- Production Volumes for the Quarter Grew 8% Sequentially and 22%
Over the Prior Year Period to a Record 82.1 MMcfe/day, Exceeding
Guidance - Lease Operating Expenses Were Reduced to $0.94 per Mcfe
for the Quarter - a 29% Reduction from the First Quarter and a 25%
Reduction from the Prior Year Period - Record Haynesville Shale
Production Levels, Accounting for Approximately 20% of Total Second
Quarter Production - Record $27.2 Million in Settlements from
Realized Derivative Contracts HOUSTON, Aug. 5
/PRNewswire-FirstCall/ -- Goodrich Petroleum Corporation (NYSE:GDP)
today announced financial and operating results for the quarter
ended June 30, 2009. PRODUCTION Net production volumes in the
second quarter increased by approximately 22% to 7.5 billion cubic
feet equivalent ("Bcfe"), or an average of approximately 82,100
Mcfe per day, versus 6.1 Bcfe, or an average of approximately
67,100 Mcfe per day in the second quarter of 2008. Average net
daily production volumes for the second quarter increased
sequentially by approximately 8% versus the first quarter of 2009.
Virtually all of net production volumes for the quarter came from
Cotton Valley trend wells in East Texas and North Louisiana,
including approximately 20% from the Haynesville Shale formation,
up from 5% in the first quarter of 2009. The Company currently
expects net daily production volumes will average between 78,000
and 82,000 Mcfe per day for the third quarter of 2009, which
includes the impact of delayed completions on up to four wells
drilled but not completed in 2009. NET INCOME Net income applicable
to common stock for the second quarter of 2009 was a loss of $36.5
million ($(1.02) per share) compared to a second quarter 2008 loss
of $40.6 million ($(1.27) per share). Results for the second
quarter of 2009 included a $23.5 million pre tax non-cash
impairment charge for oil and natural gas properties primarily
associated with the Caddo Pine Island field in Caddo Parish,
Louisiana. The second quarter also included a net $2.6 million gain
on derivatives not designated as hedges, with over $27.2 million in
realized gains on our natural gas derivative contracts being
partially offset by unrealized losses of $24.4 million on natural
gas derivative contracts and a $0.2 million loss on our interest
rate derivative contracts. By contrast, the second quarter of 2008
included a $48.9 million loss on derivatives not designated as
hedges (comprised of a $2.0 million realized loss and a $46.9
million non-cash, unrealized loss). CASH FLOW Earnings before
interest, taxes, DD&A, non-cash general and administrative
expenses and exploration ("EBITDAX"), decreased 19% to
approximately $37.3 million for the second quarter, compared to
$46.4 million in the same period of the prior year. The primary
reason for the decrease in EBITDAX was due to natural gas prices
being down approximately 67% on a unit basis from the prior year
period (see the accompanying table for a reconciliation of EBITDAX,
a non-GAAP measure, to net cash provided by operating activities).
Discretionary cash flow ("DCF"), defined as net cash provided by
operating activities before changes in working capital, was $33.0
million in the quarter, second only in the Company's history to the
$41.5 million in DCF realized in the prior year period. Net cash
provided by operating activities was $27.1 million for the quarter,
down from the prior year period's $39.9 million, once again due to
decreased price realizations (see the accompanying table for a
reconciliation of discretionary cash flow, a non-GAAP measure, to
net cash provided by operating activities). REVENUES Total revenues
for the second quarter, which do not include realized gains of
$27.2 million on natural gas derivatives not designated as hedges,
decreased by approximately 60% to $26.3 million, versus $65.2
million for the same period in the prior year. Average net oil and
natural gas prices received in the second quarter were $3.33 per
Mcf of natural gas versus $10.18 per Mcf of natural gas in the
prior year period and $52.98 per barrel of oil in the second
quarter of 2009 versus $121.51 per barrel in the prior year period.
