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Alta Mesa Resources, Inc.$4.16$.01.24%

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 Alta Mesa Resources, Inc. Announces Operations Update and 2018 Guidance; 2017 Financial Results for Subsidiary Alta Mesa Holdings, LP
   Thursday, March 29, 2018 9:14:00 AM ET

HOUSTON, March 29, 2018 (GLOBE NEWSWIRE) -- Alta Mesa Resources, Inc., (NASDAQ:AMR) (“Alta Mesa Resources”, the “Company” or “Alta Mesa”) today announced 2018 production and capex guidance estimates for its wholly owned subsidiaries, Alta Mesa Holdings, LP (“AMHLP”) and Kingfisher Midstream, LLC (“Kingfisher”). In addition, AMHLP reported its financial results for the fourth quarter and full year of 2017. A conference call to discuss these items is scheduled for today at 10 a.m. central time (888-347-8149). Prior to the call, a supplemental slide deck to be used on the call will be available in the investor relations portion of the Company’s website at www.altamesa.net .

  • Alta Mesa’s total capital expenditures for 2018 are expected to range from $725 million to $800 million, including AMHLP STACK production facilities and Kingfisher midstream facilities (excluding acquisitions). Capital will be allocated primarily to AMHLP’s upstream STACK area, $550 million to $580 million, with the remaining balance being allocated to Kingfisher, $175 million to $220 million;
     
  • AMHLP’s full-year 2017 STACK production was approximately 20.6 MBOE per day, a 58% increase over 2016 production of approximately 13.1 MBOE per day. Fourth quarter 2017 AMHLP STACK production was approximately 22.1 MBOE per day, a 47% increase over fourth quarter 2016 production of approximately 15.1 MBOE per day. AMHLP’s production in the STACK has grown at a five-year compound annual growth rate of over 80%;
     
  • For 2018, AMHLP forecasts total STACK production to average 33 to 38 MBOE per day, representing an estimated year-over-year growth of 70% at the midpoint, compared to 2017 STACK production;
     
  • AMHLP’s year-end 2017 Proved Reserves in the STACK were 176.2 MMBOE, an increase of 46.6 MMBOE, or 36% over year-end 2016;
     
  • AMHLP drilled and completed 134 gross wells in the STACK in 2017, of which 37 gross wells were funded by the joint development agreement with Bayou City Energy;
     
  • Kingfisher’s 2018 projected Net Income is expected to range between $81.2 million and $96.2 million and projected EBITDA is expected to range between $95 million and $110 million (based on consolidating financial statements), and capital expenditures are expected to range from $175 million to $215 million. EBITDA is a non-GAAP measure and is explained in greater detail under “Non-GAAP Financial Information and Reconciliation.”

Hal Chappelle, Alta Mesa’s Chief Executive Officer, said, “2017 was a year of significant progress for our company marked by several important milestones that we believe has set us up for success in 2018 and beyond. We achieved year-over-year growth in our production, reserves and EBITDAX; we have de-risked our acreage with over 250 operated horizontal wells and a comprehensive scientific and engineering effort to begin systematic development with multi-well patterns. Creating Alta Mesa Resources with the upstream assets of Alta Mesa Holdings and midstream assets of Kingfisher, we believe we have a strong balance sheet that will allow us to execute on our vision for years to come.”

AMHLP Upstream STACK Play Activities

In AMHLP’s STACK play, the company has assembled a highly contiguous leasehold position of over 130,000 net acres. In the fourth quarter of 2017, AMHLP completed 36 horizontal wells in the Osage and Meramec formations. AMHLP had 43 horizontal wells in progress as of the end of the fourth quarter, 22 of which were on production subsequent to the end of the quarter. AMHLP currently has seven rigs operating in the STACK play, with a contracted eighth rig arriving in April and plans to maintain this level for the balance of 2018. In total, AMHLP plans to drill between 170 and 180 gross wells during the year. We expect drilling and completion costs on these wells to average $3.8 million and our type curve has been approximately 650 MBOE per well. Additionally, we are intending to deploy approximately $25 million in early 2018 to expand our fresh water supply system.

