hrst_Current_Folio_8K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): November  18, 2019 (November 14, 2019) 

 

Harvest Oil & Gas Corp.

(Exact name of registrant as specified in its charter)

 

 

Delaware

001-33024

83-0656612

(State or other Jurisdiction
of Incorporation)

(Commission
File Number)

(IRS Employer
Identification No.)

 

 

 

1001 Fannin Street, Suite 750, Houston, Texas

77002

(Address of Principal Executive Offices)

(Zip Code)

 

 

 

Registrant’s telephone number, including area code: (713) 651-1144

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act: None.  

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 

 

Item 2.02Results of Operations and Financial Condition.

On November 14, 2019, Harvest Oil & Gas Corp. issued a press release providing information on its results of operations for the third quarter ended September 30, 2019. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information under this Item 2.02 and in Exhibit 99.1 in this Current Report on Form 8-K are being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information under this Item 2.02 and in Exhibit 99.1 in this Current Report on Form 8-K shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.

Item 9.01Financial Statements and Exhibits.

(d) Exhibits

 

 

 

 

 

Exhibit Number

Description

99.1

Press release issued November 14, 2019.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

Harvest Oil & Gas Corp.

 

 

 

November  18, 2019

By:

/s/ RYAN STASH

 

 

Ryan Stash

 

 

Vice President and Chief Financial Officer

 

hrst_Current_Folio_EX_99.1_ER_Quarterly

 

Harvest Oil & Gas Announces Third Quarter 2019 Results

HOUSTON, November 14, 2019 (Globe Newswire) -- Harvest Oil & Gas Corp. (OTCQX: HRST) (“Harvest” or the “Company”) today announced results for the third quarter of 2019 and the filing of its Form 10-Q with the Securities and Exchange Commission (“SEC”) on November 14, 2019. 

Key Highlights

·

Paid a one-time $7.00 cash dividend per share on October 28, 2019 to shareholders of record as of October 18, 2019

·

Entered into a new $10 million revolving credit facility with Regions Bank

·

Average daily production was 98.1 MMcfe for the third quarter of 2019

·

Completed previously  announced sale of certain oil and gas interests in the Barnett Shale for $62.4 million, net of preliminary purchase price adjustments, and anticipate a subsequent closing for an additional $6.4 million, subject to purchase price adjustments, in the fourth quarter of 2019

·

Completed previously announced sale of certain oil and gas properties in the Mid-Continent area for $5.3 million, net of preliminary purchase price adjustments

·

In conjunction with the Barnett Shale and Mid-Continent area divestitures, unwound certain commodity derivative contracts for cash settlements received of $7.9 million

·

In October 2019, signed a definitive agreement to sell its Permian Basin oil and gas interests for $3.0 million, subject to purchase price adjustments, which is expected to close at the end of the fourth quarter of 2019

 

Third Quarter 2019 Financial Results

 

 

 

 

 

 

 

 

 

 

 

 

 

Third Quarter

 

Second Quarter

$ in millions unless noted otherwise

 

 

2019

 

2019

Average daily production (MMcfe/d)

 

 

 

98.1

 

 

 

112.3

 

Total revenues

 

 

$

23.2

 

 

$

30.6

 

Total assets

 

 

 

289.9

 

 

 

317.9

 

Net loss

 

 

 

(19.5)

 

 

 

(60.9)

 

Adjusted EBITDAX (a non-GAAP  financial measure) (1)

 

 

 

9.7

 

 

 

6.9

 

Total debt

 

 

 

 -

 

 

 

 -

 

Net cash provided by operating activities

 

 

 

14.9

 

 

 

9.7

 

Additions to oil and natural gas properties (2)

 

 

 

0.3

 

 

 

1.4

 


(1)

Adjusted EBITDAX is a Non-GAAP financial measure and is described in the attached table under “Non-GAAP Measures”

(2)

Represents cash payments during the period

 

For the third quarter of 2019, Harvest reported a net loss of $19.5 million, or $(1.93) per basic and diluted weighted average share outstanding compared to a net loss of $60.9 million, or $(6.05) per basic and diluted weighted average share outstanding, for the second quarter of 2019.  For the third quarter of 2018, a net loss of $9.8 million or $(0.97) per basic and diluted weighted average share outstanding was reported.  Included in the 2019 third quarter net loss were the following items:

·

$16.3 million of impairment of oil and natural gas properties primarily related to the write down of properties located in the Permian Basin and Mid-Continent area to their fair value, properties located in the Barnett Shale, Mid-Continent area, and San Juan Basin which were sold as of September 30, 2019 and the Monroe Field which was held for sale as of September 30, 2019,

·

$8.2 million of non-cash losses on commodity derivatives,

·

$1.4 million of stock-based compensation costs contained in general and administrative expenses,

·

$0.8 million of divestiture and transaction related expense contained in general and administrative expenses,  and

·

$0.7 million related to additional severance tax assessments for properties sold in the San Juan Basin contained in general and administrative expenses. 