On an Mcfe basis, the blended price was $3.51 per Mcfe in the
second quarter of 2009 versus $10.62 per Mcfe in the prior year
period. Total revenues and average prices received in the second
quarter of 2009 do not include realized gains of $27.2 million
received on the Company's settled natural gas derivatives, none of
which were designated as hedges during the quarter. OPERATING
INCOME Operating income, defined as revenues minus operating
expenses, dropped to a loss of $53.9 million in the second quarter
of 2009, versus income of $16.1 million for the prior year period.
The significant decrease in operating income from the prior year
period was primarily a function of the previously mentioned $23.5
million non-cash impairment charge incurred during the quarter as
well as lower oil and natural gas prices. OPERATING EXPENSES Lease
operating expenses (LOE) totaled $7.0 million in the quarter, or
$0.94 per Mcfe of production, versus $7.7 million, or $1.26 per
Mcfe for the prior year period. LOE per Mcfe for the quarter was
down 25% from the second quarter of 2008, and approximately 29%
from the first quarter of 2009. The majority of the LOE
improvements occurred in the areas of salt water disposal (SWD) and
compression costs, where the company realized significant benefits
in the quarter from recently installed SWD systems and renegotiated
compression contracts. Additionally, the impact of the Haynesville
Shale production volumes began to surface in the quarter, as the
per unit rate of LOE from the Haynesville Shale production is
significantly less than our historical LOE rate. General and
administrative (G&A) expenses totaled $6.7 million for the
quarter, or $0.90 per Mcfe, versus $5.9 million, or $0.97 per Mcfe,
during the prior year period. G&A expenses were down on a per
unit basis over the prior year period as the Company grew
production volumes faster than the rate of increase of G&A.
Additionally, G&A expenses were down from the first quarter of
2009 on both an absolute basis (from $7.1 million in the first
quarter) and a per unit basis (from $1.04 in the first quarter),
Included in G&A expenses, the Company recorded a non-cash
expense related to stock based compensation for its officers,
employees and directors of $1.6 million during the quarter, which
was up slightly from the prior year period. Production and other
taxes, which are tied directly to oil and natural gas price levels,
were $1.0 million, or $0.14 per Mcfe, in the second quarter of 2009
versus $2.3 million, or $0.38 per Mcfe in the prior year period.
Transportation expenses were down slightly from the prior year
period (from $0.39 per Mcfe to $0.35 per Mcfe), while Exploration
expense increased to $3.0 million in the second quarter of 2009, or
$0.40 per Mcfe, versus $1.8 million, of $0.29 per Mcfe in the prior
year period. Exploration expense was negatively impacted during the
current quarter as a result of $1.1 million in early termination
fees incurred when we released two of our operated rigs
approximately 50 days prior to the expiration of their respective
contracts. A non-cash impairment charge of $23.5 million was
incurred during the second quarter of 2009, primarily due to the
write down of the carrying value of the Caddo Pine Island field,
where the Company's wells drilled over the last 12 months have
yielded reserve quantities insufficient to justify the costs of
those reserves. No such impairment charges were incurred in the
prior year period. CAPITAL EXPENDITURES The Company conducted
drilling and/or completion operations on 12 gross (9 net) wells in
the quarter with a 100% success rate. Capital expenditures for the
quarter totaled $65.3 million, down approximately 30% from the
prior year period, which was $93.6 million. Of the $65.3 million in
capital expenditures for the quarter, approximately $60.9 million,
or 93% of the total was associated with the drilling and/or
completion of 23 gross wells, versus $85.6 million expended for
drilling and completion of 46 gross wells during the prior year
period. Additionally, approximately $1.8 million was spent on
leasehold acquisitions, and approximately $2.4 million was
associated with facilities and other costs during the second
quarter of 2009. For the remainder of 2009, the Company is
estimating that capital expenditures will be approximately $75
million, bringing full year capital expenditures near its
previously announced budget of $230 million. LIQUIDITY As the
Company exited the second quarter of 2009 with approximately $25.0
million in cash, we now expect to make slight draws on our bank
revolver between now and the end of the year to help fund our
remaining 2009 Capital Expenditure program. While the reduction in
capital expenditures that we have seen thus far this year and
expect to see for the remainder of the year have helped to preserve
our cash and liquidity position, the concurrent slowdown in our
activity levels has resulted in an outflow of funds related to the
unwinding of our deficit working capital position. The Company
estimates that since year end it has paid out approximately $25.0
million in additional funds over and above its capital expenditure
bookings for the first half of this year, and expects an additional
$15.0 to $20.0 million of such outflow in the second half of the
year associated with the continued reduction in capital
expenditures referenced above. The Company's current borrowing base
under its senior revolving credit facility is set at $175.0 million
and currently has no balance outstanding. The borrowing base is
expected to be reset in September based upon the bank review of the
Company's estimated reserves. The Company expects to finance its
capital expenditures for the remainder of this year and into 2010
through a combination of available cash, cash flow from operations
and borrowings under its senior revolving credit facility.
