Harvest Oil & Gas Announces Second Quarter 2019 Results
HOUSTON, Aug. 14, 2019 (GLOBE NEWSWIRE) -- Harvest Oil & Gas Corp. (OTCQX: HRST) (“Harvest” or the “Company”) today announced results for the second quarter of 2019 and the filing of its Form 10-Q with the Securities and Exchange Commission (“SEC”) on August 14, 2019. Harvest is the successor reporting company to EV Energy Partners, L.P. Key Highlights
Average daily production was 112.3 MMcfe for the second quarter of 2019
In July, announced a definitive agreement to sell oil and gas properties in the Barnett Shale for $72 million, subject to purchase price adjustments, which is expected to close in the third quarter of 2019
In July, entered into a definitive agreement to sell certain oil and gas properties in the Mid-Continent area for $6.5 million, subject to purchase price adjustments, which is expected to close in the third quarter of 2019
Paid down remaining $55 million of debt under credit facility during second quarter resulting in $0 debt outstanding under the credit facility as of June 30, 2019
Second Quarter 2019 Financial Results
For the second quarter of 2019, Harvest reported a net loss of $60.9 million, or $(6.05) per basic and diluted weighted average share outstanding compared to a net loss of $35.8 million, or $(3.56) per basic and diluted weighted average share outstanding, for the first quarter of 2019. For the second quarter of 2018, a net loss of $595.6 million was reported, which reflects the combined results of two months ended May 31, 2018 (Predecessor) and one month ended June 30, 2018 (Successor). Included in the 2019 second quarter net loss were the following items:
$73.2 million of impairment of oil and natural gas properties primarily related to the Barnett Shale, which was held for sale as of June 30, 2019,
$13.6 million of non-cash gains on commodity derivatives,
$0.5 million of divestiture related expense contained in general and administrative expenses,
$0.7 million of litigation settlement expenses contained in general and administrative expenses, and
$0.7 million of stock-based compensation costs contained in general and administrative expenses.
Production for the second quarter of 2019 was 7.1 Bcf of natural gas, 146 MBbls of oil and 369 MBbls of natural gas liquids (NGLs), or 112.3 million cubic feet equivalent per day (MMcfe/d). This represents an 18 percent decrease from the first quarter of 2019 production of 137.2 MMcfe/d and a 38 percent decrease from the second quarter of 2018 production of 181.8 MMcfe/d. The decrease in production from the first quarter of 2019 was primarily due to the divestiture of oil and gas properties in the San Juan Basin that closed in April 2019, as well as a divestiture in the Mid-Continent area that closed in January 2019 and natural production declines. The decrease in production from the second quarter of 2018 was primarily due to the divestiture of the Central Texas and Karnes County, Texas properties that closed in August 2018, the Central Texas area divestiture that closed in December 2018, the Mid-Continent area divestitures that closed in December 2018, January 2019, and April 2019, the San Juan Basin divestiture that closed in April 2019 and natural production declines.
Adjusted EBITDAX for the second quarter of 2019 was $6.9 million, a 45 percent decrease from the first quarter of 2019 and a 76 percent decrease from the second quarter of 2018. The decrease in Adjusted EBITDAX from the first quarter of 2019 was primarily due to the San Juan divestiture that closed in April 2019, the Mid-Continent area divestiture that closed in April 2019, and a decrease in realized natural gas and natural gas liquids prices, partially offset by an increase in realized hedge gains compared to the previous period, an increase in other income, and an increase in realized oil prices. The decrease in Adjusted EBITDAX from the second quarter of 2018 was primarily due to the divestitures that closed in 2018, January 2019 and April 2019, and a decrease in realized oil and natural gas liquids prices, partially offset by an increase in realized commodity hedge gains, an increase in other income, and an increase in realized natural gas prices. Adjusted EBITDAX is a Non-GAAP financial measures and is described in the attached table under “Non-GAAP Measures.”
Divestitures
Barnett Shale
As previously announced in July 2019, Harvest has entered into a definitive agreement to sell substantially all of its interests in the Barnett Shale for $72 million (subject to purchase price adjustments). The transaction is expected to close in the third quarter of 2019 and has an effective date of April 1, 2019. Harvest’s Barnett Shale production for the first six months of 2019 averaged 54.5 MMcfe per day. The estimated proved reserves as of December 31, 2018 for the interests being divested, using SEC prices, were 276.6 Bcfe (62% natural gas, 37% natural gas liquids and 1% crude oil).
