Key Highlights
- Average daily production was 31.8 MMcfe for the third quarter of 2020
- On
July 7, 2020 , the Company entered into a definitive agreement to sell itsAppalachian Basin assets - On
August 4, 2020 , the Company closed on its previously announced sale of itsMichigan properties - On
August 7, 2020 , the Company announced a one-time cash distribution of$10.00 per share payable onAugust 24, 2020 to shareholders of record as ofAugust 17, 2020 - On
October 23, 2020 , the Company closed on its previously announced sale of its Appalachia properties for$21.9 million , subject to customary purchase price adjustments; the transaction was funded with a$21.9 million senior secured seller note - In
October 2020 , the Company unwound all of its remaining commodity derivative contracts for cash settlements received of$1.5 million - On
November 13, 2020 , the Company announced a one-time cash distribution of$10.00 per share payable onNovember 30, 2020 to shareholders of record as ofNovember 23, 2020
Third Quarter 2020 Financial Results | ||||||||||
Third Quarter | Second Quarter | |||||||||
$ in millions unless noted otherwise | 2020 | 2020 | ||||||||
Average daily production (MMcfe/d) | 31.8 | 36.8 | ||||||||
Total revenues | $ | 7.5 | $ | 7.4 | ||||||
Total assets (1) | 145.1 | 175.0 | ||||||||
Net income (loss) | (6.2 | ) | (7.1 | ) | ||||||
Adjusted EBITDAX (2) | 0.9 | 2.3 | ||||||||
Total debt (1) | — | — | ||||||||
Net cash provided by (used in) operating activities | (2.2 | ) | 2.2 | |||||||
Additions to oil and natural gas properties (3) | 1.0 | 0.2 |
(1) | As of September 30, 2020 and |
(2) | Adjusted EBITDAX is a Non-GAAP financial measure and is defined and reconciled under “Non-GAAP Measures” below. |
(3) | Represents cash payments during the period. |
For the third quarter of 2020, Harvest reported a net loss of
$1.1 million of impairment of oil and natural gas properties,$5.6 million of non-cash losses on commodity derivatives,$0.4 million of stock-based compensation costs contained in general and administrative expenses, and$0.4 million of divestiture and transaction related expense contained in general and administrative expenses.
Production for the third quarter of 2020 was 2.3 Bcf of natural gas, 102 MBbls of oil and 9 MBbls of natural gas liquids (NGLs), or 31.8 million cubic feet equivalent per day (MMcfe/d). This represents a 14 percent decrease from the second quarter of 2020 production of 36.8 MMcfe/d and a 68 percent decrease from the third quarter of 2019 production of 98.1 MMcfe/d. The decrease in production from the second quarter of 2020 was primarily due to the divestiture of the Company’s
Adjusted EBITDAX for the third quarter of 2020 was
Quarterly Report
Harvest’s financial statements and related footnotes are available in its Quarterly Report, which can be found at www.otcmarkets.com under the stock symbol HRST, Disclosures or through the Investor Relations section of the Harvest website at http://www.hvstog.com.
