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Alta Mesa Reports First Quarter 2018 Results

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HOUSTON, May 21, 2018 (GLOBE NEWSWIRE) -- Alta Mesa Resources, Inc., (NASDAQ:AMR) ("Alta Mesa Resources", the "Company" or "Alta Mesa") today announced first quarter 2018 unaudited financial and operational results for its wholly owned subsidiaries, Alta Mesa Holdings, LP ("AMHLP") and Kingfisher Midstream, LLC ("Kingfisher").

Financial Highlights

  • Net Loss of $33.5 million in the Successor Period*; $13.2 million of which is attributable to the Company's Class A Common Stockholders, and a Net Loss of $14.9 million in the 2018 Predecessor Period*

  • Adjusted EBITDAX of $35.5 million in the Successor Period*, and $14.2 million in the 2018 Predecessor Period*

  • Increased Alta Mesa Holdings Upstream Borrowing Base by $50 million to $400 million

  • Ended quarter with $261.1 million in cash for total liquidity of $760 million; pro forma for increased Upstream Borrowing Base liquidity was approximately $809.1 million

Hal Chappelle, Alta Mesa's Chief Executive Officer, stated, "From the first day of our announced business combination we've been focused on creating value for our stakeholders and our Q1 production and Adjusted EBITDAX reflects that we have not skipped a beat in our STACK development program." Chappelle continued; "With the business combination behind us, we are focused on driving our 2018 plan for both the upstream and midstream businesses."

First Quarter 2018 Financial and Production Summary

Net loss for the Company's Class A Common Stockholders during the Successor Period was $13.2 million, or ($0.08) per basic and diluted share. Net loss during the 2018 Predecessor Period was $14.9 million.  Adjusted earnings before interest, income taxes, depreciation, depletion and amortization and exploration costs and other items ("Adjusted EBITDAX") was $35.5 million for the Successor Period and $14.2 million for the Predecessor Period. Adjusted EBITDAX is a Non-GAAP financial measure and is described in the attached table under "Non-GAAP Financial Information and Reconciliation."

Total production for the first quarter of 2018 was 2,163 MBOE, or an average of 24.0 MBOE per day, up 24%, compared to 1,737 MBOE or 19.3 MBOE per day in the 2017 Predecessor Period. The increase in production is primarily a result of the continued successful development of AMHLP's STACK play.

Total Exploration and Production Segment costs for the Successor Period, which includes lease operating expense, marketing and transportation costs, production and ad valorem taxes and workover expenses, were $16.6 million, or $13.26 per BOE.

General and administrative costs for the Successor Period were $34.6 million including non-recurring equity based compensation expense of $3.5 million and business combination organization expense of $25.3 million. When adjusted for these non-recurring, non-cash items, general and administrative costs for the Successor Period would have been $5.8 million.

Borrowing Base Increased

AMHLP's recently completed its regularly scheduled semi-annual redetermination process and its borrowing base under the senior secured revolving credit facility increased from $350 million to $400 million. This increase reflects the reserve growth from the AMHLP's existing STACK assets. AMHLP is in compliance with all of the financial covenants associated with the credit facility and the next scheduled redetermination of the borrowing base is October 1, 2018.

About Alta Mesa Resources, Inc
Alta Mesa Resources, Inc., is an independent energy company focused on the development and acquisition of unconventional oil and natural gas reserves in the Anadarko Basin in Oklahoma, and through Kingfisher Midstream, LLC, provides best-in-class midstream energy services, including crude oil and gas gathering, processing and marketing to producers in the STACK play.

