Mid-Con Energy Partners, LP (NASDAQ:MCEP) (“Mid-Con Energy” or the
“Partnership”) announces operating and financial results for the
third quarter ended September 30, 2016. "In the third
quarter, we made significant progress in lowering costs, reducing
debt, and increasing liquidity," commented Jeff Olmstead, President
and CEO. "Specifically, we closed on the sale of our Hugoton
core area, which was one of our highest cost assets on a per Boe
basis, completed a Permian bolt-on acquisition, which represented
some of the lowest cost production in our portfolio on a per Boe
basis, and closed on a convertible preferred equity raise in August
2016. These three transactions, combined with cash from
operations and hedging activity, allowed us to reduce debt by $34.1
million during the quarter. This resulted in total liquidity
of $14.2 million at quarter end, which included $12.1 million in
availability under our $140.0 million revolving credit facility and
$2.1 million in available cash. We plan to continue focusing on
opportunities to make our operations more efficient while building
liquidity as we close out the year.”
THIRD QUARTER 2016 SUMMARY
- Production averaged 3,957 Boe/d, a decrease of 2.9%
sequentially and a decrease of 18.6% year-over-year.
- Lease Operating Expenses ("LOE") averaged $15.68/Boe, a 0.7%
increase sequentially and a decrease of 20.0% year-over-year.
- Adjusted EBITDA, a Non-GAAP measure, was $11.9 million, an
increase of 2.1% sequentially and a decrease of 24.6%
year-over-year.
- Distributable Cash Flow, a Non-GAAP measure, was $9.1 million,
an increase of 5.5% sequentially and a decrease of 26.8%
year-over-year.
- Closed previously announced Hugoton divestiture on July 28,
2016 for $18.0 million, subject to post-closing adjustments.
- Closed previously announced Permian bolt-on acquisition on
August 11, 2016 for $19.5 million, subject to post-closing
adjustments.
- Closed $25.0 million private offering of Class A Convertible
Preferred Units.
- Reduced borrowings outstanding under revolving credit facility
by $34.1 million during quarter from $162.0 million to $127.9
million debt outstanding as of September 30, 2016.
- Completed non-scheduled redetermination in August 2016,
increasing conforming borrowing base from $105.0 million to $140.0
million. Subsequently reaffirmed by the lender group on
October 28, 2016 during the fall 2016 redetermination.
The following table reflects selected unaudited
operating and financial results for the third quarter of 2016,
compared to the second quarter of 2016 and the third quarter of
2015. Mid-Con Energy’s unaudited condensed consolidated
financial statements are included at the end of this press
release.
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Three Months Ended |
|
|
September 30, |
|
June 30, |
|
September 30, |
($ in thousands) |
|
2016 |
|
2016 |
|
2015 |
Average net daily production (Boe/d)(1) |
|
3,957 |
|
|
4,077 |
|
|
4,859 |
|
Oil & natural gas sales plus cash settlements
from matured derivatives, inclusive of premiums, net(2)(3) |
|
$ |
15,592 |
|
|
$ |
17,508 |
|
|
$ |
26,867 |
|
Net loss |
|
$ |
(2,421 |
) |
|
$ |
(15,769 |
) |
|
$ |
(25,478 |
) |
Adjusted EBITDA(4) |
|
$ |
11,873 |
|
|
$ |
11,630 |
|
|
$ |
15,744 |
|
Distributable Cash Flow(4) |
|
$ |
9,104 |
|
|
$ |
8,627 |
|
|
$ |
12,433 |
|
(1) Production volumes in Boe
equivalents calculated at a Btu conversion rate of six Mcf per
Bbl. |
|
|
(2) September 30, 2016 cash
settlements from matured derivatives does not include the $5.8
million received and the $1.5 million of deferred premiums paid
upon early termination of previous oil derivative contracts in July
2016 or the related $2.8 million of premiums paid at inception of
the oil derivative contracts in January 2015. |
(3) June 30, 2016 and September 30,
2015 net premiums include those incurred previously or upon
settlement that were attributable to instruments that settled in
the period. |
(4) Non-GAAP financial measure.
Please refer to the related disclosure and reconciliation of net
income to Adjusted EBITDA and Distributable Cash Flow included in
this press release. |
|
THIRD QUARTER 2016
RESULTSProduction - Production for the third quarter of
2016 was 364 MBoe, or 3,957 Boe/d. On a daily basis, this
represents a 2.9% decrease from the second quarter of 2016 and an
18.6% decrease year-over-year. The sequential decrease in
production was primarily related to timing and scale of the Hugoton
divestiture relative to the Permian bolt-on acquisition.
