Goodrich Petroleum announces year-end and fourth quarter financial results and operational update

Thursday, February 21, 2013
  • The Company announced a net loss applicable to common stock of $77.2 million for the quarter, or ($2.12) per basic share, versus a net loss applicable to common stock of $23.8 million, or ($0.66) per basic share in the prior year period.
  • Production for the quarter was 6.6 billion cubic feet equivalent ("Bcfe"), or an average of 71,800 Mcfe per day, versus 10.0 Bcfe, or an average of 108,200 Mcfe per day in the prior year period.
  • Revenues for the quarter were $48.2 million versus $51.4 million in the prior year period.

Goodrich Petroleum Corporation (NYSE: GDP) announced financial and operating results for the year and fourth quarter ended December 31, 2012.

  • Adjusted EBITDAX grew 5 percent sequentially and 18 percent from the prior year period to a record $50.5 Million for the quarter, while Discretionary Cash Flow grew by 8 percent sequentially and 15 percent from the prior year period to $39.9 Million for the quarter
  • Adjusted Revenues, including realized gain on derivatives of $17.1 Million, totaled $65.4 Million for the quarter
  • Oil production grew by 12.5% sequentially and 47% over the prior year period to an average of 3,600 barrels of oil per day for the quarter, which comprised 30% of total production for the quarter. Oil production for the year increased by 70% over the prior year
  • Tuscaloosa Marine Shale: The Crosby 12H-1 well (50% WI), the Company's initial operated completed well in the field, had a peak, 24-hour average rate of approximately 1,300 barrels of oil equivalent ("BOE") per day, comprised of approximately 1,200 barrels of oil and 600 Mcf of natural gas per day. The well has averaged 1,200 BOE per day over 15 days, comprised of 1,100 barrels of oil and 600 Mcf of natural gas per day, and is currently producing at 1,200 BOE per day.

CASH FLOW

Earnings before interest, taxes, DD&A, non-cash general and administrative expenses and exploration (" Adjusted EBITDAX") increased by 18% to $50.5 million in the quarter, compared to $42.7 million in the prior year period and $48.0 million in the prior quarter. Adjusted EBITDAX for the year increased by 9% to $184.0 million versus $169.2 million in the prior year period.

Discretionary cash flow ("DCF"), defined as net cash provided by operating activities before changes in working capital, increased by 15% to $39.9 million in the quarter, compared to $34.8 million in the prior year period and $36.9 million in the prior quarter. DCF increased by 6% to $141.5 million for the year, versus $133.8 million in the prior year period. Net cash provided by operating activities for the year increased by 28% to $173.8 million, compared to $136.3 million for the prior year period.

NET INCOME

The Company announced a net loss applicable to common stock of $77.2 million for the quarter, or ($2.12) per basic share, versus a net loss applicable to common stock of $23.8 million, or ($0.66) per basic share in the prior year period. The quarter was negatively impacted by non-recurring expenses of $58.0 million, comprised of $45.2 million for impairment of natural gas assets and $12.8 million of exploration expense associated with the Company's partial abandonment of a well in one of its fields. The Company announced a net loss applicable to common stock of $90.2 million for 2012, or ($2.48) per basic share, versus a net loss applicable to common stock of $37.8 million, or ($1.05) per basic share for 2011.

PRODUCTION

Production for the quarter was 6.6 billion cubic feet equivalent ("Bcfe"), or an average of 71,800 Mcfe per day, versus 10.0 Bcfe, or an average of 108,200 Mcfe per day in the prior year period. Oil production for the quarter totaled 329,000 barrels of oil, or an average of approximately 3,600 barrels per day, versus 225,000 barrels of oil, or 2,450 barrels per day, in the prior year period. Peak rate for the quarter was approximately 4,350 barrels of oil per day. Natural gas production for the quarter totaled 4.6 Bcf, or an average of 50,300 Mcf per day. Production for the year totaled 1.1 million barrels of oil, a 70% increase over 2011, and 24.8 Bcf of natural gas, or an average of 85,800 Mcfe per day.

REVENUES

Revenues for the quarter were $48.2 million versus $51.4 million in the prior year period. Revenues, including realized gain on derivatives not designated as hedges of $17.1 million for the quarter, would have been $65.4 million. Average realized price per unit for the quarter, was $7.24 per Mcfe, versus $5.18 per Mcfe in the prior year period. When factoring in the realized gain on derivatives not designated as hedges, average realized price per unit was $9.83 per Mcfe, versus $6.17 in the prior year period.

Revenues for the year totaled $180.8 million, versus $201.1 million in the prior year period. Revenues, including realized gain on derivatives not designated as hedges of $73.2 million for the year, would have been $254.0 million. Average realized price per unit for the year, was $5.75 per Mcfe, versus $5.01 per Mcfe in the prior year period. When factoring in the realized gain on derivatives not designated as hedges, average realized price per unit was $8.08 per Mcfe, versus $5.79 per Mcfe in the prior year period.

OPERATING EXPENSES

Lease operating expense ("LOE") was $4.7 million in the quarter, or $0.71 per Mcfe, versus $5.9 million, or $0.60 per Mcfe in the prior year period. For the year, LOE totaled $25.9 million, or $0.83 per Mcfe, versus $21.5 million, or $0.54 per Mcfe in the prior year period.

Production and other taxes for the quarter were $2.4 million, or $0.36 per Mcfe, versus $1.3 million, or $0.13 per Mcfe in the prior year period. For the year, production and other taxes totaled $8.1 million, or $0.26 per Mcfe, versus $5.5 million, or $0.14 per Mcfe in the prior year period.

