HOUSTON, Nov. 14, 2017 (GLOBE NEWSWIRE) -- Alta Mesa Holdings, LP announced its financial results for the third quarter of 2017 and provided highlights of its recent operations. A conference call to discuss these results is scheduled for today at 2 p.m. Central time (888-347-8149).  Note that the Company will post a supplemental operations update to its website prior to call at www.altamesa.net.

Financial and Production Highlights

Net loss for the third quarter of 2017 was $24.2 million, compared to a net loss of $26.6 million for the third quarter of 2016. The difference in net loss between the two periods was primarily due to higher revenue and lower interest, partially offset by higher general and administrative expense and marketing and transportation expense.

Adjusted earnings before interest, income taxes, depreciation, depletion and amortization and exploration costs ("Adjusted EBITDAX") for the third quarter of 2017 was $31.2 million compared to $38.4 million for the third quarter of 2016. The change in Adjusted EBITDAX between the two periods is primarily the net result of non-recurring general and administrative expense, lower settlements of oil and gas derivative contracts and an increase in marketing and transportation expense. This decrease was partially offset by an increase in commodity revenues. *Adjusted EBITDAX is a non-GAAP financial measure and is described in the attached table under “Non-GAAP Financial Information and Reconciliation.”

Total Company production volumes in the third quarter of 2017 totaled 2.3 MMBOE, or an average of 25.2 MBOE per day, compared to 1.8 MMBOE or 20.0 MBOE per day in the third quarter of 2016. The increase in production is primarily a result of the continued successful development of Alta Mesa’s STACK play in Kingfisher County, Oklahoma. The Company’s total production mix was 66% oil and natural gas liquids (77% oil, 23% liquids) for the third quarter 2017.

Oil, natural gas and natural gas liquids revenue for the third quarter of 2017 totaled $75.3 million compared to $54.5 million in the third quarter of 2016. The change in revenues between the two periods was due primarily to the increase in oil, natural gas and natural gas liquids production, offset in part by the decrease in net realized commodity prices. Realized prices for oil (including settlements of derivative contracts) for the third quarter of 2017 were $48.00 per barrel, compared to $60.35 per barrel in the third quarter of 2016. Realized prices for natural gas liquids (including settlements of derivative contracts) for the third quarter of 2017 were $22.14 per barrel compared to $15.85 per barrel in the third quarter of 2016. The third quarter of 2016 included settlements of oil derivative contracts prior to contract expiry of $18.2 million. Realized prices for natural gas (including settlements of derivative contracts) in the third quarter 2017 were $2.71 per MCF, compared to $2.92 per MCF in the third quarter of 2016. The third quarter of 2016 included settlements of natural gas derivative contracts prior to contract expiry of $2.4 million. Alta Mesa has an active hedging program. As of September 30, 2017, the Company had hedged approximately 73% of its forecasted production of proved developed producing reserves through 2019 at weighted average annual floor prices ranging from $50.00 per Bbl to $51.37 per Bbl for oil and $3.18 per MMBtu to $4.43 per MMBtu for natural gas.

Production costs, which include lease and plant operating expense, marketing and transportation expense, production and ad valorem taxes and workover expense were $28.6 million, in the third quarter of 2017, or $12.34 per BOE, compared to $23.5 million, or $12.75 per BOE in the third quarter of 2016. The increase between the two periods is primarily related to increased throughput and associated fees for our properties in the STACK at the Kingfisher Midstream, LLC processing facility, in addition to an increase in compression and chemical expense.

General and administrative expense in the third quarter of 2017 was $17.5 million compared to $10.7 million in the third quarter of 2016. The difference in general and administrative expense between the two periods is primarily due to non-recurring fees attributable to the proposed merger with Silver Run Acquisition Corporation II (“Silver Run II”) during the third quarter of 2017 of approximately $2.5 million and one time settlement expense of $4.6 million.