Additionally, the decrease in volumes year-over-year was
attributable to 2016 cost savings initiatives implemented in
response to lower commodity prices. In early 2016, the
Partnership temporarily shut-in 184 wells for economic reasons, and
has since delayed certain workovers and capital expenditures into
future periods.
Price Realizations - Oil and natural gas sales
were $14.4 million in the third quarter of 2016, or $39.59/Boe of
production. On a Boe basis, this represents a 0.6% decrease
from the second quarter of 2016 and a 4.3% decrease
year-over-year. Cash settlements from matured derivatives,
excluding cash settlements received for early terminations of
derivatives net of premiums, were $1.2 million in the third quarter
of 2016, or $3.25/Boe. Cash settlements from matured
derivatives, inclusive of net premiums, for the second quarter of
2016 and the third quarter of 2015 were $7.36/Boe and $18.73/Boe,
respectively.
Operating Revenues - Operating revenues, which
include cash settlements from matured derivatives and exclude early
terminations of derivatives net of premiums, were $15.6 million, or
$42.84/Boe in the third quarter of 2016. Total operating
revenues decreased 9.2% from the previous quarter and decreased
28.7% from the third quarter of 2015 on a per Boe basis. The
negative sequential and year-over-year variance was attributable to
lower cash settlements from matured derivatives and lower oil and
natural gas volumes.
Lease Operating Expenses - LOE was $5.7 million,
or $15.68/Boe, in the third quarter of 2016, representing a 0.7%
increase from the second quarter of 2016 and a decrease of 20.0%
from the third quarter of 2015 on a per Boe basis. Lower
production volumes during the third quarter of 2016 resulted in
slightly higher LOE per Boe, however total LOE of $5.7 million
during the third quarter of 2016 declined for the fourth
consecutive quarter. Ongoing cost controls and reduced
workover activity have resulted in total cost savings
year-over-year in most LOE billing categories and across all core
areas.
Production Taxes - Production taxes in the third
quarter of 2016 were $0.8 million, or $2.07/Boe, reflecting an
effective tax rate of 5.2%. Production taxes for the second
quarter of 2016 were $0.7 million, or $1.97/Boe, for an effective
tax rate of 5.0%. Production taxes for the third quarter of
2015 were $0.2 million, or $0.46/Boe, reflecting an effective tax
rate of 1.1%. The increase sequentially was attributable to a
Permian tax exemption for select wells received during the second
quarter of 2016. The increase year-over-year was attributable
to the receipt of a production tax refund during the third quarter
of 2015 resulting from the Oklahoma Corporation Commission's
approval of the Enhanced Oil Production tax exemption for one of
our Northeastern Oklahoma properties.
Depreciation, Depletion and Amortization
Expenses ("DD&A") - DD&A for the third quarter of 2016 was
$5.7 million, or $15.56/Boe. On a per Boe basis, the third
quarter of 2016 results reflect a 0.4% decrease over the previous
quarter and a 28.0% decrease over the third quarter of 2015.
The sequential and year-over-year decrease in DD&A per Boe was
due to the decline in the carrying value of the underlying assets
in our portfolio.
General and Administrative Expenses ("G&A")
- G&A during the third quarter of 2016 was $1.7 million, or
$4.71/Boe, and included $0.3 million, or $0.85/Boe, in non-cash
equity-based compensation expense related to the Partnership’s
Long-Term Incentive Program. G&A for the second quarter
of 2016 was $1.5 million, or $3.98/Boe, and included $0.3 million,
or $0.70/Boe, in non-cash equity-based compensation. G&A
for the third quarter of 2015 was $2.3 million, or $5.04/Boe, and
included $0.6 million, or $1.43/Boe, in non-cash equity-based
compensation. The year-over-year decrease in G&A per Boe
was due to lower non-cash equity-based compensation, lower
non-recurring legal and professional fees, and lower salaries
expense.
Net Interest Expense - Net interest expense for
the third quarter of 2016 was $1.7 million, or $4.74/Boe, a 14.3%
decrease from the second quarter of 2016 and a 17.6% increase from
the third quarter of 2015, on a Boe basis. The average
effective interest rate approximated 3.74% for the third quarter of
2016, compared to 4.13% for the second quarter of 2016 and 2.95%
for the third quarter of 2015. The sequential decrease per
Boe was due to both lower borrowings outstanding during the quarter
and a lower effective interest rate calculated based on borrowing
utilization. The year-over-year increase per Boe was
primarily due to lower production partially offset by lower
borrowings outstanding.
