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8-K - FORM 8-K - PAR PACIFIC HOLDINGS, INC. | d75227e8vk.htm |
Exhibit 99.1
DELTA PETROLEUM CORPORATION
Daniel Taylor, Chairman
Carl Lakey, President and CEO
Kevin Nanke, Treasurer and CFO
Broc Richardson, V.P. Corporate Development and IR
370 17th Street, Suite 4300
Denver, Colorado 80202
Daniel Taylor, Chairman
Carl Lakey, President and CEO
Kevin Nanke, Treasurer and CFO
Broc Richardson, V.P. Corporate Development and IR
370 17th Street, Suite 4300
Denver, Colorado 80202
For Immediate Release
DELTA PETROLEUM CORPORATION
ANNOUNCES SECOND QUARTER 2010 RESULTS
ANNOUNCES SECOND QUARTER 2010 RESULTS
DENVER, Colorado (August 9, 2010) Delta Petroleum Corporation (the Company or
Delta) (NASDAQ Global Market: DPTR), an independent oil and gas exploration and development
company, today announced its financial and operating results for the second quarter of 2010.
Carl Lakey, Deltas President and CEO, stated, The second quarter for 2010 was a pivotal
period for Delta Petroleum. We have now completed our strategic alternatives process and have
begun analyzing the results from earlier changes in the well completion process in the Piceance
Basin. The new completion technique is generating results that are better than expected. Although
we are still early in the evaluation process, the results to date do suggest using the new
technique on all 15 remaining wells.
After the end of the quarter, we received approximately $130 million in gross proceeds from
the sale to Wapiti Oil & Gas of certain non-core properties that amounted to approximately 25% of
our total proved reserves at year end 2009. With the proceeds from this transaction, we have
reduced our credit facility borrowings to very minimal levels and we are now in the process of
obtaining a new credit facility that we expect to have in place by the end of the third quarter. We
will continue to stringently focus on cost control and efficient operations in the Vega area and
are confident that we will be able to create value in doing so.
$130 MILLION ASSET DIVESTITURE
As previously announced, the Company closed on its $130 million non-core asset sale with
Wapiti Oil & Gas, L.L.C. (Wapiti) on July 30, 2010 (the Wapiti Transaction). Of the $130
million purchase price, $112 million was received by the Company at closing and used to reduce bank
debt and to pay transaction costs. The remaining $18 million is being held in escrow until third
party consents are obtained for the assignment of the Companys working interest in certain
properties that were a part of the transaction. The Company expects to receive the consents and
escrowed funds during the third quarter of 2010, and upon receipt, such funds will also be used to
reduce debt.
In accordance with applicable accounting standards, properties held for sale at June 30, 2010
in conjunction with the Wapiti Transaction in which the Company only sold half of its interest
continue to be reported as a component of continuing operations and are primarily comprised of the
Newton and Midway Loop fields. The fields classified as discontinued operations are fields in
which the Company sold all of its interest and include the 31% working interest in the Garden Gulch
field, the Baffin Bay field, and the Bull Canyon field, as well as the Companys interest in its
wholly-owned subsidiary, Piper Petroleum.
The Company recorded impairment losses associated with assets held for sale during the three
months ended June 30, 2010 of $96.1 million, of which $92.2 million was included in loss from
discontinued operations and $3.9 million was included in dry holes and impairments. The Company
expects to recognize a gain on sale for the closing of the Wapiti Transaction in the three months
ending September 30, 2010 of approximately $29.4 million, subject to revision for normal and
customary purchase price adjustments as provided for under the purchase and sale agreement. In
total, the Wapiti Transaction is expected to result in a $66.7 million loss when
1
the second quarter asset held for sale impairments are considered in conjunction with the
third quarter gain on sale.
See Reconciliation of Non-GAAP Measures below for a reconciliation of non-GAAP measures to the
GAAP measures each as provided herein.
LIQUIDITY UPDATE
On July 23, 2010, the Company and its credit facility banks agreed to amend the credit
agreement for its senior credit facility. As a result of the new amendment and the completion of
the Wapiti Transaction, the Companys borrowing base was reduced to $35 million. The amendment
imposed capital expenditures limitations of $18 million for the third quarter 2010 and $10 million
for the fourth quarter 2010 with a carry-over provision and eliminated all scheduled or special
borrowing base redeterminations prior to the maturity of the facility in January 2011.
The Company was in compliance with its financial ratio, capital expenditures and accounts
payable covenants under its credit facility as of June 30, 2010.
At July 30, 2010, the Company held approximately $10 million in cash after paying transaction
costs on the Wapiti sale and $18 million held in escrow pending third party consents. Based on the
revised borrowing base and the completion of the Wapiti Transaction, $11 million was available for
borrowing under the amended credit facility, giving the Company approximately $40 million in
liquidity.
