Press Release
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Mid-Con Energy Partners, LP Announces First Quarter 2019 Operating and Financial Results and Quarterly Distribution on Preferred Units
“We continue to transform
Olmstead continued, “We are excited with the upside potential within our assets and we will continue to demonstrate capital discipline, while executing operationally. As we look to the future, we expect to continue evaluating potential acquisitions of waterflood assets as well as complementary long-lived, low-decline producing properties where we believe the opportunity exists to enhance margins through our competitive operational strengths.”
Recent Highlights
- Closed the divestiture of substantially all of the Partnership’s
Texas assets for$60.0 million in proceeds onMarch 28, 2019 , subject to customary purchase price adjustments; - Closed the acquisition of producing properties in
Caddo ,Grady , andOsage Counties in Oklahoma for$27.5 million onMarch 28, 2019 , subject to customary purchase price adjustments; - Averaged first quarter 2019 production of 3,467 barrels of oil equivalent per day (Boe/d);
- Reported net loss of
$3.8 million for the first quarter 2019; - Reduced senior debt balance from
$93.0 million atDecember 31, 2018 , to$68.0 million as ofMarch 31, 2019 ; - Amended credit agreement on
March 28, 2019 , resulting in new borrowing base of$110.0 million which provides$42.3 million in liquidity, net of letters of credit as ofApril 26, 2019 ; - Reported total leverage ratio as defined by credit agreement of 3.35x as of
March 31, 2019 ; - Generated first quarter 2019 adjusted EBITDA of
$4.5 million (1).
(1) Adjusted EBITDA is a Non-GAAP financial measure and is described and reconciled to the most directly comparable GAAP measure in the attached table under “Non-GAAP Financial Measures.”
FIRST QUARTER 2019 RESULTS
Production - Production for the first quarter of 2019 was 312 MBoe, or 3,467 Boe/d with a 94% oil weighting. On a daily basis, this represented a 5% decrease sequentially and a 24% increase year-over-year. Production in the first quarter of 2019 was adversely impacted by winter weather in
Revenue and Price Realizations - Oil and natural gas sales were
Lease Operating Expenses (“LOE”) - LOE was
Production and Ad Valorem Taxes - Production and ad valorem taxes in the first quarter of 2019 were
General and Administrative Expenses (“G&A”) - G&A in the first quarter of 2019 was
Net Income (Loss) - For the first quarter of 2019,
Adjusted EBITDA - Adjusted EBITDA, a non-GAAP measure, for the first quarter of 2019 was
BALANCE SHEET, LIQUIDITY AND BORROWING BASE SUMMARY
On
On
STRATEGIC TRANSACTION
On
HEDGING SUMMARY
As of
Period Covered | Differential Fixed Price |
Weighted Average Fixed Price |
Weighted Average Floor Price |
Weighted Average Ceiling Price |
Total Bbls Hedged/day |
Index | ||||||||||||||||
Swaps - 2019 | $ | — | $ | 56.10 | $ | — | $ | — | 1,727 | NYMEX-WTI | ||||||||||||
Swaps - 2019 | $ | (20.15 | ) | $ | — | $ | — | $ | — | 150 | WCS-CRUDE-OIL | |||||||||||
Swaps - 2020 | $ | — | $ | 55.81 | $ | — | $ | — | 1,931 | NYMEX-WTI | ||||||||||||
Swaps - 2021 | $ | — | $ | 55.78 | $ | — | $ | — | 672 | NYMEX-WTI | ||||||||||||
Collars - 2021 | $ | — | $ | — | $ | 52.00 | $ | 58.80 | 672 | NYMEX-WTI | ||||||||||||
PREFERRED UNIT DISTRIBUTION
The Partnership announces that the Board of Directors of its general partner declared a cash distribution for: (1) its Class A Convertible Preferred Units for the first quarter of 2019, a cash distribution of
FISCAL YEAR 2019 GUIDANCE
The following outlook is subject to all the cautionary statements and limitations described under the “Forward-Looking Statements” caption at the end of this press release. These estimates and assumptions reflect management’s best judgment based on current and anticipated market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control.