Kingfisher Midstream Activities

The initial Kingfisher 60 MMcf per plant has been operating at capacity since late 2017 and the 200 MMcf per day plant expansion is now mechanically complete, with the cryogenic plant operation set to begin in April. Once the expansion plant is fully operational, Kingfisher’s operated inlet capacity will be 260 MMcf per day, bringing the total system capacity to 350 MMcf per day when including the additional 90 MMcf per day of additional contracted offtake and processing capacity. In late 2017 and early 2018, drilling and completions by third party E&P operators under contract with Kingfisher slowed considerably. This slowdown in development by third party groups is reflected in the revised throughput estimates for 2018. Currently, Kingfisher has more than 300 miles of low-pressure crude and gas gathering lines, approximately 125 miles of high pressure gas transportation pipelines and a 50,000 barrel crude storage capacity with six truck loading LACTS along with three 90,000 gallon bullet tanks for NGL storage.

James Hackett, Alta Mesa Executive Chairman and Kingfisher Chief Operating Officer stated, “Despite the delays in volumes due to changes in third party drilling and completion schedules on dedicated acreage and a later closing of our merger, Kingfisher Midstream is well conceived to provide right-sized, scalable gas gathering and processing and market interface, and is situated to serve growing production in the STACK. 2017 saw Kingfisher Midstream establish and grow its service to producers. Acreage dedications and customer service, combined with differentiated access to interstate markets, are our fundamental strengths. We are building a strong management team for Kingfisher Midstream to both earn business, and to offer the market proven, experienced leadership for what we expect will be a separate public company.”

AMHLP Fourth Quarter and Full-Year 2017 Financial and Production Results

During the fourth quarter of 2017, AMHLP sold its Weeks Island field. Results of operations for Weeks Island field are reflected as discontinued operations in our consolidated financial statement for all periods presented. Operating revenues and expenses for all periods exclude discontinued operations in the Weeks Island field.

Net loss from continuing operations for the fourth quarter of 2017 was $40.8 million, compared to a net loss from continuing operations of $47.3 million for the fourth quarter of 2016. Net loss from continuing operations for full-year 2017 was $56.3 million, compared to net loss from continuing operations of $165.6 million for full-year 2016. Adjusted earnings from continuing operations before interest, income taxes, depreciation, depletion and amortization and exploration costs ("Adjusted EBITDAX") for the fourth quarter of 2017 was $41.0 million, compared to $33.1 million for the fourth quarter of 2016. Adjusted EBITDAX from continuing operations for full-year 2017 was $138.7 million compared to $146.3 million for full-year 2016. The change in adjusted EBITDAX between the annual periods is, in part, a result of lower average realized commodity prices, offset in part by increased production and decreased interest expense.  Adjusted EBITDAX is a Non-GAAP financial measure and is described in the attached table under “Non-GAAP Financial Information and Reconciliation.”

Total production volumes from continuing operations in the fourth quarter of 2017 totaled 2.3 MMBOE, or an average of 24.6 MBOE per day compared to 1.7 MMBOE or 18.6 MBOE per day in the fourth quarter of 2016. Total production volumes from continuing operations for full-year 2017 totaled 8.6 MMBOE, or an average of 23.5 MBOE per day, compared to 6.1 MMBOE or 16.6 MBOE per day for full-year 2016. The increase in production is primarily a result of the continued successful development of AMHLP’s STACK play in Kingfisher County, Oklahoma. Total production in 2017 was comprised of 49% oil, 35% natural gas and 16% natural gas liquids. AMHLP production for 2018 is expected to average between 33 and 38 MBOE per day.

Oil, natural gas and natural gas liquids revenue from continuing operations for the fourth quarter of 2017 totaled $85.5 million compared to $55.1 million in the fourth quarter of 2016. The change in revenues between the two periods was primarily due to the increase in oil, natural gas and natural gas liquids production, offset in part by the decrease in net realized commodity prices.