 

Production for the third quarter of 2019 was 6.3 Bcf of natural gas, 145 MBbls of oil and 316 MBbls of natural gas liquids (NGLs), or 98.1 million cubic feet equivalent per day (MMcfe/d). This represents a 13 percent decrease from the second quarter of 2019 production of 112.3 MMcfe/d and a 44 percent decrease from the third quarter of 2018 production of 175.5 MMcfe/d.  The decrease in production from the second quarter of 2019 was primarily due to the divestiture of oil and gas

properties in the Barnett Shale and Mid-Continent area that closed in  September 2019. The decrease in production from the third quarter of 2018 was primarily due to the divestiture of the Central Texas and Karnes County, Texas properties that closed in August 2018, the Central Texas area divestiture that closed in December 2018, the Mid-Continent area divestitures that closed in December 2018, January 2019,  April 2019 and September 2019,  the San Juan Basin divestiture that closed in April 2019,  and the Barnett Shale divestiture that closed in September 2019. 

Adjusted EBITDAX for the third quarter of 2019 was $9.7 million, a 42 percent increase over the  second quarter of 2019 and a 66 percent decrease from the third quarter of 2018. The increase in Adjusted EBITDAX over the second quarter of 2019 was primarily due an increase in cash settlements received on commodity derivative contracts and on the termination of commodity derivative contracts in conjunction with the Barnett Shale and Mid-Continent area divestitures, partially offset by the Barnett Shale and Mid-Continent divestitures that closed in September 2019, a decrease in realized natural gas, natural gas liquids and crude oil prices, a decrease in other income, and an increase in general and administrative expenses. The decrease in Adjusted EBITDAX from the third quarter of 2018 was primarily due to the divestitures that closed in 2018, January 2019, April 2019 and September 2019,  and a decrease in realized natural gas, natural gas liquids and crude oil prices, partially offset by cash settlements received on derivative contracts,  and an increase in other income.  Adjusted EBITDAX is a Non-GAAP financial measures and is described in the attached table under “Non-GAAP Measures.”

Quarterly Report on Form 10-Q

Harvest’s financial statements and related footnotes are available in its Quarterly Report on Form 10-Q, which was filed on November 14, 2019, and is available through the Investor Relations/SEC Filings section of the Harvest website at http://www.hvstog.com.

About Harvest Oil & Gas Corp.

Harvest is an independent oil and gas company engaged in the efficient operation and development of onshore oil and gas properties in the continental United States. The Company’s assets consist primarily of producing and non-producing properties in the Barnett Shale, the Appalachian Basin (which includes the Utica Shale), Michigan, the Mid-Continent areas in Oklahoma, Texas, and Louisiana, and the Permian Basin. More information about Harvest is available on the internet at https://www.hvstog.com.

Forward Looking Statements

This press release contains certain statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends affecting the financial condition of its business. These forward-looking statements are subject to a number of risks and uncertainties, most of which are difficult to predict and many of which are beyond its control. Please read the Company’s filings with the Securities and Exchange Commission, including “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2018 and other public filings and press releases for a discussion of risks and uncertainties that could cause actual results to differ from those in such forward-looking statements. These risks include, but are not limited to, risks relating to pending asset sales, including risks relating to the consummation of such sales in accordance with their terms or at all, our inability to control our contract operator, EnerVest Operating, L.L.C., outside of the parameters of the Services Agreement, our ability to obtain needed capital or financing on satisfactory terms, fluctuations in prices of oil, natural gas and natural gas liquids and the length of time commodity prices remain depressed, our ability to maintain production levels through development drilling, risks associated with drilling and operating wells, the availability of drilling and production equipment, changes in applicable laws and regulations that adversely affect our operations and general economic conditions. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “plan,” “expect,” “indicate” and similar expressions are intended to identify forward-looking statements. All statements other than statements of current or historical fact contained in this press release are forward-looking statements. Although the Company believes that the forward-looking statements contained in this press release are based upon reasonable assumptions, the forward-looking events and circumstances discussed in this press release may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.

