☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2022
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
xx(
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, $0.10 par value | PNRG | NASDAQ |
Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | |||
Non-Accelerated Filer | Smaller Reporting Company | ☒ | ||||
Emerging growth company | ☐ |
September
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7-12 | |||||||
Management’s Discussion and Analysis of Financial Conditions and Results of | 13-22 | ||||||
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25-26 | |||||||
27 |
Item 1. | FINANCIAL STATEMENTS |
June 30, 2022 | December 31, 2021 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 11,067 | $ | 10,347 | ||||
Accounts receivable, net | 17,651 | 14,208 | ||||||
Prepaid obligations | 482 | 733 | ||||||
Other current assets | 40 | 40 | ||||||
Total Current Assets | 29,240 | 25,328 | ||||||
Property and Equipment | ||||||||
Oil and gas properties at cost | 541,419 | 539,484 | ||||||
Less: Accumulated depletion and depreciation | (373,000 | ) | (359,742 | ) | ||||
168,419 | 179,742 | |||||||
Field and office equipment at cost | 27,175 | 27,080 | ||||||
Less: Accumulated depreciation | (22,760 | ) | (22,159 | ) | ||||
4,415 | 4,921 | |||||||
Total Property and Equipment, Net | 172,834 | 184,663 | ||||||
Derivative asset long-term and other assets | 898 | 923 | ||||||
Total Assets | $ | 202,972 | $ | 210,914 | ||||
LIABILITIES AND EQUITY | , | |||||||
Current Liabilities | ||||||||
Accounts payable | $ | 6,355 | $ | 7,282 | ||||
Accrued liabilities | 7,481 | 7,821 | ||||||
Due to related parties | 12 | 52 | ||||||
Current portion of asset retirement and other long-term obligations | 1,576 | 1,630 | ||||||
Derivative liability short-term | 9,791 | 4,935 | ||||||
Total Current Liabilities | 25,215 | 21,720 | ||||||
Long-Term Bank Debt | — | 36,000 | ||||||
Asset Retirement Obligations | 12,726 | 13,222 | ||||||
Derivative Liability Long-Term | — | 650 | ||||||
Deferred Income Taxes | 45,028 | 38,743 | ||||||
Other Long-Term Obligations | 1,974 | 1,488 | ||||||
Total Liabilities | 84,943 | 111,823 | ||||||
Commitments and Contingencies | 0 | 0 | ||||||
Equity | ||||||||
Common stock, $.10 par value; 2022 and 2021: Authorized: 2,810,000 shares, outstanding 2022: 1,952,645 shares; outstanding 2021: 1,992,077 shares . | 281 | 281 | ||||||
Paid-in capital | 7,555 | 7,555 | ||||||
Retained earnings | 151,027 | 128,902 | ||||||
Treasury stock, at cost; 2022: 857,355 shares; 2021: 817,923 | (40,834 | ) | (37,647 | ) | ||||
Total Equity | 118,029 | 99,091 | ||||||
Total Liabilities and Equity | $ | 202,972 | $ | 210,914 | ||||
September 30, 2017 | December 31, 2016 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 9,920 | $ | 6,568 | ||||
Restricted cash and cash equivalents | 4,193 | 3,543 | ||||||
Accounts receivable, net | 10,322 | 7,400 | ||||||
Other current assets | 1,086 | 572 | ||||||
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Total Current Assets | 25,521 | 18,083 | ||||||
Property and Equipment, at cost | ||||||||
Oil and gas properties (successful efforts method), net | 200,405 | 187,490 | ||||||
Field and office equipment, net | 7,507 | 8,878 | ||||||
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Total Property and Equipment, Net | 207,912 | 196,368 | ||||||
Other Assets | 183 | 203 | ||||||
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Total Assets | $ | 233,616 | $ | 214,654 | ||||
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LIABILITIES AND EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 13,302 | $ | 11,965 | ||||
Accrued liabilities | 16,955 | 8,184 | ||||||
Current portion of long-term debt | 2,905 | 2,949 | ||||||
Current portion of asset retirement obligations | 2,006 | 1,563 | ||||||
Derivative liability short-term | 292 | 2,547 | ||||||
Due to related parties | 31 | — | ||||||
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Total Current Liabilities | 35,491 | 27,208 | ||||||
Long-Term Bank Debt | 50,840 | 66,316 | ||||||
Asset Retirement Obligations | 15,711 | 15,943 | ||||||
Derivative Liability Long-Term | 329 | 1,092 | ||||||
Deferred Income Taxes | 47,925 | 37,500 | ||||||
Other Long-Term Obligations | 616 | 715 | ||||||
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Total Liabilities | 150,912 | 148,774 | ||||||
Commitments and Contingencies | ||||||||
Equity | ||||||||
Common stock, $.10 par value; Authorized: 4,000,000 shares, issued: 3,836,397 shares | 383 | 383 | ||||||
Paid-in capital | 8,440 | 8,313 | ||||||
Retained earnings | 116,970 | 96,322 | ||||||
Treasury stock, at cost; 1,654,101 shares and 1,552,894 shares | (51,473 | ) | (46,473 | ) | ||||
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Total Stockholders’ Equity – PrimeEnergy | 74,320 | 58,545 | ||||||
Non-controlling interest | 8,384 | 7,335 | ||||||
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Total Equity | 82,704 | 65,880 | ||||||
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Total Liabilities and Equity | $ | 233,616 | $ | 214,654 | ||||
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Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Revenues | ||||||||||||||||
Oil sales | $ | 25,838 | $ | 10,664 | $ | 52,143 | $ | 19,934 | ||||||||
Natural gas sales | 4,657 | 2,292 | 8,403 | 3,950 | ||||||||||||
Natural gas liquids sales | 4,422 | 2,404 | 8,273 | 4,149 | ||||||||||||
Realized (loss) on derivative instruments, net | (5,888 | ) | (701 | ) | (9,707 | ) | (913 | ) | ||||||||
Field service income | 3,736 | 2,375 | 6,976 | 3,800 | ||||||||||||
Unrealized gain (loss) on derivative instruments, net | 2,933 | (5,057 | ) | (4,206 | ) | (5,968 | ) | |||||||||
Other income | — | — | 29 | 29 | ||||||||||||
Total Revenues | 35,698 | 11,977 | 61,911 | 24,981 | ||||||||||||
Costs and Expenses | ||||||||||||||||
Lease operating expense | 9,213 | 4,434 | 17,934 | 8,901 | ||||||||||||
Field service expense | 3,540 | 1,837 | 6,540 | 3,255 | ||||||||||||
Depreciation, depletion, amortization and accretion on discounted liabilities | 7,021 | 6,610 | 14,199 | 13,107 | ||||||||||||
General and administrative expense | 2,418 | 2,184 | 9,090 | 4,200 | ||||||||||||
Total Costs and Expenses | 22,192 | 15,065 | 47,763 | 29,463 | ||||||||||||
Gain on Sale and Exchange of Assets | 845 | 106 | 14,836 | 106 | ||||||||||||
Income (Loss) from Operations | 14,351 | (2,982 | ) | 28,984 | (4,376 | ) | ||||||||||
Other Income (Expense) | ||||||||||||||||
Interest Expense | (150 | ) | (484 | ) | (499 | ) | (1,007 | ) | ||||||||
Income (Loss) Before Provision for (Benefit from) Income Taxes | 14,201 | (3,466 | ) | 28,485 | (5,383 | ) | ||||||||||
(Benefit) Provision for Income Taxes | 3,218 | (1,054 | ) | 6,360 | (1,514 | ) | ||||||||||
Net (Loss) Income | 10,983 | (2,412 | ) | 22,125 | (3,869 | ) | ||||||||||
Less: Net (Loss) Attributable to Non-Controlling Interests | — | (9 | ) | — | (11 | ) | ||||||||||
Net Income (Loss) Attributable to PrimeEnergy | $ | 10,983 | $ | (2,403 | ) | $ | 22,125 | $ | (3,858 | ) | ||||||