Net Loss - For the third quarter of 2016,
Mid-Con Energy reported a net loss of $2.4 million. Net loss
as reported represents $0.09 per limited partner unit, based on an
average of 29.9 million outstanding and fully diluted ("FD")
limited partner units during the third quarter of 2016. Net
loss for the second quarter of 2016 was $15.8 million, or $0.52 per
limited partner unit, based on an average of 29.8 million
outstanding and FD limited partner units during the period.
For the third quarter of 2015, net loss was $25.5 million, or $0.85
per limited partner unit, based on an average of 29.7 million
outstanding and FD limited partner units during the period.
The positive sequential variance was primarily attributable to the
favorable net effect of our derivatives during the third quarter of
2016 and non-cash impairment charges incurred during the second
quarter of 2016. On a year-over-year basis, the positive
variance was due to non-cash impairment charges incurred during the
third quarter of 2015 and lower operating costs, partially offset
by lower oil sales and the unfavorable net effect of our
derivatives.
Adjusted EBITDA - Adjusted EBITDA, a Non-GAAP
measure, for the third quarter of 2016 was $11.9 million, or
$32.62/Boe. Adjusted EBITDA per Boe for the third quarter of
2016 increased 4.1% from the second quarter of 2016 of $31.35/Boe
and decreased 7.4% from the third quarter of 2015 of
$35.22/Boe. Adjusted EBITDA increased sequentially primarily
due to higher cash settlements received from early terminations of
derivatives, net of premiums. On a year-over-year basis, the
negative variance was attributable to lower production, cash
settlements received from matured derivatives, net of premiums,
partially offset by lower LOE.
Distributable Cash Flow ("DCF") - DCF, a
Non-GAAP measure, for the third quarter of 2016 was $9.1 million
after subtracting $1.4 million in cash interest expense, $1.1
million in estimated maintenance capital expenditures, and $0.3
million in distributions to preferred unitholders from Adjusted
EBITDA. Relative to the second quarter of 2016 and the third
quarter of 2015, DCF increased 5.5% and decreased 26.8%,
respectively. DCF per unit was $0.301, based on 29.9 million
limited partner units and 360,000 general partner units outstanding
as of October 31, 2016.
HEDGING SUMMARYMid-Con Energy
enters into various commodity derivative contracts intended to
achieve more predictable cash flows by reducing the Partnership's
exposure to short-term fluctuations in the price of oil and natural
gas. We believe this risk management strategy will serve to
secure a baseline portion of our revenues and, by retaining some
opportunity to participate in upward price movements, may also
enable us to realize higher revenues during periods when prices
rise.
As of October 31, 2016, the following
unaudited table reflects volumes of Mid-Con Energy's
production hedged by commodity derivative contracts, with the
corresponding prices at which the production is hedged:
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|
OIL HEDGES |
|
4Q16 |
|
1Q17 |
|
2Q17 |
|
3Q17 |
|
4Q17 |
|
1Q18 |
|
2Q18 |
|
3Q18 |
|
4Q18 |
|
1Q19 |
|
2Q19 |
|
3Q19 |
|
4Q19 |
WTI Swap Volume
(Bbl/d) |
|
|
1,304 |
|
|
|
— |
|
|
|
— |
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|
|
— |
|
|
|
— |
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— |
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— |
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— |
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— |
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— |
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|
— |
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|
|
— |
|
|
|
— |
|
Price ($/Bbl) |
|
$ |
64.18 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
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|
$ |
— |
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|
$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
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|
Collar Volume
(Bbl/d) |
|
|
— |
|
|
|
667 |
|
|
|
659 |
|
|
|
652 |
|
|
|
652 |
|
|
|
1,500 |
|
|
|
1,484 |
|
|
|
