About

Midstates Petroleum Company, Inc. is an independent exploration and production company focused on the application of modern drilling and completion techniques in oil and liquids-rich basins in the onshore U.S. The Company’s operations are currently focused on oilfields in the Mississippian Lime play in Oklahoma. MIDSTATES PETROLEUM COMPANY, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) (Unaudited) March 31, 2019 December 31, 2018 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 717 $ 11,341 Accounts receivable: Oil and gas sales 17,519 22,165 Joint interest billing 2,253 2,474 Other 377 1,374 Commodity derivative contracts 309 6,940 Other current assets 2,534 1,684 Total current assets 23,709 45,978 PROPERTY AND EQUIPMENT: Oil and gas properties, on the basis of full-cost accounting Proved properties 818,013 809,272 Unproved properties not being amortized 1,869 4,050 Other property and equipment 6,340 6,345 Less accumulated depreciation, depletion, amortization and impairment (287,544 ) (266,198 ) Net property and equipment 538,678 553,469 OTHER NONCURRENT ASSETS: Commodity derivative contracts — 791 Right-of-use lease assets 4,648 — Other noncurrent assets 5,762 5,257 Total other noncurrent assets 10,410 6,048 TOTAL $ 572,797 $ 605,495 LIABILITIES AND EQUITY CURRENT LIABILITIES: Accounts payable $ 3,536 $ 6,511 Accrued liabilities 21,973 25,521 Commodity derivative contracts 908 — Lease liabilities 1,236 — Total current liabilities 27,653 32,032 LONG-TERM LIABILITIES: Asset retirement obligations 8,244 8,087 Commodity derivative contracts 251 80 Long-term debt 59,059 23,059 Long-term lease liabilities 4,041 — Other long-term liabilities — 560 Total long-term liabilities 71,595 31,786 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY: Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued or outstanding at March 31, 2019 and December 31, 2018 — — Warrants, 6,979,609 and 6,625,554 warrants outstanding at March 31, 2019 and December 31, 2018 37,329 37,329 Common stock, $0.01 par value, 250,000,000 shares authorized; 20,619,765 shares issued and 20,414,422 shares outstanding at March 31, 2019; 25,520,170 shares issued and 25,345,981 shares outstanding at December 31, 2018 206 255 Treasury stock (2,717 ) (2,455 ) Additional paid-in-capital 481,901 531,911 Retained deficit (43,170 ) (25,363 ) Total stockholders’ equity 473,549 541,677 TOTAL $ 572,797 $ 605,495 MIDSTATES PETROLEUM COMPANY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands) (Unaudited) For the Three Months Ended March 31, 2019 2018 REVENUES Oil sales $ 16,327 $ 32,414 Natural gas liquid sales 6,216 11,038 Natural gas sales 6,610 8,337 Other revenue 688 1,055 Total revenue from contracts with customers 29,841 52,844 Losses on commodity derivative contracts—net (7,732 ) (3,939 ) Total revenues 22,109 48,905 EXPENSES: Lease operating and workover 8,990 14,808 Gathering and transportation 19 57 Severance and other taxes 1,933 2,861 Asset retirement accretion 157 297 Depreciation, depletion, and amortization 11,794 15,213 Impairment in carrying value of oil and gas properties 9,653 — General and administrative 6,438 9,857 Total expenses 38,984 43,093 OPERATING INCOME (LOSS) (16,875 ) 5,812 OTHER EXPENSE Interest income 5 19 Interest expense—net of amounts capitalized (937 ) (1,827 ) Total other expense (932 ) (1,808 ) INCOME (LOSS) BEFORE TAXES (17,807 ) 4,004 Income tax expense — — NET INCOME (LOSS) $ (17,807 ) $ 4,004 Participating securities—non-vested restricted stock — (99 ) NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (17,807 ) $ 3,905 Basic and diluted net income (loss) per share attributable to common shareholders $ (0.78 ) $ 0.15 Basic and diluted weighted average number of common shares outstanding 22,837 25,299 MIDSTATES PETROLEUM COMPANY, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (In