Market Overview

HighPoint Resources Reports Second Quarter 2019 Financial and Operating Results

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  • Reported production sales volume increased 18% over the second quarter of 2018 to 2.84 million barrels of oil equivalent ("MMBoe")
     
  • Oil production sales volume increased 16% over the second quarter of 2018 to 1.75 million barrels of oil ("MMBbls"), represents approximately 62% of total reported production sales volumes
     
  • Hereford field production has reached a record-high of over 10,000 barrels of oil equivalent per day ("Boe/d")
     
  • Delivered strong operational execution as 30 gross wells were placed on flowback during the second quarter of 2019 and an additional 20 gross wells were placed on flowback in July
     
  • Successfully executed Hereford optimization program with all strategic completion and microseismic data gathered and all 23 wells placed on flowback; seeing immediate performance insights that are contributing to early positive development enhancements
     
  • Continued strong well performance from Northeast ("NE") Wattenberg high-fluid intensity completions as the most recent seven wells on western flank of the acreage are tracking above 1 MMBoe type-curve after 30 days
     
  • Third quarter of 2019 production expected to be in a range of 3.3-3.4 MMBoe, representing a quarterly sequential increase of approximately 18% at the mid-point of guidance; current total net company production is in excess of 37,000 Boe/d
     
  • Reiterating full-year 2019 production guidance of 12.5-13.0 MMBoe and full-year 2019 capital expenditure guidance of $350-$380 million

DENVER, Aug. 05, 2019 (GLOBE NEWSWIRE) -- HighPoint Resources Corporation (the "Company" or "HighPoint") (NYSE:HPR) today reported second quarter of 2019 financial and operating results, including year-over-year increases in production, oil volumes and EBITDAX, record Hereford field production and positive well performance in both Hereford and NE Wattenberg.

For the second quarter of 2019, the Company reported a net loss of $1.9 million, or $0.01 per diluted share. Adjusted net income for the second quarter of 2019 was a net loss of $15.0 million, or $0.07 per diluted share. EBITDAX for the second quarter of 2019 was $71.1 million. Adjusted net income (loss) and EBITDAX are non-GAAP (Generally Accepted Accounting Principles) measures. Please reference the reconciliations to GAAP net income at the end of this release.

Chief Executive Officer and President Scot Woodall commented, "We continue to execute on our operational plan as evidenced by our second quarter results, which were firmly in line with our plan and highlighted by year-over-year growth in total production sales volumes, oil volumes and EBITDAX. We delivered strong operational execution as we placed 30 wells on initial flowback during the second quarter, giving us high confidence in achieving a significantly higher production profile that we have outlined for the second half of the year. We placed an additional 20 wells on flowback in July and are currently producing over 37,000 Boe/d. This has us firmly on track to meet our third quarter production guidance, which was provided today."

"Our second quarter operational activity was highlighted by the successful execution of our large-scale Hereford optimization program, which we expect will deliver increased capital efficiency, enhanced well performance and stronger per well economics. We are extremely pleased with the immediate performance insights gained during the execution of this program, which confirms the quality and potential of this asset. We have significantly advanced our geologic understanding of the field, which is yielding early positive completion design enhancements. This has also confirmed strong reservoir quality and a significant resource of 30-40 MMBbls of original oil in place per section, which is approximately 25% greater than our legacy NE Wattenberg position. We continue to process early drilling and completion data as the real-time integration of early learnings continues. All 23 wells within the program have been completed and were placed on flowback in June and July utilizing controlled flowback. The wells are performing as anticipated during initial flowback and we look forward to providing further updates as the program wells achieve a longer production profile."

"We also continue to see strong well performance from our legacy NE Wattenberg asset as the initial high-fluid intensity completions are averaging approximately 20% above base type-curve expectations. Our most recent seven wells that are located on the western flank of our acreage were placed on flowback in June and are exhibiting strong performance as they are tracking above our 1 MMBoe type-curve during early production, supporting our enthusiasm for utilizing high-fluid intensity completions and demonstrating our ability to continually enhance value from our assets."