Operational Highlights

STACK Play, Oklahoma

In Alta Mesa’s Oklahoma STACK play, the Company has assembled a highly contiguous leasehold position which has grown from approximately 45,000 net acres in early 2015, to approximately 130,000 net acres at the end of the third quarter of 2017. The Company is targeting the Mississippian-age Osage, Meramec, and Manning formations and the Pennsylvanian-age Oswego formation. In the third quarter of 2017, the Company completed 36 horizontal wells in the Osage and Meramec formations. The Company had 43 horizontal wells in progress as of the end of the third quarter, 13 of which were on production subsequent to the end of the quarter. The Company has allocated over 95% of its 2017 capital expenditure budget, including acquisitions, to the STACK. Capital expenditures (including acquisition costs) for this area in 2017 through the third quarter were $286 million out of the total Company expenditures of $300 million.  Average daily production for this core area in the third quarter of 2017 was approximately 20.5 MBOE per day (67% oil and natural gas liquids), an increase of 51% compared to 13.6 MBOE per day in the third quarter of 2016.

Conference Call Information

Alta Mesa invites you to listen to its conference call which will discuss its financial and operational results at 2:00 p.m., Central time, on Tuesday, November 14, 2017. If you wish to participate in this conference call, dial 888-347-8149 (toll free in US/Canada) or 412-902-4228 (for International calls), five to ten minutes before the scheduled start time. A webcast of the call and any related materials will be available on Alta Mesa’s website at www.altamesa.net. Additionally, a replay of the conference call will be available for one week following the live broadcast by dialing 844-512-2921 (toll free in US/Canada) or 412-317-6671 (International calls), and referencing Conference ID #10114318.

Alta Mesa Holdings, LP is a privately held company engaged primarily in onshore oil and natural gas acquisition, exploitation, exploration and production whose focus is to maximize the profitability of our assets in a safe and environmentally sound manner. We seek to maintain a portfolio of lower risk properties in plays with known resources where we identify a large inventory of lower risk drilling, development, and enhanced recovery and exploitation opportunities. Our core properties are located in Oklahoma’s STACK play. We maximize the profitability of our assets by focusing on sound engineering, enhanced geological techniques including 3-D seismic analysis, and proven drilling, stimulation, completion, and production methods. Alta Mesa Holdings, LP is headquartered in Houston, Texas.

Safe Harbor Statement and Disclaimer

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, regarding Alta Mesa’s strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this press release, the words “could”, “should”, “will”, “play”, “believe”, “anticipate”, “intend”, “estimate”, “expect”, “project,” the negative of such terms and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on Alta Mesa’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Forward-looking statements may include statements about Alta Mesa’s: ability to effect the business combination with Silver Run II; the benefits of the business combination; the future financial performance of the combined company following the business combination; business strategy; reserves quantities and the present value of its reserves; financial strategy, liquidity and capital required for its development program;  future oil and natural gas prices; timing and amount of future production of oil and natural gas; hedging strategy and results; future drilling plans; marketing of oil and natural gas; leasehold or business acquisitions; costs of developing its properties; liquidity and access to capital; uncertainty regarding its future operating results; and plans, objectives, expectations and intentions contained in this press release that are not historical. Alta Mesa cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond its control, incident to the exploration for and development and production of oil and natural gas. These risks include, but are not limited to, the occurrence of any event, change or other circumstances that could delay the business combination with Silver Run II or give rise to the termination of the Contribution Agreement, commodity price volatility, low prices for oil, natural gas and/or natural gas liquids, global economic conditions, inflation, increased operating costs, lack of availability of drilling and production equipment and services, environmental risks, weather risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating oil and natural gas reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and other risks. Information concerning these and other factors can be found in Alta Mesa's filings with the SEC, including its Forms 10-K, 10-Q and 8-K, which can be obtained free of charge on the SEC's web site at http://www.sec.gov. Reserve engineering is a process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reservoir engineers. Specifically, future prices received for production and costs may vary, perhaps significantly, from the prices and costs assumed for purposes of these estimates.  Prices for oil or gas began a severe decline in the third quarter of 2014 and current prices for oil are significantly less than they were prior to the decline. Sustained lower prices will cause the twelve month weighted average price to decrease over time as the lower prices are reflected in the average price, which may result in the estimated quantities and present values of Alta Mesa’s reserves being reduced. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of oil and natural gas that are ultimately recovered. Should one or more of the risks or uncertainties described in this press release occur, or should underlying assumptions prove incorrect, Alta Mesa’s actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Alta Mesa may issue. Except as otherwise required by applicable law, Alta Mesa disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this press release.          