Basic Income (Loss) Per Common Share | $ | 5.57 | $ | (1.20 | ) | $ | 11.18 | $ | (1.93 | ) | ||||||
Diluted Income (Loss) Per Common Share | $ | 4.02 | $ | (1.20 | ) | $ | 8.08 | $ | (1.93 | ) | ||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues | ||||||||||||||||
Oil and gas sales | $ | 12,604 | $ | 11,557 | $ | 39,045 | $ | 27,395 | ||||||||
Realized gain (loss) on derivative instruments, net | 156 | — | (49 | ) | — | |||||||||||
Field service income | 4,109 | 3,694 | 12,176 | 11,628 | ||||||||||||
Administrative overhead fees | 1,530 | 1,600 | 4,758 | 4,990 | ||||||||||||
Unrealized (loss) gain on derivative instruments, net | (1,262 | ) | (354 | ) | 3,092 | (354 | ) | |||||||||
Other income | 47 | 2 | 169 | 59 | ||||||||||||
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Total Revenues | 17,184 | 16,499 | 59,191 | 43,718 | ||||||||||||
Costs and Expenses | ||||||||||||||||
Lease operating expense | 6,762 | 6,285 | 21,058 | 21,758 | ||||||||||||
Field service expense | 3,126 | 2,662 | 9,152 | 9,582 | ||||||||||||
Depreciation, depletion, amortization and accretion on discounted liabilities | 7,812 | 7,308 | 23,821 | 18,889 | ||||||||||||
General and administrative expense | 2,523 | 2,405 | 6,878 | 6,685 | ||||||||||||
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Total Costs and Expenses | 20,223 | 18,660 | 60,909 | 56,914 | ||||||||||||
Gain on Sale and Exchange of Assets | 359 | 10,546 | 42,078 | 26,869 | ||||||||||||
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(Loss) Income from Operations | (2,680 | ) | 8,385 | 40,360 | 13,673 | |||||||||||
Less: Interest expense | 594 | 1,002 | 1,659 | 2,809 | ||||||||||||
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(Loss) Income Before Provision (Benefit) for Income Taxes | (3,274 | ) | 7,383 | 38,701 | 10,864 | |||||||||||
(Benefit) Provision for Income Taxes | (1,384 | ) | 2,667 | 12,407 | 3,036 | |||||||||||
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Net (Loss) Income | (1,890 | ) | 4,716 | 26,294 | 7,828 | |||||||||||
Less: Net Income (Loss) Attributable toNon-Controlling Interests | 122 | (208 | ) | 5,646 | 2,239 | |||||||||||
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(Loss) Income Attributable to PrimeEnergy | $ | (2,012 | ) | $ | 4,924 | $ | 20,648 | $ | 5,589 | |||||||
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Basic (Loss) Income Per Common Share | $ | (1.22 | ) | $ | 2.15 | $ | 9.29 | $ | 2.44 | |||||||
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Diluted (Loss) Income Per Common Share | $ | (1.22 | ) | $ | 1.62 | $ | 6.94 | $ | 1.83 | |||||||
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dollars)
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Total Stockholders’ Equity – PrimeEnergy | Non- Controlling Interest | Total Equity | ||||||||||||||||||||||||||
Shares Outstanding | Common Stock | |||||||||||||||||||||||||||||||
Balance at December 31, 2021 | 1,992,077 | $ | 281 | $ | 7,555 | $ | 128,902 | $ | (37,647 | ) | $ | 99,091 | $ | — | $ | 99,091 | ||||||||||||||||
Purchase 39,432 shares of Common stock | (39,432 | ) | — | — | — | (3,187 | ) | (3,187 | ) | — | (3,187 | ) | ||||||||||||||||||||
Net Income | — | — | — | 22,125 | — | 22,125 | — | 22,125 | ||||||||||||||||||||||||
Balance at June 30, 2022 | 1,952,645 | $ | 281 | $ | 7,555 | $ | 151,027 | $ | (40,834 | ) | $ | 118,029 | $ | — | $ | 118,029 | ||||||||||||||||
Balance at December 31, 2020 | 1,994,177 | $ | 281 | $ | 7,541 | $ | 126,804 | $ | (37,502 | ) | $ | 97,124 | $ | 874 | $ | 97,998 | ||||||||||||||||
Net Loss | — | — | — | (3,858 | ) | — | (3,858 | ) | (11 | ) | (3,869 | ) | ||||||||||||||||||||
Balance at June 30, 2021 | 1,994,177 | $ | 281 | $ | 7,541 | $ | 122,946 | $ | (37,502 | ) | $ | 93,266 | $ | 863 | $ | 94,129 | ||||||||||||||||
Nine
2021
2017 | 2016 | |||||||
Net Income | $ | 26,294 | $ | 7,828 | ||||
Other Comprehensive Income, net of taxes: | ||||||||
Changes in fair value of hedge positions, net of taxes of $0 and $(2), respectively | — | 5 | ||||||
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Total other comprehensive income | — | 5 | ||||||
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Comprehensive Income | 26,294 | 7,833 | ||||||
Less: Comprehensive Income Attributable toNon-Controlling Interest | (5,646 | ) | (2,239 | ) | ||||
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Comprehensive Income Attributable to PrimeEnergy | $ | 20,648 | $ | 5,594 | ||||
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2022 | 2021 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net Income (loss) | $ | 22,125 | $ | (3,869 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation, depletion, amortization and accretion on discounted liabilities | 14,199 | 13,107 | ||||||
Gain on sale and exchange of assets | (14,836 | ) | (106 | ) | ||||
Unrealized loss on derivative instruments, net | 4,206 | 5,968 | ||||||
Deferred income taxes | 6,285 | (1,514 | ) | |||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (3,443 | ) | (3,022 | ) | ||||
Due to related parties | (40 | ) | (38 | ) | ||||
Prepaids and other assets | 251 | (939 | ) | |||||
Accounts payable | (927 | ) | 3,327 | |||||
Accrued liabilities | (340 | ) | (1,490 | ) | ||||
Net Cash Provided by Operating Activities | 27,480 | 11,424 | ||||||
Cash Flows from Investing Activities: | ||||||||
Capital expenditures, including exploration expense | (2,409 | ) | (3,729 | ) | ||||
Proceeds from sale of properties and equipment | 14,836 | 106 | ||||||
Net Cash Provided by (Used in) Investing Activities | 12,427 | (3,623 | ) | |||||
Cash Flows from Financing Activities: | ||||||||
Purchase of stock for treasury | (3,187 | ) | — | |||||
Proceeds from long-term bank debt and other long-term obligations | — | 3,000 | ||||||
Repayment of long-term bank debt and other long-term obligations | (36,000 | ) | (8,000 | ) | ||||
Net Cash Used in Financing Activities | (39,187 | ) | (5,000 | ) | ||||
Net Increase in Cash and Cash Equivalents | 720 | 2,801 | ||||||
Cash and Cash Equivalents at the Beginning of the Period | 10,347 | 996 | ||||||
Cash and Cash Equivalents at the End of the Period | $ | 11,067 | $ | 3,797 | ||||
Supplemental Disclosures: | ||||||||
Income taxes paid | $ | 75 | $ | — | ||||
Interest paid | $ | 481 | $ | 1,009 |
Nine Months Ended September
(Thousands of dollars)
Common Stock | Additional Paid in | Retained | Treasury | Total Stockholders’ Equity – | Non- Controlling | Total | ||||||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Stock | PrimeEnergy | Interest | Equity | |||||||||||||||||||||||||
Balance at December 31, 2016 | 3,836,397 | $ | 383 | $ | 8,313 | $ | 96,322 | $ | (46,473 | ) | $ | 58,545 | $ | 7,335 | $ | 65,880 | ||||||||||||||||
Repurchase 101,207 shares of common stock | — | — | — | — | (5,000 | ) | (5,000 | ) | — | (5,000 | ) | |||||||||||||||||||||
Net income | — | — | — | 20,648 | — | 20,648 | 5,646 | 26,294 | ||||||||||||||||||||||||
Repurchase ofnon-controlling interests | — | — | 127 | — | — | 127 | (187 | ) | (60 | ) | ||||||||||||||||||||||
