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): April 17, 2020  (April 14, 2020) 

 

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 April 14, 2020, Harvest Oil & Gas Corp. issued a press release providing information on its results of operations for the fourth quarter and full year ended December 31, 2019, 2019 proved reserves and guidance for 2020. 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 April 14, 2020.

 

 

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.

 

 

 

April 17, 2020

By:

/s/ RYAN STASH

 

 

Ryan Stash

 

 

Vice President and Chief Financial Officer

 

hrst_Current_Folio_EX_99.1_ER_Annual

Harvest Oil & Gas Corp. Announces Fourth Quarter and Full Year 2019 Results, Year-end Proved Reserves and 2020 Guidance

 

HOUSTON,  April 14, 2020 (Globe Newswire) – Harvest Oil & Gas Corp.  (OTCQX:  HRST)  (“Harvest” or the “Company”) today announced results for the fourth quarter and full year of 2019 and the filing of its Form 10-K with the Securities and Exchange Commission (“SEC”).  In addition, Harvest announced its 2019 year-end proved reserves and provided guidance for 2020.

 

Key Highlights

 

-

Average daily production was 53.1 MMcfe for the fourth quarter of 2019

-

Made a cash distribution of $7.00 per share in October 2019

-

Entered into a  new $10 million credit facility in October 2019

-

In December 2019, closed on the sale of substantially all of Harvest’s remaining oil and natural gas properties in the Barnett Shale for $6.2 million, net of preliminary purchase price adjustments 

-

In December 2019, closed on the sale of substantially all of Harvest’s oil and natural gas properties in the Permian Basin for total consideration of $2.9 million, net of purchase price adjustments, and expect a subsequent closing for total consideration of $0.1 million in the second quarter of 2020, subject to customary purchase price adjustments

-

In March 2020, signed a purchase and sale agreement to sell all of Harvest’s oil and natural gas properties in Michigan for a purchase price of $4.8 million, subject to an adjustment based on the value of certain derivative contracts and other customary purchase price adjustments, with an expected closing during the second quarter of 2020

-

In conjunction with divestitures during the fourth quarter, unwound certain commodity derivative contracts in January 2020 for cash settlements received of $1.1 million

-

As of March 31,  2020, Harvest had repurchased 12,139 shares of its outstanding common stock under the previously announced share repurchase program

 

The Company continues to review strategic alternatives following the divestiture of significant assets during 2019. The Company is actively considering the potential divestiture of all of its remaining assets as well as a potential sale or merger of the Company. In addition, Harvest is pursuing options to reduce its overall cost structure to more closely align with its asset base.

 

Fourth Quarter 2019 Results

 

 

 

 

 

 

 

 

 

Fourth Quarter

 

Third Quarter

$ in millions unless noted otherwise

 

2019

 

2019

Average daily production (MMcfe/d)

 

53.1

 

 

98.1

 

Total revenues

 

16.1

 

 

23.2

 

Total assets (1)

 

180.2

 

 

289.9

 

Net loss

 

(22.1)

 

 

(19.5)

 

Adjusted EBITDAX (2)

 

(0.6)

 

 

9.7

 

Total debt (1)

 

 -

 

 

 -

 

Net cash provided by operating activities

 

3.7

 

 

14.9

 

Additions to oil and natural gas properties (3)

 

(0.8)

 

 

0.3

 

 

(1)

As of December 31, 2019 and September 30, 2019

(2)

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

(3)

Represents cash payments during the period

For the fourth quarter of 2019,  Harvest reported a  net loss of $(22.1) million, or $(2.17) per basic and diluted weighted average share outstanding, compared to a net income of $34.3 million, or $3.41 per basic and diluted weighted average share outstanding, for the fourth quarter of 2018.  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. Included in 2019 fourth quarter net loss were the following items:

·

$13.5 million of impairment charges primarily related to proved oil and natural gas properties located in Michigan,  the Barnett Shale, and the Mid-Continent area,

·

$4.4 million of non-cash losses on commodity derivatives,

·

$0.4 million loss on sales of oil and natural gas properties,

·

$0.4 million of stock-based compensation costs contained in general and administrative expenses,

·

$0.5 million of divestiture and transaction related expenses contained in general and administrative expenses, and

·

$0.1 million of litigation settlement expenses contained in general and administrative expenses.

