Alta Mesa Announces Third Quarter 2018 Financial and Operational Results
HOUSTON, Nov. 13, 2018 - Alta Mesa Resources Inc., (NASDAQ: AMR, “Alta Mesa Resources”, “AMR” or the “Company”) today announced third quarter 2018 unaudited consolidated financial results and certain financial and operational results for its subsidiaries, Alta Mesa Holdings, LP (“Alta Mesa Upstream” or “AMH”) and Kingfisher Midstream, LLC (“Kingfisher Midstream” or “KFM”). A conference call to discuss these results is scheduled for today at 4 p.m. Central time (888-347-8149).
Highlights:
- Q3-18 net production of approximately 33,400 BOE per day (50% oil, 72% liquids), up over 30% from Q2-18, September average was approximately 36,800 BOE per day
- Oil volumes for Q3-18 were approximately 16,700 Bbls per day, up over 35% from Q2-18
- Production guidance for full-year 2018 reaffirmed at 29,000 to 31,000 BOE per day, 2018 exit rate guidance reaffirmed at 38,000 to 40,000 BOE per day
- Kingfisher Midstream Q3-18 system gas volumes of 116 MMcf per day, up over 20% from Q2-18
- Kingfisher Midstream EBITDA guidance for Q4-18 of $14 to $16 million
- Alta Mesa Resources completed the transfer of the produced water business from Alta Mesa Upstream to Kingfisher Midstream, effective Oct 1, 2018
- Alta Mesa Resources repurchased and retired approximately 3.1 million of its Class A common shares under its stock buy-back program at a weighted average price of $4.76 per share
Hal Chappelle, Alta Mesa Resources’ President and Chief Executive Officer, stated, “We have continued to execute at a high level of excellence in the field, bringing over 50 wells on production this quarter while controlling capital costs. With over 20 new multi-well patterns being brought onto production in 2018, we have significantly expanded our understanding of the optimal development strategies for our asset base. We are leveraging this expanded understanding to continue to refine our development plans for 2019 and beyond with a focus on maximizing capital efficiency and shareholder returns.”
Third Quarter 2018 Financial Summary
Net income, attributable to Alta Mesa Resources’ stockholders, during the third quarter of 2018 was $7.1 million or $0.04 per basic and diluted share. Adjusted earnings before interest, income taxes, depreciation, depletion and amortization and exploration costs and other items ("Adjusted EBITDAX") was $83.8 million for the third quarter of 2018. Alta Mesa Upstream had a net income during the third quarter 2018 of $17.8 million, and Adjusted EBITDAX of $73.4 million. Kingfisher Midstream had a net income during the third quarter of $2.1 million, and adjusted earnings before interest, income taxes, depreciation, depletion and amortization and other items ("Adjusted EBITDA") of $10.9 million. For the third quarter of 2018, the produced water business remains in the Alta Mesa Upstream results. Adjusted EBITDAX and Adjusted EBITDA are non-GAAP financial measures and are described in the attached table under “Non-GAAP Financial Information and Reconciliation.”
Alta Mesa Upstream Operational Results
Total production for the third quarter of 2018 was 3,077 MBOE, an average of 33,400 BOE per day, up over 30% from the second quarter of 2018. September 2018 average production was 36,800 BOE per day which is up by more than 80% from the 2017 exit rate. Alta Mesa Upstream is reaffirming its previously published full year 2018 production guidance of 29,000 to 31,000 BOE per day and reaffirms its expected 2018 production exit rate of 38,000 to 40,000 BOE per day.
In the third quarter, Alta Mesa Upstream had eight rigs and four frac crews working to complete the drilling of 46 wells and bring 53 wells onto production. Two of the wells brought on production were funded under the joint development agreement with BCE-STACK Development LLC. In 2018, through the end of the third quarter, Alta Mesa Upstream has drilled 128 horizontal wells in the STACK.
Kingfisher Midstream and Produced Water Business Update
Kingfisher Midstream’s system gas volumes for the third quarter of 2018 were 10.7 BCF, an average of 116 MMcf per day, up over 20% from the second quarter of 2018. September 2018 system gas volumes averaged 123 MMcf per day compared to 82 MMcf per day at the time of the business combination in early February 2018.
