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8-K - FORM 8-K - PAR PACIFIC HOLDINGS, INC. | d84004e8vk.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 2011 RESULTS
SECOND QUARTER 2011 RESULTS
DENVER, Colorado (August 4, 2011) Delta Petroleum Corporation (Delta or the
Company) (NASDAQ Capital Market: DPTRD), an independent oil and gas exploration and development
company, today announced its financial and operating results for the second quarter 2011.
Carl Lakey, Deltas CEO and President stated, We are pleased to provide our shareholders with
another solid operating quarter coupled with the accomplishment of some very important strategic
steps. We sold our remaining non-core assets, which reduced our leverage and provided sufficient
liquidity to continue our deep shale evaluation and development in the Vega Area. While the
strategic alternatives process, the 2C well results, and the Netherland Sewell report were all
announced subsequent to the end of the quarter, much of the efforts that went into those steps
occurred in the second quarter. The 2B and 2C well results and Netherland Sewells report are very
important contributions that support Deltas intrinsic value and aid our strategic alternatives
process.
VEGA AREA SHALE EVALUATION UPDATE
As previously announced, the Delta 2C well began producing hydrocarbons on Wednesday,
July 20, at a rate of 5.4 million cubic feet of gas per day (MMcf/d), which was choke-restricted
with a 7/64 of an inch choke and 8,360 psi of flowing tubing pressure. Gas sales from the well
began on Thursday, July 21 from the Niobrara and Frontier formations only. The well is currently
producing between 2.5 3.5 MMcf/d with 6,100 psi of flowing tubing pressure. The well choke is
currently set at 9/64 of an inch. The Mancos shale, Corcoran and Williams Fork formations remain
uncompleted.
The Delta 2B well in the Vega Area of the Piceance Basin drilled through a portion of the
Mancos formation and reached total depth of 10,700 feet. Below the Williams Fork the well was
completed in 1,200 feet of shale in the Corcoran and the upper portion of the Mancos formation.
Gas production began on April 24 and sales commenced on April 29. As announced on May 10, the 2B
well experienced sustained production of 3.3 MMcf/d from only the Mancos and Corcoran formations.
The well is currently producing 0.6 MMcf/d. The information available indicates that the natural
fractures in the 2B well may have prematurely closed by the high flow rate (6 MMcf/d) during
initial flowback activities, which has subsequently hindered production. The Company is currently
evaluating refracturing the well in the Mancos and Corcoran formations to reestablish higher
production levels in the well.
The Company is currently drilling the 12B well. The current depth is approximately 8,500 feet
with a target depth of 13,000 feet. It is expected that the target depth will reach the Frontier
formation. Total depth is expected to be reached during September. Once completed, this well will
hold the acreage of the federal Sheep Creek Unit and bring the Companys Vega leasehold up to 95%
held by production.
1
STRAGETIC ALTERNATIVES UPDATE
On July 6, 2011, Delta announced that it had engaged Macquarie Capital (USA) Inc. and
Evercore Group, L.L.C. to act as advisors to the Company in conducting a strategic alternatives
process aimed at maximizing shareholder value and dealing with the Companys 2012 debt maturities.
Through this process, the Board of Directors is evaluating all opportunities available, including a
potential sale of the Company. The process is in its early stages and the Company does not expect
to make further public comment regarding the process until the Board of Directors has approved a
specific transaction or otherwise determines that disclosure of significant developments, if any,
is appropriate.
OPERATIONS UPDATE
Current production of the Company approximates 28 million cubic feet equivalent per day
(MMcfe/d) net.
2011 CAPITAL EXPENDITURES AND PRODUCTION GUIDANCE
Delta will focus its current available capital for the remainder of 2011 on drilling and
completing the 12B well and completing the remaining two previously drilled Williams Fork wells.
The completions of the remaining two previously drilled wells have been postponed to the fourth
quarter of 2011; however, these plans could be altered depending on shale well results, with
capital potentially being reallocated to additional shale activity. Developments related to the
strategic alternatives process may also affect current capital spending plans.
Production for the third quarter 2011 is expected to be between 2.6 Bcfe and 2.7 Bcfe.
