Tulsa’s Midstates Petroleum Company, Inc. announced its first quarter 2019 financial results showing a net loss of $17.8 million or 78 cents a share.
The company said the loss included a $7.7 million loss on commodity derivative contracts and a $9.7 million non-cash ceiling-test impairment. However, adjusted EBITDA earnings were $14.2 million, outpacing quarterly operational capital expenditures by nearly $7.8 million.
Midstates also saw a drop in its oil production from the fourth quarter of 2018 to this year after the company suspended drilling operations in the third quarter of 2018. Production totaled only 13,239 barrels of oil equivalent a day for the first three months of this year.
Total oil, NGLs and natural gas revenues in the first quarter of 2019 were approximately $29.2 million, before the impact of derivatives, compared to $43.2 million in the fourth quarter of 2018. During the first quarter of 2019, the Company realized a loss on derivatives of $7.7 million, compared with a $25.4 million gain during the fourth quarter of 2018.
The result of the earnings report came a week after Midstates announced an all-stock merger-of-equals with Amplify Energy Corporation. An estimated 36 percent of Midstates and greater than 50 percent of Amplify stockholders have committed to vote their shares in favor of the merger.
- The combination of Midstates Petroleum and Amplify Energy is projected to provide the following:
- Immediate value creation through annual synergies totaling at least $20 million
- Projected 2019 levered free cash flow of at least $65 million, delivering a top-tier pro forma free cash flow yield of greater than 15%1
- Significant upside to current equity value, based on the ~$230 million value disconnect between the combined company current enterprise value of $7292 million before synergies and the pro forma combined proved developed reserve value of $960 million3
- Robust balance sheet and liquidity that will allow for acceleration of capital return programs
David Sambrooks, President and Chief Executive Officer, commented, “Over the past year we have been focused on operational excellence, strengthening our financial position and creating value for our shareholders. We believe that the merger with Amplify will create a differentiated company with increased scale that will meaningfully enhance value through cost synergies, opportunistic mergers and acquisitions, and improved financial flexibility. The combined company is forecasted to create significant free cash flow from a robust and diverse asset base with substantial upside potential.”
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