thousands) (Unaudited) Series A Preferred Stock Common Stock Warrants Treasury Stock Additional Paid-in-Capital Retained Deficit Total Stockholders’ Equity Balance as of December 31, 2018 $ — $ 255 $ 37,329 $ (2,455 ) $ 531,911 $ (25,363 ) $ 541,677 Share-based compensation — 1 — — (60 ) — (59 ) Acquisition of treasury stock — — — (50,262 ) — — (50,262 ) Net loss — — — — — (17,807 ) (17,807 ) Retirement of treasury stock — (50 ) — 50,000 (49,950 ) — — Balance as of March 31, 2019 $ — $ 206 $ 37,329 $ (2,717 ) $ 481,901 $ (43,170 ) $ 473,549 Series A Preferred Stock Common Stock Warrants Treasury Stock Additional Paid-in-Capital Retained Deficit Total Stockholders’ Equity Balance as of December 31, 2017 $ — $ 253 $ 37,329 $ (1,603 ) $ 524,755 $ (75,147 ) $ 485,587 Share-based compensation — 1 — — 2,795 — 2,796 Acquisition of treasury stock — — — (459 ) — — (459 ) Net income — — — — — 4,004 4,004 Balance as of March 31, 2018 $ — $ 254 $ 37,329 $ (2,062 ) $ 527,550 $ (71,143 ) $ 491,928 MIDSTATES PETROLEUM COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) For the Three Months Ended March 31, 2019 2018 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (17,807 ) $ 4,004 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Losses on commodity derivative contracts—net 7,732 3,939 Net cash received (paid) for commodity derivative contracts not designated as hedging instruments 769 (160 ) Asset retirement accretion 157 297 Depreciation, depletion, and amortization 11,794 15,213 Impairment in carrying value of oil and gas properties 9,653 — Share-based compensation, net of amounts capitalized to oil and gas properties 966 2,210 Amortization of deferred financing costs 174 108 Change in operating assets and liabilities: Accounts receivable—oil and gas sales 3,573 1,293 Accounts receivable—JIB and other 1,613 (663 ) Other current and noncurrent assets (1,529 ) (1,750 ) Accounts payable 1,044 (1,467 ) Accrued liabilities (4,972 ) (869 ) Other (2 ) (8 ) Net cash provided by operating activities $ 13,165 $ 22,147 CASH FLOWS FROM INVESTING ACTIVITIES Investment in property and equipment $ (9,527 ) $ (31,758 ) Net cash used in investing activities $ (9,527 ) $ (31,758 ) CASH FLOWS FROM FINANCING ACTIVITIES Repayment of revolving credit facility $ (3,000 ) $ (50,000 ) Proceeds from revolving credit facility 39,000 — Repurchase of restricted stock for tax withholdings (262 ) (459 ) Common stock repurchased and retired (50,000 ) — Net cash used in financing activities $ (14,262 ) $ (50,459 ) NET DECREASE IN CASH AND CASH EQUIVALENTS $ (10,624 ) $ (60,070 ) Cash and cash equivalents, beginning of period $ 11,341 $ 68,498 Cash and cash equivalents, end of period $ 717 $ 8,428 SUPPLEMENTAL INFORMATION: Non-cash transactions — investments in property and equipment accrued — not paid $ 3,552 $ 18,508 Cash paid for interest, net of capitalized interest of $0.1 million, respectively $ 664 $ 1,785 Right-of-use assets obtained in exchange for operating lease liabilities $ 4,857 $ — MIDSTATES PETROLEUM COMPANY, INC. SELECTED FINANCIAL AND OPERATING STATISTICS For the Three Months March 31, For the Three Months Ended December 31, 2019 2018 2018 Operating Data – Mississippian Lime: Net production volumes: Oil (Bbls/day) 3,381 4,564 4,463 NGLs (Bbls/day) 3,538 3,644 4,194 Natural gas (Mcf/day) 37,919 43,857 46,161 Total oil equivalents (MBoe) 1,191 1,397 1,505 Average daily production (Boe/day) 13,239 15,518 16,351 Operating Data – Anadarko Basin: Net production volumes: Oil (Bbls/day) — 1,207 — NGLs (Bbls/day) — 1,065 — Natural gas (MMcf) — 8,671 — Total oil equivalents (MBoe) — 334 — Average daily production (Boe/day) — 3,717 — Operating Data - Combined: Net production volumes: Oil (Bbls/day) 3,381 5,771 4,463 NGLs (Bbls/day) 3,538 4,709 4,194 Natural gas (Mcf/day) 37,919 52,528 46,161 Total oil equivalents (MBoe) 1,191 1,731 1,505 Average