Mid-Continent Area
In July 2019, Harvest entered into a definitive agreement to sell certain oil and gas properties in the Mid-Continent area located in the Anadarko Basin and Scoop-Stack for $6.5 million (subject to purchase price adjustments). The transaction is expected to close in the third quarter of 2019 and has an effective date of January 1, 2019.
Harvest’s Mid-Continent production for the first six months of 2019 for the interests being divested averaged 7.8 MMcfe per day. The estimated proved reserves as of December 31, 2018 for the interests being divested, using SEC prices, were 18.5 Bcfe (61% natural gas, 19% natural gas liquids and 20% crude oil).
Harvest is currently considering ways to return net proceeds from its asset sales to shareholders.
Updated 2019 Guidance
Subsequent to the announcement of the Barnett Shale and Mid-Continent area divestitures, Harvest has updated guidance for the third and fourth quarters of 2019 in the following table.
Quarterly Report on Form 10-Q Harvest’s financial statements and related footnotes are available in its Quarterly Report on Form 10-Q, which was filed on August 14, 2019, and is available through the Investor Relations/SEC Filings section of the Harvest website at http://www.hvstog.com.
About Harvest Oil & Gas Corp
Harvest is an independent oil and gas company engaged in the efficient operation and development of onshore oil and gas properties in the continental United States. The Company’s assets consist primarily of producing and non-producing properties in the Barnett Shale, the Appalachian Basin (which includes the Utica Shale), Michigan, the Mid-Continent areas in Oklahoma, Texas, Kansas, and Louisiana, the Permian Basin, and the Monroe Field in Northern Louisiana. More information about Harvest is available on the internet at https://www.hvstog.com.
Forward Looking Statements
This press release contains certain statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends affecting the financial condition of its business. These forward-looking statements are subject to a number of risks and uncertainties, most of which are difficult to predict and many of which are beyond its control. Please read the Company’s filings with the Securities and Exchange Commission, including “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2018 and other public filings and press releases for a discussion of risks and uncertainties that could cause actual results to differ from those in such forward-looking statements. These risks include, but are not limited to, risks relating to pending asset sales, including risks relating to the consummation of such sales in accordance with their terms or at all, our inability to control our contract operator, EnerVest Operating, L.L.C., outside of the parameters of the Services Agreement, our ability to obtain needed capital or financing on satisfactory terms, fluctuations in prices of oil, natural gas and natural gas liquids and the length of time commodity prices remain depressed, our ability to maintain production levels through development drilling, risks associated with drilling and operating wells, the availability of drilling and production equipment, changes in applicable laws and regulations that adversely affect our operations and general economic conditions. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “plan,” “expect,” “indicate” and similar expressions are intended to identify forward-looking statements. All statements other than statements of current or historical fact contained in this press release are forward-looking statements. Although the Company believes that the forward-looking statements contained in this press release are based upon reasonable assumptions, the forward-looking events and circumstances discussed in this press release may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.
You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.
Operating Statistics
Unaudited Condensed Consolidated Balance Sheets
($ in thousands, except number of shares)
Unaudited Condensed Consolidated Statements of Operations
($ in thousands, except per share/unit data)
Unaudited Condensed Consolidated Statements of Cash Flows
($ in thousands)
Non-GAAP Measures
The Company defines Adjusted EBITDAX as net (loss) income plus income taxes; interest expense, net; depreciation, depletion and amortization; accretion expense on obligations; loss (gain) on derivatives, net; cash settlements of matured commodity derivative contracts; non-cash equity-based compensation; impairment of oil and natural gas properties; non-cash oil inventory adjustment; dry hole and exploration costs; gain on sales of oil and natural gas properties; reorganization items, net; and (gain) loss on equity securities. Adjusted EBITDAX is used by the Company’s management to provide additional information and statistics relative to the performance of the business, including (prior to the creation of any reserves) the cash return on investment. The Company believes this financial measure may indicate to investors whether or not it is generating cash flow at a level that can support or sustain quarterly interest expense and capital expenditures. Adjusted EBITDAX should not be considered as an alternative to net income, operating income, cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDAX excludes some, but not all, items that affect net income and operating income and this measure may vary among companies. Therefore, Harvest’s Adjusted EBITDAX may not be comparable to similarly titled measures of other companies.
Reconciliation of Net Loss to Adjusted EBITDAX
($ in thousands)
Total Current Hedge Position
Harvest Oil & Gas Corp., Houston, TX Ryan Stash 713-651-1144 hvstog.com