Chaparral Announces First Quarter 2015 Financial and Operational Results
Oklahoma City, May 12, 2015 — Chaparral Energy, Inc. announced its first quarter 2015 financial results and provided an update on its operations today. Highlights included:
- Average total production of 31.4 MBoe/d during the first quarter, a 26 percent increase year over year pro-forma for the sale of its Ark-La-Tx properties
- Continued growth in production associated with its North Burbank Unit with 2,160 Bo/d of gross production, a 23 percent increase quarter over quarter
- Adjusted EBITDA of $120.8 million, a 10 percent increase quarter over quarter
- Significant and continued cost reductions associated with CAPEX, LOE and G&A
“Our proactive and aggressive approach in responding to the weakened pricing environment continues to be effective as we have realized significant cost reductions in our D&C, LOE and G&A programs. We anticipate seeing overall cost decreases between 20 to 30 percent in drilling and completion, 15 to 20 percent in lease operating expenses and 20 to 30 percent in G&A for the year,” said Chief Executive Officer Mark Fischer. “I believe, however, most impressive is our ability to reduce our projected annual CAPEX spend by almost 75 percent and move from a 10-rig to one-rig E&P program while managing to maintain our overall year over year production levels from 2014 to 2015 on a proforma basis. This feat speaks volumes to not only our balanced business plan, which combines E&P and EOR activities, but also to the tremendous quality of the assets in our portfolio.”
For the quarter, Chaparral produced 31.4 MBoe/d of which 56 percent was oil, 15 percent NGLs and 29 percent gas. This accounts for a 26 percent production increase on a year over year pro-forma basis and an absolute nine percent increase compared to the fourth quarter of 2014. The company drilled 15 gross operated E&P wells in the first quarter, with nine in the Mississippi Lime, three in the Oswego, two in the Marmaton, and one in the Meramec.
In response to the current market environment, the company will focus its drilling program primarily in the Mississippi Lime, Meramec and Oswego plays in Woods, Alfalfa and Kingfisher counties. It will also benefit from continued production growth in its North Burbank EOR Unit, which will not require a significant additional capital investment this year because of large investments in previous years.
Chaparral’s adjusted EBITDA at the end of the first quarter was $120.8 million compared to $109.7 million during the previous quarter, a 10 percent increase quarter over quarter and an absolute nine percent increase year over year. On a pro-forma basis, adjusted EBITDA grew more than 21 percent on a year over year basis. The company also realized $15.4 million in proceeds associated with early hedge settlements. This one-time event was necessary to maintain compliance with hedging limits under the credit agreement. The company remains well-hedged into the future, with 4.5 million barrels of oil hedged for the remainder of 2015 and 4 million barrels of oil hedged in 2016, as well as 12.2 Bcf of gas hedged for the remainder of 2015 and 14 Bcf, 12.7 Bcf and 8.3 Bcf of gas hedged in 2016, 2017 and 2018 respectively.
Oil and gas revenues before the effects of hedging activities totaled $93.1 million compared to $173.3 million in the first quarter of 2014. Despite increased year over year production, revenues decreased by 46 percent in the first quarter of 2015 compared to the first quarter of 2014 primarily due to a 51 percent drop in average realized prices. Commodity derivative contracts covered approximately 88 percent of first quarter production. The effect of these contracts increased the average realized combined oil and natural gas liquids price from $39.47 to $66.61 per barrel and increased the average realized gas price from $2.85 to $4.11 per MMBTU for the quarter.
Despite the drastic change in prices from the first quarter of 2014 to 2015, Chaparral’s net income remained relatively flat at $4.4 million in 2014 to $4.2 million in 2015. The total capital expenditure for the first quarter was $71.6 million, with $44.9 million for drilling and completion in its E&P areas, $13.8 million for EOR project areas and $9.2 million for acquisition of oil and natural gas properties and leasehold. Chaparral expects its capital expenditure for 2015 to be more heavily-focused in the first half of the year with 40 percent of its annual budget incurred as of March 31, 2015 and increasing to approximately 60 percent to be incurred by mid-year.
Chaparral’s first quarter financial and operating results call will be held at 9 a.m. Central, Tuesday, May 12. Interested parties may access the call toll-free at 888-455-2260 and ask for the Chaparral Energy conference call 10 minutes prior to the start time. The conference ID number is 9591078.
In addition, a live webcast of the call will be available through the Investor section of the company’s website. For those who cannot listen to the live call, a telephonic replay will be available through Tuesday, May 26, by calling 888-203-1112. The passcode is 9591078. An archive of the call will also be available shortly after its conclusion on the Investor section of the company’s website.
Chaparral’s 10-K and 10-Q are also available on the Investor section of the company’s website at chaparralenergy.com/investors or the Securities and Exchange Commission’s website at sec.gov.
Statements made in this release contain “forward-looking statements.” These statements are based on certain assumptions and expectations made by Chaparral which reflect management’s experience, estimates and perception of historical trends, current conditions, anticipated future developments, potential for reserves and drilling, completion of current and future acquisitions, and growth, benefits of acquisitions, future competitive position and other factors believed to be appropriate. These forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Among those risks, trends and uncertainties are our ability to find oil and natural gas reserves that are economically recoverable, the volatility of oil and natural gas prices, the uncertain economic conditions in the United States and globally, the decline in the reserve values of our properties that may result in ceiling test write-downs, our ability to replace reserves and sustain production, our estimate of the sufficiency of our existing capital sources, our ability to raise additional capital to fund cash requirements for future operations, the uncertainties involved in prospect development and property acquisitions or dispositions and in projecting future rates of production or future reserves, the timing of development expenditures and drilling of wells, the impact of natural disasters on our present and future operations, the impact of government regulation and the operating hazards attendant to the oil and natural gas business. Please read “Risk Factors” in our annual reports on form 10-K and other public filings. We undertake no duty to update or revise these forward-looking statements.
Founded in 1988 and headquartered in Oklahoma City, Chaparral is an independent oil and natural gas exploration and production company. The company has capitalized on its sustained success in the Mid-Continent area in recent years by expanding its holdings to become a leading player in the liquids-rich Northern Oklahoma Mississippian and the oil-rich Panhandle Marmaton plays. Chaparral is also the nation’s third-largest carbon dioxide enhanced oil recovery producer based on active projects. This position is underscored by its activity in the world-class North Burbank Unit in Osage County, Oklahoma, which is the largest oil recovery unit in the state. For more information, please visit chaparralenergy.com.