RESULTS FOR THE SECOND QUARTER
The Company reported a second quarter net loss attributable to common stockholders of ($149.8
million), or ($0.54) per share, compared with a net loss attributable to common stockholders of
($172.3 million), or ($0.89) per share, in the second quarter of 2009. The net loss attributable
to common stockholders for the second quarter 2010 includes a $96.1 million impairment charge
associated with the assets held for sale.
For the quarter ended June 30, 2010, the Company reported production of 4.7 billion cubic feet
equivalents (Bcfe). Approximately 1.3 Bcfe of production in the quarter was from assets sold in
the Wapiti Transaction, of which 795 Mmcfe is accounted for under Discontinued Operations. The
following discussion is on a Continuing Operations basis.
Total revenue increased 73% to $36.0 million in the quarter, versus revenue of $20.9 million
in the quarter ended June 30, 2009. The increase is primarily related to a $9.4 million increase
in contract drilling and trucking fees, improved third party rig utilization, and a $5.8 million
quarter-over-quarter increase in oil and gas sales. For the quarter ended June 30, 2010, oil and
gas sales increased 30% to $25.1 million, as compared to $19.3 million for the prior year period.
The increase was primarily the result of a 110% increase in natural gas prices and a 31% increase
in oil prices, partially offset by a 21% decrease in production. The average natural gas price
received during the quarter ended June 30, 2010 increased to $4.86 per thousand cubic feet (Mcf)
compared to $2.31 per Mcf for the prior year period. The average oil price received during the
quarter ended June 30, 2010 increased to $69.88 per barrel (Bbl) compared to $53.22 per Bbl for
the prior year period.
2
SECOND QUARTER PRODUCTION VOLUMES, UNIT PRICES AND COSTS
Production volumes, average prices received and cost per equivalent Mcf for the three months
ended June 30, 2010 and 2009 are as follows:
Three Months Ended | ||||||||
June 30, | ||||||||
2010 | 2009 | |||||||
Production Continuing Operations: |
||||||||
Oil (Mbbl) |
150 | 198 | ||||||
Gas (Mmcf) |
3,004 | 3,776 | ||||||
Total Production (Mmcfe) Continuing Operations |
3,902 | 4,964 | ||||||
Average Price Continuing Operations: |
||||||||
Oil (per barrel) |
$ | 69.88 | $ | 53.22 | ||||
Gas (per Mcf) |
$ | 4.86 | $ | 2.31 | ||||
Costs (per Mcfe) Continuing Operations: |
||||||||
Lease operating expense |
$ | 2.05 | $ | 1.38 | ||||
Transportation expense |
$ | 1.14 | $ | 0.44 | ||||
Production taxes |
$ | 0.35 | $ | 0.21 | ||||
Depletion expense |
$ | 3.82 | $ | 4.66 | ||||
Realized derivative losses (per Mcfe) |
$ | 0.15 | $ | |
Lease Operating Expense. Lease operating expenses for the quarter ended June 30, 2010
increased to $8.0 million from $6.8 million in the year earlier period primarily due to increased
water handling costs in the Vega area partially offset by lower offshore lease operating costs.
Lease operating expense per Mcfe for the quarter ended June 30, 2010 increased to $2.05 per Mcfe
from $1.38 per Mcfe. The quarter-over-quarter increase on a per unit basis was primarily due to
the increased water handling costs in the Vega area and the effect of fixed costs spread over a 21%
decline in production volumes.
Transportation Expense. Transportation expense for the quarter ended June 30, 2010 increased
to $4.5 million from $2.2 million in the prior year. Transportation expense per Mcfe for the
quarter ended June 30, 2010 increased 159% to $1.14 per Mcfe from $0.44 per Mcfe. The increase on
a per unit basis is primarily the result of changes to the Companys Vega gas marketing contract
that went into effect in October 2009 whereby the Companys gas is processed through a higher
efficiency plant. The Vega gas marketing contract has resulted in higher revenues in the Vega area
from improved natural gas liquids recoveries and a greater percentage of liquids proceeds retained.
Depreciation, Depletion, Amortization and Accretion Oil and Gas. Depreciation, depletion
and amortization expense decreased 33% to $15.9 million for the quarter ended June 30, 2010, as
compared to $23.8 million for the comparable year earlier period. Depletion expense for the quarter
ended June 30, 2010 decreased to $14.9 million from $23.1 million for the quarter ended June 30,
2009 due to lower production volumes and a decrease in the per unit depletion rate. The Companys
depletion rate decreased from $4.66 per Mcfe for the quarter ended June 30, 2009 to $3.82 per Mcfe
for the current year period primarily due to the effect of impairments recorded during late 2009 on
high depletion rate properties and Vega area proved undeveloped reserves added as a result of
higher Piceance gas prices.