1,141 |
|
|
|
1,141 |
|
|
|
424 |
|
|
|
424 |
|
|
|
424 |
|
|
|
424 |
|
Call Strike Price ($/Bbl) |
|
$ |
— |
|
|
$ |
49.00 |
|
|
$ |
50.15 |
|
|
$ |
51.22 |
|
|
$ |
52.35 |
|
|
$ |
57.39 |
|
|
$ |
57.91 |
|
|
$ |
52.42 |
|
|
$ |
53.13 |
|
|
$ |
60.52 |
|
|
$ |
60.52 |
|
|
$ |
60.52 |
|
|
$ |
60.52 |
|
Put Strike Price ($/Bbl) |
|
$ |
— |
|
|
$ |
40.00 |
|
|
$ |
45.00 |
|
|
$ |
45.00 |
|
|
$ |
45.00 |
|
|
$ |
45.00 |
|
|
$ |
45.00 |
|
|
$ |
43.57 |
|
|
$ |
43.57 |
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|
$ |
50.00 |
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|
$ |
50.00 |
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|
$ |
50.00 |
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|
$ |
50.00 |
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|
Put Volume
(Bbl/d)(1) |
|
|
1,957 |
|
|
|
2,000 |
|
|
|
1,978 |
|
|
|
1,957 |
|
|
|
1,794 |
|
|
|
— |
|
|
|
— |
|
|
|
326 |
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|
326 |
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|
— |
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— |
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— |
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|
— |
|
Put Strike Price ($/Bbl)(1) |
|
$ |
50.00 |
|
|
$ |
50.00 |
|
|
$ |
50.00 |
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|
$ |
50.00 |
|
|
$ |
50.00 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
45.00 |
|
|
$ |
45.00 |
|
|
$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
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Total Hedged Volume
(Bbl/d) |
|
|
3,261 |
|
|
|
2,667 |
|
|
|
2,637 |
|
|
|
2,609 |
|
|
|
2,446 |
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|
1,500 |
|
|
|
1,484 |
|
|
|
1,467 |
|
|
|
1,467 |
|
|
|
424 |
|
|
|
424 |
|
|
|
424 |
|
|
|
424 |
|
Floor Strike Price ($/Bbl) |
|
$ |
55.67 |
|
|
$ |
47.50 |
|
|
$ |
48.75 |
|
|
$ |
48.75 |
|
|
$ |
48.67 |
|
|
$ |
45.00 |
|
|
$ |
45.00 |
|
|
$ |
43.89 |
|
|
$ |
43.89 |
|
|
$ |
50.00 |
|
|
$ |
50.00 |
|
|
$ |
50.00 |
|
|
$ |
50.00 |
|
% Hedged(2) |
|
|
81 |
% |
|
|
66 |
% |
|
|
65 |
% |
|
|
64 |
% |
|
|
60 |
% |
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|
37 |
% |
|
|
37 |
% |
|
|
36 |
% |
|
|
36 |
% |
|
|
10 |
% |
|
|
10 |
% |
|
|
10 |
% |
|
|
10 |
% |
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(1) Deferred premium puts include
premiums that are to be paid monthly as the contracts settle (refer
to our SEC filing for additional details). |
(2) Estimated percent hedged
based on the calculated midpoint of full year 2016 production
guidance. |
HUGOTON DIVESTITUREOn July 28,
2016, Mid-Con Energy closed its previously announced sale of oil
and natural gas assets within the Hugoton core area for $18.0
million, subject to post-closing purchase price adjustments.
The transaction had an effective date of May 1, 2016, and as of
September 30, 2016 the Partnership had received net cash proceeds
of approximately $17.3 million. Net divestiture proceeds were
used to reduce borrowings outstanding under Mid-Con Energy's
revolving credit facility.
PERMIAN BOLT-ON ACQUISITIONOn
August 11, 2016, Mid-Con Energy closed its previously announced
acquisition of oil and natural gas assets in Nolan County, TX for
$19.5 million, subject to post-closing purchase price
adjustments. The transaction had an effective date of June 1,
2016, and as of September 30, 2016 the Partnership had paid net
cash proceeds of approximately $19.1 million.
CLASS A CONVERTIBLE PREFERRED
UNITSIn conjunction with the Permian bolt-on
acquisition, Mid-Con Energy closed its previously
announced private offering (the "Offering") of $25.0 million
aggregate principal amount of Class A Convertible Preferred Units
("Preferred Units") to investors led by John
Goff, arranged by Bonanza Capital and including, among
others, Mid-Con Energy III, LLC, an affiliate of Mid-Con
Energy's general partner, and Swank Capital. The
Partnership used net proceeds from the Offering to fund its Permian
bolt-on acquisition, and excess net proceeds were used for general
partnership purposes, including repayment of borrowings outstanding
under Mid-Con Energy's revolving credit facility.