OPERATIONAL UPDATE DRILLING During the second quarter of 2009, the
Company conducted drilling operations on 12 horizontal Cotton
Valley trend wells, of which nine targeted the Haynesville Shale
and three targeted the Cotton Valley Taylor sand. During the same
period, the Company reached total depth on nine wells and added 17
wells to production. Of the wells added to production, 12 wells
produced from the Haynesville Shale, one from the Cotton Valley
Taylor sand, one from the James Lime and three from the Travis
Peak. As of June 30, 2009, the Company had drilled and logged a
total of 447 Cotton Valley trend wells, with a success rate in
excess of 99%. CORE PROPERTIES Louisiana Bethany-Longstreet Field,
Caddo and DeSoto Parishes, Louisiana. In the Bethany Longstreet
field, the Company conducted drilling operations on five
Haynesville Shale horizontal wells during the quarter. In addition,
the Company conducted completion operations on four and added a
total of six wells to production during the quarter. To date, the
Company has completed and added to production a total of eight
Haynesville Horizontal wells in the Bethany Longstreet field with
an average initial production rate of 14,000 Mcf per day. Within
the existing joint venture with Chesapeake Energy ("Chesapeake"),
the Company is currently running two rigs and conducting completion
operations on two wells. Also in the Bethany Longstreet field but
outside of the existing joint venture with Chesapeake, the Company,
as operator, has commenced drilling the Plants 26 H-1 (36% WI),
which is a horizontal well targeting the Haynesville Shale
formation. Greenwood-Waskom Field, Caddo Parish, Louisiana. The
Company, as operator, is also currently drilling the Trosper 2 H-1
(87.5% WI), its initial Haynesville Shale horizontal well in the
Greenwood-Waskom field. The Company currently plans to drill one
additional well in the field during the second half of 2009. Texas
Beckville and Minden Fields, Panola and Rusk Counties, Texas During
the quarter, the Company conducted drilling operations on seven
horizontal wells, four wells targeting the Haynesville Shale and
three wells targeting the Cotton Valley Taylor sand. In addition,
the Company completed and added to production three Haynesville
Shale horizontal wells and one Cotton Valley Taylor sand well in
the Beckville and Minden fields. The Company's most recent
Haynesville Shale horizontal test, the Taylor Sealey 3H (100% WI),
which was the Company's initial well completed with both a desired
lateral length and current flowback procedure, came online as
previously reported at an initial production rate of 9.3 MMcf per
day and had a 30-day average of approximately 6.5 MMcf/day. In
addition, this quarter the Company reached total depth on three
other horizontal wells, one in the Haynesville Shale formation and
two Cotton Valley Taylor sand wells. These wells will be completed
in the future at the Company's discretion. Management Comments
Commenting on the second quarter results, W. "Gil" Goodrich, Vice
Chairman and CEO said, "We are extremely pleased with our
operational results in the second quarter. Not only did we exceed
our previous guidance on production volume growth, which came in
slightly above the upper end of our guidance, but we also achieved
major breakthroughs on lease operating expenses, as we reduced our
LOE to $0.94 per Mcfe on a per unit basis. In addition, we saw a
significant expansion in Haynesville Shale production which grew
from approximately 5% of total company volumes in the first quarter
to approximately 20% of average daily volumes during the second
quarter. Our 2009 hedging program again contributed meaningfully to