LIQUIDITY UPDATE
At June 30, 2011, the Company had $3.9 million in cash and approximately $18.0 million
available under its amended credit facility. During the second quarter, Delta received $43.2
million from the sale of non-core assets. The proceeds were used to pay down the facility, close
out certain oil derivative positions and for development activity in the Companys Piceance Basin
projects. The Company expects to have sufficient capital under its credit facility, combined with
proceeds from the non-core asset sale and net cash from operating activities, to fund Deltas
operating expenses and the current capital development described above and to maintain its debt
service obligations through the remainder of 2011.
RESULTS FOR THE SECOND QUARTER 2011
For the quarter ended June 30, 2011, the Company reported total production of 3.2 Bcfe.
Production from continuing operations was 2.8 Bcfe, remaining flat when comparing second quarter
2011 to the prior year period. Revenue from oil and gas sales was $16.9 million, an increase of
14% when compared to the prior year period of $14.8 million. The average natural gas price
received during the quarter ended June 30, 2011 increased to $5.31 per thousand cubic feet (Mcf)
compared to $4.92 per Mcf for the prior year period. The average oil price received during the
quarter ended June 30, 2011 increased to $86.87 per barrel compared to $58.29 per barrel for the
prior year period.
The Company reported a second quarter net loss attributable to Delta common stockholders of
($963,000), or ($0.03) per diluted share, compared to a net loss attributable to Delta common
stockholders of ($149.8 million), or ($5.43) per diluted share, in the second quarter of 2010. The
decrease in net loss is primarily due to a decrease in dry hole costs and impairments and a
decrease in operating expenses, as well as discontinued operations.
2
SECOND QUARTER PRODUCTION VOLUMES, UNIT PRICES AND COSTS
Production volumes, average prices received and costs per equivalent Mcf for the quarter
ended June 30, 2011 and 2010 were as follows:
Three Months Ended | ||||||||
June 30, | ||||||||
2011 | 2010 | |||||||
Production Continuing Operations: |
||||||||
Oil (Mbbl) |
38 | 41 | ||||||
Gas (Mmcf) |
2,550 | 2,528 | ||||||
Total Production (Mmcfe) Continuing Operations |
2,781 | 2,774 | ||||||
Average Price Continuing Operations: |
||||||||
Oil (per barrel) |
$ | 86.87 | $ | 58.29 | ||||
Gas (per Mcf) |
$ | 5.31 | $ | 4.92 | ||||
Costs (per Mcfe) Continuing Operations: |
||||||||
Lease operating expense |
$ | 1.28 | $ | 2.19 | ||||
Transportation expense |
$ | 1.30 | $ | 1.57 | ||||
Production taxes |
$ | 0.22 | $ | 0.28 | ||||
Depletion expense |
$ | 3.54 | $ | 4.03 | ||||
Realized derivative losses (per Mcfe) |
$ | (1.80 | ) | $ | (0.22 | ) |
Lease Operating Expense. Lease operating expenses for the three months ended June 30,
2011 decreased to $3.6 million from $6.1 million in the prior year period primarily due to lower
water handling costs in the Vega Area as a result of the resumption of development activities and
improved water handling facilities. As a result, lease operating expenses per Mcfe in the Vega
Area declined from $2.18 per Mcfe for the three months ended June 30, 2010 to $0.87 per Mcfe for
the three months ended June 30, 2011. Overall, lease operating expense per Mcfe from continuing
operations for the three months ended June 30, 2011 decreased to $1.28 per Mcfe from $2.19 per
Mcfe.
Transportation Expense. Transportation expense for the three months ended June 30, 2011
decreased to $3.6 million from $4.4 million in the prior year. Transportation expense per Mcfe for
the three months ended June 30, 2011 decreased 17% to $1.30 per Mcfe from $1.57 per Mcfe. The
decrease on a per unit basis is primarily the result of adjustments in the prior year that did not
recur in the current year.