General and Administrative Expense. General and administrative expense increased 30% to
$11.6 million for the quarter ended June 30, 2010, as compared to $9.0 million for the comparable
prior year period. The increase in general and administrative expenses is attributed to costs
associated with the strategic alternatives evaluation process and to increased non-cash stock
compensation expense related to restricted stock granted in December 2009, partially offset by
reduced staffing as a result of reductions in force during the first half of 2009 resulting in
lower cash compensation expense.
3
RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2010
The Company reported a six month net loss attributable to common stockholders of ($162.5
million), or ($0.59) per share, compared with a net loss attributable to common stockholders of
($197.9 million), or ($1.35) per share, in the six months ended June 30, 2009. The net loss
attributable to common stockholders for the six months ended June 30, 2010 includes a $96.1 million
impairment charge associated with assets held for sale.
For the six months ended June 30, 2010, the Company reported production of 9.7 Bcfe.
Approximately 2.7 Bcfe of production for the six month period was from assets sold in the Wapiti
Transaction, of which 1.7 Bcfe is accounted for under Discontinued Operations. The following
discussion is on a Continuing Operations basis.
Total revenue decreased 1% to $75.4 million for the six months ended June 30, 2010, versus
revenue of $76.2 million in the six months ended June 30, 2009. The decrease is primarily related
to a $31.2 million gain associated with the offshore California litigation in 2009, offset by a
$16.9 million period-over-period increase in oil and gas sales and a $14.1 million increase in
contract drilling and trucking fees, due to improved third party rig utilization. For the six
months ended June 30, 2010, oil and gas sales increased 44% to $55.0 million, as compared to $38.1
million for the prior year period. The increase was principally the result of a 102% increase in
natural gas prices and a 68% increase in oil prices, partially offset by a 22% decrease in
production. The average natural gas price received during a six months ended June 30, 2010
increased to $5.38 per Mcf compared to $2.66 per Mcf for the year earlier period. The average oil
price received during the six months ended June 30, 2010 increased to $70.54 per Bbl compared to
$41.99 per Bbl for the year earlier period.
SIX MONTHS ENDED PRODUCTION VOLUMES, UNIT PRICES AND COSTS
Production volumes, average prices received and cost per equivalent Mcf for the six months
ended June 30, 2010 and 2009 are as follows:
Six Months Ended | ||||||||
June 30, | ||||||||
2010 | 2009 | |||||||
Production Continuing Operations: |
||||||||
Oil (Mbbl) |
299 | 405 | ||||||
Gas (Mmcf) |
6,299 | 7,934 | ||||||
Total Production (Mmcfe) Continuing Operations |
8,093 | 10,364 | ||||||
Average Price Continuing Operations: |
||||||||
Oil (per barrel) |
$ | 70.54 | $ | 41.99 | ||||
Gas (per Mcf) |
$ | 5.38 | $ | 2.66 | ||||
Costs (per Mcfe) Continuing Operations: |
||||||||
Lease operating expense |
$ | 1.88 | $ | 1.42 | ||||
Transportation expense |
$ | 0.96 | $ | 0.45 | ||||
Production taxes |
$ | 0.35 | $ | 0.25 | ||||
Depletion expense |
$ | 3.67 | $ | 4.29 | ||||
Realized derivative losses (per Mcfe) |
$ | 0.58 | $ | |
Lease Operating Expense. Lease operating expenses for the six months ended June 30,
2010 of $15.2 million was comparable to $14.7 million in the year earlier period. Lease operating
expense per Mcfe for the six months ended June 30, 2010 increased to $1.88 per Mcfe from $1.42 per
Mcfe for the comparable year earlier period. The increase on a per unit basis was primarily due to
increased water handling costs in the Vega area and the effect of fixed costs spread over a 22%
decline in production volumes.
Transportation Expense. Transportation expense for the six months ended June 30, 2010
increased to $7.8 million from $4.6 million in the prior year. Transportation expense per Mcfe for
the six months ended June 30,
4
2010 increased to $0.96 per Mcfe from $0.45 per Mcfe. The increase on a per unit basis is
primarily the result of changes to the Companys Vega gas marketing contract that went into effect
in October 2009 whereby the Companys gas is processed through a higher efficiency plant. The Vega
gas marketing contract has resulted in higher revenues in the Vega area from improved natural gas
liquids recoveries and a greater percentage of liquids proceeds retained.