FOR MORE INFORMATION CONTACT: Lance L. Weaver (281) 943-5597 lweaver@altamesa.net


 Three Months Ended Nine Months Ended
 September 30,  September 30,
 2017   2016  2017   2016 
 (in thousands)
Oil$ 55,195  $ 40,691  $ 169,611  $ 115,778 
Natural gas  11,959    9,790    37,780    20,277 
Natural gas liquids  8,119    3,994    22,814    10,109 
Other revenues  72    57    274    358 
Total operating revenues  75,345    54,532    230,479    146,522 
Gain (loss) on sale of assets  —    (8)   —    3,723 
Gain on acquisition of oil and gas properties  5,267    —    6,893    — 
Gain (loss) on derivative contracts  (10,468)   3,508    38,024    (23,970)
Total operating revenues and other  70,144    58,032    275,396    126,275 
Lease and plant operating expense  15,503    14,644    49,836    45,222 
Marketing and transportation expense  8,666    5,254    21,566    8,140 
Production and ad valorem taxes  2,705    2,895    8,812    8,021 
Workover expense  1,714    727    5,112    3,242 
Exploration expense  5,523    8,590    19,930    15,304 
Depreciation, depletion, and amortization expense  28,784    22,433    80,082    66,857 
Impairment expense  82    919    29,206    14,238 
Accretion expense  395    540    1,447    1,615 
General and administrative expense  17,458    10,650    35,534    32,909 
Total operating expenses  80,830    66,652    251,525    195,548 
INCOME (LOSS) FROM OPERATIONS  (10,686)   (8,620)   23,871    (69,273)
Interest expense  (13,850)   (18,186)   (39,069)   (52,253)
Interest income  332    239    880    672 
Total other income (expense)  (13,518)   (17,947)   (38,189)   (51,581)
LOSS BEFORE STATE INCOME TAXES  (24,204)   (26,567)   (14,318)  (120,854)
Provision for state income taxes  —    —    285    107 
NET LOSS$ (24,204) $ (26,567) $ (14,603) $(120,961)



 September 30,  December 31,
 2017  2016
 (in thousands)
Cash and cash equivalents$ 3,740 $ 7,185
Short-term restricted cash  1,173   433
Accounts receivable, net of allowance of $802 and $889, respectively  71,260   37,611
Other receivables  679   8,061
Receivables due from affiliate  839   8,883
Prepaid expenses and other current assets  2,215   3,986
Derivative financial instruments  6,952   83
Total current assets  86,858   66,242
Oil and natural gas properties, successful efforts method, net  944,867   712,162
Other property and equipment, net  9,139   9,731
Total property and equipment, net  954,006   721,893
Investment in LLC — cost  9,000   9,000
Deferred financing costs, net  1,943   3,029
Notes receivable due from affiliate  12,121   9,987
Deposits and other long-term assets  14,686   2,977
Derivative financial instruments  5,282   723
Total other assets  43,032   25,716
TOTAL ASSETS$ 1,083,896 $ 813,851
Accounts payable and accrued liabilities$ 144,546 $ 79,710
Advances from non-operators  3,872   4,058
Advances from related party  47,794   42,528
Asset retirement obligations  3,960   4,900
Derivative financial instruments  348   21,207
Total current liabilities  200,520   152,403
Asset retirement obligations, net of current portion  65,152   61,128
Long-term debt, net  565,247   529,905
Notes payable to founder  27,861   26,957
Derivative financial instruments  —   4,482
Other long-term liabilities  7,613   6,870
Total long-term liabilities  665,873   629,342
TOTAL LIABILITIES   866,393   781,745
PARTNERS' CAPITAL  217,503   32,106