Depreciation, Depletion and Amortization. Depreciation, depletion and amortization expense
decreased 13% to $10.5 million for the three months ended June 30, 2011, as compared to $12.1
million for the comparable year earlier period. Depletion expense for the three months ended June
30, 2011 decreased to $9.8 million from $11.2 million for the three months ended June 30, 2010
primarily due to higher reserves as a result of recent drilling and completion activity in the Vega
Area. Accordingly, the Companys depletion rate decreased from $4.03 per Mcfe for the three months
ended June 30, 2010 to $3.54 per Mcfe for the current year period.
Realized Loss on Derivative Instruments, Net. During the three months ended June 30, 2011,
the Company recognized a $5.0 million loss associated with settlements on derivative contracts.
Included in this loss was $3.3 million paid to settle a portion of Deltas oil derivative contracts
outstanding from July 2011 to December 2013 as a requirement to the amended MBL Credit Agreement
completed in conjunction with the 2011 non-core asset sale. During the three months ended June 30,
2010, the Company recognized a $601,000 loss associated with settlements on derivative contracts.
3
General and Administrative Expense. General and administrative expense decreased 39% to $6.5
million for the three months ended June 30, 2011, as compared to $10.6 million for the comparable
prior year period. The decrease in general and administrative expenses is attributed to a decrease
in non-cash stock compensation expense, lower corporate consulting fees and to reduced staffing as
a result of attrition and a reduction in force since the second quarter of 2010 resulting in lower
cash compensation expense.
RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2011
The Company reported a six month net loss attributable to common stockholders of ($28.8
million), or ($1.03) per share, compared with a net loss attributable to common stockholders of
($162.5 million), or ($5.90) per share, in the six months ended June 30, 2010.
For the six months ended June 30, 2011, the Company reported production from continuing
operations of 5.78 Bcfe. Revenue from oil and gas sales was $34.6 million, remaining flat when
compared to the prior year period. The average natural gas price received during the six months
ended June 30, 2011 decreased to $5.31 per Mcf compared to $5.49 per Mcf for the year earlier
period. The average oil price received during the six months ended June 30, 2011 increased to
$82.31 per Bbl compared to $59.60 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, 2011 and 2010 are as follows:
Six Months Ended | ||||||||
June 30, | ||||||||
2011 | 2010 | |||||||
Production Continuing Operations: |
||||||||
Oil (Mbbl) |
77 | 85 | ||||||
Gas (Mmcf) |
5,323 | 5,352 | ||||||
Total Production (Mmcfe) Continuing Operations |
5,784 | 5,864 | ||||||
Average Price Continuing Operations: |
||||||||
Oil (per barrel) |
$ | 82.31 | $ | 59.60 | ||||
Gas (per Mcf) |
$ | 5.31 | $ | 5.49 | ||||
Costs (per Mcfe) Continuing Operations: |
||||||||
Lease operating expense |
$ | 1.20 | $ | 1.80 | ||||
Transportation expense |
$ | 1.31 | $ | 1.30 | ||||
Production taxes |
$ | 0.25 | $ | 0.29 | ||||
Depletion expense |
$ | 3.67 | $ | 3.81 | ||||
Realized derivative losses (per Mcfe) |
$ | (0.94 | ) | $ | (0.80 | ) |
Lease Operating Expense. Lease operating expenses for the six months ended June 30,
2011 decreased 34% to $7.0 million as compared to $10.5 million in the year earlier period. The
decrease is primarily due to lower water handling costs in the Vega Area as a result of the
resumption of development activities and improved water handling facilities. As a result, lease
operating expense per Mcfe in the Vega Area declined from $1.74 per Mcfe for the six months ended
June 30, 2010 to $0.88 per Mcfe for the six months ended June 30, 2011. Overall, lease operating
expense per Mcfe from continuing operations for the six months ended June 30, 2011 decreased to
$1.20 per Mcfe from $1.80 per Mcfe for the comparable year earlier period.
Transportation Expense. Transportation expense for the six months ended June 30, 2011 was
$7.6 million comparable to $7.6 million in the prior year. Transportation expense per Mcfe for the
six months ended June 30, 2011 increased slightly to $1.31 per Mcfe from $1.30 per Mcfe.