Realized prices for oil (including settlements of derivative contracts) for the fourth quarter of 2017 were $53.02 per barrel, compared to $52.50 per barrel in the fourth quarter of 2016. Realized prices for natural gas liquids (including settlements of derivative contracts) for the fourth quarter of 2017 were $26.28 per barrel compared to $19.61 per barrel in the fourth quarter of 2016. Realized prices for natural gas (including settlements of derivative contracts) in the fourth quarter 2017 were $3.69 per MCF, compared to $2.65 per MCF in the fourth quarter of 2016. Below is a table of average prices received by AMHLP, with and without the effect of derivative contract settlements.

Average Prices excluding derivative contract settlements 2017 2016
Oil (per Bbl)$ 49.44$ 40.54
Natural Gas (per Mcf) 2.63 2.20
Natural Gas Liquids (per Bbl) 24.36 16.38
Combined (per BOE) 33.52 26.74
     
Average Prices including derivative contract settlements 2017 2016
Oil (per Bbl)$49.13$68.96
Natural Gas (per Mcf) 3.01 2.69
Natural Gas Liquids (per Bbl) 23.31 16.04
Combined realized (per BOE) 34.00 41.31

AMHLP has an active hedging program. Currently, AMHLP had hedged approximately 45% of its forecasted production of proved developed producing reserves through 2020 at weighted average annual floor prices ranging from $50.00 per Bbl to $52.22 per Bbl for oil and from $2.80 MMbtu to $2.90 per MMBtu for natural gas.

Total production costs from continuing operations, which includes lease operating expense, marketing and transportation costs, production and ad valorem taxes and workover expenses, in the fourth quarter of 2017 were $27.1 million, or $11.99 per BOE, compared to $18.2 million, or $10.77 per BOE in the fourth quarter of 2016. For the full year 2017, production costs were $104.5 million, or $12.19 per BOE, compared to $66.9 million, or $10.99 per BOE for the full year 2016.

General and administrative costs from continuing operations in the fourth quarter of 2017 were $20.0 million, compared to $8.9 million in the fourth quarter of 2016. General and administrative cost in the fourth quarter of 2017 include non-recurring SPAC-IPO business combination expenses and non-cash bonus accruals offset by a decrease in settlement expense recorded in the third quarter 2017. When adjusted for these non-recurring, non-cash items, general and administrative costs for the fourth quarter of 2017 would have been $10.3 million. General and administrative expenses for full-year 2017 were $55.6 million compared to $41.8 million for full-year 2016.

Conference Call Information

Alta Mesa invites you to listen to its conference call which will discuss its financial and operational results at 10:00 a.m., Central time, on Thursday, March 29, 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. The commentary and answers to questions will include forward-looking information. A webcast of the call and any related materials will be available on Alta Mesa Resources website at www.altamesa.net . 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 #10117607.

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 provides midstream energy services, including crude oil and gas gathering, processing and marketing to producers in the STACK play region through Kingfisher Midstream, LLC.

Safe Harbor Statement and Disclaimer
The information in 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 present or historical fact included in this press release, 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”, “may”, “believe”, “anticipate”, “intend”, “estimate”, “expect”, “project,” the negative of such terms 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. 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, gathering and sale of oil, natural gas, and natural gas liquids. These risks include, but are not limited to: commodity price volatility, low prices for oil, natural gas and/or natural gas liquids, global economic conditions, inflation, increased operating costs, lack of availability of drilling and production equipment supplies, services and qualified personnel, processing volumes and pipeline throughput, uncertainties related to new technologies, geographical concentration of operations of our subsidiaries Alta Mesa Holdings, LP (“Alta Mesa”) and Kingfisher Midstream, LLC (“Kingfisher”), environmental risks, weather risks, security 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, reductions in cash flow, lack of access to capital,  Alta Mesa Resources’ ability to satisfy future cash obligations, restrictions in existing or future debt agreements of Alta Mesa or Kingfisher, the timing of development expenditures, managing growth and integration of acquisitions, failure to realize expected value creation from property acquisitions, title defects and limited control over non-operated properties, the Company’s ability to complete an initial public offering of the Kingfisher midstream business and the other risks described in the Company’s filings with the SEC. Reserve engineering is a process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reservoir engineers. Specifically, future prices received for production and costs may vary, perhaps significantly, from the prices and costs assumed for purposes of these estimates.  Sustained lower prices will cause the twelve-month weighted average price to decrease over time as the lower prices are reflected in the average price, which may result in the estimated quantities and present values of Alta Mesa’s reserves being reduced. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of oil and natural gas that are ultimately recovered. 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 Alta Mesa Resources 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 HOLDINGS, LP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 
 Year Ended
 December 31,
 2017
 2016
 2015
         
