ 0.77

 

$ 1.86

 

Production and other taxes

$ 0.19

 

$ 0.28

 

Transportation and processing

$ 0.40

 

$ 0.51

 

Depreciation, depletion and amortization

$ 1.04

 

$ 0.99

 

General and administrative

$ 1.57

 

$ 1.92

   

$ 3.97

 

$ 5.55

 

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

GOODRICH PETROLEUM CORPORATION

Selected Cash Flow Data (In Thousands):

         
         

Reconciliation of discretionary cash flow and net cash provided by operating activities (unaudited)

         
 

Three Months Ended

 

Three Months Ended

 

March 31, 2018

 

March 31, 2017

       

Net cash provided by operating activities (US GAAP)

6,256

 

4,665

Net changes in working capital

3,024

 

4,220

Discretionary cash flow

$ 3,232

 

$ 445

         

Supplemental Balance Sheet Data (unaudited)

   

As of

   
   

March 31, 2018

   
         
 

Cash and cash equivalents

$ 9,731

   
         
 

Long-term debt, net

$ 41,464

   
 

Unamortized debt discount and issuance cost

7,138

   
 

Total principal amount of debt

$ 48,602

   
         

Reconciliation of Net income (loss) to Adjusted EBITDA

         
   

Three Months Ended

 

Three Months Ended

   

March 31, 2018

 

March 31, 2017

         
 

Net loss (US GAAP)

$ (5,324)

 

$ (5,725)

 

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

3,452

 

2,294

 

Stock compensation expense (non-cash)

1,675

 

1,728

 

Interest expense

2,673

 

2,179

 

Loss on derivatives not designated as hedges

981

 

260

 

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

(384)

 

142

 

Other excluded items **

338

 

(204)

 

Adjusted EBITDA (2)

$ 3,411

 

$ 674

         
 

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

         

Other Information and Reconciliations

         
 

Derivative Activity

     
         
   

Three Months Ended

 

Three Months Ended

   

March 31, 2018

 

March 31, 2017

 

Change in fair value of derivatives not designated as hedges

$ (597)

 

$ (402)

 

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

(384)

 

142

 

Net loss on derivatives not designated as hedges

$ (981)

 

$ (260)

         

Reconciliation of interest payable in cash to interest expense (unaudited)

         
   

Three Months Ended

 

Three Months Ended

   

March 31, 2018

 

March 31, 2017

         
 

Interest expense (GAAP)

$ 2,673

 

$ 2,179

 

Amortization of debt discount and paid-in-kind interest

(2,500)

 

(1,927)

 

Interest payable in cash

$ 173

 

$ 252

GOODRICH PETROLEUM CORPORATION

Other Information and reconciliations continued (In Thousands):

         

Reconciliation of capital expenditures (unaudited)

         
 

Three Months Ended

 

Three Months Ended

 

March 31, 2018

 

March 31, 2017

Net cash used in investing activities (US GAAP)

$ (5,781)

 

$ (3,384)

Cash calls utilized

-

 

(294)

Inventory utilized

(204)

 

-

Cash proceeds from sale of assets

(23,209)

 

-

Miscellaneous capitalized costs

(177)

 

-

Cost incurred in prior period and paid in current period

10,511

 

648

Capital accrual at period end

(2,151)

 

(3,209)

Total capital expenditures

$ (21,011)

 

$ (6,239)

 
         

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

         
   

Three Months Ended

 

Three Months Ended

   

March 31, 2018

 

March 31, 2017

Total capital expenditures (per above)

$ (21,011)

 

$ (6,239)

Capitalized internal costs

677

 

562

Drilling and completion capital expenditures

$ (20,334)

 

$ (5,677)

GOODRICH PETROLEUM CORPORATION

CRUDE OIL AND NATURAL GAS DERIVATIVES

         

Period

 

Natural Gas Volumes
(MMbtu/day)

 

Natural Gas Price

1Q19

 

16,000

 

$ 2.814

2Q19

 

32,500

 

$ 2.814

3Q19

 

32,500

 

$ 2.814

4Q19

 

32,500

 

$ 2.814

1Q20

 

40,000

 

$ 2.814

 View original content:http://www.prnewswire.com/news-releases/goodrich-petroleum-announces-recent-developments-operational-update-and-first-quarter-2018-financial-results-300648080.html

SOURCE Goodrich Petroleum Corporation


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May 15, 2018
Key Slides found in this Presentation
Capital & Finance
        Rates of Return/ IRR
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