Depreciation, Depletion, Amortization and Accretion Oil and Gas. Depreciation, depletion
and amortization expense decreased 32% to $31.3 million for the six months ended June 30, 2010, as
compared to $45.9 million for the comparable year earlier period. Depletion expense for the six
months ended June 30, 2010 was $29.7 million compared to $44.4 million for the six months ended
June 30, 2009. The depletion rate decreased from $4.29 per Mcfe for the six months ended June 30,
2009 to $3.67 per Mcfe for the current year period primarily due to the effect of impairments
recorded during late 2009 on high depletion rate properties and Vega area proved undeveloped
reserves added as a result of higher Piceance gas prices.
General and Administrative Expense. General and administrative expense increased 7% to $23.0
million for the six months ended June 30, 2010, as compared to $21.6 million for the comparable
prior year period. The increase in general and administrative expenses is attributed to costs
associated with the strategic alternatives evaluation process and to increased non-cash stock
compensation expense related to restricted stock granted in December 2009, partially offset by
reduced staffing as a result of reductions in force during the first half of 2009 resulting in
lower cash compensation expense.
ADDITIONAL FINANCIAL INFORMATION
The following table summarizes the Companys open derivative contracts at June 30, 2010:
Remaining | ||||||||||||||
Commodity | Volume | Fixed Price | Term | Index Price | ||||||||||
Crude oil
|
1,000 | Bbls / Day1 | $ | 52.25 | July 10 - Dec 10 | NYMEX WTI | ||||||||
Crude oil
|
500 | Bbls / Day | $ | 57.70 | Jan 11 - Dec 11 | NYMEX WTI | ||||||||
Natural gas
|
6,000 | MMBtu / Day | $ | 5.720 | July 10 - Dec 10 | NYMEX HHUB | ||||||||
Natural gas
|
15,000 | MMBtu / Day | $ | 4.105 | July 10 - Dec 10 | CIG | ||||||||
Natural gas
|
5,367 | MMBtu / Day | $ | 3.973 | July 10 - Dec 10 | CIG | ||||||||
Natural gas
|
12,000 | MMBtu / Day | $ | 5.150 | Jan 11 - Dec 11 | CIG | ||||||||
Natural gas
|
3,253 | MMBtu / Day | $ | 5.040 | Jan 11 - Dec 11 | CIG |
1 | As a result of the closing of the Wapiti Transaction, for the period from August to December 2010, the Company expects its oil derivative contracts to equal 108% to 114% of forecast oil and condensate production sold on WTI based terms. Because derivative contract volumes are anticipated to exceed physical production volumes in certain months, the Company could be exposed to financial derivative losses in excess of oil revenue gains to the extent WTI oil prices rise from current levels. |
The pre-credit risk adjusted fair value of the Companys net derivative liabilities as of
June 30, 2010 was $6.6 million. A credit risk adjustment of $0.6 million to the fair value of the
derivatives reduced the reported amount of the net derivative liabilities to $6.0 million.
OPERATIONS UPDATE
Total Company net production for the month of August is expected to be 34 Mmcfe/d. During the
second quarter 2010 the Company completed one well from its drilled and uncompleted inventory in
the Vega area. The Company expects to complete the remaining 15 drilled and uncompleted wells in
the third and fourth quarters of this year, utilizing its redesigned completion techniques.
2010 CAPITAL EXPENDITURES AND PRODUCTION GUIDANCE
With the completion of the Wapiti Transaction and the reduction in the Companys credit
facility borrowing base to $35.0 million, capital expenditure limitations in the Companys credit
agreement for the third and fourth quarters of 2010 are set at $18.0 million and $10.0 million,
respectively. The Company intends to focus capital expenditures for the remainder of the year on
completing 15 previously drilled wells in the Vega area. Based on
5
this level of development and considering production sold in the Wapiti Transaction, the
Company expects oil and gas equivalent production for the remainder of the year to range between
6.9 Bcfe and 7.2 Bcfe.
INVESTOR CONFERENCE CALL
The Company will host an investor conference call Tuesday, August 10, 2010 at 12:00 noon
Eastern Time (10:00 am Mountain Time) to discuss financial and operating results for the second
quarter 2010.
Shareholders and other interested parties may participate in the conference call by dialing
877-317-6789 (international callers dial 412-317-6789) and referencing the ID code Delta
Petroleum call, a few minutes before 12:00 noon Eastern Time on August 10, 2010. The call will
also be broadcast live and can be accessed through the Companys website at
http://www.deltapetro.com/eventscalendar.html. A replay of the conference call will be available
one hour after the completion of the conference call from August 10, 2010 until August 19, 2010 by
dialing 877-344-7529 (international callers dial 412-317-0088) and entering the conference ID
443139.
ABOUT DELTA PETROLEUM CORPORATION
Delta Petroleum Corporation is an oil and gas exploration and development company based in
Denver, Colorado. The Companys core area of operation is the Rocky Mountain Region, where the
majority of its proved reserves, production and long-term growth prospects are located. Its common
stock is listed on the NASDAQ Global Market System under the symbol DPTR.