About
Harvest has been an independent oil and gas company; the Company intends to evaluate and undertake the process of winding-up and returning capital to its shareholders. 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”. 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
Operating Statistics | |||||||
Three Months Ended | |||||||
2020 | 2019 | ||||||
Production data: | |||||||
Oil (MBbls) | 102 | 145 | |||||
Natural gas liquids (MBbls) | 9 | 316 | |||||
Natural gas (MMcf) | 2,261 | 6,259 | |||||
Net production (MMcfe) | 2,927 | 9,025 | |||||
Average sales price per unit: (1) | |||||||
Oil (Bbl) | $ | 38.56 | $ | 54.02 | |||
Natural gas liquids (Bbl) (2) | (14.68 | ) | 10.46 | ||||
Natural gas (Mcf) | 1.63 | 1.87 | |||||
Mcfe | 2.56 | 2.53 | |||||
Average unit cost per Mcfe: | |||||||
Production costs: | |||||||
Lease operating expenses | $ | 2.37 | $ | 2.17 | |||
Production taxes | 0.03 | 0.18 | |||||
Total | 2.40 | 2.35 | |||||
Depreciation, depletion and amortization | — | 0.15 | |||||
General and administrative expenses | 1.46 | 0.86 |
(1) | Prior to |
(2) | Natural gas liquids revenues for the three months ended |
Nine Months Ended | ||||||
2020 | 2019 | |||||
Production data: | ||||||
Oil (MBbls) | 307 | 470 | ||||
Natural gas liquids (MBbls) | 23 | 1,169 | ||||
Natural gas (MMcf) | 7,621 | 21,765 | ||||
Net production (MMcfe) | 9,601 | 31,596 | ||||
Average sales price per unit: (1) | ||||||
Oil (Bbl) | $ | 37.34 | $ | 53.98 | ||
Natural gas liquids (Bbl) (2) | 3.85 | 16.14 | ||||
Natural gas (Mcf) | 1.68 | 2.39 | ||||
Mcfe | 2.54 | 3.05 | ||||
Average unit cost per Mcfe: | ||||||
Production costs: | ||||||
Lease operating expenses | $ | 2.36 | $ | 2.04 | ||
Production taxes | 0.04 | 0.17 | ||||
Total | 2.40 | 2.21 | ||||
Depreciation, depletion and amortization | 0.11 | 0.34 | ||||
General and administrative expenses | 1.28 | 0.66 |
(1) | Prior to |
(2) | Natural gas liquids revenues for the nine months ended |
Unaudited Condensed Consolidated Balance Sheets (in thousands, except number of shares) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 17,678 | $ | 28,968 | ||||
Restricted cash | 10,000 | 10,000 | ||||||
Accounts receivable: | ||||||||
Oil, natural gas and natural gas liquids revenues | 7,867 | 14,075 | ||||||
Other | 2,024 | 1,322 | ||||||
Derivative asset | 2,127 | 6,231 | ||||||
Other current assets | 322 | 277 | ||||||
Total current assets | 40,018 | 60,873 | ||||||
Oil and natural gas properties, net of accumulated depreciation, depletion | ||||||||
and amortization; | — | 114,031 | ||||||
Assets held for sale | 102,084 | 316 | ||||||
Other assets | 2,983 | 4,965 | ||||||
Total assets | $ | 145,085 | $ | 180,185 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 11,812 | $ | 23,524 | ||||
Other current liabilities | 426 | 586 | ||||||
Total current liabilities | 12,238 | 24,110 | ||||||
Asset retirement obligations | — | 88,668 | ||||||
Liabilities held for sale | 83,535 | 139 | ||||||
Other long–term liabilities | 656 | 1,770 | ||||||
Commitments and contingencies | ||||||||
Mezzanine equity | 118 | 127 | ||||||
Stockholders' equity: | ||||||||
Common stock - | ||||||||
1,027,760 shares issued and 1,022,272 shares outstanding as of | ||||||||
outstanding as of | 102 | 102 | ||||||
Additional paid-in capital | 170,823 | 180,177 | ||||||
shares at | (631 | ) | (562 | ) | ||||
Retained earnings (accumulated deficit) | (121,756 | ) | (114,346 | ) | ||||
Total stockholders' equity | 48,538 | 65,371 | ||||||
Total liabilities and equity | $ | 145,085 | $ | 180,185 | ||||