 (in thousands)
OPERATING REVENUES AND OTHER        
Oil $ 206,026  $ 117,703  $ 130,015 
Natural gas   47,583    29,510    26,445 
Natural gas liquids   33,804    15,663    10,864 
Other revenues  6,040    2,563    682 
Total operating revenues  293,453    165,439    168,006 
Gain (loss) on sale of assets  (27)   3,542    67,781 
Gain on acquisitions of oil and natural gas properties  3,294    —    — 
Gain (loss) on derivative contracts   8,287    (40,460)   124,141 
Total operating revenues and other  305,007    128,521    359,928 
OPERATING EXPENSES        
Lease and plant operating expense   60,881    46,383    53,821 
Marketing and transportation expense  30,521    12,853    3,139 
Production and ad valorem taxes   7,228    4,168    6,307 
Workover expense   5,873    3,540    5,200 
Exploration expense   24,606    24,768    29,445 
Depreciation, depletion, and amortization expense   94,499    64,981    78,008 
Impairment expense   30,317    16,287    50,436 
Accretion expense   1,143    1,259    1,272 
General and administrative expense   55,565    41,758    44,454 
Total operating expenses  310,633    215,997    272,082 
INCOME (LOSS) FROM CONTINUING OPERATIONS   (5,626)   (87,476)   87,846 
OTHER INCOME (EXPENSE)        
Interest expense   (51,794)   (60,884)   (62,473)
Interest income   1,163    894    723 
Loss on extinguishment of debt  —    (18,151)   — 
Total other income (expense)  (50,631)   (78,141)   (61,750)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE STATE INCOME TAXES   (56,257)   (165,617)   26,096 
Provision for (benefit from) state income taxes   6    (29)   562 
INCOME (LOSS) FROM CONTINUING OPERATIONS  (56,263)   (165,588)   25,534 
LOSS FROM DISCONTINUED OPERATIONS, net of state income taxes  (21,398)   (2,333)   (157,327)
NET LOSS$ (77,661) $ (167,921) $ (131,793)
            