The Preferred Units were issued at a price
of $2.15 per Preferred Unit (the "Unit Purchase
Price"). The Partnership will pay holders of the Preferred
Units ("Holders") a cumulative, quarterly distribution in cash at
an annual rate of 8.00% or, under certain circumstances, in
additional Preferred Units, at an annual rate of 10.00%. As
announced on October 27, 2016, the Board of Directors of the
general partner declared a cash distribution of approximately
$0.024 per Preferred Unit for the period from August 11, 2016 to
September 30, 2016. The distribution will be paid on November
14, 2016 to Holders of record on November 7, 2016.
DEBT AND LIQUIDITY SUMMARYAt
September 30, 2016, Mid-Con Energy had debt outstanding of
$127.9 million and total liquidity of $14.2 million, which included
$12.1 million of available borrowings under its revolving credit
facility and $2.1 million of available cash. During the
quarter, Mid-Con Energy reduced debt by 21.0%, or $34.1
million. Since quarter end, the Partnership paid down
borrowings outstanding by an additional $1.4 million, resulting in
a debt balance of $126.5 million as of October 31, 2016.
On October 28, 2016, the Partnership completed
its fall 2016 semi-annual borrowing base redetermination under its
reserve based revolving credit facility. The lender group has
agreed to reaffirm the previously existing conforming borrowing
base of $140.0 million effective October 28, 2016. There were
no changes to the terms or conditions of the credit
agreement. The next regularly scheduled borrowing base
redetermination will occur on or about May 1, 2017.
2016 GUIDANCEThe 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.
|
FY2016 Guidance as of 10/31/16 |
|
|
2016 |
|
Net production (Boe/d)(1) |
|
3,950-4,150 |
Lease operating expense per Boe |
|
$14.50-$16.50 |
Production taxes (% of total revenue) |
|
5.0%-5.3% |
Estimated capital expenditures |
|
$8.0 MM |
(1) Production volumes in Boe
equivalents calculated at a Btu conversion rate of six Mcf per
Bbl. |
|
THIRD QUARTER 2016 CONFERENCE
CALLAs announced on October 24, 2016, Mid-Con
Energy’s management will host a conference call on Tuesday,
November 1, 2016 at 9:00 a.m. ET. Interested parties are
invited to participate via telephone by dialing 1-877-847-5946
(Conference ID: 5961941) at least five minutes prior to the
scheduled start time of the call, or via webcast by clicking on
"Events & Presentations" in the investor relations section of
the Mid-Con Energy website at www.midconenergypartners.com.
A replay of the conference call will be
available through November 8, 2016, by dialing 1-855-859-2056
(Conference ID: 5961941). Additionally, a webcast archive
will be available at www.midconenergypartners.com.
ABOUT MID-CON ENERGY PARTNERS
LPMid-Con Energy is a publicly held Delaware limited
partnership formed in July 2011 to own, acquire, exploit and
develop producing oil and natural gas properties in North America,
with a focus on Enhanced Oil Recovery. Mid-Con Energy’s core
areas of operation are located in Southern Oklahoma, Northeastern
Oklahoma, the Gulf Coast, and the Permian. For more
information, please visit Mid-Con Energy's website at
www.midconenergypartners.com.
FORWARD-LOOKING STATEMENTSThis
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," or "will" or
other similar words. 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 Securities and Exchange
Commission ("SEC") available at
www.midconenergypartners.com or www.sec.gov. Mid-Con
Energy undertakes no obligation and does not intend to update these
forward-looking statements to reflect events or circumstances
occurring after this press release. You are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. All
forward-looking statements are qualified in their entirety by this
cautionary statement and our SEC filings. Please see the
risks and uncertainties detailed in the "Forward Looking
Statements" of our public filings.