Unaudited Condensed Consolidated Statements of Operations (in thousands, except per share data) | ||||||||
Three Months Ended | ||||||||
2020 | 2019 | |||||||
Revenues: | ||||||||
Oil, natural gas and natural gas liquids revenues | $ | 7,478 | $ | 22,870 | ||||
Transportation and marketing–related revenues | — | 379 | ||||||
Total revenues | 7,478 | 23,249 | ||||||
Operating costs and expenses: | ||||||||
Lease operating expenses | 6,929 | 19,614 | ||||||
Cost of purchased natural gas | — | 255 | ||||||
Dry hole and exploration costs | — | 36 | ||||||
Production taxes | 84 | 1,634 | ||||||
Accretion expense on obligations | — | 1,995 | ||||||
Depreciation, depletion and amortization | — | 1,367 | ||||||
General and administrative expenses | 4,270 | 7,771 | ||||||
Impairment of oil and natural gas properties | 1,093 | 16,325 | ||||||
Gain on sales of oil and natural gas properties | (16 | ) | (661 | ) | ||||
Total operating costs and expenses | 12,360 | 48,336 | ||||||
Operating loss | (4,882 | ) | (25,087 | ) | ||||
Other income (expense), net: | ||||||||
Gain (loss) on derivatives, net | (1,823 | ) | 5,718 | |||||
Interest expense | (12 | ) | (501 | ) | ||||
Other income, net | 473 | 341 | ||||||
Total other income (expense), net | (1,362 | ) | 5,558 | |||||
Loss before income taxes | (6,244 | ) | (19,529 | ) | ||||
Income tax expense | — | — | ||||||
Net loss | $ | (6,244 | ) | $ | (19,529 | ) | ||
Earnings per share: | ||||||||
Basic | $ | (6.11 | ) | $ | (19.28 | ) | ||
Diluted | $ | (6.11 | ) | $ | (19.28 | ) | ||
Weighted average common shares outstanding: | ||||||||
Basic | 1,022 | 1,013 | ||||||
Diluted | 1,022 | 1,013 | ||||||
Nine Months Ended | ||||||||
2020 | 2019 | |||||||
Revenues: | ||||||||
Oil, natural gas and natural gas liquids revenues | $ | 24,387 | $ | 96,285 | ||||
Transportation and marketing–related revenues | — | 1,397 | ||||||
Total revenues | 24,387 | 97,682 | ||||||
Operating costs and expenses: | ||||||||
Lease operating expenses | 22,628 | 64,568 | ||||||
Cost of purchased natural gas | — | 969 | ||||||
Dry hole and exploration costs | 1 | 75 | ||||||
Production taxes | 369 | 5,277 | ||||||
Accretion expense on obligations | 3,366 | 6,373 | ||||||
Depreciation, depletion and amortization | 1,103 | 10,712 | ||||||
General and administrative expenses | 12,332 | 20,794 | ||||||
Impairment of oil and natural gas properties | 3,536 | 115,604 | ||||||
Gain on sales of oil and natural gas properties | (368 | ) | (679 | ) | ||||
Total operating costs and expenses | 42,967 | 223,693 | ||||||
Operating loss | (18,580 | ) | (126,011 | ) | ||||
Other income (expense), net: | ||||||||
Gain on derivatives, net | 9,868 | 5,374 | ||||||
Interest expense | (38 | ) | (3,335 | ) | ||||
Gain on equity securities | — | 4,593 | ||||||
Other income, net | 1,340 | 3,168 | ||||||
Total other income (expense), net | 11,170 | 9,800 | ||||||
Loss before income taxes | (7,410 | ) | (116,211 | ) | ||||
Income tax expense | — | — | ||||||
Net loss | $ | (7,410 | ) | $ | (116,211 | ) | ||
Earnings per share: | ||||||||
Basic | $ | (7.27 | ) | $ | (115.29 | ) | ||
Diluted | $ | (7.27 | ) | $ | (115.29 | ) | ||
Weighted average common shares outstanding: | ||||||||
Basic | 1,020 | 1,008 | ||||||
Diluted | 1,020 | 1,008 | ||||||
Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) | ||||||||
Nine Months Ended | ||||||||
2020 | 2019 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (7,410 | ) | $ | (116,211 | ) | ||
Adjustments to reconcile net loss to net cash flows | ||||||||
provided by operating activities: | ||||||||
Accretion expense on obligations | 3,366 | 6,373 | ||||||
