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Goodrich Petroleum Announces Third Quarter 2019 Financial Results

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HOUSTON, Nov. 7, 2019 /PRNewswire/ -- Goodrich Petroleum Corporation (NYSE:GDP) (the "Company") today announced financial results for the third quarter ended September 30, 2019.

QUARTER HIGHLIGHTS

  • Net Income: Net income was $2.0 million in the quarter ($0.16 per basic, $0.14 per diluted share). Net income adjusted for the non-cash change in fair value of unsettled derivative contracts of $2.2 million was $4.2 million.
  • Adjusted EBITDA: Adjusted EBITDA increased by 49% over the prior year period and decreased 1% sequentially to $21.3 million despite lower natural gas prices versus the prior year period and second quarter of 2019.
  • Production: Production increased by 61% over the prior year period and decreased by 1% sequentially to an average of 136,000 Mcfe per day for the quarter. Production for the quarter was negatively impacted by approximately 4,100 Mcfe per day, comprised of third party pipeline maintenance of 2,200 Mcfe per day and shut-ins due to offset fracs of 1,900 Mcfe per day. In addition, the Company completed 1.0 gross (0.9 net) well in the quarter versus previous guidance of 2.0 gross (2.0 net) wells.
  • Cash Operating Expenses: Per unit cash operating expenses decreased by 23% versus the prior year period and 5% sequentially to $0.98 per Mcfe for the quarter, as follows.
    • Lease operating expense ("LOE") decreased by 13% sequentially to $0.21 per Mcfe
    • Production and other taxes expense were flat sequentially at $0.05 per Mcfe
    • Transportation and processing expense decreased by 11% sequentially to $0.41 per Mcfe
    • General and Administrative ("G&A") expense payable in cash increased by 7% sequentially to $0.29 per Mcfe
  • Senior Credit Facility Borrowing Base: The borrowing base under the Company's senior credit facility increased by $10 million to $125 million in August from the initial borrowing base determined in May, 2019. After discussions with its lead bank, the Company expects the fall borrowing base redetermination to be reaffirmed at $125 million.
  • Return on Capital Employed ("ROCE"), defined as annualized third quarter earnings before interest and taxes ("EBIT") divided by total assets less current liabilities, was 17% for the quarter.

(See accompanying tables at the end of this press release that reconciles Net income adjusted for the non-cash change in fair value of unsettled derivative contracts, Adjusted EBITDA, G&A expense payable in cash and ROCE, all non-US GAAP financial measures, to their most directly comparable US GAAP financial measure.)

OPERATIONAL UPDATE

The Company has recently completed its Harris14&23 No. 2 (99% WI) well in the Thorn Lake field of Red River Parish, Louisiana. The well, which has a lateral length of approximately 9,400 feet, had an average 24-hour initial production rate of approximately 26,000 Mcfe per day. This is the Company's sixth recent vintage well completed in the Thorn Lake field and the average cumulative production for the previous five recent vintage wells has been approximately 7 Bcf over 13 months from an average lateral length of 6,900 feet.

The Company has drilled and cased its Loftus 27&34 No. 1 (71% WI) well in the Bethany-Longstreet field of Caddo Parish, Louisiana. The well, which is a 7,500 foot lateral is currently being fracked and is expected to be turned in line ("TIL") by  December.

Due to current market conditions the Company and the operator of certain non-operated wells plan to defer completions on an additional 1.0 gross (1.0 net) operated well and 3.0 gross (0.75 net) non-operated wells until the first quarter of 2020, bringing the Company total of drilled but uncompleted ("DUC") Haynesville wells to approximately 5.0 gross (2.5 net) wells as we enter the first quarter. The expected fourth quarter completion cadence is currently 2.0 gross (1.7 net) wells compared to the prior guidance of 5.0 gross (2.7 net) wells. Production for the fourth quarter of 2019 is expected to be 140,000 – 145,000 Mcfe per day, which is lower by an estimated 14,000 Mcfe per day for the quarter due to the deferment of completions versus previous guidance. For the year, the Company expects to complete 8.0 gross (7.2 net) wells versus previous guidance of 12.0 gross (9.3 net) wells.

The Company is currently running one drilling rig.

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://goodrichpetroleumcorp.investorroom.com/presentations

3Q19 FINANCIAL RESULTS

REVENUES

Revenues totaled $27.2 million in the quarter, versus $24.4 million in the prior year period. Average realized price per unit was $2.17 per Mcfe ($2.01 per Mcf of gas and $59.67 per barrel of oil) in the quarter, versus $3.12 per Mcfe in the prior year period ($2.75 per Mcf of gas and $72.29 per barrel of oil). Revenues adjusted for the derivative cash settlements for the quarter of $5.9 million was $33.1 million.

(See accompanying table at the end of this press release that reconciles revenues adjusted for the derivative cash settlements, which is a non-US GAAP financial measure, to its most directly comparable US GAAP financial measure.)

PRODUCTION

Production totaled 12.5 Bcfe in the quarter, or an average of approximately 136,000 Mcfe per day, versus 7.8 Bcfe, or an average of approximately 85,000 Mcfe per day, in the prior year period. Natural gas production totaled 12.3 Bcf in the quarter (98% of total production), versus 7.5 Bcf (96% of total production) during the prior year period.

CASH FLOW

Adjusted EBITDA was $21.3 million in the quarter and discretionary cash flow ("DCF"), defined as net cash provided by operating activities before changes in working capital, was $20.3 million in the quarter versus Adjusted EBITDA of $14.3 million and DCF of $13.8 million in the prior year period.

