HOUSTON--(BUSINESS WIRE)--Midstates Petroleum Company, Inc. (NYSE: MPO) (the “Company” or “Midstates”) today provided an operational update for the fourth quarter of 2013 and preliminary estimates of 2014 production and capital expenditures.
Fourth Quarter 2013
During the fourth quarter of 2013, Midstates had five rigs active in its Mississippian Lime horizontal drilling program and spud a total of 21 gross wells, of which five were drilling at year-end. In the Anadarko Basin, Midstates also had five rigs active throughout the fourth quarter drilling horizontal wells and spud a total of 15 gross wells, of which five were drilling at year-end. Midstates did not drill any new wells in the Gulf Coast region during the fourth quarter; however the Company successfully recompleted two existing wells.
The Company said its fourth quarter 2013 production increased approximately 9% to about 31,100 net barrels of oil equivalent (Boe) per day from 28,464 Boe per day in the third quarter. Fourth quarter production was 44% oil, 21% natural gas liquids and 35% natural gas. Midstates’ Mississippian Lime properties averaged about 17,500 Boe per day; its Anadarko Basin properties contributed about 8,450 Boe per day; and its Gulf Coast properties added about 5,150 Boe per day. The Company said that harsh winter weather conditions experienced in its Mid-Continent Region in December reduced fourth quarter production by approximately 250 Boe per day.
Cash Operating Expenses per Boe in the fourth quarter of 2013 are expected to be lower than in the third quarter of 2013. The Company estimates its fourth quarter Adjusted EBITDA to be in the range of $115 to $120 million, up over 15% from $101.6 million in the third quarter of 2013. Capital expenditures for the fourth quarter are estimated at $125 to $135 million.
2014 Outlook
Midstates is currently considering various strategic options that would improve its financial flexibility and provide additional cushion to its balance sheet; this may include sales of assets, possible joint-ventures or farm-outs on its properties. Discussions are currently underway with a variety of interested third parties. As a result, Midstates’ Board of Directors has not yet approved a final capital budget for 2014. However, the Company today provided a preliminary estimate of its capital spending plans and production for 2014, assuming no change in its asset base. Midstates will provide an update, if there are material changes to the Company’s 2014 capital spending plans or production estimates, following any announcement of a transaction.
The Company estimates its preliminary 2014 capital budget (excluding capitalized interest) to be in the range of $500 to $550 million, with 80-85% allocated for drilling and completion activities. For the first quarter of 2014, Midstates estimates it will invest $125 to $135 million, with five rigs running in the Mississippian Lime, spudding 20 to 25 wells and five rigs in the Anadarko Basin, spudding 13 to 17 wells.
Winter weather conditions continue to impact first quarter 2014 production volumes as well as drilling and completion activity. For the first quarter of 2014, Midstates estimates its production will average 30,000 to 31,000 Boe per day, with 55-60% from its Mississippian Lime program, 25-30% from its Anadarko Basin program, and the balance from its Gulf Coast assets. The first quarter production range has been reduced by about 1,000 Boe per day due to weather-related interruptions already experienced, production curtailment resulting from facility and power upgrades and third party gathering and processing interruptions. The Company has included the impact of further weather disruptions in its first quarter estimate. Midstates has a backlog of open hole wells currently on production that are being stimulated and completed during the balance of the first quarter and into the second quarter.
Based on the preliminary capital budget, Midstates estimates its full year 2014 production to range from 33,000 to 36,000 Boe per day, with 55-60% from its Mississippian Lime program, 25-30% from its Anadarko Basin program, and the balance from its Gulf Coast assets. The full year 2014 production guidance takes into consideration the first quarter impacts discussed above and assumes no change in the Company’s asset base. The product mix is not expected to be materially different from what was experienced in the fourth quarter of 2013.
John Crum, Midstates’ Chairman, CEO and President commented, “In 2013 we grew our production over 139% from 10,000 Boe per day in 2012 to 23,900 Boe per day in 2013. We achieved this production milestone through strong organic growth on our Mississippian Lime properties coupled with a major acquisition in the Anadarko Basin. The drilling efficiencies and cost reductions we achieved in 2013 will enable us to undertake an even more robust drilling program in 2014 without an increase in capital. I am very pleased with the growth we achieved on our Mississippian Lime properties and look forward to applying the knowledge gained there to efficiently grow production in our Anadarko Basin properties.”
Fourth Quarter Earnings Conference Call
Midstates also announced today that its fourth quarter 2013 earnings release will be issued on Tuesday, March 4, after the close of trading on the NYSE. The Company will host a conference call to discuss fourth quarter results the following morning, Wednesday, March 5 at 10:00 a.m. Eastern time (9:00 a.m. Central time).
Participants may join the conference call by dialing (888) 218-6667 (for U.S. and Canada) or (707) 595-2723 (International). The conference call access code is 51629241 for all participants. To listen via live web cast, please visit the Investor Relations section of the Company's website, www.midstatespetroleum.com.
About Midstates Petroleum Company, Inc.
Midstates Petroleum Company, Inc. is an independent exploration and production company focused on the application of modern drilling and completion techniques to oil-prone resources in previously discovered yet underdeveloped hydrocarbon trends. The Company’s operations are currently focused on oilfields in the Mississippian Lime trend in northwestern Oklahoma, in the Anadarko Basin in Texas and Oklahoma, and in the Upper Gulf Coast Tertiary trend in central Louisiana. The Company is headquartered in Houston, Texas. Additional information about the Company is available at www.midstatespetroleum.com.
Non-GAAP Financial Measure
Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of the Company's consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted EBITDA as earnings before interest income, interest expense, income taxes, depreciation, depletion and amortization, property impairments, unrealized commodity derivative gains and losses and non-cash stock-based compensation expense. Adjusted EBITDA is not a measure of net income or cash flows as determined by United States generally accepted accounting principles, or GAAP.
Cash operating expenses include lease operating and workover, gathering and transportation, severance and other taxes, cash portion of general and administrative expenses, and acquisition and transaction costs.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements that are not statements of historical fact, including statements regarding the Company's strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, assets sales and other strategic asset alternatives, plans and objectives of management, are forward-looking statements. Without limiting the generality of the foregoing, these statements are based on certain assumptions made by the Company based on management's experience, expectations and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Although the Company believes that its plans, intentions and expectations reflected in or suggested by the forward-looking statements made in this press release are reasonable, the Company gives no assurance that these plans, intentions or expectations will be achieved when anticipated or at all. Moreover, such statements are subject to a number of factors, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These factors include, but are not limited to costs and difficulties related to the integration of the acquired businesses and operations with Midstates’ business and operations; unexpected costs, charges or expenses resulting from the acquisition; litigation relating to acquisitions; variations in the market demand for, and prices of, oil and natural gas; uncertainties about the Company's estimated quantities of oil and natural gas reserves; the adequacy of the Company's capital resources and liquidity including, but not limited to, access to additional borrowing capacity under its revolving credit facility; general economic and business conditions; weather-related downtime; failure to realize expected value creation from property acquisitions or dispositions; uncertainties about the Company's ability to replace reserves and economically develop its current reserves; risks related to the concentration of the Company's operations; drilling results; and potential financial losses or earnings reductions from the Company's commodity derivative positions.
Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
