Alta Mesa Reports First Quarter 2018 Results
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”.
