Midstates says 3Q income grew but it’s taking a ‘pause’ in the 4Q


Tulsa’s Midstates Petroleum Company, Inc. reported its third quarter 2018 net income totaled $11.5 million or 44 cents a share., much better than the $3.7 million and 14-cents a share earnings a year earlier.

It also was an improvement over the second quarter of 2018 when the company reported a net loss of $1.5 million. However, the company also indicated it’s taking a breather in the coming few months.

Its earnings before interest, taxes, depreciation and amortization was $31.9 million and outpaced operational capital expenditures by nearly $10.4 million. Adjusted earnings in the second quarter of 2018 were $27 million.

At the same time, the company grew its Mississippian Lime production to 17,996 barrels of oil equivalent a day which was a 5% increase over the second quarter and a 16% jump over the first quarter of 2018.

The company it not only managed to reduce full-year operational capital expenditure guidance by nearly 10%, it also maintained its mid-point yearly production guidance and reaffirmed the company’s borrowing base at $170 million.

David Sambrooks, President and Chief Executive Officer, commented, “We are very pleased with our continued strong quarterly results, which have allowed Midstates to achieve several notable accomplishments this year. Thus far in 2018, we have generated $88.6 million in Adjusted EBITDA, sold our non-core Anadarko asset and paid down $100 million in debt.”

He said the company’s worked to drive down lease operating and overhead expenses while growing production in the Mississippian Lime assets. But Sambrooks also explained the company is taking a pause in its fourth quarter drilling activity to “better incorporate the learnings from our drilling and completion successes into our ongoing program.”

He said the company now believes two mile laterals are proving to be more economic. The company put eight wells online in the just-completed third quarter and spudded three others including two extended lateral wells.

The Company continued to run its one-rig drilling program in the Mississippian Lime through the third quarter of 2018 with the goal of minimizing drilling and completion costs to enhance economics in delineated areas with extended lateral wells. The Company has drilled and completed four extended lateral wells in 2018.

At the end of the third quarter of 2018, Midstates’ rig contractor approached the Company with an option to farm-out the drilling rig to another operator for a multiple well package starting early in the fourth quarter of 2018. In order to further study the production results of its recent extended lateral wells, Midstates elected to farm-out the rig for a portion of the fourth quarter of 2018.

The Company did not bring online any new saltwater disposal injection wells during the third quarter of 2018. Midstates is currently operating 11 non-Arbuckle injection wells in Woods and Alfalfa Counties, Oklahoma, with permitted injection capacity of approximately 240,000 barrels of water per day.

The Company’s total permitted injection capacity in all formations in Woods and Alfalfa Counties, Oklahoma, which may differ from actual injection capacity due to operational constraints, is approximately 372,000 barrels of water per day. The Company’s current disposal rate into all formations of approximately 160,000 barrels of water per day. Approximately 45% of the Company’s water injection is currently being injected into non-Arbuckle formations.

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