FOR MORE INFORMATION CONTACT: Lance L. Weaver (281) 943-5597 lweaver@altamesa.net


 
ALTA MESA RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) 
(in thousands, except share and per share data)
 
                     
  Successor     Predecessor  
  February 9, 2018     January 1, 2018   Three  
  Through     Through   Months Ended  
  March 31, 2018     February 8, 2018   March 31, 2017  
OPERATING REVENUES AND OTHER                    
Oil $  40,278       $  30,972     $  46,940    
Natural gas    5,210          4,276        9,591    
Natural gas liquids    4,714          4,000        7,072    
Product sales    8,369          —        —    
Gathering and processing revenue    3,411          —        —    
Other revenues    555          888        1,234    
Total operating revenues    62,537          40,136        64,837    
Gain on sale of assets and other    5,979          —        —    
Gain (loss) on derivative contracts    (22,646 )        7,298        30,242    
Total operating revenues and other    45,870          47,434        95,079    
OPERATING EXPENSES                    
Lease operating expense    8,317          4,485        11,010    
Marketing and transportation expense    1,021          3,725        5,662    
Plant operating expense    587          —        —    
Product expense    8,220          —        —    
Gathering and processing expense    2,338          —        —    
Production taxes    1,415          953        1,266    
Workover expense    1,245          423        588    
Exploration expense    4,955          3,633        5,047    
Depreciation, depletion, and amortization expense    15,577          11,784        18,978    
Impairment expense    —          —        1,188    
Accretion expense    102          39        96    
General and administrative expense    34,557          24,352        9,736    
Total operating expenses    78,334          49,394        53,571    
INCOME (LOSS) FROM OPERATIONS    (32,464 )        (1,960 )      41,508    
OTHER INCOME (EXPENSE)                    
Interest expense    (5,444 )        (5,511 )      (12,042 )  
Interest income and other    546          172        249    
Total other income (expense)    (4,898 )        (5,339 )      (11,793 )  
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES    (37,362 )        (7,299 )      29,715    
Income tax provision (benefit)    (3,813 )        —        285    
INCOME (LOSS) FROM CONTINUING OPERATIONS    (33,549 )        (7,299 )      29,430    
Loss from discontinued operations, net of tax    —          (7,593 )      (4,515 )  
NET INCOME (LOSS)    (33,549 )        (14,892 )      24,915    
Net loss attributable to noncontrolling interest    (20,314 )        —        —    
NET INCOME (LOSS) ATTRIBUTABLE TO ALTA MESA RESOURCES, INC. $  (13,235 )     $  (14,892 )   $  24,915    
                     
NET INCOME (LOSS) PER COMMON SHARE:                    
Basic and Diluted $  (0.08 )                
                     
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING                    
Basic and Diluted    169,371,730                  
                       


 
ALTA MESA RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 
(in thousands)
 
                   
  Successor     Predecessor
  February 9, 2018     January 1, 2018   Three
  Through     Through   Months Ended
  March 31, 2018     February 8, 2018   March 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:                  
Net income (loss) $ (33,549 )     $ (14,892 )   $ 24,915  
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:                  
Depreciation, depletion, and amortization expense   15,577         12,414       24,804  
Impairment expense           5,560       1,220  
Accretion expense   102         140       572  
Amortization of deferred financing costs           171       962  
Amortization of debt premium   (820 )              
Equity based compensation expense   3,466                
Dry hole expense           (45 )      
Expired leases   4,189         1,250       3,333  
(Gain) loss on derivative contracts   22,646         (7,298 )     (30,242 )
Settlements of derivative contracts   (4,610 )       (1,661 )     (1,970 )
Interest converted into debt           103       298  
Interest on notes receivable due from related party   (162 )       (85 )     (200 )
Deferred tax provision (benefit)   (3,813 )              
Loss on sale of assets and other           1,923        
Changes in assets and liabilities:                  
Accounts receivable   (3,189 )       (20,895 )     (5,374 )
Other receivables   997         (9,887 )     7,494  
Receivables due from related party   (2,067 )       (117 )     139  
Prepaid expenses and other non-current assets   (2,194 )       9,970       (9,543 )
Advances from related party   (7,008 )       24,116       (29,791 )
Settlement of asset retirement obligation   (166 )       (63 )     (2,394 )
Accounts payable, accrued liabilities, and other liabilities   (75,960 )       25,815       11,837  
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES   (86,561 )       26,519       (3,940 )
CASH FLOWS FROM INVESTING ACTIVITIES:                  
Capital expenditures for property, plant and equipment   (133,055 )       (38,096 )     (60,589 )
Acquisitions of Alta Mesa and Kingfisher Midstream, net of cash acquired   (796,826 )              
Proceeds withdrawn from Trust Account   1,042,742                
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES   112,861         (38,096 )     (60,589 )
CASH FLOWS FROM FINANCING ACTIVITIES:                  
Proceeds from long-term debt   9,000         60,000       55,065  
Repayments of long-term debt   (134,065 )       (43,000 )      
Additions to deferred financing costs   (1,007 )             (64 )
Capital distributions           (68 )      
Capital contributions                 7,875  
Proceeds from issuance of Class A shares   400,000                
Repayment of sponsor note   (2,000 )              
Repayment of deferred underwriting compensation   (36,225 )              
Redemption of Class A common shares   (33 )              
NET CASH  PROVIDED BY FINANCING ACTIVITIES   235,670         16,932       62,876  
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH   261,970         5,355       (1,653 )
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period   388         4,990       7,618  
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of period $ 262,358       $ 10,345     $ 5,965  
                         