Alta Mesa Resources has completed the transfer of the produced water business from Alta Mesa Upstream to Kingfisher Midstream for a value of approximately $90 million, subject to closing adjustments and will be funded under the Kingfisher Midstream revolving credit facility. The transaction closed November 9, 2018 with an effective date of October 1, 2018. Produced water volumes for the third quarter 2018 averaged approximately 75,000 barrels of water per day. This purpose-built and expanding system currently consists of over 200 miles of permanently installed gathering pipeline and 20 produced water disposal wells. Concurrently, Alta Mesa Upstream entered a new 15-year produced water gathering and disposal agreement with Kingfisher Midstream that includes all current and future Alta Mesa Upstream acreage in select counties including Kingfisher and Major county.
Craig Collins, Chief Operating Officer of Kingfisher Midstream, stated, “We are excited to mark a strategic milestone for Kingfisher Midstream by having recently completed the transfer of the produced water business from Alta Mesa Upstream. The produced water business further supports our efforts to provide differentiated services at competitive rates that will establish long term, multi-stream, fee-based growth for our midstream business.” Collins added, "Continuing to execute on growing volumes in all three product lines, gas, oil and produced water, is a key focus as we exit 2018 and begin 2019.”
Updated 2018 Guidance for Kingfisher Midstream
Kingfisher Midstream issued EBITDA guidance of $14 to $16 million for Q4-2018 and updated full year 2018 EBITDA guidance to $36 to $38 million. These amounts include revenue generated in Q4-2018 from the newly transferred produced water business as if the business was owned on October 1, 2018. This implies annualized Q4-2018 Kingfisher Midstream EBITDA of $56 to $64 million.
| Q4-2018 Guidance | Updated Full Year 2018 Guidance | |
| Average Rig Count | ||
| Alta Mesa Upstream | ~9 | ~8 |
| Third Parties | ≤ 3 | ≤ 4 |
| Average Gas Volumes (MMcf/d) | ||
| Alta Mesa Upstream | 90 – 100 | 80 – 85 |
| Third Parties | 15 – 25 | 15 - 25 |
| Average Crude Oil Volumes (Bbls/d) | 6,500 – 7,500 | ~5,000 |
| Average Water Volumes (Bbls/d)1 | 80,000 – 90,000 | 80,000 – 90,000 |
| Plant Operating Expenses($/MMbtu) | $0.25 - $0.30 | $0.25 - $0.30 |
| Gathering & Processing Expense ($mm) | ~$3 | ~$11 |
| Water Operating Expense ($/Bbl) | ~$0.30 | ~$0.30 |
| G&A Expense ($mm) | ~$4.5 | ~$14 |
| One-Time Expenses Addback2 | - | ($2) |
| Adjusted EBITDA ($mm)3 | $14 - $16 | $36 - $38 |
| Capex ($mm)4 | $45 - $55 | $80 - $90 |
Note: Full-year 2018 represents the period from Feb 9, 2018 to Dec 31, 2018
- Water volumes shown for Full Year 2018 Average are the Average for Q4-2018
- One-time expense addback includes transition services agreement payments made in Q1 and Q2
- Adjusted EBITDA includes full Q4 2018 EBITDA from produced water business, as if business was owned on Oct 1, 2018
- Capex does not include the $90 million purchase price for produced water. Capex excludes FY 2018 funding for Cimarron Express of $16 million that is accounted as an equity investment
Share Repurchase Program Update
The Company repurchased and retired approximately 3.1 million shares of Class A common stock at a weighted average price of $4.76 per share under the previously announced $50 million share repurchase program. Repurchases are done at the company’s discretion in accordance with applicable securities laws from time to time in open market or private transactions.
Management Update
The Company today announced that Michael A. McCabe, Alta Mesa Vice President, Chief Financial Officer and Assistant Secretary is retiring from the Company. To help ensure an orderly transition, Mr. McCabe will remain with Alta Mesa while the company conducts a search to fill the Chief Financial Officer position.