FORWARD-LOOKING STATEMENTS
Forward-looking statements in this announcement are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Readers are cautioned that all
forward-looking statements are based on managements present expectations, estimates and
projections, but involve risks and uncertainty, including without limitation the effects of oil and
natural gas prices, availability of capital to fund required payments on our credit facility and
our projected capital development and working capital needs, the ability to obtain necessary third
party consents to transfer assets to be conveyed in the Wapiti Transaction, as well as general
market conditions, competition and pricing, the increase in supply and contraction in demand for
natural gas in the United States, lack of availability of third party services including frac
crews, the impact of current economic and financial conditions on our ability to raise capital,
availability of borrowings under our credit facility and the ability to obtain a new or replacement
credit facility, uncertainties in the projection of future rates of production, unanticipated
recovery or production problems, unanticipated results from wells being drilled or completed, the
effects of delays in completion of gas gathering systems, pipelines and processing facilities, as
well as general market conditions, competition and pricing. Please refer to the Companys report
on Form 10-K for the year ended December 31, 2009 and subsequent reports on Forms 10-Q and 8-K as
filed with the Securities and Exchange Commission for additional information. The Company is under
no obligation (and expressly disclaims any obligation) to update or alter its forward-looking
statements, whether as a result of new information, future events or otherwise.
For further information contact the Company at (303) 293-9133 or via email at
investorrelations@deltapetro.com
SOURCE: Delta Petroleum Corporation
6
DELTA PETROLEUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, | December 31, | |||||||
2010 | 2009 | |||||||
(In thousands, except share data) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 11,051 | $ | 61,918 | ||||
Short-term restricted deposits |
100,000 | 100,000 | ||||||
Trade accounts receivable, net of allowance for doubtful
accounts of $100 and $100, respectively |
17,757 | 16,654 | ||||||
Oil and gas properties held for sale |
99,902 | | ||||||
Deposits and prepaid assets |
2,051 | 3,103 | ||||||
Inventories |
4,150 | 5,588 | ||||||
Other current assets |
3,169 | 5,189 | ||||||
Total current assets |
238,080 | 192,452 | ||||||
Property and equipment: |
||||||||
Oil and gas properties, successful efforts method of accounting: |
||||||||
Unproved |
236,096 | 280,844 | ||||||
Proved |
944,163 | 1,379,920 | ||||||
Drilling and trucking equipment |
175,844 | 177,762 | ||||||
Pipeline and gathering systems |
96,446 | 92,064 | ||||||
Other |
15,681 | 16,154 | ||||||
Total property and equipment |
1,468,230 | 1,946,744 | ||||||
Less accumulated depreciation and depletion |
(578,771 | ) | (800,501 | ) | ||||
Net property and equipment |
889,459 | 1,146,243 | ||||||
Long-term assets: |
||||||||
Long-term restricted deposit |
100,000 | 100,000 | ||||||
Investments in unconsolidated affiliates |
4,928 | 7,444 | ||||||
Deferred financing costs |
2,442 | 3,017 | ||||||
Other long-term assets |
6,163 | 8,329 | ||||||
Total long-term assets |
113,533 | 118,790 | ||||||
Total assets |
$ | 1,241,072 | $ | 1,457,485 | ||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities: |
||||||||
Credit facility Delta |
$ | 119,538 | $ | | ||||
Credit facility DHS |
73,590 | 83,268 | ||||||
Installments payable on property acquisition |
99,144 | 97,874 | ||||||
Accounts payable |
31,175 | 44,225 | ||||||
Liabilities related to oil and gas properties held for sale |
7,280 | | ||||||
Offshore litigation payable |
| 13,877 | ||||||
Other accrued liabilities |
11,628 | 13,459 | ||||||
Derivative instruments |
4,705 | 19,497 | ||||||
Total current liabilities |
347,060 | 272,200 | ||||||
Long-term liabilities: |
||||||||
Installments payable on property acquisition, net of current portion |
96,619 | 95,381 | ||||||
7% Senior notes |
149,647 | 149,609 | ||||||
33/4% Senior convertible notes |
106,268 | 104,008 | ||||||
Credit facility Delta |