Distribution ofnon-controlling interests | — | — | — | — | — | — | (4,410 | ) | (4,410 | ) | ||||||||||||||||||||||
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Balance at September 30, 2017 | 3,836,397 | $ | 383 | $ | 8,440 | $ | 116,970 | $ | (51,473 | ) | $ | 74,320 | $ | 8,384 | $ | 82,704 | ||||||||||||||||
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The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements
PRIMEENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTSOF CASH FLOWS – Unaudited
Nine Months Ended September 30, 2017 and 2016
(Thousands of dollars)
2017 | 2016 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 26,294 | $ | 7,828 | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation, depletion, amortization and accretion on discounted liabilities | 23,821 | 18,889 | ||||||
Gain on sale and exchange of assets | (42,078 | ) | (26,869 | ) | ||||
Unrealized (gain) loss on derivative instruments, net | (3,092 | ) | 354 | |||||
Provision for deferred income taxes | 10,425 | 1,648 | ||||||
Changes in assets and liabilities: | ||||||||
(Increase) decrease in accounts receivable | (2,922 | ) | 2,009 | |||||
(Increase) in other current assets and restricted cash | (1,164 | ) | (612 | ) | ||||
Increase (decrease) in accounts payable | 1,337 | (2,497 | ) | |||||
Increase in accrued liabilities | 8,771 | 4,188 | ||||||
Increase in due to related parties | 31 | 22 | ||||||
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Net Cash Provided by Operating Activities | 21,423 | 4,960 | ||||||
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Cash Flows from Investing Activities: | ||||||||
Capital expenditures, including exploration expense | (40,057 | ) | (11,701 | ) | ||||
Proceeds from sale of property and equipment | 46,977 | 28,238 | ||||||
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Net Cash Provided by (Used in) Investing Activities | 6,920 | 16,537 | ||||||
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Cash Flows from Financing Activities: | ||||||||
Purchase of stock for treasury | (5,000 | ) | (509 | ) | ||||
Purchase ofnon-controlling interests | (60 | ) | (187 | ) | ||||
Proceeds from long-term bank debt and other long-term obligations | 52,000 | 9,000 | ||||||
Repayment of long-term bank debt and other long-term obligations | (67,521 | ) | (33,311 | ) | ||||
Distributions tonon-controlling interests | (4,410 | ) | (843 | ) | ||||
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Net Cash Used in Financing Activities | (24,991 | ) | (25,850 | ) | ||||
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Net Increase (Decrease) in Cash and Cash Equivalents | 3,352 | (4,353 | ) | |||||
Cash and Cash Equivalents at the Beginning of the Period | 6,568 | 9,750 | ||||||
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Cash and Cash Equivalents at the End of the Period | $ | 9,920 | $ | 5,397 | ||||
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Supplemental Disclosures: | ||||||||
Income taxes paid | $ | 2,588 | $ | 45 | ||||
Interest paid | $ | 1,762 | $ | 2,798 |
The accompanying Notes are an integral part of these Condensed Consolidated Financial
PRIMEENERGY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2017
(Unaudited)
2022
Recently Issued Accounting Pronouncements:
The FASB issued ASU2014-09,Revenue from Contracts with Customers (Topic 606). This ASU supersedes theRevenue recognition requirements in Topic 605, Revenue Recognition and industry-specific guidance in Subtopic932-605. Extractivies – Oil and Gas Revenue Recognition.This ASU provides guidance concerning the recognition and measurement of revenue from contracts with customers. Its objective is to increase the usefulness of information in the financial statements regarding the nature, timing and uncertainty of revenues. The effective date for ASU2014-09 was delayed through the issuance of ASU2015-14,Revenue from Contracts with Customers – Deferral of theEffective Date,to annual and interim periods beginning in 2018 and is required to be adopted using either the retrospective or cumulative effect (modified retrospective) transition method, with early adoption permitted in 2017. The Company is evaluating the impact this ASU will have on its consolidated financial statements and related disclosures and does not plan on early adopting.
The FASB issued ASU2016-02,Leases (Topic 842). This ASU requires lessee recognition on the balance sheet of aright-of-use asset and a lease liability, initially measured at the present value of the lease payments. It further requires recognition in the income statement of a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis. Finally, it requires classification of all cash payments within operating activities in the statement of cash flows. It is effective for fiscal years commencing after December 15, 2018 and early adoption is permitted. This ASU will not have a material impact on the Company’s financial statements and related disclosures.
In August 2016, the FASB issued Accounting Standards Update (ASU)2016-15, Statement of Cash Flows (Topic 230). ASU2016-15 seeks to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the provisions of ASU2016-15 and assessing the impact, if any, it may have on its statement of consolidated cash flows.
In January 2017, the FASB issued ASUNo. 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments—Equity Method and Joint Venture (Topic 323), which states that registrants should consider additional qualitative disclosures if the impact of an issued but not yet adopted ASU is unknown or cannot be reasonably estimated and to include a description of the effect of the accounting policies that the registrant expects to apply, if determined. Transition guidance in certain issued but not yet adopted ASUs, including Leases and Revenue Recognition, was also updated to reflect this amendment. This guidance is effective immediately. The adoption of this guidance had no effect on the Company’s financial statements.
HistoricallyDispositions
During the nine months ended September 30, 2017, The Company sold or farmed out interests in certainnon-core undeveloped oil and natural gas properties through a number of separate individually negotiated transactions in exchange for cash and a royalty or working interest in West Texas, New Mexico and Oklahoma. Proceeds under these agreements were $47 million.
During the nine months of 2017, the Company acquired approximately 118 net mineral acres for $596,000 adjacent to existing Company acreage in order to facilitate the drilling of future horizontal wells.
$845,000
Restricted cash and cash equivalents include $4.19 million and $3.54 million at September 30, 2017 and December 31, 2016, respectively, of cash primarily pertaining to oil and gas revenue payments. There were corresponding accounts payable recorded at September 30, 2017 and December 31, 2016 for these liabilities. Both the restricted cash and the accounts payable are classified as current on the accompanying condensed consolidated balance sheets.