 
ALTA MESA HOLDINGS, LP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
      
 December 31,  December 31,
 2017  2016
      
 (in thousands)
ASSETS     
CURRENT ASSETS     
Cash and cash equivalents $ 3,721 $ 7,185
Restricted cash   1,269   433
Accounts receivable, net of allowance of $848 and $889, respectively  81,141   34,732
Other receivables   1,542   8,061
Receivables due from affiliate  790   8,883
Prepaid expenses and other current assets   2,932   3,986
Current assets — discontinued operations  —   2,879
Derivative financial instruments   216   83
Total current assets  91,611   66,242
PROPERTY AND EQUIPMENT     
Oil and natural gas properties, successful efforts method, net   951,475   632,229
Other property and equipment, net   8,913   9,731
Total property and equipment, net  960,388   641,960
OTHER ASSETS     
Investment in LLC — cost   9,000   9,000
Deferred financing costs, net   1,787   3,029
Notes receivable due from affiliate  12,369   9,987
Deposits and other long-term assets   10,234   2,977
Noncurrent assets — discontinued operations  —   79,933
Derivative financial instruments   8   723
Total other assets   33,398   105,649
TOTAL ASSETS $1,085,397 $ 813,851
LIABILITIES AND PARTNERS' CAPITAL     
CURRENT LIABILITIES     
Accounts payable and accrued liabilities $ 178,371 $ 78,437
Accounts payable — related party  5,476   —
Advances from non-operators  5,502   4,058
Advances from related party  23,390   42,528
Asset retirement obligations   7,606   4,900
Current liabilities — discontinued operations  —   1,273
Derivative financial instruments   19,303   21,207
Total current liabilities  239,648   152,403
LONG-TERM LIABILITIES     
Asset retirement obligations, net of current portion   47,449   43,147
Long-term debt, net   607,440   529,905
Notes payable to founder   28,166   26,957
Noncurrent liabilities — discontinued operations  —   18,325
Derivative financial instruments   1,114   4,482
Other long-term liabilities   7,135   6,526
Total long-term liabilities  691,304   629,342
TOTAL LIABILITIES   930,952   781,745
Commitments and Contingencies     
PARTNERS' CAPITAL  154,445   32,106
TOTAL LIABILITIES AND PARTNERS' CAPITAL$1,085,397 $ 813,851
      


 
ALTA MESA HOLDINGS, LP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 Year Ended December 31,
 2017
  2016
 2015
         
 (in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss$ (77,661) $(167,921) $(131,793)
Adjustments to reconcile net loss to net cash provided by operating activities:      
Depreciation, depletion, and amortization expense   111,539    92,901    143,969 
Impairment expense   30,317    16,306    176,774 
Accretion expense   2,095    2,174    2,076 
Amortization of deferred financing costs   2,732    3,905    3,392 
Amortization of debt discount   —    468    510 
Dry hole expense   2,500    419    22,708 
Expired leases   9,125    11,158    6,526 
(Gain) loss on derivative contracts  (8,287)   40,460   (124,141)
Settlements of derivative contracts  4,117    88,689    106,949 
Premium paid on derivatives contracts  (520)   —    — 
Loss on extinguishment of debt  —    18,151    — 
Interest converted into debt   1,209    1,209    1,208 
Interest on notes receivable due from affiliate  (867)   (774)   (713)
(Gain) loss on sale of assets   22,179    (3,542)   (67,781)
Gain on acquisitions of oil and natural gas properties  (3,294)   —    — 
Changes in assets and liabilities:        
Accounts receivable   (43,530)   (10,500)   16,470 
Other receivables   6,519    10,465    (10,288)
Receivables due from affiliate  218    45    (1,725)
Prepaid expenses and other non-current assets   (6,203)   (819)   (2,269)
Advances from related party  (19,138)   42,528    — 
Settlement of asset retirement obligation   (6,409)   (2,125)   (1,794)
Accounts payable — related party  (2,170)   —    — 
Accounts payable, accrued liabilities, and other liabilities   34,857    (11,493)   3,900 
NET CASH PROVIDED BY OPERATING ACTIVITIES  59,328    131,704    143,978 
CASH FLOWS FROM INVESTING ACTIVITIES:        
Capital expenditures for property and equipment   (313,961)   (214,061)   (223,604)
Acquisitions   (55,605)   (11,527)   (48,202)
Proceeds from sale of property  25,205    1,290    141,404 
Notes receivable due from affiliate  (1,515)   —    — 
NET CASH USED IN INVESTING ACTIVITIES   (345,876)   (224,298)   (130,402)
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from long-term debt   373,065    222,557    252,500 
Repayments of long-term debt   (296,622)   (333,935)   (295,020)
Repayments of senior secured term loan  —   (127,708)   — 
Repurchase of senior notes due 2018   —   (459,391)   — 
Proceeds from issuance of senior notes due 2024  —    500,000    — 
Additions to deferred financing costs   (398)   (13,747)   (4,313)
Capital distributions  —    —    (3,810)
Capital contributions  207,875    303,462    20,000 
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES   283,920    91,238    (30,643)
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH  (2,628)   (1,356)   (17,067)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period   7,618    8,974    26,041 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period $ 4,990  $ 7,618  $ 8,974 
            

*Non-GAAP Financial Information and Reconciliation
AMHLP 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).