daily production (Boe/day) 13,239 19,235 16,351 Average Sales Prices: Oil, without realized derivatives (per Bbl) $53.65 $62.41 $58.73 Oil, with realized derivatives (per Bbl) $57.00 $59.57 $63.64 Natural gas liquids, without realized derivatives (per Bbl) $19.52 $26.04 $23.57 Natural gas liquids, with realized derivatives (per Bbl) $19.52 $26.04 $23.57 Natural gas, without realized derivatives (per Mcf) $1.94 $1.76 $2.35 Natural gas, with realized derivatives (per Mcf) $1.86 $2.04 $1.93 Costs and Expenses (per Boe of production): Lease operating $6.82 $6.83 $6.27 Workover $0.72 $1.73 $0.78 Gathering and transportation $0.02 $0.03 $0.04 Severance and other taxes $1.62 $1.65 $1.78 Asset retirement accretion $0.13 $0.17 $0.10 Depreciation, depletion and amortization $9.91 $8.79 $9.85 Impairment of oil and gas properties $8.10 $— $— General and administrative $5.40 $5.70 $3.20 MIDSTATES PETROLEUM COMPANY, INC. ADJUSTED EBITDA (In thousands) (Unaudited) For the Three Months Ended March 31, For the Three Months Ended December 31, 2019 2018 2018 Adjusted EBITDA to net income (loss) reconciliation: Net income (loss) $ (17,807 ) $ 4,004 $ 35,807 Depreciation, depletion and amortization 11,794 15,213 14,818 Impairment in carrying value of oil and gas properties 9,653 — — Losses (gains) on commodity derivative contracts—net 7,732 3,939 (25,425 ) Net cash received (paid) for commodity derivative contracts not designated as hedging instruments 769 (160 ) 203 Income tax expense — — — Interest income (5 ) (19 ) (5 ) Interest expense, net of amounts capitalized 937 1,827 713 Asset retirement obligation accretion 157 297 152 Share-based compensation, net of amounts capitalized 966 2,210 1,078 Adjusted EBITDA $ 14,196 $ 27,311 $ 27,341 Lagging costs associated with restructuring $ 21 $ 37 $ 208 Costs incurred for strategic reviews 77 2,321 280 Advisory costs — — — Adjusted EBITDA before restructuring and advisory costs $ 14,294 $ 29,669 $ 27,829 MIDSTATES PETROLEUM COMPANY, INC. CASH OPERATING EXPENSES (In thousands) (Unaudited) For the Three Months Ended March 31, For the Three Months Ended December 31, 2019 2018 2018 Operating Expenses – GAAP $ 38,984 $ 43,093 $ 33,128 Adjustments for certain non-cash items: Asset retirement accretion 157 297 152 Share-based compensation, net 966 2,210 1,078 Depreciation, depletion and amortization 11,794 15,213 14,818 Impairment of oil and gas properties 9,653 — — Cash Operating Expenses – Non-GAAP $ 16,414 $ 25,373 $ 17,080 Cash Operating Expenses – Non-GAAP per BOE $ 13.78 $ 14.66 $ 11.35 Advisory fees $ — $ — $ — Advisory fees, per BOE $ — $ — $ — Lagging costs associated with restructuring $ 21 $ 37 $ 208 Lagging costs associated with restructuring, per BOE $ 0.02 $ 0.02 $ 0.14 Severance costs $ 1,155 $ 1,596 $ — Severance costs, per BOE $ 0.97 $ 0.92 $ — Costs incurred for strategic reviews $ 77 $ 2,321 $ 280 Costs incurred for strategic reviews, per BOE $ 0.06 $ 1.34 $ 0.19 Adjusted Cash Operating Expenses – Non-GAAP $ 15,161 21,419 $ 16,592 Adjusted Cash Operating Expenses – Non-GAAP per BOE $ 12.73 $ 12.37 $ 11.02 MIDSTATES PETROLEUM COMPANY, INC. ADJUSTED CASH GENERAL AND ADMINISTRATIVE EXPENSES (In thousands) (Unaudited) For the Three Months Ended March 31, For the Three Months Ended December 31, 2019 2018 2018 General and Administrative Expenses – GAAP $ 6,438 $ 9,857 $ 4,805 Adjustments for certain non-cash and non-recurring items: Share-based compensation, net (966 ) (2,210 ) (1,078 ) Capitalized general and administrative expenses — 663 29 Severance costs (1,155 ) (1,596 ) — Costs incurred for strategic reviews (77 ) (2,321 ) (280 ) Advisory costs included in general and administrative expenses — (37 ) (208 ) Adjusted Cash General and Administrative Expenses – Non-GAAP $ 4,240 $ 4,356 $ 3,268 Adjusted Cash General and Administrative Expenses – Non-GAAP per BOE $ 3.56 $ 2.52 $ 2.17