 Nine Months Ended
 September 30,
 2017   2016 
 (in thousands)
Net loss$ (14,603) $ (120,961)
Adjustments to reconcile net loss to net cash provided by operating activities:   
Depreciation, depletion, and amortization expense  80,082    66,857 
Impairment expense  29,206    14,238 
Accretion expense  1,447    1,615 
Amortization of deferred financing costs  2,205    3,004 
Amortization of debt discount  —    382 
Dry hole expense  2,447    423 
Expired leases  8,394    6,689 
(Gain) loss on derivative contracts  (38,024)   23,970 
Settlements of derivative contracts  1,775    83,839 
Premium paid on derivative contracts  (520)   — 
Interest converted into debt  904    904 
Interest on notes receivable due from affiliates  (619)   (574)
Gain on sale of assets  —    (3,723)
Gain on acquisition of oil and gas properties  (6,893)   — 
Changes in assets and liabilities:     
Restricted cash  (740)   (92,046)
Accounts receivable  (33,649)   (4,774)
Other receivables  7,382    14,436 
Receivables due from affiliate  169    214 
Prepaid expenses and other non-current assets  (9,938)   (1,898)
Advances from related party  5,266    13,425 
Settlement of asset retirement obligation  (6,083)   (1,465)
Accounts payable, accrued liabilities, and other liabilities  27,308    2,918 
Capital expenditures for property and equipment  (244,308)   (149,179)
Acquisitions  (55,236)   — 
Proceeds from sale of property  —    1,405 
Notes receivable due from affiliate  (1,515)   — 
Proceeds from long-term debt  286,065    141,935 
Repayments of long-term debt  (251,622)   (1,500)
Additions to deferred financing costs  (220)   (799)
Capital contributions  207,875    — 
CASH AND CASH EQUIVALENTS, beginning of period  7,185    8,869 
CASH AND CASH EQUIVALENTS, end of period$ 3,740  $ 8,204 

Prices: Below is a table of average hedged and unhedged prices received by the Company.

Average Prices including settlements of derivative contractsQ3-2017
Oil (per Bbl)$48.00
Natural Gas (per Mcf) 2.71
Natural Gas Liquids (per Bbl) 22.14
Combined realized (per BOE) 33.16
Average Prices excluding settlements of derivative contractsQ3-2017
Oil (per Bbl)$47.20
Natural Gas (per Mcf) 2.50
Natural Gas Liquids (per Bbl) 23.29
Combined (per BOE) 32.50

*Non-GAAP Financial Information and Reconciliation

Adjusted EBITDAX is a non-GAAP financial measure and as used herein represents net income/(loss) before interest expense, exploration expense, depletion, depreciation and amortization, impairment of oil and natural gas properties, accretion of asset retirement obligations, tax expense, gains/loss on sale and acquisition of assets and the non-cash portion of gain/loss on oil, natural gas and natural gas liquids derivative contracts. Alta Mesa’s management believes Adjusted EBITDAX is useful because it allows external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, to more effectively evaluate our operating performance, compare the results of our operations from period to period and against our peers without regard to our financing methods or capital structure and because it highlights trends in our business that may not otherwise be apparent when relying solely on GAAP measures. Adjusted EBITDAX is not a measurement of Alta Mesa’s financial performance under GAAP, and should not be considered as an alternative to net income (loss), operating income (loss) or any other performance measure derived in accordance with GAAP or as an alternative to net cash provided by operating activities as a measure of Alta Mesa’s profitability or liquidity. Adjusted EBITDAX has significant limitations, including that it does not reflect Alta Mesa’s cash requirements for capital expenditures, contractual commitments, working capital or debt service. In addition, other companies may calculate Adjusted EBITDAX differently than Alta Mesa does, limiting its usefulness as a comparative measure. The following table sets forth a reconciliation of net income (loss) as determined in accordance with GAAP to Adjusted EBITDAX for the periods indicated (unaudited in thousands):

  Three Months Ended
  September 30,
     2017     2016 
Net loss ($24,204) ($26,567)
Adjustments to loss:    
 Provision for income taxes -  - 
 Interest expense  13,850   18,186 
 Unrealized loss – derivative contracts   11,989   14,340 
 Exploration expense  5,523   8,590 
 Depreciation, depletion and amortization  28,784   22,433 
 Impairment expense  82   919 
 Accretion expense  395   540 
 (Gain) on acquisition of properties  (5,267)  - 
 Loss on sale of assets    -   8 
Adjusted EBITDAX $31,152  $38,449