(4) Additional Balance Sheet Information:
(Thousands of dollars) | September 30, 2017 | December 31, 2016 | ||||||
Accounts Receivable: | ||||||||
Joint interest billing | $ | 2,886 | $ | 2,345 | ||||
Trade receivables | 1,354 | 1,070 | ||||||
Oil and gas sales | 6,087 | 4,078 | ||||||
Other | 207 | 204 | ||||||
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10,534 | 7,697 | |||||||
Less: Allowance for doubtful accounts | (212 | ) | (297 | ) | ||||
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Total | $ | 10,322 | $ | 7,400 | ||||
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Accounts Payable: | ||||||||
Trade | $ | 5,273 | $ | 3,967 | ||||
Royalty and other owners | 7,174 | 6,501 | ||||||
Prepaid drilling deposits | 67 | 83 | ||||||
Other | 788 | 1,414 | ||||||
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Total | $ | 13,302 | $ | 11,965 | ||||
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Accrued Liabilities: | ||||||||
Compensation and related expenses | $ | 2,887 | $ | 2,295 | ||||
Property costs | 12,133 | 3,317 | ||||||
Income Tax | 1,366 | 1,988 | ||||||
Other | 569 | 584 | ||||||
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Total | $ | 16,955 | $ | 8,184 | ||||
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(5) Property and Equipment:
Property and equipment at September 30, 2017 and December 31, 2016 consisted
(Thousands of dollars) | June 30, 2022 | December 31, 2021 | ||||||
Accounts Receivable : | ||||||||
Joint interest billing | $ | 2,975 | $ | 1,902 | ||||
Trade receivables | 1,638 | 1,429 | ||||||
Oil and gas sales | 12,454 | 11,154 | ||||||
Other | 955 | 94 | ||||||
18,022 | 14,579 | |||||||
Less: Allowance for doubtful accounts | (371 | ) | (371 | ) | ||||
Total | $ | 17,651 | $ | 14,208 | ||||
Accounts Payable: | ||||||||
Trade | $ | 2,991 | $ | 2,390 | ||||
Royalty and other owners | 2,246 | 2,802 | ||||||
Partner advances | 1,062 | 1,209 | ||||||
Other | 56 | 881 | ||||||
Total | $ | 6,355 | $ | 7,282 | ||||
Accrued Liabilities: | ||||||||
Compensation and related expenses | $ | 4,367 | $ | 3,919 | ||||
Property costs | 2,216 | 2,901 | ||||||
Taxes | 813 | 893 | ||||||
Other | 85 | 108 | ||||||
Total | $ | 7,481 | $ | 7,821 | ||||
Effective July 30, 2010 the Company entered into a Second Amended and Restated Credit Agreement between Compass Bank as agent and a syndicated group of lenders (“Credit Agreement”). The Credit Agreement had a revolving line of credit and letter of credit facility of up to $250 million with a final maturity date of July 30, 2017. The credit facility was secured by substantially all of the Company’s oil and gas properties. The credit facility was subject to a borrowing base determined by the lenders taking into consideration the estimated value of PEC’s oil and gas properties in accordance with the lenders’ customary practices for oil and gas loans.
At September 30,
Equipment Loans:
On July 31, 2013, the Companyits lenders entered into a $10.0 million LoanFourth Amended and SecurityRestated Credit Agreement with JP Morgan Chase Bank (“Equipment Loan”(the “2022 Credit Agreement”). The Equipment Loan is secured by a portion of the Company’s field service equipment, carries an interest rate of 3.95% per annum, requires monthly payments (principal and interest) of $184,000, and has a final maturity date of July 31, 2018. As of September 30, 2017, the Company had a total of $1.80 million outstanding on this Equipment Loan.
On July 29, 2014, the Company entered into additional equipment financing facilities (“Additional Equipment Loans”) totaling $6.0 million with JP Morgan Chase Bank. In August 2014, the Company drew down $4.8 million of this facility that is secured by field service equipment, carries an interest rate of 3.40% per annum, requires monthly payments (principal and interest) of $87,800, and has a final maturity date of July 31, 2019. The remaining $1.2 million under the Additional Equipment Loans was available for interim draws to finance the acquisition of any future field service equipment. In December 2014, the Company made an interim draw of an additional $0.5 million on this facility that is secured by recently purchased field service equipment. Interim draws on this facility carried a floating interest rate, payable monthly at the LIBO published rate plus 2.50% and on June 26, 2015 converted into a fixed term loan, with a rate of 3.50% and requiring monthly payments (principal and interest) of $8,700 with a final maturity date of June 26, 2020. 1, 2026. Under the 2022 Credit Agreement, the Company has a revolving line of credit and letter of credit facility of up to $300 million subject to a borrowing base that is determined semi-annually by the lenders based upon the Company’s financial statements and the estimated value of the Company’s oil and gas properties, in accordance with the Lenders’ customary practices for oil and gas loans. The initial borrowing base of the agreement is $75 million. The credit facility is secured by substantially all of the Company’s oil and gas properties. The 2022 Credit Agreement includes terms and covenants that require the Company to maintain a minimum current ratio and total indebtedness to EBITDAX (earnings before depreciation, depletion, amortization, taxes, interest expense and exploration costs) ratio, as defined, and restrictions are placed on the payment of dividends, the amount of treasury stock the Company may purchase, and commodity hedge agreements.
The Company determined these loans are Level 3 liabilities in the fair-value hierarchy and estimated their fair value as $3,941 million and $6,958 million at September 30, 2017 and 2016, respectively, using a discounted cash flow model.
(7)under its current revolving credit facility.
(Thousands of dollars) | Operating Leases | |||
2017 | 141 | |||
2018 | 525 | |||
|
| |||
Total minimum payments | $ | 666 | ||
|
|
$27,000 in 2025.
2022 is as follows:
(Thousands of dollars) | Operating Leases | |||
2022 | $ | 349 | ||
2023 | $ | 251 | ||
2024 | $ | 106 | ||
2025 | 27 | |||
Total undiscounted lease payments | $ | 733 | ||
Less: Amount associated with discounting | (66 | ) | ||
Net operating lease liabilities | $ | 667 | ||
(Thousands of dollars) | ||||
Asset retirement obligation – December 31, 2016 | $ | 17,505 | ||
Liabilities incurred | 45 | |||
Liabilities settled | (409 | ) | ||
Accretion expense | 576 | |||
|
| |||
Asset retirement obligation – September 30, 2017 | $ | 17,717 | ||
|
|
(Thousands of dollars) | June 30, 2022 | |||
Asset retirement obligation at December 31, 2021 | $ | 14,295 | ||
Liabilities settled | (835 | ) | ||
Accretion expense | 339 | |||
Asset retirement obligation at June 30, 2022 | $ | 13,799 | ||
(8)
The Company, as managing general partner of the affiliated Partnerships, is responsible for all Partnership activities, including the drilling of development wells and the production and sale of oil and gas from productive wells. The Company also provides the administration, accounting and tax preparation work for the Partnerships, and is liable for all debts and liabilities of the affiliated Partnerships, to the extent that the assets of a given limited Partnership are not sufficient to satisfy its obligations. At September 30, 2017, the affiliated Partnerships have established cash reserves in excess of their debts and liabilities and the Company believes these reserves will be sufficient to satisfy Partnership obligations.
(9)
(10)
The Company, as managing general partner or managing trustee, makes an annual offer to repurchase the interests of the partners and trust unit holders in certain of the Partnerships or Trusts. The Company purchased such interests in amounts totaling $60,000 and $187,000 for the nine months ended September 30, 2017 and 2016, respectively.