Guidance as of May 1, 2019 | FY 2019 | |
Net production (Boe/d)(1) | 3,400 - 3,800 | |
Lease operating expenses per Boe | $21.00 - $24.00 | |
Production and ad valorem taxes (% of total revenue) | 8.00% - 9.50% | |
Estimated capital expenditures | 9.0 MM | |
(1) Production volumes in Boe equivalents calculated at a rate of six Mcf per Bbl. | ||
FIRST QUARTER 2019 CONFERENCE CALL
As announced on
ABOUT
FORWARD-LOOKING STATEMENTS
This press release includes “forward-looking statements” — that is, statements related to future, not past, events within meaning of the federal securities laws. Forward-looking statements are based on current expectations and include any statement that does not directly relate to a current or historical fact. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as “anticipate,” “believe,” “estimate,” “intend,” “expect,” “plan,” “project,” “should,” “goal,” “forecast,” “guidance,” “could,” “may,” “continue,” “might,” “potential,” “scheduled,” “pursue,” “target,” “will” and the negative of such terms or other comparable terminology. These forward-looking statements involve certain risks and uncertainties and ultimately may not prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. For further discussion of risks and uncertainties, you should refer to Mid-Con Energy’s filings with the
Mid-Con Energy Partners, LP and subsidiaries | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(in thousands, except number of units) | ||||||||
(Unaudited) | ||||||||
March 31, 2019 | December 31, 2018 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 185 | $ | 467 | ||||
Accounts receivable | ||||||||
Oil and natural gas sales | 5,035 | 3,691 | ||||||
Other | 179 | 503 | ||||||
Derivative financial instruments | — | 5,666 | ||||||
Prepaid expenses and other | 487 | 118 | ||||||
Assets held for sale, net | 430 | 430 | ||||||
Total current assets | 6,316 | 10,875 | ||||||
Property and equipment | ||||||||
Oil and natural gas properties, successful efforts method | ||||||||
Proved properties | 276,389 | 379,441 | ||||||
Unproved properties | 3,371 | 2,928 | ||||||
Other property and equipment | 1,551 | 427 | ||||||
Accumulated depletion, depreciation, amortization and impairment | (90,710 | ) | (175,948 | ) | ||||
Total property and equipment, net | 190,601 | 206,848 | ||||||
Derivative financial instruments | — | 2,418 | ||||||
Other assets | 1,385 | 1,563 | ||||||
Total assets | $ | 198,302 | $ | 221,704 | ||||
LIABILITIES, CONVERTIBLE PREFERRED UNITS AND EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | ||||||||
Trade | $ | 804 | $ | 141 | ||||
Related parties | 1,176 | 3,732 | ||||||
Derivative financial instruments | 2,928 | — | ||||||
Accrued liabilities | 590 | 2,024 | ||||||
Other current liabilities | 408 | — | ||||||
Total current liabilities | 5,906 | 5,897 | ||||||
Derivative financial instruments | 1,329 | — | ||||||
Long-term debt | 68,000 | 93,000 | ||||||
Other long-term liabilities | 782 | 47 | ||||||
Asset retirement obligations | 29,780 | 26,001 | ||||||
Commitments and contingencies | ||||||||
Class A convertible preferred units - 11,627,906 issued and outstanding, respectively | 22,016 | 21,715 | ||||||
Class B convertible preferred units - 9,803,921 issued and outstanding, respectively | 14,683 | 14,635 | ||||||
Equity, per accompanying statements | ||||||||
General partner | (831 | ) | (786 | ) | ||||
Limited partners - 30,785,958 and 30,436,124 units issued and outstanding, respectively | 56,637 | 61,195 | ||||||
Total equity | 55,806 | 60,409 | ||||||
Total liabilities, convertible preferred units and equity | $ | 198,302 | $ | 221,704 |
