Chaparral Energy reported more losses in the first quarter of 2020, showing it had net income of $4.9 million for the quarter but also a more than $66 million loss in operating income.
At the same time, the company has continued with layoffs of 18 workers who made up 15% of Chaparral’s workforce. It was also hit with an interim redetermination of its borrowing ability and lenders cut the company’s base from $325 million to $175 million which created a $75 million deficiency which Chaparral will pay off in six equal monthly installments.
The $4.9 million in net income amounted to eleven cents a share and included a more than $71 million non-cash impairment. Adjusted EBITDA came to $40.7 million despite 19% and 22% declines in WTI oil prices and Henry Hub natural gas prices.
Chaparral has suspended all drilling operations as of March and released its two operating rigs by April 8. It is also shutting in non-essential oil production and confirms it has engaged “advisors to assist in evaluating all strategic alternatives.”
“The global COVID-19 pandemic and the separate actions taken earlier in the year by Saudi Arabia and Russia have created an unprecedented environment causing significant uncertainty across the oil sector,” said Chief Executive Officer Chuck Duginski. “During these turbulent conditions, we continue to execute operationally at a very high level and we have managed through the pricing and logistical challenges that we have faced in this current environment.”
“The historic price shock in the final days of the May crude futures contract will have an ongoing effect on realized prices for May. To minimize exposure to the abnormally low wellhead price for crude oil, the Company has begun to shut-in substantially all non-essential oil production, which excludes oil wells associated with waterfloods and those with well-specific mechanical or other risks.”
Duginski also said because of the uncertain environment, Chaparral is cautious on providing detailed guidance for the second quarter or for the rest of 2020.
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Source: Chaparral Energy