"Summit Midstream commissioned its new gas processing plant in July, which increased Hereford gas processing capacity to support our development plans and we continue to produce our NE Wattenberg volumes unconstrained as our diversified midstream outlets provide a strategic advantage that maximizes optionality."

"Although crude oil prices continue to fluctuate, we possess a very strong hedge position with more than 70% of our expected oil production hedged in the second half of 2019 and more than 50% of expected oil production in 2020 hedged at an attractive level of greater than $59.00 per barrel. We will maintain a disciplined approach to capital investment and are on track to achieve our target of generating positive free cash flow for the second half of the year beginning in the third quarter."

OPERATING AND FINANCIAL RESULTS

The following table summarizes certain operating and financial results for the second quarter of 2019 and 2018 and for the first quarter of 2019:

  Three Months Ended
 June 30,
  Three Months Ended
 March 31,
  2019   2018   Change   2019   Change
Combined production sales volumes (MBoe) 2,841     2,409     18 %   2,798     2 %
Net cash provided by operating activities ($ millions) $ 20.9     $ 14.6     43 %   $ 77.7     (73 )%
Discretionary cash flow ($ millions) (1) $ 57.5     $ 51.3     12 %   $ 64.2     (10 )%
Combined realized prices with hedging (per Boe) $ 37.48     $ 39.29     (5 )%   $ 38.01     (1 )%
Net income (loss) ($ millions) $ (1.9 )   $ (46.9 )   96 %   $ (96.2 )   98 %
Per share, basic $ (0.01 )   $ (0.22 )   95 %   $ (0.46 )   98 %
Per share, diluted $ (0.01 )   $ (0.22 )   95 %   $ (0.46 )   98 %
Adjusted net income (loss) ($ millions) (1) $ (15.0 )   $ (3.2 )   (369 )%   $ (10.7 )   (40 )%
Per share, basic $ (0.07 )   $ (0.02 )   (250 )%   $ (0.05 )   (40 )%
Per share, diluted $ (0.07 )   $ (0.02 )   (250 )%   $ (0.05 )   (40 )%
Weighted average shares outstanding, basic (in thousands) 210,377     209,393     %   209,932     %
Weighted average shares outstanding, diluted (in thousands) (1) 210,377     209,393     %   209,932     %
EBITDAX ($ millions) (1) $ 71.1     $ 63.1     13 %   $ 76.9     (8 )%

(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.

The Company reported oil, natural gas and natural gas liquids ("NGL") production of 2.84 MMBoe for the second quarter of 2019, which was an increase of 18% over the second quarter of 2018. Oil volumes totaled 1.75 MMBbls or 62% of total equivalent production sales volumes, which was an increase of 16% over the second quarter of 2018.

Production sales volumes for the second quarter were comprised of approximately 62% oil, 21% natural gas and 17% NGLs.

For the second quarter of 2019, WTI oil prices averaged $59.81 per barrel, Northwest Pipeline ("NWPL") natural gas prices averaged $2.08 per MMBtu and NYMEX natural gas prices averaged $2.64 per MMBtu. Commodity price realizations to benchmark pricing were WTI less $4.29 per barrel of oil and NWPL less $0.50 per Mcf of gas. The NGL price averaged approximately 16% of the WTI price per barrel.

For the second quarter of 2019, the Company had derivative commodity swaps in place for 17,250 barrels of oil per day tied to WTI pricing at $59.18 per barrel, 7,000 MMBtu of natural gas per day tied to NWPL regional pricing at $2.11 per MMBtu, and no hedges in place for NGLs.

  Three Months Ended
 June 30,
  Three Months Ended
 March 31,
  2019   2018   Change   2019   Change
Average Realized Prices before Hedging:                  
Oil (per Bbl) $ 55.46     $ 65.07     (15 )%   $ 50.82     9 %
Natural gas (per Mcf) 1.58     1.29     22 %   2.21     (29 )%
NGLs (per Bbl) 9.81     20.84     (53 )%   13.29     (26 )%
Combined (per Boe) 37.83     45.71     (17 )%   36.35     4 %
                           
Average Realized Prices with Hedging:                          
Oil (per Bbl) $ 54.88     $ 54.59  
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