 

Production for the fourth quarter of 2019 was 3.7 Bcf of natural gas, 121 Mbbls of oil and 75 Mbbls of natural gas liquids  (“NGLs”), or 53.1 million cubic feet equivalent per day (Mmcfe/day). This represents a 63 percent decrease from the fourth quarter of 2018 production of 144.9 Mmcfe/day and a  46 percent decrease from the third quarter of 2019 production of 98.1 Mmcfe/day. The decrease in production from the fourth quarter of 2018 was primarily due to divestitures in 2019 in the Barnett Shale, the San Juan Basin, the Mid-Continent area and the Monroe Field in Northern Louisiana. The decrease in production from the third quarter of 2019  was primarily due to the Barnett Shale,  Mid-Continent area and the Monroe Field divestitures that closed during the third and fourth quarters of 2019.    

Adjusted EBITDAX for the fourth quarter of 2019 was $(0.6) million. The decrease in Adjusted EBITDAX from the fourth quarter of 2018 was primarily attributable to the divestitures that closed in 2019 and lower realized natural gas prices, partially offset by an increase in cash settlements received on commodity derivative contracts. The decrease in Adjusted EBITDAX from the third quarter of 2019 was primarily attributable to the Barnett Shale, Mid-Continent area and Monroe Field divestitures that closed during the third and fourth quarters of 2019 and a decrease in cash settlements received on commodity derivative contracts and on termination of commodity derivative contracts in conjunction with divestitures, partially offset by higher natural gas and natural gas liquids prices, and a decrease in cash general and administrative expenses. Adjusted EBITDAX is a non-GAAP financial measure and is described in the below table under “Non-GAAP Measures.”

Full Year 2019 Results

 

 

 

 

 

 

 

 

 

 

 

 

$ in millions unless noted otherwise

 

2019

 

2018 (1)

Average daily production (MMcfe/d)

 

99.9

 

 

170.5

 

Total revenues (2)

 

113.8

 

 

249.6

 

Total assets (3)

 

180.2

 

 

534.5

 

Net loss (2)(4)

 

(138.3)

 

 

(586.6)

 

Adjusted EBITDAX (2)(5)

 

28.3

 

 

92.0

 

Total debt (3)

 

 -

 

 

115.0

 

Net cash provided by operating activities

 

47.7

 

 

67.2

 

Additions to oil and natural gas properties (6)

 

1.3

 

 

57.1

 

 

(1)

All amounts reflect the combined results of five months ended May 31, 2018 (Predecessor) and seven months ended December 31, 2018 (Successor)

(2)

Includes royalty adjustment of $5.0 million in 2018. See Note 14 of the Notes to Consolidated Financial Statements included under “Item 8. Financial Statements and Supplementary Data” contained in Harvest’s Form 10-K filed April 14, 2020.  Excluding this royalty adjustment, for 2018, total revenue would have been $254.6 million, net loss would have been $581.6 million and Adjusted EBITDAX would have been $97.0 million.

(3)

As of December 31, 2019 and 2018

(4)

Includes $589.6 million of reorganization items, net, in 2018

(5)

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

(6)

Represents cash payments during the period

 

For 2019,  Harvest reported a net loss of $138.3 million compared to a net loss of $586.6 million for 2018. Included in net loss for 2019 were the following items:

·

$129.1 million of impairment charges related to the sale of proved oil and natural gas properties located in the Barnett Shale, San Juan Basin, Permian Basin, Mid-Continent area, and the Monroe Field, and oil and natural gas properties located in Michigan, which were under a purchase and sale agreement entered into in March 2020,

·

$16.6 million of non-cash losses on commodity derivatives,

·

$4.6 million of gain on equity securities, 

·

$2.5 million of stock-based compensation costs contained in general and administrative expenses, and

·

$2.4 million of divestiture and transaction related expenses contained in general and administrative expenses.

 

Production for 2019 was 25.5 Bcf of natural gas, 591 Mbbls of oil and 1.2 Mmbbls of natural gas liquids, or 99.9 Mmcfe/day.  This represents a 41 percent decrease from the 2018 production of 170.5 Mmcfe/day. The decrease from 2018 production was primarily due to the divestitures of oil and natural gas properties in 2018 and 2019.

Adjusted EBITDAX for 2019 was $28.3 million, a 69 percent decrease as compared to 2018. The decrease in Adjusted EBITDAX as compared to 2018 is primarily due to divestitures that closed in 2018 and 2019 and a decrease in realized oil, natural gas, and natural gas liquids prices, partially offset by an increase in cash settlements received on commodity derivative contracts, a decrease in general and administrative expenses and an increase in other income. 