| 124,038 | ||||||
Asset retirement obligations |
4,620 | 7,654 | ||||||
Derivative instruments |
1,319 | 7,475 | ||||||
Total long-term liabilities |
358,473 | 488,165 | ||||||
Commitments and contingencies |
||||||||
Equity: |
||||||||
Preferred
stock, $.01 par value: authorized 3,000,000 shares, none issued |
| | ||||||
Common stock, $.01 par value: authorized 600,000,000 shares,
issued 282,760,000 shares at June 30, 2010 and
282,548,000 shares at December 31, 2009 |
2,828 | 2,825 | ||||||
Additional paid-in capital |
1,631,517 | 1,625,035 | ||||||
Treasury stock at cost; 34,000 shares at June 30, 2010
and 42,000 shares at December 31, 2009 |
(75 | ) | (268 | ) | ||||
Accumulated deficit |
(1,101,557 | ) | (939,010 | ) | ||||
Total Delta stockholders equity |
532,713 | 688,582 | ||||||
Non-controlling interest |
2,826 | 8,538 | ||||||
Total equity |
535,539 | 697,120 | ||||||
Total liabilities and equity |
$ | 1,241,072 | $ | 1,457,485 | ||||
7
DELTA PETROLEUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Revenue: |
||||||||||||||||
Oil and gas sales |
$ | 25,067 | $ | 19,267 | $ | 54,970 | $ | 38,116 | ||||||||
Contract drilling and trucking fees |
11,064 | 1,674 | 20,996 | 6,887 | ||||||||||||
Gain (loss) on offshore litigation award and property sales, net |
(109 | ) | (81 | ) | (538 | ) | 31,204 | |||||||||
Total revenue |
36,022 | 20,860 | 75,428 | 76,207 | ||||||||||||
Operating expenses: |
||||||||||||||||
Lease operating expense |
8,015 | 6,845 | 15,202 | 14,749 | ||||||||||||
Transportation expense |
4,454 | 2,178 | 7,807 | 4,626 | ||||||||||||
Production taxes |
1,377 | 1,061 | 2,821 | 2,550 | ||||||||||||
Exploration expense |
358 | 471 | 584 | 1,531 | ||||||||||||
Dry hole costs and impairments |
30,767 | 106,621 | 31,121 | 108,064 | ||||||||||||
Depreciation, depletion, amortization and accretion oil and gas |
15,920 | 23,846 | 31,339 | 45,850 | ||||||||||||
Drilling and trucking operating expenses |
8,123 | 2,342 | 16,012 | 7,598 | ||||||||||||
Depreciation and amortization drilling and trucking |
5,226 | 6,175 | 10,798 | 11,967 | ||||||||||||
General and administrative |
11,640 | 8,966 | 23,027 | 21,594 | ||||||||||||
Executive severance expense, net |
| 3,739 | | 3,739 | ||||||||||||
Total operating expenses |
85,880 | 162,244 | 138,711 | 222,268 | ||||||||||||
Operating loss |
(49,858 | ) | (141,384 | ) | (63,283 | ) | (146,061 | ) | ||||||||
Other income and (expense): |
||||||||||||||||
Interest expense and financing costs, net |
(9,556 | ) | (15,775 | ) | (20,116 | ) | (32,201 | ) | ||||||||
Other income (expense), net |
(299 | ) | 1,256 | (170 | ) | 1,408 | ||||||||||
Realized loss on derivative instruments, net |
(601 | ) | | (4,714 | ) | | ||||||||||
Unrealized gain (loss) on derivative instruments, net |
3,676 | (15,647 | ) | 20,948 | (21,111 | ) | ||||||||||
Income (loss) from unconsolidated affiliates |
991 | (3,617 | ) | 983 | (2,870 | ) | ||||||||||
Total other expense |
(5,789 | ) | (33,783 | ) | (3,069 | ) | (54,774 | ) | ||||||||
Loss from continuing operations before income taxes and
discontinued operations |
(55,647 | ) | (175,167 | ) | (66,352 | ) | (200,835 | ) | ||||||||
Income tax expense (benefit) |
203 | 265 | 478 | (318 | ) | |||||||||||
Loss from continuing operations |
(55,850 | ) | (175,432 | ) | (66,830 | ) | (200,517 | ) | ||||||||
Discontinued operations: |
||||||||||||||||
Loss from discontinued operations, net of tax |
(96,630 | ) | (5,051 | ) | (101,642 | ) | (9,400 | ) | ||||||||
Net loss |
(152,480 | ) | (180,483 | ) | (168,472 | ) | (209,917 | ) | ||||||||
Less net loss attributable to non-controlling interest |
2,730 | 8,165 | 5,925 | 12,046 | ||||||||||||
Net loss attributable to Delta common stockholders |
$ | (149,750 | ) | $ | (172,318 | ) | $ | (162,547 | ) | $ | (197,871 | ) | ||||
Amounts attributable to Delta common stockholders: |
||||||||||||||||
Loss from continuing operations |
$ | (53,120 | ) | $ | (167,267 | ) | $ | (60,905 | ) | $ | (188,471 | ) | ||||
Loss from discontinued operations, net of tax |
(96,630 | ) | (5,051 | ) | (101,642 | ) | (9,400 | ) | ||||||||
Net loss |
$ | (149,750 | ) | $ | (172,318 | ) | $ | (162,547 | ) | $ | (197,871 | ) | ||||
Basic income (loss) attributable to Delta common stockholders
per common share: |
||||||||||||||||