Mr. McCabe joined the company twelve years ago and has served as the Chief Financial Officer during a transformational period of growth from a diversified private upstream company to a focused pure play STACK company with integrated upstream and midstream operations. Hal Chappelle, Alta Mesa Resources’ President and Chief Executive Officer, stated, “On behalf of the entire Board, management team and Alta Mesa employees I want to thank Mike for his dedication and valuable contributions during his more than a decade at Alta Mesa. Mike has played a significant role in the evolution of the Company and its preparation for becoming public via the business combination earlier this year. I am deeply appreciative that Mike will remain with the Company to help facilitate a smooth leadership transition and wish him all the best in his retirement.”
“It has been a privilege to work alongside the talented and dedicated Alta Mesa team,” said McCabe. “I am proud of the team we have built and the asset base we have assembled. The team and assets are well positioned to deliver capital efficient growth for years to come. I am committed to working with Hal and the full management team to ensure a smooth transition.”
Conference Call Information
Alta Mesa Resources invites you to listen to its conference call which will discuss its financial and operational results at 4:00 p.m., Central time, on Tuesday, November 13, 2018. If you wish to participate in this conference call, dial 888-347-8149 (toll free in US/Canada) or 412-902-4228 (for International calls), five to ten minutes before the scheduled start time. A webcast of the call and any related materials will be available on Alta Mesa Resources’ website at http://altamesaresources.irpass.com/. Additionally, a replay of the conference call will be available for one week following the live broadcast by dialing 844-512-2921 (toll free in US/Canada) or 412-317-6671 (International calls), and referencing Conference ID #10125708.
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, gas and produced water gathering, processing and marketing to producers in the STACK play. Alta Mesa Resources Inc. is headquartered in Houston, Texas.
Safe Harbor Statement and Disclaimer
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, regarding Alta Mesa Resources’ strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this press release, the words “could”, “should”, “will”, “play”, “believe”, “anticipate”, “intend”, “estimate”, “expect”, “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on Alta Mesa Resources’ current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Forward-looking statements may include statements about Alta Mesa Resources’: business strategy; financial strategy; future oil and natural gas prices; timing and amount of future production of oil and natural gas; future drilling plans; production and financial guidance; and plans, objectives, expectations and intentions contained in this press release that are not historical. Alta Mesa Resources cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond its control, incident to the exploration for and development and production of oil and natural gas. These risks include, but are not limited to, commodity price volatility, low prices for oil and/or natural gas, global economic conditions, inflation, increased operating cost, lack of availability of drilling and production equipment and services, environmental risks, weather risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating oil and natural gas reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and other risks. Information concerning these and other factors can be found in Alta Mesa Resources' filings with the SEC, including its Forms 10-K, 10-Q and 8-K, which can be obtained free of charge on the SEC's web site at http://www.sec.gov. Should one or more of the risks or uncertainties described in this press release occur, or should underlying assumptions prove incorrect, Alta Mesa Resources’ actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we may issue. Except as otherwise required by applicable law, Alta Mesa Resources disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this press release.