Commodity Hedges

 

In January 2020, Harvest terminated the following hedge positions in connection with divestitures that closed during the fourth quarter of 2019 at a net gain of $1.1 million. 

 

 

 

 

 

 

 

 

 

    

    

    

Swap

    

Swap

Period

 

Index

 

Volume

 

Price

Natural Gas (MmmBtus):

 

  

 

 

 

 

 

Feb - Dec 2020

 

NYMEX

 

1,005.0

 

$

2.73

 

 

 

 

 

 

 

 

Crude (MBbls):

 

  

 

 

 

 

 

Jan - Dec 2020

 

WTI

 

47.6

 

$

60.53

 

 

 

 

 

 

 

 

Ethane (MBbls):

 

  

 

 

 

 

 

Jan - Dec 2020

 

Mt Belvieu

 

40.3

 

$

11.91

 

 

 

 

 

 

 

 

Propane (MBbls):

 

  

 

 

 

 

 

Jan - Dec 2020

 

Mt Belvieu

 

40.3

 

$

29.23

 

Details regarding Harvest’s total current hedge position may be found in the Total Current Hedge Position table at the end of this press release.

Year-end 2019 Estimated Net Proved Reserves

 

Harvest’s year-end 2019 estimated net proved reserves were 156 Bcfe. Approximately 76 percent were natural gas, 21 percent were crude oil and 3 percent were natural gas liquids.  As specified by the SEC, the prices for oil, natural gas and natural gas liquids were the average prices during the year determined using the price on the first day of each month. The prices utilized in calculating the Company’s total estimated proved reserves at December 31, 2019 were $55.69 per Bbl of oil and $2.58 per MMBtu of natural gas.

At December 31, 2019, our proved reserves had a standardized measure of discounted future net cash flows of $106.9 million and a present value of future net pre-tax cash flows attributable to estimated net proved reserves, discounted at 10 percent per annum (“PV-10”) of $110.5 million based on SEC pricing. PV–10, is a computation of the standardized measure of discounted future net cash flows on a pre–tax basis and is computed on the same basis as standardized measure but does not include a provision for federal income taxes, Texas gross margin tax or other state taxes. PV–10 is considered a non–GAAP financial measure under the regulations of the SEC. We believe PV–10 to be an important measure for evaluating the relative significance of our oil and natural gas properties. We further believe investors and creditors may utilize our PV–10 as a basis for comparison of the relative size and value of our reserves to other companies. PV–10, however, is not a substitute for the standardized measure. See the attached table under “Non-GAAP Measures” for a reconciliation of standardized measure to PV-10. Our PV–10 measure and standardized measure do not purport to present the fair value of our reserves.

 

 

 

 

 

 

 

 

 

 

 

 

Estimated Net Proved Reserves (1)

 

 

 

 

 

 

 

 

Natural Gas

 

 

Crude Oil

 

Natural Gas

 

 

 

Equivalents

 

    

(MMBbls)

    

(Bcf)

    

NGLs (MMBbls)

    

(Bcfe)

Proved Reserves:

 

 

 

 

 

 

 

 

 Developed

 

5.6

 

118.0

 

0.7

 

155.8

 Undeveloped

 

 —

 

 —

 

 —

 

 —

Total

 

5.6

 

118.0

 

0.7

 

155.8

 

(1)

In March of 2020, Harvest signed a purchase and sale agreement to sell all oil and natural gas properties in Michigan representing 55.8 Bcfe of the Company’s 2019 year-end proved reserves. The divestiture  is considered 100% developed.

For comparative purposes, utilizing NYMEX forward closing prices for oil and natural gas at April 8, 2020 for January 1, 2020 through December 31, 2031, total proved reserves at December 31, 2019 were 152.3 Bcfe, with a PV–10 of $78.7 million, a decrease of 3.5 Bcfe versus SEC reserves and $31.8 million versus PV–10 using SEC prices.  The unweighted average of the NYMEX strip prices used were $44.23 per Bbl of oil and $2.46 per MMBtu of natural gas. NYMEX forward strip-based proved reserves were calculated based on the SEC proved reserves estimation methodology, but applying NYMEX forward strip prices rather than SEC prices. We believe that investors and creditors may utilize our NYMEX strip-based PV-10 as a basis for comparison of the relative size and value of our reserves to other companies.  The PV–10 of our NYMEX forward strip-based reserves is not a substitute for the standardized measure and does not purport to present the fair value of our reserves.

