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Goodrich Petroleum Announces Capital Expenditure Budget And 2019 Guidance

HOUSTON, Dec. 20, 2018 /PRNewswire/ -- Goodrich Petroleum Corporation (NYSE American: GDP) today announced that it is reducing its 2019 capital expenditure budget by approximately $40 million, yet expects to maintain its previous production guidance for 2019 due to outperformance of its wells relative to its type curves.  The Company now expects its capital expenditure budget for 2019 to be in the range of $90 million to $100 million.  At current commodity prices, the Company anticipates generating EBITDA approximately in-line with 2019 capital expenditures and expects to exit 2019 at approximately 1.0 times debt to EBITDA.

The Company expects to grow production by 90 – 105% versus 2018 to a range of approximately 49.3 – 52.9 Bcfe for the year, or an average of 135,000 – 145,000 Mcfe per day. Natural gas is expected to comprise approximately 98% of total production.

The Company's capital expenditure budget contemplates drilling and/or completing 11 gross (9.8 net) horizontal wells for the year, with a blended net average lateral length of approximately 7,000 feet. The budget currently contemplates that the Company will operate 100% of its net wells for the year. The preliminary capital expenditure budget is subject to quarterly review and approval by the Company's board of directors, with the flexibility to accelerate in the second half of the year depending on commodity prices. The Company has allocated the vast majority of the budget to drilling and completing core Haynesville Shale wells in the Bethany-Longstreet and Thorn Lake areas of Caddo, DeSoto and Red River Parishes, Louisiana.

Cash margin is expected to continue to expand as unit costs decrease with the growth in volumes, and the Company is issuing a guidance range for the following cash costs per Mcfe of production for 2019:



Mcfe

Lease Operating Expense ("LOE")


$0.20 – 0.30

Taxes


$0.05 – 0.09

Transportation


$0.40 – 0.48

G&A (Cash)


$0.25 – 0.35

The Company has hedged approximately 50 - 53% of its expected natural gas volumes for the year at a blended average price of $2.87 and approximately 62.5% of expected crude oil volumes for the year at $51.08.

Operational Update

The Company expects to commence frac operations on two Cason – Dickson (98% WI) wells (approximately 9,300 foot laterals) in the Thorn Lake area of Red River Parish, Louisiana beginning in early January, to be followed by two Loftus (~90% WI) wells (7,500 foot laterals) in the Bethany-Longstreet field in DeSoto Parish, Louisiana. .

The Company expects to begin the year with one rig running on its core North Louisiana Haynesville acreage and add a second rig in the second quarter.    

OTHER INFORMATION

In this press release, the Company refers to several non-US GAAP financial measures, including Pro Forma Adjusted EBITDA and DCF.  Management believes Pro Forma Adjusted EBITDA and DCF are good financial indicators of the Company's performance and ability to internally generate operating funds.  DCF should not be considered an alternative to net cash provided by operating activities, as defined by US GAAP.  Pro Forma Adjusted EBITDA should not be considered an alternative to net loss, as defined by US GAAP.  Management believes that these non-US GAAP financial measures provide useful information to investors because they are monitored and used by Company management and widely used by professional research analysts in the valuation and investment recommendations of companies within the oil and gas exploration and production industry. 

Initial production rates are subject to decline over time and should not be regarded as reflective of sustained production levels.  In particular, production from horizontal drilling in shale oil and natural gas resource plays and tight natural gas plays that are stimulated with extensive pressure fracturing are typically characterized by significant early declines in production rates.

Unless otherwise stated, oil production volumes include condensate.

Certain statements in this news release regarding future expectations and plans for future activities may be regarded as "forward looking statements" within the meaning of the Securities Litigation Reform Act.  They are subject to various risks, such as financial market conditions, changes in commodities prices and costs of drilling and completion, operating hazards, drilling risks, and the inherent uncertainties in interpreting engineering data relating to underground accumulations of oil and gas, as well as other risks discussed in detail in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 and other subsequent filings with the Securities and Exchange Commission.  Although the Company believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.

Goodrich Petroleum is an independent oil and natural gas exploration and production company listed on the NYSE American under the symbol "GDP".

 

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