Transportation and processing expense was $2.8 million, or $0.43 per Mcfe in the quarter, versus $5.5 million, or $0.55 per Mcfe in the prior year period. For the year, transportation expense was $13.9 million, or $0.44 per Mcfe, versus $13.0 million, or $0.32 per Mcfe in the prior year period.

Depreciation, depletion and amortization ("DD&A") expense for the quarter totaled $37.1 million, or $5.62 per Mcfe, versus $38.6 million, or $3.87 per Mcfe in the prior year period. DD&A expense for the year totaled $141.2 million, or $4.50 per Mcfe, versus $131.8 million, or $3.29 per Mcfe for the prior year period.

Exploration expense was $16.4 million, or $2.48 per Mcfe for the quarter, versus $1.9 million, or $0.19 per Mcfe in the prior year period. Exploration expense for the year was $23.1 million, or $0.74 per Mcfe, versus $8.3 million, or $0.21 per Mcfe in the prior year. Approximately $12.8 million or 78% of exploration expense for the quarter and 56% for the year was associated with the dry hole expense related to the Denkmann 33H-1 mechanical failure.

Impairment expense was $45.2 million, or $6.84 per Mcfe for the quarter, versus $6.9 million, or $0.69 per Mcfe in the prior year period. Impairment expense for the year was $47.8 million, or $1.52 per Mcfe, versus $8.1 million, or $0.20 per Mcfe during the prior year period. Impairment expense during the quarter was mostly due to the impact of falling natural gas prices on our Angelina River trend field in Texas.

General and Administrative ("G&A") expense was $7.2 million, or $1.09 per Mcfe in the quarter, versus $8.0 million, or $0.80 per Mcfe in the prior year period. For the quarter, the Company recorded non-cash G&A expenses related to stock based compensation for its officers and employees of $2.2 million, or $0.33 per Mcfe, versus $2.0 million, or $0.20 per Mcfe in the prior year period. For the year, G&A expense totaled $28.9 million, or $0.92 per Mcfe, versus $29.8 million, or $0.74 per Mcfe in the prior year period. Non-cash, stock based compensation for the year was 24% of G&A expenses, or $6.9 million, which was $0.22 per Mcfe, versus $6.5 million, or $0.16 per Mcfe for the prior year period.

OPERATING INCOME

Operating income, defined as revenues minus operating expenses, totaled a loss of $67.1 million for the quarter versus an operating loss of $16.9 million for the prior year period. Operating income was negatively impacted by $58.0 million of non-recurring, non-cash expenses in the quarter. Operating income for the year was a loss of $63.7 million versus an operating loss of $17.1 million for the prior year period.

INTEREST EXPENSE

Interest expense for the quarter was $13.1 million, or $1.98 per Mcfe, versus $12.5 million, or $1.26 per Mcfe in the prior year period. Non-cash interest expense associated with the Company's long term debt comprised 26% of the total, or $3.4 million ($0.52 per Mcfe). For the year, interest expense was $52.4 million, or $1.67 per Mcfe, versus $49.4 million, or $1.23 per Mcfe in the prior year. Non-cash interest expense comprised 24% of the total for the year, or $12.8 million ($0.41 per Mcfe).

CAPITAL EXPENDITURES

Capital expenditures for the quarter were $57.2 million, of which $54.0 million was spent on drilling and completion costs and $3.1 million on leasehold acquisition, facilities and other expenditures. For the full year 2012, capital expenditures totaled $250.7 million, of which $218.7 millionwas for drilling and completion costs (90% oil directed activities) and $32.0 million was for leasehold, infrastructure and other miscellaneous expenditures. Drilling and completion expenditures of $218.7 million were comprised of $94.6 million for wells drilled in 2012 that had new reserve additions, $73.2 million, or 33% of the Company's drilling and completion capital expenditures for the year, for the conversion of 16 proved undeveloped reserve locations to proved developed reserves in 2012, $28.5 million for wells with drilling and/or completion operations in 2012 that did not have reserves booked at year-end and $22.4 million of carry-over drilling and completion costs from wells drilled in prior years.

YEAR-END RESERVES

The Company's proved oil and natural gas reserves as of December 31, 2012 were 333.1 Bcfe, versus 490 Bcfe in the prior year period. The Company incurred negative reserve revisions of 121 Bcfe of natural gas reserves at year-end that were on the books at year-end 2011 primarily related to the loss of proved undeveloped natural gas reserves, mainly in Northwest Louisiana and East Texas areas, as a result of such reserves being uneconomic under SEC pricing. The Company also sold 36.1 Bcfe during the year in an asset sale of a non-core property. Year-end proved reserves were 76% natural gas, 24% oil and liquids (an increase from 17% at year-end 2011) and 48% developed. The present value, using a 10% discount rate of the future net cash flows before income taxes of the proved reserves ("PV-10"), was $359.1 million, using SEC pricing of $2.85 per MMBtu for natural gas and $94.71 per barrel of oil. At current five year futures NYMEX pricing of $90.13 per barrel of oil (WTI) and $4.17 per MMBtu of natural gas, the year-end proved reserves would have been 442 Bcfe and the related PV-10 would have been $530 million. Year-end PV-10 of proved reserves is a non-GAAP financial measure. Please refer to "Other Information" section for additional disclosure and nformation.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. More

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