Operating Statistics

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30,

 

 

2019

 

2018

Production data:

 

 

 

 

Oil (MBbls)

 

 

145

 

 

341

Natural gas liquids (MBbls)

 

 

316

 

 

611

Natural gas (MMcf)

 

 

6,259

 

 

10,437

Net production (MMcfe)

 

 

9,025

 

 

16,147

Average sales price per unit: (1)

 

 

 

 

 

 

Oil (Bbl)

 

 

54.02

 

 

68.20

Natural gas liquids (Bbl)

 

 

10.46

 

 

30.55

Natural gas (Mcf)

 

 

1.87

 

 

2.54

Mcfe

 

 

2.53

 

 

4.24

Average unit cost per Mcfe:

 

 

 

 

 

 

Production costs:

 

 

 

 

 

 

Lease operating expenses

 

 

2.17

 

 

1.75

Production taxes

 

 

0.18

 

 

0.18

Total

 

 

2.35

 

 

1.93

Depreciation, depletion and amortization

 

 

0.15

 

 

0.49

General and administrative expenses

 

 

0.86

 

 

0.48

 


(1)

Prior to realized $14.0 million of net gains and $1.8 million of net losses on settlements of commodity derivatives for the three months ended September 30, 2019 and 2018, respectively.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Successor

 

 

Predecessor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Combined

 

 

Nine Months

 

Four Months

 

 

Five Months

 

Nine Months

 

 

Ended

 

Ended

 

 

Ended

 

Ended

 

 

Sept 30, 2019

 

Sept 30, 2018

 

 

May 31, 2018

 

Sept 30, 2018

Production data:

 

 

 

 

 

 

 

 

 

Oil (MBbls)

 

 

470

 

 

449

 

 

 

662

 

 

1,111

Natural gas liquids (MBbls)

 

 

1,169

 

 

826

 

 

 

1,040

 

 

1,866

Natural gas (MMcf)

 

 

21,765

 

 

14,049

 

 

 

16,982

 

 

31,031

Net production (MMcfe)

 

 

31,596

 

 

21,695

 

 

 

27,193

 

 

48,888

Average sales price per unit: (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil (Bbl)

 

$

53.98

 

 

67.80

 

 

$

64.14

 

$

65.62

Natural gas liquids (Bbl)

 

 

16.14

 

 

29.51

 

 

 

25.86

 

 

27.48

Natural gas (Mcf)

 

 

2.39

 

 

2.50

 

 

 

2.41

 

 

2.45

Mcfe

 

 

3.05

 

 

4.15

 

 

 

4.06

 

 

4.10

Average unit cost per Mcfe:

 

 

 

 

 

 

 

 

 

 

 

 

 

Production costs:

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating expenses

 

$

2.04

 

 

1.74

 

 

$

1.67

 

$

1.70

Production taxes

 

 

0.17

 

 

0.18

 

 

 

0.20

 

 

0.19

Total

 

 

2.21

 

 

1.92

 

 

 

1.87

 

 

1.89

Depreciation, depletion and amortization

 

 

0.34

 

 

0.49

 

 

 

1.70

 

 

1.16

General and administrative expenses

 

 

0.66

 

 

0.45

 

 

 

0.58

 

 

0.52


(1)

Prior to realized $17.5 million of net gains and $0.2 million of net losses on settlements of commodity derivatives for the nine months ended September 30, 2019 and 2018, respectively.

 

 

Unaudited Condensed Consolidated Balance Sheets

($ in thousands, except number of shares)

 

 

 

 

 

 

 

 

 

    

September 30, 2019

 

    

December 31, 2018

ASSETS

 

 

  

 

 

 

  

Current assets:

 

 

 

 

 

 

  

Cash and cash equivalents

 

$

98,348

 

 

$

6,313

Equity securities

 

 

 —

 

 

 

47,082

Accounts receivable:

 

 

 

 

 

 

 

Oil, natural gas and natural gas liquids revenues

 

 

21,538

 

 

 

40,176

Other

 

 

481

 

 

 

4,496

Derivative asset

 

 

8,745

 

 

 

15,452

Other current assets

 

 

406

 

 

 

2,314

Total current assets

 

 

129,518

 

 

 

115,833

 

 

 

 

 

 

 

 

Oil and natural gas properties, net of accumulated depreciation, depletion

 

 

 

 

 

 

 

and amortization; September 30, 2019, $19,362; December 31, 2018, $12,950

 

