Market Overview

HighPoint Resources Reports Third Quarter 2019 Financial and Operating Results

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  • Reported production sales volume of 3.4 million barrels of oil equivalent ("MMBoe") for the third quarter of 2019, represents an increase of 20% over the second quarter of 2019 and a 24% increase over the third quarter of 2018
     
  • Oil production sales volume of 2.18 million barrels of oil ("MMBbls") for the third quarter of 2019 or 64% of total equivalent production sales volume, represents an increase of 25% over the second quarter of 2019 and a 27% increase over the third quarter of 2018
     
  • Reported net income of $11.1 million or $0.05 per diluted share and adjusted net income (non-GAAP) of a loss of $7.4 million or $0.03 per diluted share
     
  • EBITDAX (non-GAAP) of $94.3 million increased 33% over the second quarter of 2019 driven by a significant per unit reduction in controllable cash operating costs1 of 29% and 30% compared to both the second quarter of 2019 and third quarter of 2018, respectively
     
  • Continued positive results from DSU 11-63-16 (east pad) as wells are exhibiting a dramatic 120% increase in current daily production rate through 130 days with a shallower decline compared to previously completed wells, demonstrating economic development of both the Niobrara and Codell formations in Hereford
     
  • Encouraging early performance from upspaced DSU 11-63-16 (west pad) that is exhibiting a meaningful increase of 55% in current daily production rate through 85 days compared to previously completed wells and continues ramping to peak production
     
  • Became cash flow positive in the third quarter of 2019
     
  • Semi-annual borrowing base review recently completed with $500 million credit facility reaffirmed

Reconciliations of non-GAAP measures, including adjusted net income and EBITDAX can be found in the tables at the end of this release

1 Cash operating costs include lease operating expense, gathering, transportation and processing expense and production tax expense

DENVER, Nov. 04, 2019 (GLOBE NEWSWIRE) -- HighPoint Resources Corporation (the "Company" or "HighPoint") (NYSE:HPR) today reported third quarter of 2019 financial and operating results, including significant sequential increases in total production, oil volumes and EBITDAX over the second quarter of 2019, meaningfully lower cash costs and positive results from the Hereford field drilling program.

For the third quarter of 2019, the Company reported net income of $11.1 million, or $0.05 per diluted share. Adjusted net income for the third quarter of 2019 was a net loss of $7.4 million, or $0.03 per diluted share. EBITDAX for the third quarter of 2019 was $94.3 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, "Our third quarter results are reflective of strong operational execution and were highlighted by robust growth in oil volumes and a significant reduction in cash operating costs that underpinned a 33% increase in EBITDAX to $94 million compared to the second quarter of 2019. We also became cash flow positive during the third quarter, which will enhance liquidity. Following up on our recent positive operational update, we continue to demonstrate a dramatic improvement in Hereford well performance with results showing a substantial and continuous increase in productivity. Today, we are providing a further positive update to the initial seven wells in DSU 11-63-16 that are now showing a 120% increase in current daily production with a shallower decline profile compared to previously completed wells, demonstrating a viable, economic development template for the Hereford field. Similarly, the performance of the four wells on the western side of DSU 11-63-16 continues to improve since our last update, showing a 55% increase in current daily production and are trending to peak production. This continues to build upon the early success of the Hereford optimization program as we assess performance opportunities of upspacing and increased completion intensity."

OPERATING AND FINANCIAL RESULTS

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

  Three Months Ended
 September 30,
  Three Months Ended
 June 30,
  2019   2018   Change   2019   Change
Combined production sales volumes (MBoe) 3,399     2,736     24 %   2,841     20 %
Net cash provided by operating activities ($ millions) $ 96.8     $ 91.3     6 %   $ 20.9     363 %
Discretionary cash flow ($ millions) (1) $ 79.9     $ 65.9     21 %   $ 57.5     39 %
Combined realized prices with hedging (per Boe) $ 36.88     $ 41.23     (11 )%   $ 37.48     (2 )%
Net income (loss) ($ millions) $ 11.1     $ (29.4 )   *nm     $ (1.9 )   *nm  
Per share, basic $ 0.05     $ (0.14 )   *nm     $ (0.01 )   *nm  
Per share, diluted $ 0.05     $ (0.14 )   *nm     $ (0.01 )   *nm  
Adjusted net income (loss) ($ millions) (1) $ (7.4 )   $ 2.3     *nm     $ (15.0 )   51 %
Per share, basic $ (0.04 )   $ 0.01     *nm     $ (0.07 )   43 %
Per share, diluted $ (0.03 )   $ 0.01     *nm     $ (0.07 )   57 %
Weighted average shares outstanding, basic (in thousands) 210,550     209,502     1 %   210,377     %
Weighted average shares outstanding, diluted (in thousands) (1) 210,937     209,502     1 %   210,377     %
EBITDAX ($ millions) (1) $ 94.3     $ 78.0     21 %   $ 71.1     33 %

(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 3.4 MMBoe for the third quarter of 2019, which was a 20% increase over the second quarter of 2019 and a 24% increase over the third quarter of 2018. Oil volumes totaled 2.18 MMBbls, which was a 25% increase over the second quarter of 2019 and a 27% increase over the third quarter of 2018. Third quarter of 2019 volumes were negatively impacted by depressed processing yields, including basin-wide ethane rejections.

Production sales volumes for the third quarter were comprised of approximately 64% oil, 21% natural gas and 15% NGLs.

For the third quarter of 2019, West Texas Intermediate ("WTI") oil prices averaged $56.45 per barrel, Northwest Pipeline ("NWPL") natural gas prices averaged $1.91 per MMBtu and NYMEX natural gas prices averaged $2.23 per MMBtu. Commodity price realizations to benchmark pricing were WTI less $4.11 per barrel of oil and NWPL less $0.88 per Mcf of gas. The NGL price averaged approximately 10% of the WTI price per barrel as unprecedented weakness in broader markets resulted in a 76% decline in NGL prices compared to the third quarter of 2018.

For the third quarter of 2019, the Company had derivative commodity swaps in place for 19,730 barrels of oil per day tied to WTI pricing at $56.45 per barrel, 7,000 MMBtu of natural gas per day tied to NWPL regional pricing at $1.91 per MMBtu, and no hedges in place for NGLs.

  Three Months Ended
 September 30,
  Three Months Ended
 June 30,
  2019   2018   Change   2019   Change
Average Realized Prices before Hedging:                  
Oil (per Bbl) $ 52.27     $ 66.96     (22 )%   $ 55.46     (6 )%
Natural gas (per Mcf) 1.03     1.59     (35 )%   1.58     (35 )%
NGLs (per Bbl) 5.76     24.31     (76 )%   9.81     (41 )%
Combined (per Boe) 35.68     48.10     (26 )%   37.83     (6 )%
                   
Average Realized Prices with Hedging:                  
Oil (per Bbl) $ 54.08     $ 55.92     (3 )%   $ 54.88     (1 )%
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