Receivables from related parties consist of reimbursable general and administrative costs, lease operating expenses and reimbursement for property development and related costs. These receivables are due from joint venture partners, which may include members of the Company’s Board of Directors.
(11).
September 30, 2017 | Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance at September 30, 2017 | ||||||||||||
(Thousands of dollars) | ||||||||||||||||
Assets | ||||||||||||||||
Commodity derivative contracts | $ | — | $ | — | $ | 131 | $ | 131 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total assets | $ | — | $ | — | $ | 131 | $ | 131 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities | ||||||||||||||||
Commodity derivative contracts | $ | — | $ | — | $ | (621 | ) | $ | (621 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Total liabilities | $ | — | $ | — | $ | (621 | ) | $ | (621 | ) | ||||||
|
|
|
|
|
|
|
|
December 31, 2016 | Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance at December 31, 2016 | ||||||||||||
(Thousands of dollars) | ||||||||||||||||
Assets | ||||||||||||||||
Commodity derivative contracts | $ | — | $ | — | $ | 57 | $ | 57 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total assets | $ | — | $ | — | $ | 57 | $ | 57 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities | ||||||||||||||||
Commodity derivative contract | $ | — | $ | — | $ | (3,639 | ) | $ | (3,639 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Total liabilities | $ | — | $ | — | $ | (3,639 | ) | $ | (3,639 | ) | ||||||
|
|
|
|
|
|
|
|
2021:
June 30, 2022 | Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance at June 30, 2022 | ||||||||||||
(Thousands of dollars) | ||||||||||||||||
Assets | ||||||||||||||||
Commodity derivative contracts | $ | — | $ | — | $ | — | $ | — | ||||||||
Total assets | $ | — | $ | — | $ | — | $ | — | ||||||||
Liabilities | ||||||||||||||||
Commodity derivative contracts | $ | — | $ | — | $ | (9,791 | ) | $ | (9,791 | ) | ||||||
Total liabilities | $ | — | $ | — | $ | (9,791 | ) | $ | (9,791 | ) | ||||||
December 31, 2021 | Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance at December 31, 2021 | ||||||||||||
(Thousands of dollars) | ||||||||||||||||
Assets | ||||||||||||||||
Commodity derivative contracts | $ | — | $ | — | $ | — | $ | — | ||||||||
Total assets | $ | — | $ | — | $ | — | $ | — | ||||||||
Liabilities | ||||||||||||||||
Total liabilities | $ | — | $ | — | $ | (5,585 | ) | $ | (5,585 | ) | ||||||
(Thousands of dollars) | ||||
Net Liabilities – December 31, 2016 | $ | (3,582 | ) | |
Total realized and unrealized (gains) losses: | ||||
Included in earnings (a) | 3043 | |||
Purchases, sales, issuances and settlements | 49 | |||
|
| |||
Net Liabilities – September 30, 2017 | $ | (490 | ) | |
|
|
(Thousands of dollars) | ||||
Net Liabilities – December 31, 2021 | $ | (5,585 | ) | |
Total realized and unrealized (gains) losses: | ||||
Included in earnings (a) | (13,913 | ) | ||
Purchases, sales, issuances and settlements | 9,707 | |||
Net Liabilities — June 30, 2022 | $ | (9,791 | ) | |
Derivative instruments are reported in revenues as realized gain/loss and on a separately reported line item captioned unrealized gain/loss on derivative |
Interest rate swap derivatives are treated as cash-flow hedges and are used to fix our floating interest rates on existing debt. Settlements of the swaps, which began in January 2014 and concluded in January 2016, was recognized within interest expense. There were no remaining interest rate swaps as of September 30, 2017 and December 31, 2016.The value of interest rate swaps if applicable, would be recorded in accumulated other comprehensive loss, net of tax.
Fair Value | ||||||||||
(Thousands of dollars) | Balance Sheet Location | September 30, 2017 | December 31, 2016 | |||||||
Asset Derivatives: | ||||||||||
Derivatives not designated as cash-flow hedging instruments: | ||||||||||
Crude oil commodity contracts | Other Current Assets | $ | 12 | $ | — | |||||
Natural gas commodity contracts | Other Current Assets | 94 | — | |||||||
Crude oil commodity contracts | Other Assets | 19 | — | |||||||
Natural gas commodity contracts | Other Assets | 6 | 57 | |||||||
|
|
|
| |||||||
Total | $ | 131 | $ | 57 | ||||||
|
|
|
| |||||||
Liability Derivatives: | ||||||||||
Derivatives not designated as cash-flow hedging instruments: | ||||||||||
Crude oil commodity contracts | Derivative liability short-term | (88 | ) | (1,065 | ) | |||||
Natural gas commodity contracts | Derivative liability short-term | (204 | ) | (1,482 | ) | |||||
Natural gas commodity contracts | Derivative liability long-term | (254 | ) | (463 | ) | |||||
Crude oil commodity contracts | Derivative liability long-term | (75 | ) | (629 | ) | |||||
|
|
|
| |||||||
Total | $ | (621 | ) | $ | (3,639 | ) | ||||
|
|
|
| |||||||
Total derivative instruments | $ | (490 | ) | $ | (3,582 | ) | ||||
|
|
|
|
2021:
Fair Value | ||||||||||
(Thousands of dollars) | Balance Sheet Location | June 30, 2022 | December 31, 2021 | |||||||
Liability Derivatives: | ||||||||||
Derivatives not designated as cash-flow hedging instruments: | ||||||||||
Crude oil commodity contracts | Derivative liability short-term | $ | (7,722 | ) | $ | (3,992 | ) | |||
Natural gas commodity contracts | Derivative liability short-term | (2,069 | ) | (943 | ) | |||||
Crude oil commodity contracts | Derivative liability long-term | — | (490 | ) | ||||||
Natural gas commodity contracts | Derivative liability long-term | — | (160 | ) | ||||||
Total derivative instruments | $ | (9,791 | ) | $ | (5,585 | ) | ||||
Amount of gain/loss recognized in income | ||||||||||
(Thousands of dollars) | Location of gain/loss recognized in income | 2017 | 2016 | |||||||
Derivative designated as cash-flow hedge instruments: | ||||||||||
Interest rate swap contracts | Interest expense | $ | — | $ | (7 | ) | ||||
Derivatives not designated as cash-flow hedge instruments: | ||||||||||
Natural gas commodity contracts | Unrealized (loss) gain on derivative instruments, net | 1,709 | — | |||||||
Crude oil commodity contracts | Unrealized (loss) gain on derivative instruments, net | 1,383 | — | |||||||
Natural gas commodity contracts | Realized gain (loss) on derivative instruments, net | (130 | ) | — | ||||||
Crude oil commodity contracts | Realized gain (loss) on derivative instruments, net | 81 | — | |||||||
|
|
|
| |||||||
$ | 3,043 | $ | (7 | ) |
(12)2021:
Location of gain/loss recognized in income | Amount of gain/loss recognized in income | |||||||||
(Thousands of dollars) | 2022 | 2021 | ||||||||
Derivatives not designated as cash- flow hedge instruments: | ||||||||||
Natural gas commodity contracts | Unrealized (loss) on derivative instruments, net | $ | (966 | ) | $ | (1,085 | ) | |||
Crude oil commodity contracts | Unrealized (loss) on derivative instruments, net | (3,240 | ) | (4,883 | ) | |||||
Natural gas commodity contracts | Realized (loss) on derivative instruments, net | (1,986 | ) | (277 | ) | |||||
Crude oil commodity contracts | Realized (loss) on derivative instruments, net | (7,721 | ) | (636 | ) | |||||
$ | (13,913 | ) | $ | (6,681 | ) | |||||
Nine Months Ended September 30, | ||||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||||
Net Income (In 000’s) | Weighted Average Number of Shares Outstanding | Per Share Amount | Net Income (In 000’s) | Weighted Average Number of Shares Outstanding | Per Share Amount | |||||||||||||||||||
Basic | $ | 20,648 | 2,223,399 | $ | 9.29 | $ | 5,589 | 2,294,444 | $ | 2.44 | ||||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||