4
Depreciation, Depletion, Amortization and Accretion Oil and Gas. Depreciation, depletion
and amortization expense decreased 6% to $22.5 million for the six months ended June 30, 2011, as
compared to $23.9 million for the comparable year earlier period. Depletion expense for the six
months ended June 30, 2011 was $21.2 million compared to $22.3 million for the six months ended
June 30, 2010. The Companys depletion rate decreased from $3.81 per Mcfe for the six months ended
June 30, 2010 to $3.67 per Mcfe for the current year period primarily due to higher reserves as a
result of the Companys recent drilling and completion activity in the Vega Area.
Realized Loss on Derivative Instruments, Net. During the six months ended June 30, 2011, the
Company recognized a $5.5 million loss associated with settlements on derivative contracts compared
to a $4.7 million loss for the comparable prior year period. Included in the June 30, 2011 loss
was $3.3 million paid to settle a portion of Deltas oil derivative contracts outstanding from July
2011 to December 2013 as a requirement to the amended MBL Credit Agreement completed in conjunction
with the 2011 non-core asset sale.
General and Administrative Expense. General and administrative expense decreased 37% to
$13.1 million for the six months ended June 30, 2011, as compared to $20.9 million for the
comparable prior year period. The decrease in general and administrative expenses is attributed to
a decrease in non-cash stock compensation expense, lower corporate consulting fees and to reduced
staffing as a result of attrition and a reduction in force during 2010 resulting in lower cash
compensation expense.
DHS DRILLING COMPANY
The Board of Directors of DHS Drilling Company engaged transaction advisors to explore a
strategic alternatives process focused on a sale of DHS or substantially all of its assets. In
accordance with accounting standards, the financial position and results of operations relating to
DHS have been reflected as assets and liabilities held for sale and discontinued operations in the
accompanying consolidated balance sheets and statements of operations. The DHS credit facility
debt of $69.9 million at June 30, 2011 is included in the consolidated balance sheets as a
component of liabilities related to assets held for sale. The DHS credit facility debt is
non-recourse to Delta.
ADDITIONAL FINANCIAL INFORMATION
The following table summarizes the Companys open derivative contracts at June 30, 2011:
Remaining | ||||||||||||||||||||
Commodity | Volume | Fixed Price | Term | Index Price | ||||||||||||||||
Crude oil |
192 | Bbls / Day | $ | 57.70 | Jul 11 - Dec 11 | NYMEX WTI | ||||||||||||||
Crude oil |
79 | Bbls / Day | $ | 91.05 | Jul 11 - Dec 11 | NYMEX WTI | ||||||||||||||
Crude oil |
230 | Bbls / Day | $ | 91.05 | Jan 12 - Dec 12 | NYMEX WTI | ||||||||||||||
Crude oil |
162 | Bbls / Day | $ | 91.05 | Jan 13 - Dec 13 | NYMEX WTI | ||||||||||||||
Natural gas |
12,000 | MMBtu / Day | $ | 5.150 | Jul 11 - Dec 11 | CIG | ||||||||||||||
Natural gas |
3,253 | MMBtu / Day | $ | 5.040 | Jul 11 - Dec 11 | CIG | ||||||||||||||
Natural gas |
12,052 | MMBtu / Day | $ | 4.440 | Jan 12 - Dec 12 | CIG | ||||||||||||||
Natural gas |
10,301 | MMBtu / Day | $ | 4.440 | Jan 13 - Dec 13 | CIG | ||||||||||||||
Natural gas liquids(1) |
35,406 | Gallons / Day | $ | 0.913 | Jul 11 - Dec 11 | MT. BELVIEU | ||||||||||||||
Natural gas liquids(1) |
30,617 | Gallons / Day | $ | 0.832 | Jan 12 - Dec 12 | MT. BELVIEU | ||||||||||||||
Natural gas liquids(1) |
12,286 | Gallons / Day | $ | 0.767 | Jan 13 - Dec 13 | MT. BELVIEU |
(1) | Natural gas liquids include purity ethane, propane, natural gasoline, normal butane and isobutene derivatives and the weighted average price is used. |
5
INVESTOR CONFERENCE CALL
The Company will host an investor conference call today, Thursday, August 4, 2011 at
12:00 noon Eastern Time (10:00 am Mountain Time) to discuss financial and operating results for the
second quarter 2011.