Guidance for 2020

 

The guidance table below assumes the Michigan divestiture closes at the end of the second quarter. Therefore, the guidance for the second half of 2020 excludes this asset.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

 

 

1H 2020 (1)

 

 

 

2H 2020

 

 

Net Production

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural Gas (Mmcf)

 

 

5,208

-

5,756

 

 

 

3,312

-

3,661

 

 

Crude Oil (Mbbls)

 

 

197

-

218

 

 

 

193

-

213

 

 

Natural Gas Liquids (Mbbls)

 

 

15

-

16

 

 

 

10

-

11

 

 

Total Mmcfe

 

 

6,481

-

7,164

 

 

 

4,531

-

5,008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Daily Production (Mmcfe/d)

 

 

36

-

39

 

 

 

25

-

27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income

 

 

$
0.4

-

$
0.8

 

 

 

$
0.4

-

$
0.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Price Differential vs NYMEX

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural Gas ($/Mcf)

 

 

($0.35)

-

($0.05)

 

 

 

($0.39)

-

($0.09)

 

 

Crude Oil ($/Bbl)

 

 

($3.93)

-

($1.93)

 

 

 

($3.90)

-

($1.90)

 

 

NGL (% of NYMEX Crude Oil)

 

 

22%

-

26%

 

 

 

22%

-

26%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

LOE and other

 

 

$
15.9

-

$
17.6

 

 

 

$
11.8

-

$
13.0

 

 

Production Taxes (as % of revenue)

 

 

0.7%

-

1.3%

 

 

 

0.7%

-

1.3%

 

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

General and administrative expense (2)

 

 

$
6.0

-

$
7.0

 

 

 

$
6.0

-

$
7.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures (3)    

 

 

–  

-

$
0.5

 

 

 

–  

-

$
0.5

 

 

 

(1)

Assumes the Michigan divestiture closes at the end of June 2020.

(2)

Excludes non-cash general and administrative expense, of which non-cash share-based compensation is a part. Also excludes any amounts for divestiture and transaction related costs.

(3)

Represents estimates for drilling, capital workover and related capital expenditures.

 

Annual Report on Form 10-K  

 

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

 

Investor Presentation

 

An updated investor presentation will be posted to the Investor Relations section of the Harvest website on April 14, 2020.

 

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 Appalachian Basin (which includes the Utica Shale) and Michigan. 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, 2019 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

 

Three Months

 

 

 

Ended

 

Ended

 

 

 

December 31, 

 

December 31, 

    

 

 

2019

 

2018

 

Production data:

 

 

 

 

 

 

 

Oil (MBbls)

 

 

121

 

 

194

 

Natural gas liquids (MBbls)

 

 

75

 

 

523

 

Natural gas (MMcf)

 

 

3,704

 

 

9,035

 

Net production (MMcfe)

 

 

4,882

 

 

13,334

 

Average sales price per unit: (1)

 

 

  

 

 

  

 

Oil (Bbl)

 

$

54.78

 

$

56.70

 

Natural gas liquids (Bbl) (2)

 

 

20.17

 

 

15.17

 

Natural gas (Mcf)

 

 

2.15

 

 

3.13

 

Mcfe (2)

 

 

3.30

 

 

3.54

 

Average unit cost per Mcfe:

 

 

 

 

 

 

 

Production costs:

 

 

 

 

 

 

 

Lease operating expenses

 

$

2.71

 

$

1.98

 

Production taxes

 

 

0.06

 

 

0.19

 

Total

 

 

2.77

 

 

2.17

 

Depreciation, depletion and amortization

 

 

0.20

 

 

0.41

 

General and administrative expenses

 

 

1.23

 

 

0.44

 

 

(1)

Prior to $2.1 million of realized net gains and $4.0 million of realized net losses on settlements of commodity derivatives for the three months ended December 31, 2019 and 2018, respectively.