Options | 750,731 | — | 751,357 | |||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Diluted | $ | 20,648 | 2,974,130 | $ | 6.94 | $ | 5,589 | 3,045,801 | $ | 1.83 | ||||||||||||||
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| |||||||||||||||||
Three Months Ended September 30, | ||||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||||
Net Income (In 000’s) | Weighted Average Number of Shares Outstanding | Per Share Amount | Net Income (In 000’s) | Weighted Average Number of Shares Outstanding | Per Share Amount | |||||||||||||||||||
Basic | $ | (2,012 | ) | 1,642,933 | $ | (1.22 | ) | $ | 4,924 | 2,293,964 | $ | 2.15 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||
Options (a) | — | — | 753,594 | |||||||||||||||||||||
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| |||||||||||||||||
Diluted | $ | (2,012 | ) | 1,642,933 | $ | (1.22 | ) | $ | 4,924 | 3,047,558 | $ | 1.62 | ||||||||||||
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|
|
|
|
|
|
Six Months Ended June 30, | ||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||
Net Income (In 000’s) | Weighted Average Number of Shares Outstanding | Per Share Amount | Net Loss (In 000’s) | Weighted Average Number of Shares Outstanding | Per Share Amount | |||||||||||||||||||
Basic | $ | 22,125 | 1,979,690 | $ | 11.18 | $ | (3,858 | ) | 1,994,177 | $ | (1.93 | ) | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||
Options (a) | — | 756,879 | — | — | ||||||||||||||||||||
Diluted | $ | 22,125 | 2,736,569 | $ | 8.08 | $ | (3,858 | ) | 1,994,177 | $ | (1.93 | ) | ||||||||||||
Three Months Ended June 30, | ||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||
Net Income (In 000’s) | Weighted Average Number of Shares Outstanding | Per Share Amount | Net Loss (In 000’s) | Weighted Average Number of Shares Outstanding | Per Share Amount | |||||||||||||||||||
Basic | $ | 10,983 | 1,972,979 | $ | 5.57 | $ | (2,403 | ) | 1,994,177 | $ | (1.20 | ) | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||
Options (a) | — | 757,185 | — | — | ||||||||||||||||||||
Diluted | $ | 10,983 | 2,730,164 | $ | 4.02 | $ | (2,403 | ) | 1,994,177 | $ | (1.20 | ) | ||||||||||||
(a) | The effect of the 767,500 outstanding stock options is |
Item 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
We are the operator of the majority of our developed and undeveloped acreage which is nearly all held by production. In the Permian Basin of West Texas and eastern New Mexico the Company maintains an acreage position of over 21,160 gross (12,742 net) acres, approximately 92% of which is in Reagan, Upton, Martin and Midland counties of Texas where our current horizontal drilling activity is focused. We believe this acreage has significant resource potential in the Spraberry, Wolfcamp and other intervals for additional horizontal drilling that could support the drilling potential in excess of 400 additional horizontal wells. In Oklahoma we maintain an acreage position of approximately 82,572 gross (12,980 net) acres. Our Oklahoma horizontal development is focused primarily in Canadian, Kingfisher, Grady, and Garvin counties. We believe approximately 2,231 net acres in these counties hold significant additional resource potential that could support the drilling of as many as 75 new horizontal wells based on an estimate of only two wells per section, per formation ( Woodford & Mississippian ), with our share of such prospective future development being about $42 million based on an average 10.5% ownership level.
Our balanced portfolio of assets positionsposition us well for both the current commodity price environment and future potential upside as we develop our attractive resource opportunities. Our primary sources of liquidity are cash flows generated from our operations throughand our producingcredit facility.
The Company willreserves, we continue to actively pursue the acquisition of leasehold acreage and producing properties in areas where we currently operate and believe there is additional exploration and development potential and willproperties. We attempt to assume the position of operator in all such acquisitions. In orderacquisitions of producing properties and will continue to evaluate properties for leasehold acquisition and for exploration and development operations in areas in which we own interests. To diversify and broaden our asset base, we will consider acquiring the assets or stock in other entities and companies in the oil and gas business. Our main objective in making any such acquisitions will be to acquire income producingincome-producing assets so asor developable leasehold acreage to build stockholder value through consistent growth inand development of our oil and gas reserve base on a cost-efficientcost-effective basis.
RECENT ACTIVITIES
Since all our derivative contracts are accounted for under
Gulf Coast | Mid- Continent | West Texas | Other | Total | ||||||||||||||||
Proved Reserves as of December 31, 2021 (MBoe) | ||||||||||||||||||||
Developed | 906 | 2,383 | 8,957 | 6 | 12,252 | |||||||||||||||
Undeveloped | — | — | — | — | — | |||||||||||||||
Total | 906 | 2,383 | 8,957 | 6 | 12,252 | |||||||||||||||
Average Net Daily Production (Boe per day) | 336 | 747 | 2,878 | 3 | 3,964 | |||||||||||||||
Gross Productive Wells (Working Interest and ORRI Wells) | 207 | 549 | 576 | 200 | 1,532 | |||||||||||||||
Gross Productive Wells (Working Interest Only) | 189 | 400 | 530 | 88 | 1,207 | |||||||||||||||
Net Productive Wells (Working Interest Only) | 105 | 189 | 263 | 6 | 564 | |||||||||||||||
Gross Operated Productive Wells | 137 | 195 | 321 | — | 653 | |||||||||||||||
Gross Operated Water Disposal, Injection and Supply wells | 7 | 44 | 6 | — | 57 |
Reserve Category | ||||||||||||||||||||||||||||||||||||||||||||||||
Proved Developed | Proved Undeveloped | Total | ||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, | Oil (MBbls) | NGLs (MBbls) | Gas (MMcf) | Total (MBoe) | Oil (MBbls) | NGLs (MBbls) | Gas (MMcf) | Total (MBoe) | Oil (MBbls) | NGLs (MBbls) | Gas (MMcf) | Total (MBoe) | ||||||||||||||||||||||||||||||||||||
2019 | 4,381 | 2,914 | 19,995 | 10,268 | 1,833 | 1,017 | 4,547 | 3,608 | 6,214 | 3,931 | 24,542 | 14,235 | ||||||||||||||||||||||||||||||||||||
2020 | 2,684 | 2,258 | 13,633 | 7,214 | 1,784 | 787 | 3,897 | 3,221 | 4,468 | 3,045 | 17,530 | 10,435 | ||||||||||||||||||||||||||||||||||||
2021 | 5,386 | 2,882 | 23,902 | 12,252 | — | — | — | — | 5,386 | 2,882 | 23,902 | 12,252 |
(a) | In computing total reserves on a barrels of oil equivalent (Boe) basis, gas is converted to oil based on its relative energy content at the rate of six Mcf of gas to one barrel of oil and NGLs are converted based upon volume; one barrel of natural gas liquids equals one barrel of oil. |
Proved Developed | Proved Undeveloped | Total | ||||||||||||||||||||||||||||||
As of December 31, | Future Net Revenue | Present Value 10 Of Future Net Revenue | Future Net Revenue | Present Value 10 Of Future Net Revenue | Future Net Revenue | Present Value 10 Of Future Net Revenue | Present Value 10 Of Future Income Taxes | Standardized Measure of Discounted Cash flow | ||||||||||||||||||||||||
2019 | $ | 116,592 | $ | 82,155 | $ | 42,700 | $ | 17,876 | $ | 159,292 | $ | 100,031 | $ | 18,419 | $ | 81,612 | ||||||||||||||||
2020 | $ | 43,886 | $ | 34,717 | $ | 37,346 | $ | 21,823 | $ | 81,232 | $ | 56,539 | $ | 14,920 | $ | 41,619 | ||||||||||||||||
2021 | $ | 275,227 | $ | 171,906 | $ | — | $ | — | $ | 275,227 | $ | 171,906 | $ | 36,100 | $ | 135,806 |
Reagan County, Texas.