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 4, 2011. 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 4, 2011 until August 12,
2011 by dialing 877-344-7529 (international callers dial 412-317-0088) and entering the conference
ID 10002277.
ABOUT DELTA PETROLEUM
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 Capital Market System under the symbol DPTRD until on or around
August 10, 2011, when the symbol will return to 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. Such forward-looking statements
include, without limitation, business objectives and strategies, including our focus on the Vega
Area of the Piceance Basin, as well as statements regarding our strategic alternatives process,
possible value creation and resource potential, anticipated future operating and overhead costs,
liquidity requirements and availability of capital, drilling and completion activity and
anticipated timing, anticipated sources and uses of capital, and anticipated production for third
quarter 2011. 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 the Companys credit facility, its working capital needs and in respect of the
possible redemption of its senior convertible notes, the demand for natural gas in the United
States, 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, regulations
that might be adopted in the future that could, among other things, significantly limit or curtail
hydraulic fracturing techniques used in the Piceance Basin, as well as general market conditions,
competition and pricing. The United States Securities and Exchange Commission permits oil and gas
companies, in their filings with the SEC, to characterize as proved reserves only those
accumulations that a company has demonstrated by actual production or conclusive formation tests to
be economically and legally producible under existing economic and operating conditions, and that
are part of an approved five-year development plan. Please refer to the Companys report on Form
10-K for the year ended December 31, 2010 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
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(In thousands, except share data) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 3,894 | $ | 14,190 | ||||
Short-term restricted deposits |
100,000 | 100,000 | ||||||
Trade accounts receivable, net of allowance for doubtful
accounts of $100 and $100, respectively |
7,510 | 7,373 | ||||||
Assets held for sale DHS subsidiary and oil and gas properties |
66,704 | 108,218 | ||||||
Deposits and prepaid assets |
2,617 | 1,720 | ||||||
Inventories |
642 | 3,446 | ||||||
Other current assets |
2,836 | 4,821 | ||||||
Total current assets |
184,203 | 239,768 | ||||||
Property and equipment: |
||||||||
Oil and gas properties, successful efforts method of accounting: |
||||||||
Unproved |
229,623 | 229,943 | ||||||
Proved |
695,189 | 671,041 | ||||||
Pipeline and gathering systems |
92,461 | 93,558 | ||||||
Other |
13,815 | 13,556 | ||||||
Total property and equipment |
1,031,088 | 1,008,098 | ||||||
Less accumulated depreciation and depletion |
(247,438 | ) | (232,493 | ) | ||||
Net property and equipment |
783,650 | 775,605 | ||||||
Long-term assets: |
||||||||
Investments in unconsolidated affiliates |
3,590 | 3,376 | ||||||
Deferred financing costs |
1,432 | 1,832 | ||||||
Other long-term assets |
2,970 | 3,531 | ||||||
Total long-term assets |
7,992 | 8,739 | ||||||
Total assets |
$ | 975,845 | $ | 1,024,112 | ||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities: |
||||||||
Credit facility Delta |
$ | 15,000 | $ | | ||||
Installment payable on property acquisition |
99,144 | 97,874 | ||||||