our quarterly results with just over $27.0 million in cash receipts
from realized natural gas hedges during the quarter, which is in
addition to reported revenue of $26.0 million. All of the above
combined for a solid quarter in discretionary cash flow, which was
a near-record $33.0 million. Aside from our results at Caddo Pine
Island field, which led to the impairment discussed herein, our
drilling program in the first half of the year was extremely
successful, as evidenced by the rapid production growth, largely
the result of our new Haynesville Shale horizontal wells. We are
also extremely pleased with the early results and performance from
our initial Cotton Valley (Taylor Sand) horizontal wells. We are
continuing to fine tune our horizontal drilling and completion
methodologies, which will no doubt yield long term benefits to GDP
shareholders. We have also begun to establish a hedging position
for 2010 with 10,000 MMbtu per day placed in a costless collar with
a floor of $6.00 per MMbtu and a ceiling of $7.15 per MMbtu. We
still expect to exit 2009 with an extremely strong balance sheet,
and we remain committed to providing superior growth at a
reasonable cost going forward." OTHER INFORMATION In this press
release, the Company refers to two non-GAAP financial measures,
EBITDAX and discretionary cash flow. Management believes that each
of these measures is a good financial indicator of the Company's
ability to internally generate operating funds. Management also
believes that these non-GAAP financial measures of cash flow
provide useful information to investors because they are widely
used by professional research analysts in the valuation and
investment recommendations of companies within the oil and natural
gas exploration and production industry. Neither discretionary cash
flow nor EBITDAX should be considered an alternative to net cash
provided by operating activities, as defined by GAAP. Initial
production rates are subject to decline over time and should not be
regarded as reflective of sustained production levels. Certain
statements in this news release regarding future expectations and
plans for future activities may be regarded as "forward looking
statements" within the meaning of the Securities Litigation Reform
Act. They are subject to various risks, such as financial market
conditions, operating hazards, drilling risks, and the inherent
uncertainties in interpreting engineering data relating to
underground accumulations of oil and natural gas, as well as other
risks discussed in detail in the Company's Annual Report on Form
10-K and other filings with the Securities and Exchange Commission.
Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to be correct. Goodrich
Petroleum is an independent oil and natural gas exploration and
production company listed on the New York Stock Exchange. The
majority of its properties are in Louisiana and Texas. GOODRICH
PETROLEUM CORPORATION SELECTED INCOME DATA (In Thousands, Except
Per Share Amounts) Three Months Ended Six Months Ended June 30,
June 30, 2009 2008 2009 2008 (as adjusted) (as adjusted) Total
Revenues $26,263 $65,173 $54,724 $111,526 Operating Expenses Lease
operating expense 6,984 7,669 15,980 14,766 Production and other
taxes 1,049 2,334 2,537 3,589 Transportation 2,591 2,386 5,179
4,256 Depreciation, depletion and amortization 36,537 29,033 70,195
54,118 Exploration 2,959 1,776 5,179 3,779 Impairment of oil and
gas properties 23,490 - 23,490 - General and administrative 6,713
5,920 13,770 11,360 Gain on sale of assets (113) - (113) -
Operating income (loss) (53,947) 16,055 (81,493) 19,658 Other
income (expense) Interest expense (5,298) (6,026) (10,506) (11,447)