 Three Months Ended Dec 31, 
  2017   2016  
Net loss from continuing operations$(40,757) $(47,305) 
Adjustments to net loss:    
Benefit for income taxes (279)    (136) 
Interest expense 12,724     8,631  
Loss on extinguishment of debt -   18,151  
Unrealized loss - oil & gas hedges 32,080    21,340  
Exploration expense 5,011     9,414   
Depreciation, depletion and amortization 27,081     20,479   
Impairment expense 1,112     2,048   
Accretion expense 405     325   
Loss on sale of assets 3,627    180  
Adjusted EBITDAX$41,004  $  33,127   



 Twelve Months Ended Dec 31, 
  2017   2016  
Net loss from continuing operations$(56,263) $(165,588) 
Adjustments to net loss:    
Provision (benefit) for income taxes 6   (29) 
Interest expense 51,794   60,884  
Loss on extinguishment of debt -   18,151  
Unrealized loss (gain) - oil & gas hedges (4,690)  129,149  
Exploration expense 24,606   24,768  
Depreciation, depletion and amortization 94,499   64,981  
Impairment expense 30,317   16,287  
Accretion expense 1,143   1,259  
(Gain) on sale of assets  -   (3,542) 
(Gain) on acquisition of oil and gas properties (3,294)  -  
Loss on sale of assets 27
   -  
Adjusted EBITDAX$138,145  $146,320  


Kingfisher Forward Looking Reconciliation of Net Income to EBITDA. EBITDA is a non-GAAP financial measure and as used herein represents net income (loss) before interest expense, tax expense, depreciation and amortization. Kingfisher’s management believes EBITDA 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. EBITDA is not a measurement of Kingfisher’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 Kingfisher’s profitability or liquidity. In addition, other companies may calculate EBITDA differently than Kingfisher does, limiting its usefulness as a comparative measure. The following table sets forth a reconciliation of projected net income (loss) as determined in accordance with GAAP to EBITDA for the periods indicated (unaudited in thousands).

Kingfisher EBITDA (Non-GAAP Measure) Outlook2018E Low2018E High
Net Income$81,200$96,200
Interest4,0004,000
DD&A9,8009,800
EBITDA$95,000$110,000


Alta Mesa Resources Annual Guidance

 Upstream - AMHLP2018E
   
 Drilling Activity 
 Average rigs8
 Gross well count170 - 180
 Net Volumes 
 Oil (BOPD)18,000 - 21,000
 Gas (MCFD)58,000 - 68,000
 NGL (BPD)2,000
 BOEPD33,000 - 38,000
 Differentials 
 Oil (% WTI)95%
 Gas (% NYMEX HH)93%
 Expenses 
 Total Operating Expenses$135mm - $155mm
 CAPEX 
 Non-Acquisition CAPEX$550mm - $580mm


 Midstream - Kingfisher2018E
   
 Processing Capacity 
 Cryogenic processing260 MMcf/d
 Processing Agreements90 MMcf/d
 Inlet Volumes 
 Alta Mesa90 - 100 MMcf/d
 Third Parties50 - 70 MMcf/d
 Average Rig count 
 Alta Mesa8
 Third Parties5 - 15
 Operating Expenses 
 Operating Cost ($/MMbtu)$0.20 - $0.25 per MMbtu
 G&A$5-$6mm
 CAPEX 
 Total Capex$175 - $220mm
 Plant construction$25 - $45mm
 Existing area well connects and compression$70 - $80mm
 Expansion area well connects and compression$70 - $80mm
 Crude Gathering$12 - $15mm
 EBITDA$95 - $110mm

Primary Logo

Source: Alta Mesa Resources, Inc.


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