33/4% Senior convertible notes current |
110,953 | | ||||||
Accounts payable |
21,030 | 27,616 | ||||||
Liabilities related to assets held for sale - DHS subsidiary and
oil and gas properties |
76,112 | 82,852 | ||||||
Other accrued liabilities |
8,281 | 11,066 | ||||||
Derivative instruments |
2,123 | 574 | ||||||
Total current liabilities |
332,643 | 219,982 | ||||||
Long-term liabilities: |
||||||||
7% Senior notes |
149,722 | 149,684 | ||||||
33/4% Senior convertible notes |
| 108,593 | ||||||
Credit facility Delta |
| 29,130 | ||||||
Asset retirement obligations |
3,299 | 2,709 | ||||||
Derivative instruments |
3,482 | 2,419 | ||||||
Total long-term liabilities |
156,503 | 292,535 | ||||||
Commitments and contingencies |
||||||||
Equity: |
||||||||
Preferred stock, $.01 par value: |
||||||||
authorized 3,000,000 shares, none issued |
| | ||||||
Common stock, $.01 par value: authorized 200,000,000 shares,
issued 29,095,000 shares at June 30, 2011 and
28,514,000 shares at December 31, 2010 (1) |
291 | 285 | ||||||
Additional paid-in capital |
1,640,295 | 1,635,783 | ||||||
Treasury stock at cost; zero shares at June 30, 2011
and 3,000 shares at December 31, 2010 (1) |
| (279 | ) | |||||
Accumulated deficit |
(1,150,145 | ) | (1,121,342 | ) | ||||
Total Delta stockholders equity |
490,441 | 514,447 | ||||||
Non-controlling interest |
(3,742 | ) | (2,852 | ) | ||||
Total equity |
486,699 | 511,595 | ||||||
Total liabilities and equity |
$ | 975,845 | $ | 1,024,112 | ||||
(1) | All common share amounts (except par value and par value per share amounts) have been retroactively restated as of June 30, 2011 to reflect the Companys one-for-ten reverse common stock split effective July 13, 2011. |
7
DELTA PETROLEUM CORPORATION
AND SUBSIDIARIES
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended | Six months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Revenue: |
||||||||||||||||
Oil and gas sales |
$ | 16,882 | $ | 14,822 | $ | 34,597 | $ | 34,484 | ||||||||
Loss on property sales |
| (109 | ) | | (538 | ) | ||||||||||
Total revenue |
16,882 | 14,713 | 34,597 | 33,946 | ||||||||||||
Operating expenses: |
||||||||||||||||
Lease operating expense |
3,563 | 6,067 | 6,958 | 10,527 | ||||||||||||
Transportation expense |
3,625 | 4,359 | 7,568 | 7,642 | ||||||||||||
Production taxes |
611 | 786 | 1,461 | 1,691 | ||||||||||||
Exploration expense |
233 | 358 | 276 | 584 | ||||||||||||
Dry hole costs and impairments |
273 | 29,865 | 416 | 30,219 | ||||||||||||
Depreciation, depletion, amortization and accretion |
10,528 | 12,142 | 22,479 | 23,887 | ||||||||||||
General and administrative expense |
6,471 | 10,648 | 13,100 | 20,898 | ||||||||||||
Total operating expenses |
25,304 | 64,225 | 52,258 | 95,448 | ||||||||||||
Operating loss |
(8,422 | ) | (49,512 | ) | (17,661 | ) | (61,502 | ) | ||||||||
Other income and (expense): |
||||||||||||||||
Interest expense and financing costs, net |
(7,997 | ) | (7,781 | ) | (14,803 | ) | (16,484 | ) | ||||||||
Other income |
233 | 111 | 164 | 179 | ||||||||||||
Realized loss on derivative instruments, net |
(5,010 | ) | (601 | ) | (5,450 | ) | (4,714 | ) | ||||||||
Unrealized gain (loss) on derivative instruments, net |
8,341 | 3,676 | (2,612 | ) | 20,948 | |||||||||||
Income from unconsolidated affiliates |
131 | 991 | 214 | 983 | ||||||||||||
Total other income and (expense) |
(4,302 | ) | (3,604 | ) | (22,487 | ) | 912 | |||||||||
Loss from continuing operations before income taxes and
discontinued operations |
(12,724 | ) | (53,116 | ) | (40,148 | ) | (60,590 | ) | ||||||||
Income tax expense (benefit) |
(3,938 | ) | 203 | (4,633 | ) | 478 | ||||||||||