Interest income 144 - 383 - Gain (loss) on derivatives not
designated as hedges 2,556 (48,947) 39,562 (73,434) (2,598)
(54,973) 29,439 (84,881) Loss from continuing operations before
income taxes (56,545) (38,918) (52,054) (65,223) Income tax benefit
21,505 - 20,151 - Loss from continuing operations (35,040) (38,918)
(31,903) (65,223) Discontinued operations: Gain (loss) on sale of
assets, net of tax - (120) - 280 Income (loss) from discontinued
operations, net of tax 58 (101) 65 284 58 (221) 65 564 Net loss
(34,982) (39,139) (31,838) (64,659) Preferred stock dividends 1,512
1,511 3,024 3,023 Net loss applicable to common stock $(36,494)
$(40,650) $(34,862) $(67,682) Loss per common share from continuing
operations Basic $(1.02) $(1.26) $(0.97) $(2.14) Diluted $(1.02)
$(1.26) $(0.97) $(2.14) Income (loss) per common share from
discontinued operations Basic $- $(0.01) $- $0.02 Diluted $-
$(0.01) $- $0.02 Net loss per common share applicable to common
stock Basic $(1.02) $(1.27) $(0.97) $(2.12) Diluted $(1.02) $(1.27)
$(0.97) $(2.12) Weighted average common shares outstanding: Basic
35,937 32,124 35,953 31,915 Diluted 35,937 32,124 35,953 31,915
GOODRICH PETROLEUM CORPORATION Selected Cash Flow Data (In
Thousands): Three Months Ended Six Months Ended June 30, June 30,
-------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- (as
adjusted) (as adjusted) Calculation of EBITDAX: Revenue 26,263
65,173 54,724 111,526 Lease operating expense (6,984) (7,669)
(15,980) (14,766) Production and other taxes (1,049) (2,334)
(2,537) (3,589) Transportation (2,591) (2,386) (5,179) (4,256)
G&A - cash portion only (5,141) (4,480) (10,567) (8,653)
Realized gain (loss) on derivatives not designated as hedges 26,801
(1,949) 47,827 (1,582) EBITDAX 37,299 46,355 68,288 78,680
Reconciliation of EBITDAX to Net Cash Provided by Operating
Activities: EBITDAX 37,299 46,355 68,288 78,680 EBITDAX -
Discontinued Operations 58 (101) 65 284 Exploration (2,959) (1,776)
(5,179) (3,779) Prospect amortization 1,377 885 2,901 2,449 Dry
hole - - 101 - Interest expense (2,924) (3,900) (5,885) (7,217)
Interest income 144 - 383 - Current income taxes 31 - 35 - Other
non-cash items - 21 - - Net changes in working capital (5,910)
(1,583) 2,664 (13,321) Net cash provided by operating activities
(GAAP) 27,116 39,901 63,373 57,096 Reconciliation of Discretionary
Cash Flow to Net Cash Provided by Operating Activities:
Discretionary cash flow 33,026 41,484 60,709 70,417 Net changes in
working capital (5,910) (1,583) 2,664 (13,321) Net cash provided by
operating activities (GAAP) 27,116 39,901 63,373 57,096 Selected
Operating Data: Three Months Ended Six Months Ended June 30, June
30, -------- -------- 2009 2008 2009 2008 ---- ---- ---- ----
Production - Continuing Operations: Natural gas (MMcf) 7,223 5,841
13,768 10,874 Oil and condensate (MBbls) 41 45 86 83 Total (Mmcfe)
7,469 6,109 14,287 11,375 Average sales price per unit: Natural gas
(per Mcf) $3.33 $10.18 $3.70 $9.37 Oil (per Bbl) 52.98 121.51 42.75
109.70 Natural gas and oil (Mcfe) 3.51 10.62 3.83 9.76 Expenses per
Mcfe: Lease operating expense $0.94 $1.26 $1.12 $1.30 Production
and other taxes 0.14 0.38 0.18 0.32 Transportation 0.35 0.39 0.36
0.37 DD&A 4.89 4.75 4.91 4.76 Exploration 0.40 0.29 0.36 0.33
Impairment of oil and gas properties 3.14 - 1.64 - General and
administrative 0.90 0.97 0.96 1.00 Gain on sale of assets (0.02) -
(0.01) - DATASOURCE: Goodrich Petroleum Corporation CONTACT: Robert
C. Turnham, Jr., President, or David R. Looney, Chief Financial
Officer, both of Goodrich Petroleum Corporation, +1-713-780-9494,
fax, +1-713-780-9254 Web Site: http://www.goodrichpetroleum.com/
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