$22 million loss reported by Chaparral Energy in 2nd quarter

Despite $21 million in asset sales, Oklahoma City’s Chaparral Energy Inc. reported a 2018 second quarter loss of $22 million. The company said the loss was driven by a $27 million non-cash loss associated with commodity derivatives. The loss figured to 49-cents a share.

The loss came as the company saw its STACK production increase 44% compared to one year ago, reaching 13,198 barrels of oil equivalent a day. The production helped Chaparral generate adjusted EBITDA of $26.9 million.

The company reported it brought on 17 new gross operated wells in the quarter and eleven were part of a joint venture drilling program. It also increased 2018 STACK full-year production guidance to 13.0-14.0 MBoe/d and credited strong operational results and higher working interests.

Chaparral also raised its 2018 CAPEX guidance to nearly $325 million.

“The second quarter was a strong and extremely productive quarter for Chaparral,” said Chief Executive Officer Earl Reynolds. “We continue to see strong performance from our STACK wells, particularly our Merge Meramec in Canadian County and our Osage and Meramec wells in Garfield County.”

He said because of the STACK success, the company plans to add another rig before the end of the year.

“We also further strengthened our balance sheet and long-term financial stability during the quarter,” commented Reynolds. “We successfully completed a $300 million unsecured senior notes offering, which allowed us to pay down the entire outstanding balance of our revolving credit facility and significantly increased our liquidity. ”

Excluding production from divested enhanced oil recovery (EOR) assets, the company’s second quarter 2018 average total production grew by 8% on a year-over-year basis to 19,725 Boe/d, of which 61% was liquids and 39% natural gas. The natural gas percentage was slightly higher from the previous quarter due to the company’s strategic development of its Canadian and Garfield County acreage.

Chaparral operated three rigs during the second quarter in Canadian and Garfield counties. The company brought 17 new gross STACK wells on production, 11 of which were part of its joint venture drilling program with Bayou City Energy.

The company continues to see strong results within the Merge Meramec in Canadian County and Osage and Meramec in Garfield County. During the first two quarters of 2018, Chaparral brought online six operated one-mile Canadian County Merge Meramec wells. These included two joint venture wells, the Lassen 1107, which had a three-phase 30-day initial production (IP) rate of 1,218 Boe/d, of which 73% was liquids, and the Katmai 1206, which recorded 1,168 Boe/d on the same basis, of which 76% was liquids. In addition, the Banff 1207 recorded a three-phase 30-day IP rate of 1,209 Boe/d, of which 59% was liquids.

Year-to-date, Chaparral has brought online 10 operated Osage and Meramec wells in Garfield County. As with its Merge assets, the company continues to see strong results from this area. Recent notable wells included the Glock 2205, a joint venture well, which produced at a three-phase 30-day IP rate of 913 Boe/d, of which 61% was liquids and the Dogwood 2205, which recorded 870 Boe/d on the same basis, of which 57% was liquids.

Chaparral’s total capital expenditures during the second quarter were $89.2 million. This includes $59.3 million associated with STACK drilling and completions activity and $26.8 million spent on additional STACK acquisitions.

The company will operate three rigs during the third quarter.

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