Loss from continuing operations |
(8,786 | ) | (53,319 | ) | (35,515 | ) | (61,068 | ) | ||||||||
Discontinued operations: |
||||||||||||||||
Gain (loss) from results of operations and sale of
discontinued operations, net of tax |
9,320 | (99,161 | ) | 5,785 | (107,404 | ) | ||||||||||
Net income (loss) |
534 | (152,480 | ) | (29,730 | ) | (168,472 | ) | |||||||||
Less net (gain) loss attributable to non-controlling interest
included in discontinued operations |
(1,497 | ) | 2,730 | 927 | 5,925 | |||||||||||
Net loss attributable to Delta common stockholders |
$ | (963 | ) | $ | (149,750 | ) | $ | (28,803 | ) | $ | (162,547 | ) | ||||
Amounts attributable to Delta common stockholders: |
||||||||||||||||
Loss from continuing operations |
$ | (8,786 | ) | $ | (53,319 | ) | $ | (35,515 | ) | $ | (61,068 | ) | ||||
Income (loss) from discontinued operations, net of tax |
7,823 | (96,431 | ) | 6,712 | (101,479 | ) | ||||||||||
Net loss |
$ | (963 | ) | $ | (149,750 | ) | $ | (28,803 | ) | $ | (162,547 | ) | ||||
Basic income (loss) attributable to Delta common stockholders |
||||||||||||||||
per common share: |
||||||||||||||||
Loss from continuing operations |
$ | (0.31 | ) | $ | (1.93 | ) | $ | (1.27 | ) | $ | (2.22 | ) | ||||
Discontinued operations |
0.28 | (3.50 | ) | 0.24 | (3.68 | ) | ||||||||||
Net loss |
$ | (0.03 | ) | $ | (5.43 | ) | $ | (1.03 | ) | $ | (5.90 | ) | ||||
Diluted income (loss) attributable to Delta common stockholders
per common share: |
||||||||||||||||
Loss from continuing operations |
$ | (0.31 | ) | $ | (1.93 | ) | $ | (1.27 | ) | $ | (2.22 | ) | ||||
Discontinued operations |
0.28 | (3.50 | ) | 0.24 | (3.68 | ) | ||||||||||
Net loss |
$ | (0.03 | ) | $ | (5.43 | ) | $ | (1.03 | ) | $ | (5.90 | ) | ||||
Weighted average common shares outstanding(1): |
||||||||||||||||
Basic |
27,873 | 27,583 | 27,878 | 27,565 | ||||||||||||
Diluted |
27,873 | 27,583 | 27,878 | 27,565 |
(1) | All common share amounts (except par value and par value per share amounts) have been retroactively restated as of June 30, 2011 to reflect the Companys one-for-ten reverse common stock split effective July 13, 2011. |
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DELTA PETROLEUM CORPORATION
RECONCILIATION OF DISCRETIONARY CASH FLOW AND EBITDAX
(Unaudited)
($ in thousands)
June 30, | June 30, | |||||||
THREE MONTHS ENDED | 2011 | 2010 | ||||||
CASH USED IN OPERATING ACTIVITIES |
$ | (8,686 | ) | $ | (15,829 | ) | ||
Changes in assets and liabilities |
4,168 | 6,650 | ||||||
Exploration costs |
233 | 358 | ||||||
Discretionary cash flow* continuing operations |
(4,285 | ) | (8,821 | ) | ||||
Discretionary cash flow* discontinued operations |
2,768 | 9,497 | ||||||
Total discretionary cash flow* |
$ | (1,517 | ) | $ | 676 | |||
June 30, | June 30, | |||||||
SIX MONTHS ENDED | 2011 | 2010 | ||||||
CASH USED IN OPERATING ACTIVITIES |
$ | (7,076 | ) | $ | (41,548 | ) | ||
Changes in assets and liabilities |
2,787 | 27,271 | ||||||
Exploration costs |
276 | 584 | ||||||
Discretionary cash flow* continuing operations |
(4,013 | ) | (13,693 | ) | ||||
Discretionary cash flow* discontinued operations |
4,975 | 18,275 | ||||||
Total discretionary cash flow* |
$ | 962 | $ | 4,582 | ||||
* | Discretionary cash flow represents net cash provided by (used in) operating activities before changes in assets and liabilities and exploration costs. Discretionary cash flow is presented as a supplemental financial measurement in the evaluation of Deltas business. The Company believes that it provides additional information regarding its ability to meet 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 | 2011 | 2010 | ||||||