Loss from continuing operations |
$ | (0.19 | ) | $ | (0.86 | ) | $ | (0.22 | ) | $ | (1.29 | ) | ||||
Discontinued operations |
(0.35 | ) | (0.03 | ) | (0.37 | ) | (0.06 | ) | ||||||||
Net loss |
$ | (0.54 | ) | $ | (0.89 | ) | $ | (0.59 | ) | $ | (1.35 | ) | ||||
Diluted income (loss) attributable to Delta common stockholders
per common share: |
||||||||||||||||
Loss from continuing operations |
$ | (0.19 | ) | $ | (0.86 | ) | $ | (0.22 | ) | $ | (1.29 | ) | ||||
Discontinued operations |
(0.35 | ) | (0.03 | ) | (0.37 | ) | (0.06 | ) | ||||||||
Net loss |
$ | (0.54 | ) | $ | (0.89 | ) | $ | (0.59 | ) | $ | (1.35 | ) | ||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic |
275,832 | 193,028 | 275,652 | 146,248 | ||||||||||||
Diluted |
275,832 | 193,028 | 275,652 | 146,248 |
8
DELTA PETROLEUM CORPORATION
AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
($ in thousands)
June 30, | June 30, | |||||||
THREE MONTHS ENDED | 2010 | 2009 | ||||||
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
$ | (6,332 | ) | $ | 38,757 | |||
Changes in assets and liabilities |
6,650 | (3,778 | ) | |||||
Less net proceeds from offshore litigation award |
| (48,701 | ) | |||||
Exploration costs |
358 | 471 | ||||||
Discretionary cash flow (deficiency)* |
$ | 676 | $ | (13,251 | ) | |||
June 30, | June 30, | |||||||
SIX MONTHS ENDED | 2010 | 2009 | ||||||
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
$ | (23,273 | ) | $ | 32,849 | |||
Changes in assets and liabilities |
27,271 | (11,286 | ) | |||||
Less net proceeds from offshore litigation award |
| (48,701 | ) | |||||
Exploration costs |
584 | 1,531 | ||||||
Discretionary cash flow (deficiency)* |
$ | 4,582 | $ | (25,607 | ) | |||
* | Discretionary cash flow represents net cash provided by (used in) operating activities before changes in assets and liabilities, net proceeds from offshore litigation award and exploration costs. Discretionary cash flow is presented as a supplemental financial measurement in the evaluation of our business. We believe that it provides additional information regarding our ability to meet our future debt service, capital expenditures and working capital requirements. This measure is widely used by investors and rating agencies in the valuation, comparison, rating and investment recommendations of companies. Discretionary cash flow is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for cash flows from operating, investing or financing activities as an indicator of cash flows, or as a measure of liquidity. |
June 30, | June 30, | |||||||
THREE MONTHS ENDED | 2010 | 2009 | ||||||
Net loss |
$ | (152,480 | ) | $ | (180,483 | ) | ||
Minority interest |
2,730 | 8,165 | ||||||
Income tax expense |
203 | 265 | ||||||
Interest expense and financing costs, net |
9,556 | 15,775 | ||||||
Depletion, depreciation and amortization |
26,973 | 36,107 | ||||||
(Gain) loss on offshore litigation award, property sales and other |
440 | (1,643 | ) | |||||
Unrealized (gain) loss on derivative instruments, net |
(3,676 | ) | 15,647 | |||||
Exploration, dry hole and impairment costs |
123,287 | 107,092 | ||||||
EBITDAX** |
$ | 7,033 | $ | 925 | ||||
June 30, | June 30, | |||||||
THREE MONTHS ENDED | 2010 | 2009 | ||||||
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
$ | (6,332 | ) | $ | 38,757 | |||
Changes in assets and liabilities |
6,650 | (3,778 | ) | |||||
Less net proceeds from offshore litigation award |
| (48,701 | ) | |||||
Interest net of financing costs |
6,141 | 10,446 | ||||||
Exploration costs |
358 | 471 | ||||||
Other non-cash items |
216 | 3,730 | ||||||
EBITDAX** |
$ | 7,033 | $ | 925 | ||||
June 30, | June 30, | |||||||
SIX MONTHS ENDED | 2010 | 2009 | ||||||
Net loss |
$ | (168,472 | ) | $ | (209,917 | ) | ||
Minority interest |
5,925 | 12,046 | ||||||
Income tax expense (benefit) |
478 | (318 | ) | |||||
Interest expense and financing costs, net |
20,116 | 32,201 | ||||||
Depletion, depreciation and amortization |
55,731 | 68,721 | ||||||
(Gain) loss on offshore litigation award, property sales and other |
801 | (32,928 | ) | |||||
Unrealized (gain) loss on derivative instruments, net |
(20,948 | ) | 21,111 | |||||
Exploration, dry hole and impairment costs |
123,867 | 109,595 | ||||||
EBITDAX** |
$ | 17,498 | $ | 511 | ||||
9
June 30, | June 30, | |||||||