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 per share data) | |||||||||||||||||||||
| Successor | Predecessor | Successor | Predecessor | ||||||||||||||||||
| Three | Three | February 9, 2018 | January 1, 2018 | Nine | |||||||||||||||||
| Months Ended | Months Ended | Through | Through | Months Ended | |||||||||||||||||
| Sept 30, 2018 | Sept 30, 2017 | Sept 30, 2018 | Feb 8, 2018 | Sept 30, 2017 | |||||||||||||||||
| OPERATING REVENUES AND OTHER | |||||||||||||||||||||
| Oil | $ | 107,253 | $ | 44,201 | $ | 222,822 | $ | 30,972 | $ | 133,489 | |||||||||||
| Natural gas | 11,959 | 9,583 | 25,149 | 4,276 | 29,816 | ||||||||||||||||
| Natural gas liquids | 13,880 | 7,548 | 28,835 | 4,000 | 21,201 | ||||||||||||||||
| Product sales | 22,676 | — | 50,650 | — | — | ||||||||||||||||
| Gathering and processing revenue | 8,102 | — | 18,586 | — | — | ||||||||||||||||
| Other revenues | 1,011 | 1,792 | 3,795 | 888 | 5,005 | ||||||||||||||||
| Total operating revenues | 164,881 | 63,124 | 349,837 | 40,136 | 189,511 | ||||||||||||||||
| Gain (loss) on sale of assets and other | (18 | ) | — | 5,898 | — | — | |||||||||||||||
| Gain on acquisition of oil and gas properties | — | 5,267 | — | — | 5,267 | ||||||||||||||||
| Gain (loss) on derivative contracts | (11,212 | ) | (10,468 | ) | (63,077 | ) | 7,298 | 38,024 | |||||||||||||
| Total operating revenues and other | 153,651 | 57,923 | 292,658 | 47,434 | 232,802 | ||||||||||||||||
| OPERATING EXPENSES | |||||||||||||||||||||
| Lease operating expense | 16,351 | 10,407 | 37,347 | 4,485 | 32,897 | ||||||||||||||||
| Marketing and transportation expense | 2,847 | 8,314 | 6,041 | 3,725 | 20,486 | ||||||||||||||||
| Plant operating expense | 4,507 | — | 8,407 | — | — | ||||||||||||||||
| Product expense | 22,830 | — | 50,433 | — | — | ||||||||||||||||
| Gathering and processing expense | 2,334 | — | 7,912 | — | — | ||||||||||||||||
| Production taxes | 6,311 | 1,262 | 10,332 | 953 | 3,712 | ||||||||||||||||
| Workover expense | 1,065 | 1,441 | 2,643 | 423 | 3,131 | ||||||||||||||||
| Exploration expense | 1,029 | 3,649 | 14,067 | 3,633 | 11,888 | ||||||||||||||||
| Depreciation, depletion and amortization expense | 52,877 | 24,159 | 102,227 | 11,784 | 63,247 | ||||||||||||||||
| Impairment expense | — | — | — | — | 1,188 | ||||||||||||||||
| Accretion expense | 226 | 108 | 489 | 39 | 234 | ||||||||||||||||
| General and administrative expense | 11,902 | 17,445 | 68,915 | 24,352 | 35,474 | ||||||||||||||||
| Total operating expenses | 122,279 | 66,785 | 308,813 | 49,394 | 172,257 | ||||||||||||||||
| INCOME (LOSS) FROM OPERATIONS | 31,372 | (8,862 | ) | (16,155 | ) | (1,960 | ) | 60,545 | |||||||||||||
| OTHER INCOME (EXPENSE) | |||||||||||||||||||||
| Interest expense | (12,348 | ) | (13,545 | ) | (29,571 | ) | (5,511 | ) | (38,165 | ) | |||||||||||
| Interest income and other | 357 | 244 | 1,727 | 172 | 792 | ||||||||||||||||
| Total other income (expense), net | (11,991 | ) | (13,301 | ) | (27,844 | ) | (5,339 | ) | (37,373 | ) | |||||||||||
| INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 19,381 | (22,163 | ) | (43,999 | ) | (7,299 | ) | 23,172 | |||||||||||||
| Income tax provision (benefit) | 1,626 | — | (5,865 | ) | — | 285 | |||||||||||||||
| INCOME (LOSS) FROM CONTINUING OPERATIONS | 17,755 | (22,163 | ) | (38,134 | ) | (7,299 | ) | 22,887 | |||||||||||||
| Loss from discontinued operations, net of tax | — | (2,041 | ) | — | (7,593 | ) | (37,490 | ) | |||||||||||||
| NET INCOME (LOSS) | 17,755 | (24,204 | ) | (38,134 | ) | (14,892 | ) | (14,603 | ) | ||||||||||||