 

142,471

 

 

 

405,688

Assets held for sale

 

 

9,284

 

 

 

 —

Long-term derivative asset

 

 

1,933

 

 

 

8,499

Other assets

 

 

6,679

 

 

 

4,474

Total assets

 

$

289,885

 

 

$

534,494

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

  

 

 

 

  

Current liabilities:

 

 

  

 

 

 

  

Accounts payable and accrued liabilities

 

$

24,143

 

 

$

26,146

Derivative liability

 

 

 —

 

 

 

1,165

Other current liabilities

 

 

684

 

 

 

 —

Total current liabilities

 

 

24,827

 

 

 

27,311

 

 

 

 

 

 

 

 

Asset retirement obligations

 

 

101,374

 

 

 

117,529

Long–term debt, net

 

 

 —

 

 

 

115,000

Liabilities held for sale

 

 

2,759

 

 

 

 —

Other long–term liabilities

 

 

1,638

 

 

 

1,036

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

Mezzanine equity

 

 

135

 

 

 

79

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

  

Common stock - $0.01 par value; 65,000,000 shares authorized;

 

 

 

 

 

 

 

10,213,888 shares issued and 10,179,379 shares outstanding as of

 

 

 

 

 

 

 

September 30, 2019; 10,054,816 shares issued and 10,042,468 shares

 

 

 

 

 

 

 

outstanding as of December 31, 2018

 

 

102

 

 

 

100

Additional paid-in capital

 

 

251,834

 

 

 

249,717

Treasury stock at cost - 34,509 shares at September 30, 2019; 12,348

 

 

 

 

 

 

 

shares at December 31, 2018

 

 

(542)

 

 

 

(247)

Retained earnings (accumulated deficit)

 

 

(92,242)

 

 

 

23,969

Total stockholders' equity

 

 

159,152

 

 

 

273,539

Total liabilities and equity

 

$

289,885

 

 

$

534,494

 

Unaudited Condensed Consolidated Statements of Operations

($ in thousands, except per share/unit data)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30,

 

 

2019

 

2018

Revenues:

 

 

 

 

 

 

Oil, natural gas and natural gas liquids revenues

 

$

22,870

 

$

68,407

Transportation and marketing–related revenues

 

 

379

 

 

559

Total revenues

 

 

23,249

 

 

68,966

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

Lease operating expenses

 

 

19,614

 

 

28,281

Cost of purchased natural gas

 

 

255

 

 

393

Dry hole and exploration costs

 

 

36

 

 

21

Production taxes

 

 

1,634

 

 

2,973

Accretion expense on obligations

 

 

1,995

 

 

2,345

Depreciation, depletion and amortization

 

 

1,367

 

 

7,860

General and administrative expenses

 

 

7,771

 

 

7,673

Impairment of oil and natural gas properties

 

 

16,325

 

 

2,565

Gain on sales of oil and natural gas properties

 

 

(661)

 

 

(28)

Total operating costs and expenses

 

 

48,336

 

 

52,083

 

 

 

 

 

 

 

Operating income (loss)

 

 

(25,087)

 

 

16,883

 

 

 

 

 

 

 

Other income (expense), net:

 

 

  

 

 

  

Gain (loss) on derivatives, net

 

 

5,718

 

 

(26,423)

Interest expense

 

 

(501)

 

 

(3,967)

Gain on equity securities

 

 

 —

 

 

4,830

Other income (expense), net

 

 

341

 

 

(111)

Total other income (expense), net

 

 

5,558

 

 

(25,671)

 

 

 

 

 

 

 

Reorganization items, net

 

 

 —

 

 

(972)

 

 

 

 

 

 

 

Loss before income taxes

 

 

(19,529)

 

 

(9,760)

 

 

 

 

 

 

 

Income tax benefit

 

 

 —

 

 

 —

 

 

 

 

 

 

 

Net loss

 

$

(19,529)

 

$

(9,760)

 

 

 

 

 

 

 

Basic and diluted earnings per share:

 

 

  

 

 

  

Net loss

 

$

(1.93)

 

$

(0.97)

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

Basic and Diluted

 

 

10,131

 

 

10,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Successor

 

 

Predecessor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Combined

 

 

Nine Months

 

Four Months

 

 

Five Months

 

Nine Months

 

 

Ended

 

Ended

 

 

Ended

 

Ended

 

 

Sept 30, 2019

 

Sept 30, 2018

 

 

May 31, 2018

 

