HighPoint Resources Reports Third Quarter 2020 Financial and Operating Results

Rhea-AI Summary

HighPoint Resources Corporation (HPR) reported its third-quarter 2020 results, achieving production sales of 2.8 million barrels of oil equivalent (MMBoe), 9% above guidance. Oil production constituted 1.5 million barrels (53% of total). Although the company faced a GAAP net loss of $16 million ($3.72 per diluted share), adjusted net earnings were $17 million ($4.01 per diluted share), supported by EBITDAX of $64 million. Notably, net bank debt was reduced by 34%. A merger with Bonanza Creek was also announced, aiming to strengthen their position in the DJ Basin.

Positive

• Production of 2.8 MMBoe exceeded guidance by 9%.
• Oil production sales volume reached 1.5 MMBbls, constituting 53% of total production.
• Cash flow positive with a 34% reduction in net bank debt.
• Adjusted net income of $17 million, or $4.01 per diluted share.

Negative

• GAAP net loss of $16 million or $3.72 per diluted share.
• Minimal capital expenditures of $1.8 million due to suspended drilling activities.

• Reported production sales volume of 2.8 million barrels of oil equivalent ("MMBoe") for the third quarter of 2020, exceeding the high end of guidance by 9%        
   
• Oil production sales volume of 1.5 million barrels of oil ("MMBbls") for the third quarter of 2020; 53% of total equivalent production sales volume
   
• Cash flow positive for the quarter with net bank debt¹ reduced 34% compared to the end of the second quarter
   
• Reported a GAAP net loss of $16 million, or $3.72 per diluted share with adjusted net earnings² of $17 million, or $4.01 per diluted share and EBITDAX² of $64 million
   
• Excluding the impact of reverse stock split³ adjusted net earnings per diluted share were $0.08
   
• Recently announced a definitive agreement to merge with Bonanza Creek in a strategic combination that creates a large-scale rural DJ Basin company⁴

⁽¹⁾ Net bank debt represents the outstanding balance under our credit facility less cash and cash equivalents
⁽²⁾ Non-GAAP measures, reconciliation to GAAP financial measures can be found in the tables at the end of this release
⁽³⁾ Announced a 1-for-50 reverse stock split on October 20, 2020 effective as of the market open on October 30, 2020
⁽⁴⁾ See the Company's press release dated November 9, 2020 for more details on the transaction

DENVER, Nov. 09, 2020 (GLOBE NEWSWIRE) -- HighPoint Resources Corporation ("we", "us", the "Company" or "HighPoint") (NYSE: HPR) today announced third quarter of 2020 financial and operating results, reporting a net loss of $16 million, or $3.72 per diluted share. Adjusted net income for the third quarter of 2020 was $17 million, or $4.01 per diluted share. EBITDAX for the third quarter of 2020 was $64 million. Excluding the impact of the reverse stock split that became effective on October 30, 2020, adjusted net earnings per diluted share were $0.08. Adjusted net income (loss) and EBITDAX are non-GAAP (Generally Accepted Accounting Principles) measures. Reconciliations of non-GAAP measures, including adjusted net income and EBITDAX to GAAP net income can be found in the tables at the end of this release.

Chief Executive Officer and President Scot Woodall commented, "The current operating environment continued to present challenges during the third quarter, but I am proud of our ability to exceed our quarterly objectives and continue to make progress toward our full year goals. Our employees remain healthy and safe and I'm pleased with our ability to execute as production exceeded guidance on significantly lower spending and we aggressively reduced operating costs. This allowed us to generate positive free cash flow, which was used to reduce net bank debt by 34%. Today, we announced an agreement to merge with Bonanza Creek in a strategic combination that provides our stakeholders an opportunity to participate in a larger DJ Basin company with a strong balance sheet and free cash flow profile. We look forward to working with the Bonanza Creek team in the coming months as we integrate the two organizations."

THIRD QUARTER 2020 RESULTS

The Company reported oil, natural gas and natural gas liquids ("NGL") production of 2.8 MMBoe for the third quarter of 2020, which exceeded the high end of the guidance range of 2.5-2.6 MMBoe. Oil volumes totaled 1.5 MMBbls or 53% of total equivalent volumes and also exceeded the high end of the guidance range of 1.4-1.46 MMBbls. Production sales volumes for the third quarter were comprised of approximately 53% oil, 25% natural gas and 22% NGLs.

For the third quarter of 2020, West Texas Intermediate ("WTI") oil prices averaged $40.93 per barrel, Northwest Pipeline ("NWPL") natural gas prices averaged $1.87 per MMBtu and NYMEX natural gas prices averaged $1.98 per MMBtu. Commodity price realizations to benchmark pricing were WTI less $4.32 per barrel of oil and NWPL less $0.51 per Mcf of gas. The NGL price averaged approximately 25% of the WTI price per barrel.

Lease operating expense ("LOE") averaged $1.87 per Boe in the third quarter of 2020 compared to $3.16 per Boe in the second quarter of 2020. Third quarter LOE was lower compared to the second quarter of 2020 as a result of operational efficiencies and cost savings.

Production tax expense averaged $(0.38) per Boe in the third quarter of 2020 compared to $0.50 per Boe in the second quarter of 2020. Production tax expense for the third quarter of 2020 included a $5 million reduction in estimated 2019 Colorado ad valorem tax that is due in 2021. Excluding the adjustment, production taxes would have averaged 6.4% as a percentage of revenues. Production tax expense is expected to average approximately 6%-7% of revenues for the remainder of 2020.  

Capital Expenditures

Capital expenditures for the third quarter of 2020 totaled $1.8 million, which consisted of flowback capital and minimal workover activity. As previously reported, due to continued oil price volatility, the Company suspended drilling and completion activity and continues to defer further activity until broader market conditions improve. Accordingly, the Company anticipates minimal capital spending for the fourth quarter of 2020.

Third Quarter Conference Call and Webcast

Due to the definitive merger agreement with Bonanza Creek announced today, the Company will not host a conference call/webcast to review its third quarter of 2020 results.

WEBSITE INFORMATION

This press release, along with other news about HighPoint, is available at http://investor.hpres.com/news-releases. We routinely post information that may be important to investors in the investor relations section of our website, http://investor.hpres.com/news-releases. We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD, and we encourage investors to consult that section of our website regularly for important information about the Company. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document. Investors interested in automatically receiving news and information when posted to our

FAQ

What were HighPoint Resources' production volumes for Q3 2020?

HighPoint reported production volumes of 2.8 million barrels of oil equivalent (MMBoe) for Q3 2020.

What was the net loss reported by HPR for Q3 2020?

HighPoint reported a GAAP net loss of $16 million, or $3.72 per diluted share for Q3 2020.

How much did HighPoint reduce its net bank debt in Q3 2020?

HighPoint reduced its net bank debt by 34% compared to the second quarter of 2020.

What is the significance of the merger between HighPoint Resources and Bonanza Creek?

The merger is expected to create a large-scale company in the DJ Basin, enhancing financial stability and production capabilities.

What were the capital expenditures for HighPoint in Q3 2020?

HighPoint's capital expenditures totaled $1.8 million for Q3 2020.