one in the Lower Spraberry, confirming the economic viability of these reservoirs on our acreage. Prime holds 47.5% working interest in these reservoirs. As a result of the success of the initial three wells, nine additional horizontals followed and were completed in the third quarter of 2021. Our average 47.5% share of the cost of these nine horizontal wells was approximately $26.7 million in total. In Martin County,addition to the Wolfcamp “A”, Jo Mill and Lower Spraberry, that are now considered fully developed on the tract, four locations in the Middle Spraberry will be considered for future development at an estimated gross cost of approximately $30.2 million with the Company’s share being approximately $14.2 million.
Once all wells are on production, our current West Texas horizontal drilling program will consist of 58 wells.
In Eddy County, New Mexico, the Company term assigned 80 net mineral acres for $400,000, retaining an overriding royalty on future horizontal development.
Our Oklahoma horizontal development program, which began in 2012, has, through the third quarter of 2017, participated in 26 horizontal wells for approximately $26 million. Over this same time period the Company chose to retain an overriding royalty interest in 26 other horizontal wells. Through the third quarter of 2017, we participated in 2 horizontal wells that have been placed on production:flowing back. The Company participatedis participating with 19.7%9.38% interest with an approximate investment $2.2 million
or working interest.
2017
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2017 | 2016 | Increase / (Decrease) | 2017 | 2016 | Increase / (Decrease) | |||||||||||||||||||
Barrels of Oil Produced | 190,000 | 199,000 | (9,000 | ) | 591,000 | 511,000 | 80,000 | |||||||||||||||||
Average Price Received | $ | 45.09 | $ | 41.89 | $ | 3.20 | $ | 46.50 | $ | 37.64 | $ | 8.86 | ||||||||||||
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| |||||||||||||||
Oil Revenue (In 000’s) | $ | 8,568 | $ | 8,337 | $ | 231 | $ | 27,479 | $ | 19,233 | $ | 8,246 | ||||||||||||
Mcf of Gas Produced | 1,294,000 | 1,124,000 | 170,000 | 3,466,000 | 3,308,000 | 158,000 | ||||||||||||||||||
Average Price Received | $ | 3.12 | $ | 2.86 | $ | 0.26 | $ | 3.34 | $ | 2.47 | $ | 0.87 | ||||||||||||
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| |||||||||||||||
Gas Revenue (In 000’s) | $ | 4,037 | $ | 3,220 | $ | 817 | $ | 11,567 | $ | 8,162 | $ | 3,405 | ||||||||||||
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| |||||||||||||
Total Oil & Gas Revenue (In 000’s) | $ | 12,605 | $ | 11,557 | $ | 1,048 | $ | 39,046 | $ | 27,395 | $ | 11,651 | ||||||||||||
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|
Realized gain (loss) on derivative instruments, net include net gains of $81 thousand
Six months ended June 30, | ||||||||||||||||
2022 | 2021 | Increase / (Decrease) | Increase / (Decrease) | |||||||||||||
Barrels of Oil Produced | 508,000 | 328,000 | 180,000 | 54.9 | % | |||||||||||
Average Price Received | $ | 102.64 | $ | 60.77 | $ | 41.87 | 68.9 | % | ||||||||
Oil Revenue (In 000’s) | $ | 52,143 | $ | 19,934 | $ | 32,209 | 161.6 | % | ||||||||
Mcf of Gas Sold | 1,577,000 | 1,445,000 | 132,000 | 9.1 | % | |||||||||||
Average Price Received | $ | 5.35 | $ | 2.73 | $ | 2.62 | 96 | % | ||||||||
Gas Revenue (In 000’s) | $ | 8,403 | $ | 3,950 | $ | 4,453 | 112.7 | % | ||||||||
Barrels of Natural Gas Liquids Sold | 210,000 | 195,000 | 15,000 | 7.7 | % | |||||||||||
Average Price Received | $ | 39.40 | $ | 21.28 | $ | 18.12 | 85.2 | % | ||||||||
Natural Gas Liquids Revenue (In 000’s) | $ | 8,273 | $ | 4,149 | $ | 4,124 | 99.4 | % | ||||||||
Total Oil & Gas Revenue (In 000’s) | $ | 68,819 | $ | 28,033 | $ | 40,786 | 145.5 | % | ||||||||
Three months ended June 30, | ||||||||||||||||
2022 | 2021 | Increase / (Decrease) | Increase / (Decrease) | |||||||||||||
Barrels of Oil Produced | 235,000 | 165,000 | 70,000 | 42.4 | % | |||||||||||
Average Price Received | $ | 109.95 | $ | 64.63 | $ | 45.32 | 70.1 | % | ||||||||
Oil Revenue (In 000’s) | $ | 25,838 | $ | 10,664 | $ | 15,174 | 142.3 | % | ||||||||
Mcf of Gas Sold | 800,000 | 780,000 | 20,000 | 2.6 | % | |||||||||||
Average Price Received | $ | 5.86 | $ | 2.94 | $ | 2.92 | 99.3 | % | ||||||||
Gas Revenue (In 000’s) | $ | 4,657 | $ | 2,292 | $ | 2,365 | 103.2 | % | ||||||||
Barrels of Natural Gas Liquids Sold | 106,000 | 109,000 | (3,000 | ) | (2.8 | )% | ||||||||||
Average Price Received | $ | 41.72 | $ | 22.06 | $ | 19.66 | 89.1 | % | ||||||||
Natural Gas Liquids Revenue (In 000’s) | $ | 4,422 | $ | 2,404 | $ | 2,018 | 83.9 | % | ||||||||
Total Oil & Gas Revenue (In 000’s) | $ | 34,917 | $ | 15,360 | $ | 19,557 | 127.3 | % | ||||||||
NGL Derivatives
There were no swaps in place related to the three and nine months ended September 30, 2016. Oil and gas prices receivedour derivative instruments for the three and ninesix months ended SeptemberJune 2022 and 2021:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
($ in thousand) | ||||||||||||||||
Oil derivatives – realized losses | $ | (4,522 | ) | $ | (484 | ) | $ | (7,721 | ) | $ | (636 | ) | ||||
Oil derivatives – unrealized gains (losses) | 1,951 | (3,987 | ) | (3,240 | ) | (4,883 | ) | |||||||||
Total losses on oil derivatives | $ | (2,571 | ) | $ | (4,471 | ) | $ | (10,961 | ) | $ | (5,519 | ) | ||||
Natural gas derivatives – realized losses | $ | (1,366 | ) | $ | (217 | ) | $ | (1,986 | ) | $ | (277 | ) | ||||
Natural gas derivatives – unrealized gains (losses) | 982 | (1,070 | ) | (966 | ) | (1,085 | ) | |||||||||
Total losses on natural gas derivatives | $ | (384 | ) | $ | (1,287 | ) | $ | (2,952 | ) | $ | (1,362 | ) | ||||
Total losses on oil and natural gas derivatives | $ | (2,955 | ) | $ | (5,758 | ) | $ | (13,913 | ) | $ | (6,881 | ) | ||||
Three Months Ended September 30, 2017 | Nine Months Ended September 30, 2017 | |||||||
Oil Price | $ | 45.52 | $ | 46.63 | ||||
Gas Price | $ | 3.18 | $ | 3.30 |
2022 | 2021 | |||||||
Oil Price | $ | 87.44 | $ | 58.84 | ||||
Gas Price | $ | 4.09 | $ | 2.54 | ||||
NGLS Price | $ | 39.40 | $ | 21.28 |
operations.