 

(2)

Includes the effects of a royalty adjustment of $5.0 million in the fourth quarter. See Note 14 of the Notes to Consolidated Financial Statements included under “Item 8. Financial Statements and Supplementary Data” contained in Harvest’s Form 10-K filed April 14, 2020.  Excluding this royalty adjustment, the average sales price for natural gas liquids for the fourth quarter would have been $24.74 per barrel and the average sales price per mcfe would have been $3.92.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Successor

 

 

Predecessor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Combined

 

 

Year

 

Seven Months

 

 

Five Months

 

Year

 

 

Ended

 

Ended

 

 

Ended

 

Ended

 

 

December 31, 

 

December 31, 

 

 

May 31,

 

December 31, 

 

 

2019

    

2018

 

    

2018

    

2018

Production data:

 

 

 

 

 

  

 

 

 

  

 

 

 

Oil (MBbls)

 

 

591

 

 

642

 

 

 

662

 

 

1,304

Natural gas liquids (MBbls)

 

 

1,244

 

 

1,348

 

 

 

1,040

 

 

2,388

Natural gas (MMcf)

 

 

25,470

 

 

23,084

 

 

 

16,982

 

 

40,066

Net production (MMcfe)

 

 

36,479

 

 

35,029

 

 

 

27,193

 

 

62,222

Average sales price per unit: (1)

 

 

 

 

 

  

 

 

 

  

 

 

  

Oil (Bbl)

 

$

54.14

 

$

64.45

 

 

$

64.14

 

$

64.32

Natural gas liquids (Bbl) (2)

 

 

16.39

 

 

23.95

 

 

 

25.86

 

 

24.79

Natural gas (Mcf)

 

 

2.36

 

 

2.75

 

 

 

2.41

 

 

2.61

Mcfe (2)

 

 

3.08

 

 

3.92

 

 

 

4.06

 

 

3.98

Average unit cost per Mcfe:

 

 

 

 

 

 

 

 

 

 

 

 

  

Production costs:

 

 

 

 

 

 

 

 

 

 

 

 

  

Lease operating expenses

 

$

2.13

 

$

1.83

 

 

$

1.67

 

$

1.76

Production taxes

 

 

0.15

 

 

0.19

 

 

 

0.20

 

 

0.19

Total

 

 

2.28

 

 

2.02

 

 

 

1.87

 

 

1.95

Depreciation, depletion and amortization

 

 

0.32

 

 

0.46

 

 

 

1.70

 

 

1.00

General and administrative expenses

 

 

0.73

 

 

0.45

 

 

 

0.58

 

 

0.50

 

(1)

Prior to $19.6 million of realized net gains and $4.3 million of realized net losses on settlements of commodity derivatives for the years ended December 31, 2019 and 2018, respectively.

 

(2)

Includes the effects of  a royalty adjustment of $5.0 million in 2018.  See Note 14 of the Notes to Consolidated Financial Statements included under “Item 8. Financial Statements and Supplementary Data” contained in Harvest’s Form 10-K filed April 14, 2020.  Excluding this royalty adjustment, for the seven months ended December 31, 2018, the average sales price for natural gas liquids would have been $27.66 per barrel and the average sales price per mcfe would have been $4.06, and for the combined year ended December 31, 2018, the average sales price for natural gas liquids would have been $26.88 per barrel and the average price per mcfe would have been $4.06.

 

Consolidated Balance Sheets

($ in thousands, except number of shares)

 

 

 

 

 

 

 

 

 

    

December 31, 

    

December 31, 

 

 

2019

 

2018

ASSETS

 

 

  

 

 

  

Current assets:

 

 

  

 

 

  

Cash and cash equivalents

 

$

28,968

 

$

6,313

Restricted cash

 

 

10,000

 

 

 —

Equity securities

 

 

 —

 

 

47,082

Accounts receivable:

 

 

 

 

 

 

Oil, natural gas and natural gas liquids revenues

 

 

14,075

 

 

40,176

Other

 

 

1,322

 

 

4,496

Derivative asset

 

 

6,231

 

 

15,452

Other current assets

 

 

277

 

 

2,314

Total current assets

 

 

60,873

 

 

115,833

 

 

 

 

 

 

 

Oil and natural gas properties, net of accumulated depreciation, depletion and amortization; December 31, 2019, $15,066; December 31, 2018, $12,950

 

 

114,031

 

 

405,688

Assets held for sale

 

 

316

 

 

 —

Long-term derivative asset

 

 

 —

 

 

8,499

Other assets

 

 

4,965

 

 

4,474

Total assets

 

$

180,185

 

$

534,494

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

  

 

 

  

Current liabilities:

 