|
Mid-Con Energy Partners, LP and
subsidiaries |
Condensed Consolidated Balance
Sheets |
(in thousands, except number of units) |
(Unaudited) |
|
|
September 30, 2016 |
|
December 31, 2015 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
2,115 |
|
|
$ |
615 |
|
Accounts receivable: |
|
|
|
Oil and natural gas sales |
4,711 |
|
|
4,551 |
|
Other |
1,136 |
|
|
5,009 |
|
Derivative financial
instruments |
1,376 |
|
|
24,419 |
|
Prepaids and other |
297 |
|
|
623 |
|
Total current assets |
9,635 |
|
|
35,217 |
|
Property and Equipment: |
|
|
|
Oil and natural gas properties,
successful efforts method: |
|
|
|
Proved properties |
438,873 |
|
|
518,916 |
|
Other property and equipment |
262 |
|
|
— |
|
Accumulated depletion,
depreciation, amortization and impairment |
(171,027 |
) |
|
(232,008 |
) |
Total property and equipment,
net |
268,108 |
|
|
286,908 |
|
Derivative financial instruments |
— |
|
|
1,144 |
|
Other assets |
2,881 |
|
|
3,817 |
|
Total assets |
$ |
280,624 |
|
|
$ |
327,086 |
|
LIABILITIES, CONVERTIBLE PREFERRED UNITS AND
EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable: |
|
|
|
Trade |
$ |
2,516 |
|
|
$ |
3,185 |
|
Related parties |
44 |
|
|
559 |
|
Derivative financial
instruments |
2,307 |
|
|
— |
|
Accrued liabilities |
144 |
|
|
165 |
|
Current maturities of long-term
debt |
— |
|
|
30,000 |
|
Total current liabilities |
5,011 |
|
|
33,909 |
|
Derivative financial instruments |
1,992 |
|
|
— |
|
Long-term debt |
127,900 |
|
|
150,000 |
|
Other long-term liabilities |
99 |
|
|
— |
|
Asset retirement obligations |
11,009 |
|
|
12,679 |
|
Commitments and contingencies |
|
|
|
Class A convertible preferred units - 11,627,906
and 0 issued and outstanding, respectively |
19,066 |
|
|
— |
|
EQUITY, per accompanying statement: |
|
|
|
Partnership equity: |
|
|
|
General partner interest |
(209 |
) |
|
47 |
|
Limited partners- 29,912,230 and
29,724,890 units issued and outstanding, respectively |
115,756 |
|
|
130,451 |
|
Total equity |
115,547 |
|
|
130,498 |
|
Total liabilities, convertible
preferred units and equity |
$ |
280,624 |
|
|
$ |
327,086 |
|
|
|
|
|
|
|
|
|
|
Mid-Con Energy Partners, LP and
subsidiaries |
Condensed Consolidated Statements of
Operations |
(in thousands, except per unit data) |
(Unaudited) |
|
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenues: |
|
|
|
|
|
|
|
Oil sales |
$ |
14,012 |
|
|
$ |
18,137 |
|
|
$ |
39,565 |
|
|
$ |
56,675 |
|
Natural gas sales |
398 |
|
|
356 |
|
|
891 |
|
|
1,000 |
|
(Loss) gain on derivatives,
net |
(444 |
) |
|
19,771 |
|
|
(7,964 |
) |
|
12,544 |
|
Total revenues |
13,966 |
|
|
38,264 |
|
|
32,492 |
|
|
70,219 |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
Lease operating expenses |
5,709 |
|
|
8,761 |
|
|
17,551 |
|
|
25,293 |
|
Oil and natural gas production
taxes |
753 |
|
|
206 |
|
|
2,077 |
|
|
2,634 |
|
Impairment of proved oil and
natural gas properties |
— |
|
|
40,920 |
|
|
895 |
|
|
40,920 |
|
Impairment of proved oil and
natural gas properties sold |
— |
|
|
— |
|
|
3,578 |
|
|
— |
|
Depreciation, depletion and
amortization |
5,665 |
|
|
9,655 |
|
|
17,550 |
|
|
25,692 |
|
Accretion of discount on asset
retirement obligations |
127 |
|
|
91 |
|
|
443 |
|
|
276 |
|
General and administrative |
1,715 |
|
|
2,253 |
|
|
5,281 |
|
|
7,531 |
|
Total operating costs and
expenses |
13,969 |
|
|
61,886 |
|
|
47,375 |
|
|
102,346 |
|
Loss on sales of oil and natural gas properties,
net |
(530 |
) |
|
— |
|
|
(517 |
) |
|
— |
|
Loss from operations |
(533 |
) |
|
(23,622 |
) |
|
(15,400 |
) |
|
(32,127 |
) |
Other income (expense): |
|
|
|
|
|
|
|
Interest income |
4 |
|
|
2 |
|
|
9 |
|
|
8 |
|
Interest expense |
(1,728 |
) |
|
(1,804 |
) |
|
(5,981 |
) |
|
(5,361 |
) |
Other expense |
(164 |
) |
|
— |
|
|
(131 |
) |
|
— |
|
Loss on settlement of ARO |
— |
|
|
(54 |
) |
|
— |
|
|
(54 |