| Net income (loss) attributable to non-controlling interest | 10,620 | — | (25,590 | ) | — | — | |||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO Alta Mesa Resources Inc. STOCKHOLDERS | $ | 7,135 | $ | (24,204 | ) | $ | (12,544 | ) | $ | (14,892 | ) | $ | (14,603 | ) | |||||||
| NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO Alta Mesa Resources Inc. STOCKHOLDERS: | |||||||||||||||||||||
| Basic | $ | 0.04 | $ | (0.07 | ) | ||||||||||||||||
| Diluted | $ | 0.04 | $ | (0.08 | ) | ||||||||||||||||
| ALTA MESA RESOURCES, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except shares and per share data) | ||||||||
| | Successor | Predecessor | ||||||
| | September 30, 2018 | December 31, 2017 | ||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 32,185 | $ | 3,660 | ||||
| Restricted cash | 872 | 1,269 | ||||||
| Accounts receivable, net | 122,828 | 76,161 | ||||||
| Other receivables | 250 | 1,388 | ||||||
| Receivables due from related party | 15,395 | 790 | ||||||
| Note receivable due from related party | 1,642 | — | ||||||
| Prepaid expenses and other current assets | 3,883 | 2,932 | ||||||
| Current assets — discontinued operations | — | 5,195 | ||||||
| Derivative financial instruments | — | 216 | ||||||
| Total current assets | 177,055 | 91,611 | ||||||
| PROPERTY, PLANT AND EQUIPMENT | ||||||||
| Oil and natural gas properties, successful efforts method, net | 2,697,757 | 894,630 | ||||||
| Other property, plant and equipment, net | 401,424 | 32,140 | ||||||
| Total property, plant and equipment, net | 3,099,181 | 926,770 | ||||||
| OTHER ASSETS | ||||||||
| Equity method investment | 9,338 | — | ||||||
| Deferred financing costs, net | 3,377 | 1,787 | ||||||
| Notes receivable due from related party | 11,492 | 12,369 | ||||||
| Goodwill | 699,898 | — | ||||||
| Intangible assets, net | 403,552 | — | ||||||
| Deposits and other long-term assets | 89 | 9,067 | ||||||
| Non-current assets — discontinued operations | — | 43,785 | ||||||
| Deferred tax asset | 9,077 | — | ||||||
| Derivative financial instruments | — | 8 | ||||||
| Total other assets | 1,136,823 | 67,016 | ||||||
| TOTAL ASSETS | $ | 4,413,059 | $ | 1,085,397 | ||||
| Successor | Predecessor | |||||||
| September 30, 2018 | December 31, 2017 | |||||||
| LIABILITIES, PARTNERS’ CAPITAL AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued liabilities | $ | 240,431 | $ | 170,489 | ||||
| Accounts payable — affiliate | — | 5,476 | ||||||
| Advances from non-operators | 9,233 | 5,502 | ||||||
| Advances from related party | 16,917 | 23,390 | ||||||
| Asset retirement obligations | 1,300 | 69 | ||||||
| Current liabilities — discontinued operations | — | 15,419 | ||||||
| Derivative financial instruments | 34,396 | 19,303 | ||||||
| Total current liabilities | 302,277 | 239,648 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Asset retirement obligations, net of current portion | 9,169 | 10,400 | ||||||
| Long-term debt, net | 676,354 | 607,440 | ||||||
| Noncurrent liabilities — discontinued operations | — | 66,862 | ||||||
| Derivative financial instruments | 7,078 | 1,114 | ||||||
| Deferred tax liability | 4,893 | — | ||||||
| Other long-term liabilities | 5 | 5,488 | ||||||
| Total long-term liabilities | 697,499 | 691,304 | ||||||
| TOTAL LIABILITIES | 999,776 | 930,952 | ||||||
| PREFERRED STOCK, $0.0001 par value | ||||||||
| Class A: 1,000,000 shares authorized; 3 shares issued and outstanding | — | — | ||||||
| Class B: 1,000,000 shares authorized; 1 share issued and outstanding | — | — | ||||||
| Commitments and Contingencies | ||||||||
| PARTNERS’ CAPITAL | — | 154,445 | ||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common stock, $0.0001 par value | ||||||||
| Class A: 1,200,000,000 shares authorized; 175,957,183 shares issued and outstanding | 18 | — | ||||||
| Class C: 280,000,000 shares authorized; 204,921,888 shares issued and outstanding | 20 | — | ||||||