 

  

 

 

  

Accounts payable and accrued liabilities

 

$

23,524

 

$

26,146

Derivative liability

 

 

 —

 

 

1,165

Other current liabilities

 

 

586

 

 

 —

Total current liabilities

 

 

24,110

 

 

27,311

 

 

 

 

 

 

 

Asset retirement obligations

 

 

88,668

 

 

117,529

Liabilities held for sale

 

 

139

 

 

 —

Long–term debt, net

 

 

 —

 

 

115,000

Other long–term liabilities

 

 

1,770

 

 

1,036

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

  

 

 

 

 

 

 

 

Mezzanine equity

 

 

127

 

 

79

 

 

 

 

 

 

 

Stockholders' equity:

 

 

  

 

 

  

Common stock - $0.01 par value; 65,000,000 shares authorized; 10,221,008 shares issued and 10,183,467 shares outstanding as of December 31, 2019; 10,054,816 shares issued and 10,042,468 shares outstanding as of December 31, 2018

 

 

102

 

 

100

Additional paid-in capital

 

 

180,177

 

 

249,717

Treasury stock at cost - 37,541 shares at December 31, 2019; 12,348 shares at December 31, 2018

 

 

(562)

 

 

(247)

Retained earnings (accumulated deficit)

 

 

(114,346)

 

 

23,969

Total stockholder's equity

 

 

65,371

 

 

273,539

Total liabilities and equity

 

$

180,185

 

$

534,494

 

 

Consolidated Statements of Operations

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

 

 

 

 

 

 

 

 

 

 

Three Months

 

Three Months

 

 

Ended

 

Ended

 

 

December 31, 

 

December 31, 

 

    

2019

    

2018

Revenues:

 

 

  

 

 

  

Oil, natural gas and natural gas liquids revenues (1)

 

$

16,134

 

$

47,227

Transportation and marketing–related revenues

 

 

 4

 

 

687

Total revenues (1)

 

 

16,138

 

 

47,914

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

  

Lease operating expenses

 

 

13,230

 

 

26,444

Cost of purchased natural gas

 

 

74

 

 

504

Dry hole and exploration costs

 

 

 —

 

 

113

Production taxes

 

 

316

 

 

2,539

Accretion expense on obligations

 

 

1,739

 

 

2,286

Depreciation, depletion and amortization

 

 

954

 

 

5,422

General and administrative expenses

 

 

5,988

 

 

5,924

Impairment of oil and natural gas properties

 

 

13,478

 

 

500

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

 

 

361

 

 

(650)

Total operating costs and expenses

 

 

36,140

 

 

43,082

 

 

 

 

 

 

 

Operating income (loss)

 

 

(20,002)

 

 

4,832

 

 

 

 

 

 

 

Other income (expense), net:

 

 

 

 

 

  

Gain (loss) on derivatives, net

 

 

(2,316)

 

 

47,617

Interest expense

 

 

(154)

 

 

(2,059)

Gain on equity securities

 

 

 —

 

 

(15,960)

Other income, net

 

 

355

 

 

458

Total other income (expense), net

 

 

(2,115)

 

 

30,056

 

 

 

 

 

 

 

Reorganization items, net

 

 

 —

 

 

(543)

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

(22,117)

 

 

34,345

 

 

 

 

 

 

 

Income tax benefit (expense)

 

 

13

 

 

(78)

 

 

 

 

 

 

 

Net income (loss) (1)

 

$

(22,104)

 

$

34,267

 

 

 

 

 

 

 

Basic and diluted earnings per share:

 

 

  

 

 

  

Net income (loss)

 

$

(2.17)

 

$

3.41

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

Basic

 

 

10,180

 

 

10,042

Diluted

 

 

10,180

 

 

10,047

 

(1)

Includes the effects of a royalty adjustment of $5.0 million in the three months ended December 31, 2018.  See Note 14 of the Notes to Consolidated Financial Statements included under “Item 8. Financial Statements and Supplementary Data” contained in Harvest’s Form 10-K filed April 14, 2020.  Excluding this royalty adjustment, for the fourth quarter, total revenue would have been $52.9 million and net income would have been $39.3 million.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Successor

 

 

Predecessor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Combined

 

 

Year

 

Seven Months

 

 

Five Months

 

Year

 

 

Ended

 

Ended

 

 

Ended

 

Ended

 

 

December 31, 

 

December 31, 

 

