Chaparral Energy’s 2Q Earnings for 2017 Elevated by Strong STACK Performance

Oklahoma City-based Chaparral Energy, Inc. posted a net income of $21.4 million or 47 cents per share, according to a press release issued on Monday.

The company announced an adjusted EBITDA of $42.5 million, which is a 15 percent quarter-over-quarter increase.

“Chaparral had a very good quarter, fueled by continued best-in-class execution, strong well results and growing STACK production,” said Earl Reynolds, Chief Executive Officer. “We have also had meaningful interest in our EOR asset packages and continue to move forward with the divestiture process. We believe this sale will be a significant step in the company’s transformation to a premier, pure-play STACK operator.”

During the second quarter, Chaparral focused the vast majority of its operated capital in central Oklahoma’s highly active STACK play. The company brought seven new STACK wells on production — four in the Meramec, two in the Osage and one in the Woodford. Chaparral also participated in 28 outside operated STACK wells.

“As a result of our strong STACK performance and the attractive economics within the play, Chaparral will be expanding our STACK development program and adding at least six additional gross operated wells this year,” said Reynolds “Due to this incremental activity, we now expect our full-year STACK production to grow by more than 25 percent from 2016 to 2017 and our exit rate is projected to increase by more than 45 percent compared to last year. In anticipation of this growth, we are increasing our total company production guidance to 8.3 to 8.7 MMBoe for the year, of which 9,100 to 9,500 Boe/d is in the STACK.”

The company had a total net production of 23.9 MBoe/d, of which 57 percent was oil, 16 percent was NGLs and 27 percent natural gas. This compares to 22.5 MBoe/d in the first quarter. This was primarily driven by growing production in the STACK, which recorded 9,136 Boe/d during the second quarter, marking a 17 percent year-over-year and 12 percent quarter-over-quarter increase in its STACK production.

Chaparral also announced it had secured nearly 18,000 acres in the STACK during the first half of 2017, which included approximately 15,600 acres in its Garfield County position, as well as 2,000 acres in Kingfisher and Canadian counties. The company currently has more than 110,000 net acres in the STACK.

The company’s capital expenditures for the second quarter were $71.6 million, with $42.2 million spent in the STACK, $15.7 million spent on additional STACK acreage acquisitions and $13.7 million spent on other operational categories.

Chaparral’s total revenues for the second quarter were $74 million. This represents a 12 percent year-over-year increase, which is primarily a result of an improvement in commodity prices. Production taxes were $3.4 million, while transportation and processing costs was $3.1 million for the quarter.

“Our operating teams continue to execute well and we continue to have success mitigating increasing inflationary pressure from the service sector,” stated Reynolds. “With the extension of our drilling program, increase in our outside operated activity levels, success in securing additional STACK acreage and inflationary pressures, we have raised our capital budget for the year to a range of $185 – $200 million.”