Depreciation, depletion and amortization | 1,103 | 10,712 | ||||||
Share–based compensation cost | 987 | 2,184 | ||||||
Cash dividends paid on share-based compensation | (412 | ) | — | |||||
Impairment of oil and natural gas properties | 3,536 | 115,604 | ||||||
Gain on sales of oil and natural gas properties | (368 | ) | (679 | ) | ||||
Gain on equity securities | — | (4,593 | ) | |||||
Gain on derivatives, net | (9,868 | ) | (5,374 | ) | ||||
Cash settlements of derivative contracts (1) | 13,971 | 17,483 | ||||||
Other | — | 1,571 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 3,526 | 21,637 | ||||||
Other current assets | (45 | ) | 1,909 | |||||
Accounts payable and accrued liabilities | (7,994 | ) | (4,061 | ) | ||||
Other, net | 707 | (2,531 | ) | |||||
Net cash flows provided by operating activities | 1,099 | 44,024 | ||||||
Cash flows from investing activities: | ||||||||
Additions to oil and natural gas properties | (1,507 | ) | (2,096 | ) | ||||
Reimbursements related to oil and natural gas properties | — | 2,124 | ||||||
Proceeds from sale of oil and natural gas properties | (581 | ) | 111,575 | |||||
Proceeds from sale of equity securities | — | 51,675 | ||||||
Other | — | 38 | ||||||
Net cash flows provided by (used in) investing activities | (2,088 | ) | 163,316 | |||||
Cash flows from financing activities: | ||||||||
Repayment of long-term debt borrowings | — | (115,000 | ) | |||||
Purchase of treasury stock | (69 | ) | (295 | ) | ||||
Dividends | (10,223 | ) | — | |||||
Other | (9 | ) | (10 | ) | ||||
Net cash flows used in financing activities | (10,301 | ) | (115,305 | ) | ||||
Increase (Decrease) in cash, cash equivalents and restricted cash | (11,290 | ) | 92,035 | |||||
Cash, cash equivalents and restricted cash – beginning of period | 38,968 | 6,313 | ||||||
Cash, cash equivalents and restricted cash – end of period | $ | 27,678 | $ | 98,348 |
(1) | In the nine months ended |
Non-GAAP Measures
The Company defines Adjusted EBITDAX as net income (loss) plus income tax expense (benefit); 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) loss on sales of oil and natural gas properties; 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 Income (Loss) to Adjusted EBITDAX (in thousands) | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
2020 | 2019 | 2020 | 2020 | 2019 | ||||||||||||||||
Net loss | $ | (6,244 | ) | $ | (19,529 | ) | $ | (7,135 | ) | $ | (7,410 | ) | $ | (116,211 | ) | |||||
Add: | ||||||||||||||||||||
Income tax expense | — | — | — | — | — | |||||||||||||||
Interest expense, net | 12 | 501 | 7 | 33 | 3,335 | |||||||||||||||
Depreciation, depletion and amortization | — | 1,367 | 514 | 1,103 | 10,712 | |||||||||||||||
Accretion expense on obligations | — | 1,995 | 1,603 | 3,366 | 6,373 | |||||||||||||||
(Gain) loss on derivatives, net | 1,823 | (5,718 | ) | 966 | (9,868 | ) | (5,374 | ) | ||||||||||||
Cash settlements of commodity derivative contracts | 3,805 | 13,959 | 5,693 | 13,971 | 17,483 | |||||||||||||||
Non-cash share-based compensation | 397 | 1,421 | 253 | 987 | 2,184 | |||||||||||||||
Impairment of oil and natural gas properties | 1,093 | 16,325 | 837 | 3,536 | 115,604 | |||||||||||||||
Dry hole and exploration costs | — | 36 | 1 | 1 | 75 | |||||||||||||||
Gain on sales of oil and natural gas properties | (16 | ) | (661 | ) | (415 | ) | (368 | ) | (679 | ) | ||||||||||
Gain on equity securities | — | — | — | — | (4,593 | ) | ||||||||||||||
Adjusted EBITDAX | $ | 870 | $ | 9,696 | $ | 2,324 | $ | 5,351 | $ | 28,909 |
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Source:
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