) |
Total other expense |
(1,888 |
) |
|
(1,856 |
) |
|
(6,103 |
) |
|
(5,407 |
) |
Net loss |
(2,421 |
) |
|
(25,478 |
) |
|
(21,503 |
) |
|
(37,534 |
) |
Less: Distributions to preferred
unitholders |
440 |
|
|
— |
|
|
440 |
|
|
— |
|
Less: General partner's interest in
net loss |
(29 |
) |
|
(306 |
) |
|
(256 |
) |
|
(451 |
) |
Limited partners' interest in net loss |
$ |
(2,832 |
) |
|
$ |
(25,172 |
) |
|
$ |
(21,687 |
) |
|
$ |
(37,083 |
) |
|
|
|
|
|
|
|
|
Net loss per limited partner unit: |
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.09 |
) |
|
$ |
(0.85 |
) |
|
$ |
(0.73 |
) |
|
$ |
(1.25 |
) |
Weighted average limited partner units
outstanding: |
|
|
|
|
|
|
|
Limited partner units (basic and
diluted) |
29,868 |
|
|
29,705 |
|
|
29,807 |
|
|
29,614 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mid-Con Energy Partners, LP and
subsidiaries |
Condensed Consolidated Statements of Cash
Flows |
(in thousands) |
(Unaudited) |
|
|
Nine Months Ended September
30, |
|
2016 |
|
2015 |
Cash Flows from Operating Activities: |
|
|
|
Net loss |
$ |
(21,503 |
) |
|
$ |
(37,534 |
) |
Adjustments to reconcile net loss
to net cash provided by operating activities: |
|
|
|
Depreciation, depletion and
amortization |
17,550 |
|
|
25,692 |
|
Debt issuance costs
amortization |
1,019 |
|
|
839 |
|
Accretion of discount on asset
retirement obligations |
443 |
|
|
276 |
|
Impairment of proved oil and
natural gas properties |
895 |
|
|
40,920 |
|
Impairment of proved oil and
natural gas properties sold |
3,578 |
|
|
— |
|
Loss on settlement of ARO |
— |
|
|
54 |
|
Cash paid for settlement of
ARO |
— |
|
|
(79 |
) |
Mark-to-market on derivatives: |
|
|
|
Loss (gain) on derivatives,
net |
7,964 |
|
|
(12,544 |
) |
Cash settlements received for
matured derivatives |
18,467 |
|
|
15,566 |
|
Cash settlements received for early
terminations and modifications of derivatives, net |
5,820 |
|
|
11,069 |
|
Cash premiums paid for derivatives,
net |
(3,766 |
) |
|
(15,765 |
) |
Loss on sales of oil and natural
gas properties, net |
517 |
|
|
— |
|
Non-cash equity-based
compensation |
961 |
|
|
2,957 |
|
Changes in operating assets and
liabilities: |
|
|
|
Accounts receivable |
(160 |
) |
|
1,859 |
|
Other receivables |
4,805 |
|
|
1,342 |
|
Prepaids and other |
326 |
|
|
128 |
|
Accounts payable and accrued
liabilities |
(1,288 |
) |
|
(3,446 |
) |
Net cash provided by operating
activities |
35,628 |
|
|
31,334 |
|
Cash Flows from Investing Activities: |
|
|
|
Additions to oil and natural gas
properties |
(5,111 |
) |
|
(11,250 |
) |
Additions to other property and
equipment |
(124 |
) |
|
— |
|
Acquisitions of oil and natural gas
properties |
(19,055 |
) |
|
(1 |
) |
Proceeds from sales of oil and
natural gas properties |
17,312 |
|
|
— |
|
Net cash used in investing
activities |
(6,978 |
) |
|
(11,251 |
) |
Cash Flows from Financing Activities: |
|
|
|
Proceeds from line of credit |
— |
|
|
28,000 |
|
Payments on line of credit |
(52,100 |
) |
|
(39,000 |
) |
Offering costs |
(16 |
) |
|
(88 |
) |
Distributions paid |
— |
|
|
(11,266 |
) |
Debt issuance costs |
(9 |
) |
|
— |
|
Proceeds from sale of convertible
preferred units, net of offering costs |
24,975 |
|
|
— |
|
Net cash used in financing
activities |
(27,150 |
) |
|
(22,354 |
) |
Net increase (decrease) in cash and
cash equivalents |
1,500 |
|
|
(2,271 |
) |
Beginning cash and cash equivalents |
615 |
|
|
3,232 |
|
Ending cash and cash equivalents |
$ |
2,115 |
|
|
$ |
961 |
|
|
|
|
|
|
|
|
|
NON-GAAP FINANCIAL MEASURES
This press release, financial tables and other
supplemental information include “Adjusted EBITDA” and
“Distributable Cash Flow,” each of which are non-generally accepted
accounting principles (“Non-GAAP”) measures used by our management
to describe financial performance with external users of our
financial statements.