SIX MONTHS ENDED | 2010 | 2009 | ||||||
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
$ | (23,273 | ) | $ | 32,849 | |||
Changes in assets and liabilities |
27,271 | (11,286 | ) | |||||
Less net proceeds from offshore litigation award |
| (48,701 | ) | |||||
Interest net of financing costs |
12,901 | 20,774 | ||||||
Exploration costs |
584 | 1,531 | ||||||
Other non-cash items |
15 | 5,344 | ||||||
EBITDAX** |
$ | 17,498 | $ | 511 | ||||
** | EBITDAX represents net loss before minority interest, income tax expense (benefit), interest expense and financing costs, net, depreciation, depletion and amortization expense, gain and loss on sale of oil and gas properties, offshore litigation and other investments, net unrealized gains and losses on derivative contracts and exploration and impairment and dry hole costs. EBITDAX is presented as a supplemental financial measurement in the evaluation of our business. We believe that it provides additional information regarding our ability to meet our future debt service, capital expenditures and working capital requirements. This measure is widely used by investors and rating agencies in the valuation, comparison, rating and investment recommendations of companies. EBITDAX is also a financial measurement that, with certain negotiated adjustments, is reported to our lenders pursuant to our bank credit agreement and is used in the financial covenants in our bank credit agreement and our senior note indentures. EBITDAX is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for net income, income from operations, or cash flow provided by (used in) operating activities prepared in accordance with GAAP. |
June 30, 2010 | June 30, 2009 | |||||||||||||||||||||||
THREE MONTHS ENDED | Oil (Mbbl) |
Gas (Mmcf) |
Mmcfe |
Oil (Mbbl) |
Gas (Mmcf) |
Mmcfe |
||||||||||||||||||
Total Production |
153 | 3,777 | 4,697 | 202 | 4,483 | 5,695 | ||||||||||||||||||
Less Wapiti Transaction production
reported in discontinued operations*** |
(4 | ) | (773 | ) | (795 | ) | (4 | ) | (707 | ) | (731 | ) | ||||||||||||
Production from Continuing Operations |
150 | 3,004 | 3,902 | 198 | 3,776 | 4,964 | ||||||||||||||||||
Less Wapiti Transaction production
reported in continuing operations*** |
(54 | ) | (223 | ) | (547 | ) | (71 | ) | (316 | ) | (742 | ) | ||||||||||||
Production from Remaining Operations |
96 | 2,781 | 3,355 | 127 | 3,460 | 4,222 | ||||||||||||||||||
June 30, 2010 | June 30, 2009 | |||||||||||||||||||||||
SIX MONTHS ENDED | Oil (Mbbl) |
Gas (Mmcf) |
Mmcfe |
Oil (Mbbl) |
Gas (Mmcf) |
Mmcfe |
||||||||||||||||||
Total Production |
309 | 7,889 | 9,743 | 414 | 9,532 | 12,016 | ||||||||||||||||||
Less Wapiti Transaction production
reported in discontinued operations*** |
(10 | ) | (1,590 | ) | (1,650 | ) | (9 | ) | (1,598 | ) | (1,652 | ) | ||||||||||||
Production from Continuing Operations |
299 | 6,299 | 8,093 | 405 | 7,934 | 10,364 | ||||||||||||||||||
Less Wapiti Transaction production
reported in continuing operations*** |
(106 | ) | (443 | ) | (1,079 | ) | (147 | ) | (627 | ) | (1,509 | ) | ||||||||||||
Production from Remaining Operations |
193 | 5,856 | 7,014 | 258 | 7,307 | 8,855 | ||||||||||||||||||
*** | The properties included in the Wapiti Transaction were comprised of non-operated properties in which Delta sold all of its interest to Wapiti and operated properties in which Delta sold half of its interest to Wapiti. In accordance with applicable accounting rules, properties in which Delta sold all of its interest are reported as discontinued operations. However, properties in which Delta only sold half of its interest to Wapiti are required to be reported as a component of continuing operations. As a result, the Companys results from continuing operations for all periods presented include production from properties included in the Wapiti Transaction in which Delta now owns 50% less than the amounts included in the Companys financial statements as continuing operations. As a result, the Company believes that the information presented will be useful to investors and analysts in understanding the impact of the transaction upon the Companys production. Adjustments from Continuing Operations and totals from Remaining Operations are non-GAAP measures, but are reconciled to their equivalent GAAP measure. |
10