Sept 30, 2018

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil, natural gas and natural gas liquids revenues

 

$

96,285

 

$

89,942

 

 

$

110,307

 

$

200,249

Transportation and marketing–related revenues

 

 

1,397

 

 

744

 

 

 

724

 

 

1,468

Total revenues

 

 

97,682

 

 

90,686

 

 

 

111,031

 

 

201,717

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

  

 

 

  

 

 

 

  

 

 

  

Lease operating expenses

 

 

64,568

 

 

37,656

 

 

 

45,372

 

 

83,028

Cost of purchased natural gas

 

 

969

 

 

522

 

 

 

557

 

 

1,079

Dry hole and exploration costs

 

 

75

 

 

64

 

 

 

122

 

 

186

Production taxes

 

 

5,277

 

 

3,943

 

 

 

5,343

 

 

9,286

Accretion expense on obligations

 

 

6,373

 

 

3,134

 

 

 

3,176

 

 

6,310

Depreciation, depletion and amortization

 

 

10,712

 

 

10,590

 

 

 

46,196

 

 

56,786

General and administrative expenses

 

 

20,794

 

 

9,702

 

 

 

15,648

 

 

25,350

Restructuring costs

 

 

 —

 

 

 —

 

 

 

5,211

 

 

5,211

Impairment of oil and natural gas properties

 

 

115,604

 

 

2,565

 

 

 

 3

 

 

2,568

(Gain) loss on sales of oil and natural gas properties

 

 

(679)

 

 

(47)

 

 

 

 5

 

 

(42)

Total operating costs and expenses

 

 

223,693

 

 

68,129

 

 

 

121,633

 

 

189,762

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

(126,011)

 

 

22,557

 

 

 

(10,602)

 

 

11,955

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense), net:

 

 

  

 

 

  

 

 

 

  

 

 

  

Gain (loss) on derivatives, net

 

 

5,374

 

 

(30,655)

 

 

 

444

 

 

(30,211)

Interest expense

 

 

(3,335)

 

 

(5,166)

 

 

 

(13,652)

 

 

(18,818)

Gain on equity securities

 

 

4,593

 

 

4,830

 

 

 

 —

 

 

4,830

Other income (expense), net

 

 

3,168

 

 

(84)

 

 

 

776

 

 

692

Total other income (expense), net

 

 

9,800

 

 

(31,075)

 

 

 

(12,432)

 

 

(43,507)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reorganization items, net

 

 

 —

 

 

(1,780)

 

 

 

(587,325)

 

 

(589,105)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(116,211)

 

 

(10,298)

 

 

 

(610,359)

 

 

(620,657)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

 —

 

 

 —

 

 

 

(166)

 

 

(166)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(116,211)

 

$

(10,298)

 

 

$

(610,525)

 

$

(620,823)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per share / unit:

 

 

  

 

 

  

 

 

 

  

 

 

  

Net loss

 

$

(11.53)

 

$

(1.03)

 

 

$

(12.12)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares / units outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

 

10,080

 

 

10,021

 

 

 

49,369

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Cash Flows

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Successor

 

 

Predecessor

 

 

Nine Months

 

Four Months

 

 

Five Months

 

 

Ended

 

Ended

 

 

Ended

 

 

Sept 30, 2019

 

Sept 30, 2018

 

 

May 31, 2018

Cash flows from operating activities:

 

 

  

 

 

  

 

 

 

  

Net loss

 

$

(116,211)

 

$

(10,298)

 

 

$

(610,525)

Adjustments to reconcile net loss to net cash flows provided by

 

 

 

 

 

 

 

 

 

 

operating activities:

 

 

 

 

 

 

 

 

 

 

Accretion expense on obligations

 

 

6,373

 

 

3,134

 

 

 

3,176

Depreciation, depletion and amortization

 

 

10,712

 

 

10,590

 

 

 

46,196

Equity–based compensation cost

 

 

2,184

 

 

1,144

 

 

 

3,784

Impairment of oil and natural gas properties

 

 

115,604

 

 

2,565

 

 

 

 3

(Gain) loss on sales of oil and natural gas properties

 

 

(679)

 

 

(47)

 

 

 

 5

Gain on equity securities

 

 

(4,593)

 

 

(4,830)

 

 

 

 —

(Gain) loss on derivatives, net

 

 

(5,374)

 

 

30,655

 

 

 

(444)

Cash settlements of derivative contracts (1)

 

 

17,483

 

 

(1,847)

 

 

 