Mid-Con Energy Partners, LP and subsidiaries | ||||||||
Condensed Consolidated Statements of Operations | ||||||||
(in thousands, except per unit data) | ||||||||
(Unaudited) | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2019 | 2018 | |||||||
Revenues | ||||||||
Oil sales | $ | 14,594 | $ | 14,544 | ||||
Natural gas sales | 250 | 168 | ||||||
Other operating revenues | 372 | — | ||||||
Loss on derivatives, net | (12,198 | ) | (3,382 | ) | ||||
Total revenues | 3,018 | 11,330 | ||||||
Operating costs and expenses | ||||||||
Lease operating expenses | 6,830 | 4,640 | ||||||
Production and ad valorem taxes | 1,282 | 1,033 | ||||||
Other operating expenses | 473 | — | ||||||
Impairment of proved oil and natural gas properties | — | 8,751 | ||||||
Depreciation, depletion and amortization | 3,098 | 3,441 | ||||||
Dry holes and abandonments of unproved properties | — | 88 | ||||||
Accretion of discount on asset retirement obligations | 328 | 153 | ||||||
General and administrative | 2,662 | 1,894 | ||||||
Total operating costs and expenses | 14,673 | 20,000 | ||||||
Gain (loss) on sales of oil and natural gas properties, net | 9,469 | (400 | ) | |||||
Loss from operations | (2,186 | ) | (9,070 | ) | ||||
Other (expense) income | ||||||||
Interest income | 8 | 2 | ||||||
Interest expense | (1,615 | ) | (1,339 | ) | ||||
Other income | 5 | — | ||||||
Loss on settlements of asset retirement obligations | — | (11 | ) | |||||
Total other expense | (1,602 | ) | (1,348 | ) | ||||
Net loss | (3,788 | ) | (10,418 | ) | ||||
Less: Distributions to preferred unitholders | 1,149 | 1,016 | ||||||
Less: General partner's interest in net loss | (45 | ) | (123 | ) | ||||
Limited partners' interest in net loss | $ | (4,892 | ) | $ | (11,311 | ) | ||
Limited partners' interest in net loss per unit | ||||||||
Basic and diluted | $ | (0.16 | ) | $ | (0.37 | ) | ||
Weighted average limited partner units outstanding | ||||||||
Limited partner units (basic and diluted) | 30,630 | 30,176 |
Mid-Con Energy Partners, LP and subsidiaries | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Three Months Ended March 31, |
||||||||
2019 | 2018 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (3,788 | ) | $ | (10,418 | ) | ||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities | ||||||||
Depreciation, depletion and amortization | 3,098 | 3,441 | ||||||
Debt issuance costs amortization | 178 | 154 | ||||||
Accretion of discount on asset retirement obligations | 328 | 153 | ||||||
Impairment of proved oil and natural gas properties | — | 8,751 | ||||||
Dry holes and abandonments of unproved properties | — | 88 | ||||||
Loss on settlements of asset retirement obligations | — | 11 | ||||||
Cash paid for settlements of asset retirement obligations | — | (27 | ) | |||||
Mark to market on derivatives | ||||||||
Loss on derivatives, net | 12,198 | 3,382 | ||||||
Cash settlements received (paid) for matured derivatives | 143 | (1,324 | ) | |||||
(Gain) loss on sales of oil and natural gas properties | (9,469 | ) | 400 | |||||
Non-cash equity-based compensation | 334 | 239 | ||||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable | (1,344 | ) | 234 | |||||
Other receivables | 127 | (280 | ) | |||||
Prepaids and other | (369 | ) | (331 | ) | ||||
Accounts payable - trade and accrued liabilities | 432 | 319 | ||||||
Accounts payable - related parties | (2,999 | ) | (357 | ) | ||||
Net cash (used in) provided by operating activities | (1,131 | ) | 4,435 | |||||
Cash flows from investing activities | ||||||||
