Chaparral Announces Second Quarter 2015 Financial and Operational Results
Oklahoma City, August 12, 2015 — Chaparral Energy, Inc. announced its second quarter 2015 financial results and provided an update on its operations today. Highlights included:
- An average production of 28.4 Mboe/d during the second quarter, which was flat year over year on a pro-forma basis taking into account the sale of its Ark-La-Tx properties in 2014
- Continued EOR production growth, highlighted by increases within its North Burbank Unit with 2,600 gross Bo/d during the second quarter, a more than 20 percent quarter over quarter increase and 61 percent year over year increase
- A year over year pro-forma LOE spend decrease of 10 percent, or nearly $3.1 million
- An adjusted EBITDA of $95.4 million
- Total asset impairments of $231 million, which includes oil and gas properties, equipment inventories and drilling rigs
“Chaparral remains extremely focused on our liquidity and internal cost savings initiatives, having already captured tremendous savings in key areas such as CAPEX, LOE and G&A,” said Chief Executive Officer Mark Fischer. “In addition, our oil-focused drilling E&P operations in the STACK and Mississippi Lime plays and EOR program continue to perform well despite the reduced price environments and corresponding lower level of activity, which has allowed us to maintain our production levels.”
“Likewise, our long-standing hedging strategy and efforts to secure additional liquidity by paying down our borrowing base provide Chaparral with the security and flexibility that is vital in the current market environment. Looking forward, we will continue to protect our liquidity through rigorous capital discipline and sustainable improved operational performance.”
For the quarter, Chaparral produced 28.4 Boe/d of which 54 percent was oil, 15 percent NGLs and 31 percent gas. While this accounts for an almost absolute 10 percent year over year decrease in production, on a pro-forma basis, taking into account properties associated with the company’s 2014 Ark-La-Tx sale, production was virtually flat compared to the second quarter of 2014. This decline was a direct result of the planned reduction in its drilling rig program, as well as a strategic delay of completion activities until the second half of this year.
Chaparral also remains extremely focused on reducing its lease operating expense. From a total dollar perspective, the company reduced its LOE expense in the second quarter by more than $4.2 million, or 13 percent, compared to the previous quarter. It anticipates this downward trend will continue throughout the year.
As of June 30, Chaparral had drilled 20 gross operated E&P wells during the year, with nine in the STACK, nine in the Mississippi Lime and two in the Marmaton. The company’s EOR Business Unit also continues to record increased production without requiring significant additional capital investment this year. Its North Burbank Unit grew production by 61 percent with 2,600 gross Bo/d during the second quarter compared to 1,600 Bo/d during the second quarter of 2014.
Chaparral’s adjusted EBITDA at the end of the second quarter was $95.4 million compared to $105.4 million during the previous quarter, which excluded the effects of a $15.4 million early settlement gain associated with certain hedging instruments. This $10 million quarter over quarter decrease was in line with the company’s previously communicated expectations based on the timing of its 2015 drilling program and strategic delay of completions activity.
The company has a robust hedging program, with 2.9 million barrels of oil hedged for the remainder of 2015, as well as 4 million barrels in 2016. From a gas standpoint, it has 7.9 Bcf of gas hedged for the remainder of 2015, 14 Bcf hedged in 2016, 12.7 Bcf in 2017 and 8.3 Bcf hedged in 2018.
Revenues during the second quarter, before the effects of hedging activities, were up slightly totaling $94.2 million compared to $93.1 million in the first quarter. However, due to a 46 percent decline in average realized prices, this marked a 51 percent year over year decrease for the quarter.
As expected, due to a decline in average commodity prices, Chaparral was required to record an asset impairment of $231 million in the second quarter due to lower prices that impacted oil and gas properties, inventory and equipment.
Chaparral’s second quarter financial and operating results call will be held at 9 a.m. Central, Wednesday, August 12. Interested parties may access the call toll-free at 888-461-2024 and ask for the Chaparral Energy conference call 10 minutes prior to the start time. The conference ID number is 8037693.
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 Wednesday, August 26, by calling 888-203-1112. The replay passcode is 8037693. An archive of the call will also be available shortly after its conclusion on the Investor section of the company’s website.
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 a pure play Mid-Continent 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 Mississippi Lime and STACK, which is home to multiple oil-rich reservoirs including the Oswego, Meramec, Osage, Woodford and Hunton formations. Chaparral is also the nation’s third-largest carbon dioxide enhanced oil recovery producer based on number of 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.