| Additional paid in capital | 1,472,570 | — | ||||||
| Accumulated deficit | (20,658 | ) | — | |||||
| Total stockholders’ equity/partners’ capital | 1,451,950 | 154,445 | ||||||
| Noncontrolling interest | 1,961,333 | — | ||||||
| Total equity | 3,413,283 | 154,445 | ||||||
| TOTAL LIABILITIES, PARTNERS’ CAPITAL AND STOCKHOLDERS’ EQUITY | $ | 4,413,059 | $ | 1,085,397 | ||||
| ALTA MESA RESOURCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) | ||||||||||||
| Successor | Predecessor | |||||||||||
| Feb 9, 2018 Through Sept 30, 2018 | Jan 1, 2018 Through Feb 8, 2018 | Nine Months Ended Sept 30, 2017 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
| Net loss | $ | (38,134 | ) | $ | (14,892 | ) | $ | (14,603 | ) | |||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||
| Depreciation, depletion and amortization expense | 102,227 | 12,414 | 80,082 | |||||||||
| Impairment expense | — | 5,560 | 29,206 | |||||||||
| Accretion expense | 489 | 140 | 1,447 | |||||||||
| Amortization of deferred financing costs | 339 | 171 | 2,205 | |||||||||
| Amortization of debt premium | (3,281 | ) | — | — | ||||||||
| Equity-based compensation expense | 8,333 | — | — | |||||||||
| Dry hole expense | — | (45 | ) | 2,447 | ||||||||
| Expired leases | 10,658 | 1,250 | 8,394 | |||||||||
| (Gain) loss on derivative contracts | 63,077 | (7,298 | ) | (38,024 | ) | |||||||
| Cash settlements of derivative contracts | (32,836 | ) | (1,661 | ) | 1,775 | |||||||
| Premium paid on derivative contracts | — | — | (520 | ) | ||||||||
| Interest converted into debt | — | 103 | 904 | |||||||||
| Interest added to notes receivable due from related party | (680 | ) | (85 | ) | (619 | ) | ||||||
| Deferred tax benefit | (5,082 | ) | — | — | ||||||||
| Loss on sale of assets and other | 81 | 1,923 | — | |||||||||
| Gain on acquisition of oil and gas properties | — | — | (6,893 | ) | ||||||||
| Impact on cash from changes in assets and liabilities: | ||||||||||||
| Accounts receivable | (16,225 | ) | (20,895 | ) | (33,649 | ) | ||||||
| Other receivables | 972 | (9,887 | ) | 7,382 | ||||||||
| Receivables due from related party | (14,488 | ) | (117 | ) | 169 | |||||||
| Prepaid expenses and other non-current assets | 8,366 | 9,970 | (9,938 | ) | ||||||||
| Advances from related party | (30,589 | ) | 24,116 | 5,266 | ||||||||
| Settlement of asset retirement obligation | (1,249 | ) | (63 | ) | (6,083 | ) | ||||||
| Accounts payable, accrued liabilities, and other liabilities | (49,472 | ) | 25,815 | 27,308 | ||||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 2,506 | 26,519 | 56,256 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
| Capital expenditures for property, plant and equipment | (523,645 | ) | (38,096 | ) | (244,308 | ) | ||||||
| Acquisitions, net of cash acquired | (791,819 | ) | — | (55,236 | ) | |||||||
| Proceeds withdrawn from Trust Account | 1,042,742 | — | — | |||||||||
| Investment in equity affiliate and other, net | (9,326 | ) | — | (1,515 | ) | |||||||
| NET CASH USED IN INVESTING ACTIVITIES | (282,048 | ) | (38,096 | ) | (301,059 | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
| Proceeds from long-term debt | 162,500 | 60,000 | 286,065 | |||||||||
| Repayments of long-term debt | (193,565 | ) | (43,000 | ) | (251,622 | ) | ||||||
| Additions to deferred financing costs | (3,716 | ) | — | (220 | ) | |||||||
| Purchase and retirement of Class A common shares | (14,750 | ) | — | — | ||||||||
| Capital distributions | — | (68 | ) | — | ||||||||
| Capital contributions | — | — | 207,875 | |||||||||
| 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 | 312,211 | 16,932 | 242,098 | |||||||||
| NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 32,669 | 5,355 | (2,705 | ) | ||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 388 | 4,990 | 7,618 | |||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ | 33,057 | $ | 10,345 | $ | 4,913 | ||||||