3,099

Reorganization items, net

 

 

 —

 

 

 —

 

 

 

573,304

Other

 

 

1,571

 

 

780

 

 

 

248

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

21,637

 

 

(2,014)

 

 

 

(3,518)

Other current assets

 

 

1,909

 

 

314

 

 

 

1,853

Accounts payable and accrued liabilities

 

 

(4,061)

 

 

(4,183)

 

 

 

4,405

Other, net

 

 

(2,531)

 

 

(38)

 

 

 

69

Net cash flows provided by operating activities  

 

 

44,024

 

 

25,925

 

 

 

21,655

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

  

 

 

  

 

 

 

  

Additions to oil and natural gas properties

 

 

(2,096)

 

 

(22,307)

 

 

 

(29,727)

Reimbursements related to oil and natural gas properties

 

 

2,124

 

 

1,091

 

 

 

652

Proceeds from sale of oil and natural gas properties

 

 

111,575

 

 

136,483

 

 

 

 3

Proceeds from sale of equity securities

 

 

51,675

 

 

 —

 

 

 

 —

Other

 

 

38

 

 

16

 

 

 

26

Net cash flows provided by (used in) investing activities

 

 

163,316

 

 

115,283

 

 

 

(29,046)

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

  

 

 

  

 

 

 

  

Repayment of long-term debt borrowings

 

 

(115,000)

 

 

(164,000)

 

 

 

 —

Long–term debt borrowings

 

 

 —

 

 

 —

 

 

 

34,000

Loan costs incurred

 

 

 —

 

 

 —

 

 

 

(2,813)

Purchase of treasury stock

 

 

(295)

 

 

(247)

 

 

 

 —

Contributions from general partner

 

 

 —

 

 

 —

 

 

 

40

Other

 

 

(10)

 

 

 —

 

 

 

 —

Net cash flows provided by (used in) financing activities

 

 

(115,305)

 

 

(164,247)

 

 

 

31,227

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in cash, cash equivalents and restricted cash

 

 

92,035

 

 

(23,039)

 

 

 

23,836

Cash, cash equivalents and restricted cash – beginning of period

 

 

6,313

 

 

28,732

 

 

 

4,896

Cash, cash equivalents and restricted cash – end of period

 

$

98,348

 

$

5,693

 

 

$

28,732

 

(1)

In the nine months ended September 30, 2019, $9.5 million of the $17.5 million of net gains on commodity derivatives was due to settlements received on the termination of commodity derivative contracts in conjunction with closed divestitures.

Non-GAAP Measures

The Company defines Adjusted EBITDAX as net loss plus income taxes; interest expense, net; depreciation, depletion and amortization; accretion expense on obligations; (gain) loss on derivatives, net; cash settlements of commodity derivative contracts; non-cash equity-based compensation; impairment of oil and natural gas properties; non-cash oil inventory adjustment; dry hole and exploration costs; gain on sales of oil and natural gas properties; reorganization items, net;  and gain on equity securities.

Adjusted EBITDAX is used by the Company’s management to provide additional information and statistics relative to the performance of the business, including (prior to the creation of any reserves) the cash return on investment.  The Company believes this financial measure may indicate to investors whether or not it is generating cash flow at a level that can support or sustain quarterly interest expense and capital expenditures. Adjusted EBITDAX should not be considered as an alternative to net income, operating income, cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDAX excludes some, but not all, items that affect net income and operating income and this measure may vary among companies. Therefore, Harvest’s Adjusted EBITDAX may not be comparable to similarly titled measures of other companies.

Reconciliation of Net Loss to Adjusted EBITDAX

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Successor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Combined

 

 

Three Months Ended

 

Nine Months

 

Nine Months

 

 

 

 

Ended

 

Ended

 

    

Sept 30,

    

Sept 30,

 

Jun 30,

 

Sept 30,

    

Sept 30,

 

 

2019

    

2018

 

2019

 

2019

    

2018

Net loss

 

$

(19,529)

 

$

(9,760)

 

$

(60,907)

 

$

(116,211)

 

$

(620,823)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

 —

 

 

 —

 

 

(285)

 

 

 —

 

 

166

Interest expense, net

 

 

501

 

 

4,030

 

 

1,315

 

 

3,335

 

 

18,880

Depreciation, depletion and amortization

 

 

1,367

 

 

7,860

 

 

4,373

 

 

10,712

 

 

56,786

Accretion expense on obligations

 

 

1,995

 

 

2,345

 

 

2,168