Net loss from continuing operations |
$ | (8,786 | ) | $ | (53,318 | ) | ||
Income tax expense (benefit) |
(3,938 | ) | 203 | |||||
Interest expense and financing costs, net |
7,998 | 7,782 | ||||||
Depletion, depreciation and amortization |
10,527 | 12,142 | ||||||
Stock based compensation |
2,346 | 3,281 | ||||||
Loss on sale of oil and gas properties and other |
| 109 | ||||||
Unrealized gain on derivative instruments, net |
(8,341 | ) | (3,676 | ) | ||||
Realized loss on derivative instruments |
3,295 | | ||||||
Exploration, dry hole and impairment costs |
506 | 30,223 | ||||||
EBITDAX** continuing operations |
3,607 | (3,254 | ) | |||||
EBITDAX ** discontinued operations |
3,866 | 9,956 | ||||||
Total EBITDAX** |
$ | 7,473 | $ | 6,702 | ||||
June 30, | June 30, | |||||||
THREE MONTHS ENDED | 2011 | 2010 | ||||||
CASH USED IN OPERATING ACTIVITIES |
$ | (8,686 | ) | $ | (15,829 | ) | ||
Changes in assets and liabilities |
4,168 | 6,650 | ||||||
Interest net of financing costs |
4,581 | 4,369 | ||||||
Exploration costs |
233 | 358 | ||||||
Realized loss on derivative instruments |
3,295 | | ||||||
Other non-cash items |
16 | 1,198 | ||||||
EBITDAX** continuing operations |
3,607 | (3,254 | ) | |||||
EBITDAX** discontinued operations |
3,866 | 9,956 | ||||||
Total EBITDAX** |
$ | 7,473 | $ | 6,702 | ||||
June 30, | June 30, | |||||||
SIX MONTHS ENDED | 2011 | 2010 | ||||||
Net loss from continuing operations |
$ | (35,515 | ) | $ | (61,068 | ) | ||
Income tax expense (benefit) |
(4,633 | ) | 478 | |||||
Interest expense and financing costs, net |
14,807 | 16,484 | ||||||
Depletion, depreciation and amortization |
22,478 | 23,887 | ||||||
Stock based compensation |
4,666 | 6,489 | ||||||
Loss on sale of oil and gas properties and other |
| 538 | ||||||
Unrealized (gain) loss on derivative instruments, net |
2,612 | (20,948 | ) | |||||
Realized loss on derivative instruments |
3,295 | | ||||||
Exploration, dry hole and impairment costs |
692 | 30,803 | ||||||
EBITDAX** continuing operations |
8,402 | (3,337 | ) | |||||
EBITDAX ** discontinued operations |
7,966 | 20,161 | ||||||
Total EBITDAX** |
$ | 16,368 | $ | 16,824 | ||||
9
June 30, | June 30, | |||||||
SIX MONTHS ENDED | 2011 | 2010 | ||||||
CASH USED IN OPERATING ACTIVITIES |
$ | (7,076 | ) | $ | (41,548 | ) | ||
Changes in assets and liabilities |
2,787 | 27,271 | ||||||
Interest net of financing costs |
8,773 | 9,355 | ||||||
Exploration costs |
276 | 584 | ||||||
Realized loss on derivative instruments |
3,295 | | ||||||
Other non-cash items |
347 | 1,001 | ||||||
EBITDAX** continuing operations |
8,402 | (3,337 | ) | |||||
EBITDAX** discontinued operations |
7,966 | 20,161 | ||||||
Total EBITDAX** |
$ | 16,368 | $ | 16,824 | ||||
** | EBITDAX represents net income (loss) before non-controlling interest, income tax expense (benefit), interest expense and financing costs, net, depreciation, depletion and amortization expense, stock based compensation, gain and loss on sale of oil and gas properties and other investments, net, gain on discontinued operations, unrealized gains and losses on derivative contracts, realized losses on early termination of derivative instruments and exploration and impairment and dry hole costs. EBITDAX is presented as a supplemental financial measurement in the evaluation of the Companys business. Delta believes that it provides additional information regarding its ability to meet 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 the Companys lenders pursuant to its bank credit agreement and is used in the financial covenants in its bank credit agreement and Deltas 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. |
10