 
ALTA MESA RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except share and per share data) 
             
  Successor     Predecessor
  March 31,     December 31,
  2018        2017
ASSETS            
CURRENT ASSETS            
Cash and cash equivalents $  261,063       $  3,660
Short-term restricted cash    1,295          1,269
Accounts receivable, net of allowance of $65 and $415, respectively    109,825          76,161
Other receivables    225          1,388
Receivables due from related party    7,892          790
Note receivable due from related party    1,578          —
Prepaid expenses and other current assets    5,903          2,932
Current assets — discontinued operations    —          5,195
Derivative financial instruments    —          216
Total current assets    387,781          91,611
PROPERTY, PLANT AND EQUIPMENT            
Oil and natural gas properties, successful efforts method, net    2,389,522          920,563
Other property, plant and equipment, net    322,122          6,207
Total property, plant and equipment, net    2,711,644          926,770
OTHER ASSETS            
Deferred financing costs, net    1,007          1,787
Notes receivable due from related party    11,039          12,369
Goodwill    650,663          —
Intangible assets, net    468,913          —
Deposits and other long-term assets    8,630          9,067
Non-current assets — discontinued operations    —          43,785
Deferred tax asset    3,813          —
Derivative financial instruments    49          8
Total other assets    1,144,114          67,016
TOTAL ASSETS $  4,243,539       $  1,085,397
LIABILITIES, PARTNERS' CAPITAL AND STOCKHOLDERS' EQUITY            
CURRENT LIABILITIES            
Accounts payable and accrued liabilities $  159,110       $  170,489
Accounts payable — affiliate    —          5,476
Advances from non-operators    1,312          5,502
Advances from related party    40,498          23,390
Asset retirement obligations    622          69
Current liabilities — discontinued operations    —          15,419
Derivative financial instruments    26,401          19,303
Total current liabilities    227,943          239,648
LONG-TERM LIABILITIES            
Asset retirement obligations, net of current portion    6,033          10,400
Long-term debt, net    584,815          607,440
Noncurrent liabilities — discontinued operations    —          66,862
Derivative financial instruments    2,916          1,114
Other long-term liabilities    1,934          5,488
Total long-term liabilities    595,698          691,304
TOTAL LIABILITIES     823,641          930,952
PREFERRED STOCK, $0.0001 par value, 1,000,000 shares authorized            
Class A: 3 shares issued and outstanding    —          —
Class B: 1 share issued and outstanding    —          —
Commitments and Contingencies (Note 13)            
PARTNERS' CAPITAL    —          154,445
STOCKHOLDERS' EQUITY            
Common stock, $0.0001 par value            
Class A: 1,200,000,000 shares authorized, 169,371,730 shares issued and outstanding    17          —
Class C: 280,000,000 shares authorized, 213,402,398 shares issued and outstanding    21          —
Additional paid in capital    1,402,888          —
Retained earnings (accumulated deficit)    (21,349 )        —
Total stockholders' equity/partners' capital    1,381,577          154,445
Non-controlling interest    2,038,321          —
Total equity    3,419,898          154,445
TOTAL LIABILITIES, PARTNERS' CAPITAL AND STOCKHOLDERS' EQUITY $  4,243,539       $  1,085,397
               