*Non-GAAP Financial Information and Reconciliation
Adjusted EBITDAX and Adjusted EBITDA are non-GAAP financial measures for AMR, AMH and Kingfisher Midstream, respectively, and are used by management and external users of our consolidated financial statements. We define Adjusted EBITDA as net income (loss) before interest expense, depreciation and amortization, accretion of asset retirement obligations, tax expense, the non-cash gain (loss) on sale of assets, the non-cash portion of gain (loss) on oil, natural gas and natural gas liquids derivative contracts, and other items. We define Adjusted EBITDAX as 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, the non-cash gain (loss) on sale of assets, the non-cash portion of gain (loss) on oil, natural gas and natural gas liquids derivative contracts, and other items. The Company’s management believes Adjusted EBITDAX and Adjusted EBITDA are 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 and Adjusted EBITDA are not measurements of AMR, AMH and/or Kingfisher Midstream’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 AMR’s and AMH’s profitability or liquidity. Adjusted EBITDAX and Adjusted EBITDA have significant limitations, including that they do not reflect AMR’s, AMH’s and/or Kingfisher Midstream’s cash requirements for capital expenditures, contractual commitments, working capital or debt service. In addition, the presentation of Adjusted EBITDAX and Adjusted EBITDA used herein may not be comparable to similarly titled measures in other companies’ reports, limiting its usefulness as a comparative measure. The following tables set forth a reconciliation of net income (loss) as determined in accordance with GAAP to Adjusted EBITDAX for the periods indicated (unaudited in thousands):
| EBITDA & EBITDAX Calculation | Successor Three Months Ended Sep 30, 2018 | Successor Feb 9 - Sep 30, 2018 | ||||||||||||||||
| (Non-GAAP Measure) | AMR | AMH | KFM | AMR | AMH | KFM | ||||||||||||
| Net income (loss) | $ | 7,135 | $ | 17,844 | $ | 2,066 | $ | (12,544 | ) | $ | (39,204 | ) | $ | (2,847 | ) | |||
| Net income (loss) attributable to noncontrolling interest | 10,620 | - | - | (25,590 | ) | - | - | |||||||||||
| Taxes | 1,626 | - | - | (5,865 | ) | 7 | - | |||||||||||
| Interest | 12,348 | 11,008 | 1,340 | 29,571 | 26,565 | 3,006 | ||||||||||||
| Loss on sale of assets and other | 18 | 18 | - | 81 | 81 | - | ||||||||||||
| Loss on derivative contracts | 11,212 | 11,212 | - | 63,077 | 63,077 | - | ||||||||||||
| Settlements of derivative contracts | (13,867 | ) | (13,867 | ) | - | (32,836 | ) | (32,836 | ) | - | ||||||||
| Depreciation, depletion & amortization expense | 52,877 | 45,623 | 7,254 | 102,227 | 83,068 | 19,159 | ||||||||||||
| Accretion expense | 226 | 226 | - | 489 | 489 | - | ||||||||||||
| Stock compensation expense | 604 | 325 | 277 | 8,333 | 6,714 | 784 | ||||||||||||
| EBITDA | 82,799 | 72,389 | 10,937 | 126,943 | 107,961 | 20,102 | ||||||||||||
| Exploration expense | 1,029 | 1,029 | - | 14,067 | 14,067 | - | ||||||||||||
| EBITDAX | 83,828 | 73,418 | 10,937 | 141,010 | 122,028 | 20,102 | ||||||||||||
| Non-recurring business combination expense | - | - | - | 25,734 | 25,734 | - | ||||||||||||
| Adjusted EBITDAX | $ | 83,828 | $ | 73,418 | $ | 10,937 | $ | 166,744 | $ | 147,762 | $ | 20,102 | ||||||
*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 September 30, 2018 (“Successor Period”), to indicate the application of the different basis of accounting between the periods presented. The three months ended September 30, 2017 is referred to as the “2017 Predecessor Period”. Alta Mesa Upstream is the “Predecessor” for periods prior to the Business Combination, which do not include the consolidation of the Company and Kingfisher Midstream. For the periods after the Business Combination, Alta Mesa Resources, including the consolidation of Alta Mesa Upstream and Kingfisher Midstream, is the “Successor”.