Field service expense increased $0.4 million, or 17.4% from $2.7 million for the third quarter 2016 to $3.1 million for the third quarter 2017 and decreased $0.4 million, or 4.5% from $9.58 million for the nine months ended September 30, 20162021 to $9.2 million for the ninesecond quarter 2022 and increased $9.0 million or 101.1% from $8.9 million for the six months ended SeptemberJune 30, 2017.2021 to $17.9 million for the six months ended June 30, 2022. This increase is primarily due to higher production taxes related to higher commodity prices during 2022 combined with workover expenses and lease operating expense related to higher lifting cost properties returned to production.
during these periods.
General and administrative expense increased $0.2 million, or 2.9%9.1% from $6.7$2.2 million for the ninethree months ended SeptemberJune 30, 20162021 to $6.9 million for the nine months ended September 30, 2017, and $0.1 million, or 4.9% from $2.4 million for the three months ended SeptemberJune 30, 20162022. This increase in 2022 is primarily due to $2.5increased employee compensation and benefits.
Gain on sale and exchange of assets of $42.1 million and $26.9 million$499 thousand for the ninesix months ended SeptemberJune 30, 2017 and September 30, 2016, respectively consists of sales of non-essential oil and gas interests and field service equipment.
Interest expense decreased from $1.10 million for the third quarter 2016 to $0.6 million for the third quarter 2017 and from $2.8 million for the nine months ended September 30, 2016 to $1.7 million for the nine months ended September 30, 2017.2022. This decrease reflects the reductionincrease in rates and lower current borrowings under our revolving credit agreement.
A
change in net income or loss for those periods.
Net cash provided by our operating activities and proceeds from the sale of properties for the ninesix months ended SeptemberJune 30, 20172022 was $21.4$42.3 million, compared to $5.0$11.5 million forin the nine months ended September 30, 2016. prior year.
control7.
We currently maintain
2022 | 2023 | 2022 | 2023 | |||||||||||||
Swap Agreements | ||||||||||||||||
Natural Gas (MMBTU) | 591,000 | 254,000 | $ | 2.95 | $ | 3.60 | ||||||||||
Oil (barrels) | 168,900 | 70,700 | $ | 61.66 | $ | 69.50 |
Our credit agreement required us to hedge
Monthly Hedge Volumes | Price | |||||||||||||||||||
Year | BBLs | MMBTU | BBLs | MMBTU | ||||||||||||||||
October through December | 2017 | 14,300 | 235,000 | $ | 50.10 | $ | 3.11 | |||||||||||||
January through June | 2018 | 11,900 | 200,000 | $ | 52.02 | $ | 2.97 | |||||||||||||
July through December | 2018 | 23,900 | 200,000 | $ | 51.91 | $ | 2.97 | |||||||||||||
January through March | 2019 | 12,500 | 130,000 | $ | 50.75 | $ | 3.12 | |||||||||||||
April through June | 2019 | 35,000 | 60,000 | $ | 48.80 | $ | 2.66 | |||||||||||||
July through September | 2019 | 35,000 | 60,000 | $ | 50.73 | $ | 2.77 | |||||||||||||
October through December | 2019 | 35,000 | — | $ | 50.39 | $ | — |
Maintaining a strong balance sheetgas business environment, the number and ample liquidity are key componentsquality of ouroil and gas prospects available, the market for oilfield services, and oil and gas business strategy. For 2017, we will continue our focus on preserving financial flexibility and ample liquidity as we manage the risks facing our industry. Our 2017 capital budget is reflective of current commodity prices andopportunities in general.
We have in place both a stock repurchase program and a limited partnership interestin place, spending under this program during the first six months of 2022 was $3.2 million. The Company expects continued spending under the stock repurchase program under which we expect to continue spending during 2017. For the nine month period ended September 30, 2017, we have spent $5,060,000 million under these programs.
in 2022.
Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Item 4. | CONTROLS AND PROCEDURES |
Item 1. | LEGAL PROCEEDINGS |
Item 1A. | RISK FACTORS |
Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
During the nine months ended September 30, 2017, the Company purchased the following shares of common stock as treasury shares.
2017 Month | Number of Shares | Average Price Paid per share | Maximum Number of Shares that May Yet Be Purchased Under The Program at Month - End (1) | |||||||||
January | 101 | $ | 54.05 | 236,946 | ||||||||
February | 140 | $ | 57.25 | 236,806 | ||||||||
March | 251 | $ | 49.55 | 236,555 | ||||||||
April | 85,033 | $ | 49.98 | 151,522 | ||||||||
May | 2,242 | $ | 41.12 | 149,280 | ||||||||
June | 5,057 | $ | 46.80 | 144,223 | ||||||||
July | 1,274 | $ | 48.31 | 142,949 | ||||||||
August | 49 | $ | 47.39 | 142,900 | ||||||||
September | 7,060 | $ | 47.02 | 135,840 | ||||||||
|
|
|
| |||||||||
Total/Average | 101,207 | $ | 49.41 | |||||||||
|
|
|
|
2022 Month | Number of Shares | Average Price Paid per share | Maximum Number of Shares that May Yet Be Purchased Under The Program at Month—End (1) | |||||||||
January | 2,981 | $ | 76.21 | 144,740 | ||||||||
February | 5,948 | $ | 73.26 | 138,792 | ||||||||
March | 2,259 | $ | 75.36 | 136,533 | ||||||||
April | 3,426 | $ | 74.82 | 133,107 | ||||||||
May | 5,963 | $ | 82.37 | 127,144 | ||||||||
June | 18,855 | $ | 85.18 | 108,289 | ||||||||
Total/Average | 39,432 | $ | 80.82 | |||||||||
(1) | In December 1993, we announced that the Board of Directors authorized a stock repurchase program whereby we may purchase outstanding shares of the common stock from time-to-time, |
Item 3. | DEFAULTS UPON SENIOR SECURITIES |
Item 4. | RESERVED |
Item 5. | OTHER INFORMATION |
Item 6. | EXHIBITS |
PrimeEnergy Resources Corporation | ||||||
(Registrant) | ||||||
/s/ Charles E. Drimal, Jr. | ||||||
(Date) | Charles E. Drimal, Jr. | |||||
President | ||||||
Principal Executive Officer | ||||||
/s/ Beverly A. Cummings | ||||||
Beverly A. Cummings | ||||||
Executive Vice President | ||||||
Principal Financial Officer |
24