*Non-GAAP Financial Information and Reconciliation
Alta Mesa Reconciliation of Net Loss to Adjusted EBITDAX.  Adjusted EBITDAX is a non-GAAP financial measure and as used herein represents net income (loss) before interest expense, exploration expense, depletion, depreciation and amortization, impairment of oil and natural gas properties, accretion of asset retirement obligations, tax expense, gain (loss) on sale of assets and the non-cash portion of gain/loss on oil, natural gas and natural gas liquids derivative contracts. Alta Mesa's management believes Adjusted EBITDAX is useful because it allows external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, to more effectively evaluate our operating performance, compare the results of our operations from period to period and against our peers without regard to our financing methods or capital structure and because it highlights trends in our business that may not otherwise be apparent when relying solely on GAAP measures. Adjusted EBITDAX is not a measurement of Alta Mesa's financial performance under GAAP, and should not be considered as an alternative to net income (loss), operating income (loss) or any other performance measure derived in accordance with GAAP or as an alternative to net cash provided by operating activities as a measure of Alta Mesa's profitability or liquidity. Adjusted EBITDAX has significant limitations, including that it does not reflect Alta Mesa's cash requirements for capital expenditures, contractual commitments, working capital or debt service. In addition, other companies may calculate Adjusted EBITDAX differently than Alta Mesa does, limiting its usefulness as a comparative measure. The following table sets forth a reconciliation of net income (loss) as determined in accordance with GAAP to Adjusted EBITDAX for the periods indicated (unaudited in thousands).

     
EBITDAX Calculation (Non-GAAP Measure) Feb 9 –
Mar 31,
2018
Successor
Jan 1 – 
Feb 8, 
2018
Predecessor
     
Net  Loss attributable to Alta Mesa Resources, Inc. $ (13,235 ) $ (14,892 )
Net Loss attributable to Noncontrolling Interest   (20,314 )    -  
Taxes   (3,813 )   -  
Interest   5,444     5,511  
(Gain) loss on derivative contracts   22,646
    (7,298 )
Settlements of derivative contracts   (4,610 )   (1,661 )
Exploration   4,955     3,633  
Depreciation, depletion and amortization   15,577     11,784  
Accretion expense   102     39  
Stock Compensation expense   3,466     -  
EBITDAX   10,218     (2,884 )
Non-recurring Business Combination Expense   25,291     17,040  
Adjusted EBITDAX $ 35,509   $ 14,156  
             

*Successor Company and Period:
The financial statements and certain footnote presentations separate the Company's presentations into two distinct periods, the period before the consummation of the Business Combination, which is from January 1, 2018 to February 8, 2018 ("2018 Predecessor Period") and the period after the consummation of the Business Combination, which is from February 9, 2018 to March 31, 2018 ("Successor Period"), to indicate the application of the different basis of accounting between the periods presented.  The three months ended March 31, 2017 is referred to as the "2017 Predecessor Period".  AMHLP is the "Predecessor" for periods prior to the Business Combination, which do not include the consolidation of the Company and Kingfisher.  For the periods after the Business Combination, Alta Mesa Resources, including the consolidation of AMHLP and Kingfisher, is the "Successor".

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