The Partnership believes the Non-GAAP financial
measures described above are useful to investors because these
measurements are used by many companies in its industry as a
measurement of financial performance and are 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 and Distributable Cash Flow
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:
- 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 settlements received for early terminations of
derivatives, net;
- Cash premiums received (paid) for derivatives, net;
- Cash premiums (paid) at inception of derivatives, net;
- Impairment of proved oil and natural gas properties;
- Impairment of proved oil and natural gas properties sold;
- Non-cash equity-based compensation;
- Dry hole costs and abandonments of unproved properties;
and
- (Gain) loss on sales of oil and natural gas properties,
net.
Distributable Cash Flow is defined as Adjusted
EBITDA less:
- Cash interest expense;
- Estimated maintenance capital expenditures;
- Other non-operating cash (income) expense; and
- Distributions to preferred unitholders.
|
Mid-Con Energy Partners, LP and
subsidiaries |
Reconciliation of Net Income to Adjusted
EBITDA and Distributable Cash Flow |
(in thousands) |
(Unaudited) |
|
|
Three Months Ended |
|
|
September 30, |
|
June 30, |
|
September 30, |
|
|
2016 |
|
2016 |
|
2015 |
Net loss |
|
$ |
(2,421 |
) |
|
$ |
(15,769 |
) |
|
$ |
(25,478 |
) |
Interest expense, net |
|
1,724 |
|
|
2,052 |
|
|
1,802 |
|
Depreciation, depletion and
amortization |
|
5,665 |
|
|
5,800 |
|
|
9,655 |
|
Accretion of discount on asset
retirement obligations |
|
127 |
|
|
159 |
|
|
91 |
|
Loss (gain) on derivatives,
net |
|
444 |
|
|
10,088 |
|
|
(19,771 |
) |
Cash settlements received for early
terminations of derivatives, net |
|
5,820 |
|
|
— |
|
|
— |
|
Cash settlements received for
matured derivatives, net |
|
1,182 |
|
|
6,191 |
|
|
8,383 |
|
Cash premiums paid for derivatives,
net(1) |
|
(1,509 |
) |
|
(1,611 |
) |
|
(499 |
) |
Impairment of proved oil and
natural gas properties |
|
— |
|
|
895 |
|
|
40,920 |
|
Impairment of proved oil and
natural gas properties sold |
|
— |
|
|
3,578 |
|
|
— |
|
Non-cash equity-based
compensation |
|
311 |
|
|
260 |
|
|
641 |
|
Loss (gain) on sales of oil and
natural gas properties, net |
|
530 |
|
|
(13 |
) |
|
— |
|
Adjusted EBITDA |
|
11,873 |
|
|
11,630 |
|
|
15,744 |
|
Less: |
|
|
|
|
|
|
Cash interest expense |
|
1,363 |
|
|
1,764 |
|
|
1,567 |
|
Estimated maintenance capital
expenditures |
|
1,129 |
|
|
1,239 |
|
|
1,744 |
|
Distributions to preferred
unitholders(2) |
|
277 |
|
|
— |
|
|
— |
|
Distributable Cash Flow |
|
$ |
9,104 |
|
|
$ |
8,627 |
|
|
$ |
12,433 |
|
|
|
|
|
|
|
|
(1) September 30, 2016 cash premiums
paid for derivatives, net reflect deferred premiums paid upon early
termination of previous oil derivative contracts in July 2016. |
(2) Cash distributions payable to
holders of Class A Convertible Preferred Units on November 14, 2016
according to terms of the Partnership Agreement and attributable to
the period from August 11, 2016 to September 30, 2016. |
|
INVESTOR RELATIONS CONTACT
IR@midcon-energy.com
(918) 743-7575
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