 

May 31,

 

December 31, 

 

 

2019

    

2018

 

    

2018

 

2018

Revenues:

 

 

 

 

 

  

 

 

 

  

 

 

 

Oil, natural gas and natural gas liquids revenues (1)

 

$

112,419

 

$

137,169

 

 

$

110,307

 

$

247,476

Transportation and marketing–related revenues

 

 

1,401

 

 

1,431

 

 

 

724

 

 

2,155

Total revenues (1)

 

 

113,820

 

 

138,600

 

 

 

111,031

 

 

249,631

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

  

 

 

 

  

 

 

 

Lease operating expenses

 

 

77,798

 

 

64,100

 

 

 

45,372

 

 

109,472

Cost of purchased natural gas

 

 

1,043

 

 

1,026

 

 

 

557

 

 

1,583

Dry hole and exploration costs

 

 

75

 

 

177

 

 

 

122

 

 

299

Production taxes

 

 

5,593

 

 

6,482

 

 

 

5,343

 

 

11,825

Accretion expense on obligations

 

 

8,112

 

 

5,420

 

 

 

3,176

 

 

8,596

Depreciation, depletion and amortization

 

 

11,666

 

 

16,012

 

 

 

46,196

 

 

62,208

General and administrative expenses

 

 

26,782

 

 

15,626

 

 

 

15,648

 

 

31,274

Restructuring costs

 

 

 —

 

 

 —

 

 

 

5,211

 

 

5,211

Impairment of oil and natural gas properties

 

 

129,082

 

 

3,065

 

 

 

 3

 

 

3,068

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

 

 

(318)

 

 

(697)

 

 

 

 5

 

 

(692)

Total operating costs and expenses

 

 

259,833

 

 

111,211

 

 

 

121,633

 

 

232,844

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

(146,013)

 

 

27,389

 

 

 

(10,602)

 

 

16,787

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense), net:

 

 

 

 

 

  

 

 

 

  

 

 

 

Gain on derivatives, net

 

 

3,058

 

 

16,962

 

 

 

444

 

 

17,406

Interest expense

 

 

(3,489)

 

 

(7,225)

 

 

 

(13,652)

 

 

(20,877)

(Gain ) loss on equity securities

 

 

4,593

 

 

(11,130)

 

 

 

 —

 

 

(11,130)

Other income, net

 

 

3,523

 

 

374

 

 

 

776

 

 

1,150

Total other income (expense), net

 

 

7,685

 

 

(1,019)

 

 

 

(12,432)

 

 

(13,451)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reorganization items, net

 

 

 —

 

 

(2,323)

 

 

 

(587,325)

 

 

(589,648)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

(138,328)

 

 

24,047

 

 

 

(610,359)

 

 

(586,312)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit (expense)

 

 

13

 

 

(78)

 

 

 

(166)

 

 

(244)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) (1)

 

$

(138,315)

 

$

23,969

 

 

$

(610,525)

 

$

(586,556)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per share / unit:

 

 

 

 

 

  

 

 

 

  

 

 

 

Net income (loss)

 

$

(13.69)

 

$

2.39

 

 

$

(12.12)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares / units outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

10,105

 

 

10,030

 

 

 

49,369

 

 

 

Diluted

 

 

10,105

 

 

10,032

 

 

 

49,369

 

 

 

 

(1)

Includes the effects of a royalty adjustment of $5.0 million in the seven months ended December 31, 2018.  See Note 14 of the Notes to Consolidated Financial Statements included under “Item 8. Financial Statements and Supplementary Data” contained in Harvest’s Form 10-K filed April 14, 2020.  Excluding this royalty adjustment, for the seven months ended December 31, 2018, total revenue would have been $143.6 million and net income would have been $29.0 million, and for the combined year ended December 31, 2018, total revenue would have been $254.6 million and net loss would have been $581.6 million.

 

Consolidated Statements of Cash Flows

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Successor

 

 

Predecessor

 

 

Year

 

Seven Months

 

 

Five Months

 

Year

 

 

Ended

 

Ended

 

 

Ended

 

Ended

 

 

December 31, 

 

December 31,

 

 

May 31,

 

December 31, 

 

 

2019

    

2018

 

    

2018

 

2017

Cash flows from operating activities:

 

 

 

 

 

  

 

 

 

  

 

 

  

Net income (loss)

 

$

(138,315)

 

$

23,969