Acquisitions of oil and natural gas properties | (2,796 | ) | (8,899 | ) | ||||
Additions to oil and natural gas properties | (3,057 | ) | (1,465 | ) | ||||
Proceeds from sales of oil and natural gas properties | 32,502 | 1,151 | ||||||
Net cash provided by (used in) investing activities | 26,649 | (9,213 | ) | |||||
Cash flows from financing activities | ||||||||
Proceeds from line of credit | 7,000 | 2,000 | ||||||
Payments on line of credit | (32,000 | ) | (11,762 | ) | ||||
Debt issuance costs | — | (651 | ) | |||||
Proceeds from sale of Class B convertible preferred units, net of offering costs | — | 14,971 | ||||||
Distributions to Class A convertible preferred units | (500 | ) | (1,000 | ) | ||||
Distributions to Class B convertible preferred units | (300 | ) | — | |||||
Net cash (used in) provided by financing activities | (25,800 | ) | 3,558 | |||||
Net decrease in cash and cash equivalents | (282 | ) | (1,220 | ) | ||||
Beginning cash and cash equivalents | 467 | 1,832 | ||||||
Ending cash and cash equivalents | $ | 185 | $ | 612 | ||||
NON-GAAP FINANCIAL MEASURES
This press release, the financial tables and other supplemental information include “Adjusted EBITDA” which is a non-generally accepted accounting principles (“Non-GAAP”) measure used by our management to describe financial performance with external users of our financial statements. The Partnership believes the Adjusted EBITDA is useful to investors because this measurement is used by many companies in its industry as a measurement of financial performance and is commonly employed by financial analysts and others to evaluate the financial performance of the Partnership and to compare the financial performance of the Partnership with the performance of other publicly traded partnerships within its industry. Adjusted EBITDA should not be considered an alternative to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP.
Adjusted EBITDA is defined as net income (loss) plus (minus):
- Interest expense, net;
- Depreciation, depletion and amortization;
- Accretion of discount on asset retirement obligations;
- (Gain) loss on derivatives, net;
- Cash settlements received (paid) for matured derivatives, net;
- Cash premiums received (paid) for derivatives, net;
- Impairment of proved oil and natural gas properties;
- Non-cash equity-based compensation;
- (Gain) loss on sales of oil and natural gas properties, net; and
- Dry holes and abandonments on unproved properties.
Mid-Con Energy Partners, LP and subsidiaries | ||||||
Reconciliation of Net (Loss) Income to Adjusted EBITDA | ||||||
(in thousands) | ||||||
(Unaudited) | ||||||
Thee Month Ended | ||||||
March 31, 2019 | December 31, 2018 | March 31, 2018 | ||||
Net (loss) income | $ (3,788) | $ 2,369 | $ (10,418) | |||
Interest expense, net | 1,607 | 1,641 | 1,337 | |||
Depreciation, depletion and amortization | 3,098 | 5,105 | 3,441 | |||
Accretion of discount on asset retirement obligations | 328 | (27) | 153 | |||
Impairment of proved oil and natural gas properties | — | 21,450 | 8,751 | |||
Dry holes and abandonments of unproved properties | — | 417 | 88 | |||
Loss (gain) on derivatives, net | 12,198 | (24,914) | 3,382 | |||
Cash settlements received (paid) for matured derivatives | 143 | (940) | (1,324) | |||
Cash premiums paid for derivatives, net | — | (201) | — | |||
Non-cash equity-based compensation | 334 | 74 | 239 | |||
(Gain) loss on sales of oil and natural gas properties, net | (9,469) | 120 | 400 | |||
Adjusted EBITDA | $ 4,451 | $ 5,094 | $ 6,049 | |||
INVESTOR RELATIONS CONTACT
IR@midcon-energy.com
(918) 743-7575
Source: Mid-Con Energy Partners, LP