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

NET INCOME

The Company announced net income of $2.0 million in the quarter ($0.16 per basic and $0.14 per fully diluted share), versus net income of $1.7 million ($0.14 per basic and $0.12 per fully diluted share) in the prior year period. Net income adjusted for the non-cash change in fair value of unsettled derivative contracts of $2.2 million was $4.2 million.

(See accompanying table at the end of this press release that reconciles net income adjusted for the non-cash change in fair value of unsettled derivative contracts, which is a non-US GAAP financial measure, to its most directly comparable US GAAP financial measure.)

OPERATING EXPENSES

Lease operating expense ("LOE") was $2.6 million ($0.21/Mcfe) in the quarter, versus $2.6 million ($0.33/Mcfe) in the prior year period. LOE for the quarter included $0.1 million ($0.01/Mcfe) for workovers, versus $0.3 million ($0.04/Mcfe) in the prior year period. Lease operating expense for the quarter excluding workovers was $2.5 million ($0.20/Mcfe) versus $2.3 million ($0.29/Mcfe) in the prior year period.

Production and other taxes were $0.6 million in the quarter ($0.05/Mcfe), versus $1.0 million ($0.12/Mcfe) in the prior year period. 

Transportation and processing expense was $5.1 million ($0.41/Mcfe) in the quarter, versus $3.3 million ($0.43/Mcfe) in the prior year period.

Depreciation, depletion and amortization ("DD&A") expense was $13.2 million ($1.06/Mcfe) in the quarter, versus $7.9 million ($1.02/Mcfe) in the prior year period.

General and administrative expense was $5.2 million ($0.42/Mcfe) in the quarter, which includes non-cash expense of $1.6 million ($0.13/Mcfe) versus $4.6 million ($0.60/Mcfe) in the prior year period, which included non-cash expense of $1.5 million ($0.20/Mcfe). G&A Payable in Cash was $3.6 million ($0.29/Mcfe) in the quarter.

(See accompanying table at the end of this press release that reconciles G&A expense payable in cash, which is a non-US GAAP financial measure, to its most directly comparable US GAAP financial measure.)

OPERATING INCOME

Operating income, defined as revenues minus operating expenses, totaled $0.2 million in the quarter, versus $5.0 million in the prior year period. Operating income adjusted for the derivative cash settlements of $5.9 million was $6.1 million for the quarter.

(See accompanying table at the end of this press release that reconciles operating income adjusted for the derivative cash settlements, which is a non-US GAAP financial measure, to its most directly comparable US GAAP financial measure.)

CAPITAL EXPENDITURES

Capital expenditures totaled $25.5 million in the quarter, of which $24.8 million was spent on drilling and completion costs and $0.7 million on other expenditures, versus $38.3 million in the prior year period, of which $37.5 million was spent on drilling and completion costs and $0.8 million on other expenditures. Capital expenditures for the fourth quarter are expected to be $10 - 15 million.

INTEREST EXPENSE

Interest expense totaled $2.0 million ($0.16/Mcfe) in the quarter, which included cash interest of $1.2 million incurred on the credit facility and non-cash interest of $0.8 million, which included $0.4 million paid in-kind interest and $0.4 million amortization of debt discount and debt issuance costs on the Company's second lien notes. Interest expense for the prior year period totaled $3.1 million, which included cash interest of $0.3 million incurred on the credit facility and non-cash interest of $2.8 million incurred on the Company's second lien notes, which included $1.7 million paid in-kind interest and $1.1 million amortization of debt discount.

CRUDE OIL AND NATURAL GAS DERIVATIVES

The Company had a gain of $3.8 million on its derivatives not designated as hedges in the quarter, which was comprised of a $5.9 million gain on derivative cash settlements offset by a $2.2 million loss representing the change in fair value of our open natural gas and oil derivative contracts. In the prior year period the Company had a loss of $0.2 million on its derivatives not designated as hedges, which was comprised of a negligible change of the fair value of our open natural gas and oil derivative contracts as well as a $0.2 million loss on cash settlement.

During the quarter, the Company increased the amount of natural gas derivatives through March 2021 by 70,000 Mmbtu per day at an average price of $2.52 per Mmbtu.

BALANCE SHEET

The Company exited the quarter with $1.2 million of cash, $87.9 million outstanding borrowings under the Company's senior credit facility, which had a borrowing base of $125 million, and $12.5 million outstanding under the Company's second lien notes. The borrowing base on the senior credit facility increased $10 million in August 2019 to $125 million, and after discussions with its lead bank, the Company expects the fall redetermination to be reaffirmed at $125 million.

OTHER INFORMATION

In this press release, the Company refers to several non-US GAAP financial measures, including Adjusted EBITDA, DCF, Return on Capital Employed ("ROCE") and G&A expense payable in cash. 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 income (loss) applicable to common stock, as defined by US GAAP. G&A Payable in Cash should not be considered an alternative to general and administrative expense, 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.

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, 2018 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 under the symbol "GDP".

GOODRICH PETROLEUM CORPORATION

SELECTED INCOME AND PRODUCTION DATA

(In thousands, except per share amounts) (Unaudited)














Three Months Ended


Three Months Ended


Nine Months Ended


Nine Months Ended




September 30, 2019


September 30, 2018


September 30, 2019


September 30, 2018

Volumes










Natural gas (MMcf)


12,257


7,479

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