SRC Energy Inc. (NYSE American: SRCI) (“SRC” or the “Company”), an
oil and gas exploration and production company focused in the
Denver-Julesburg Basin, today issues preliminary third quarter 2018
operating results, provides an operations update and announces its
third quarter 2018 earnings release and conference call date.
Production and Average Realized Pricing
Summary
|
Three Months
Ended |
|
9/30/2018 |
6/30/2018 |
Sequential % Chg. |
9/30/2017 |
Average Daily Volumes |
|
|
|
Total Production (BOE) |
49,165 |
47,646 |
3% |
40,378 |
Liquids % |
65% |
65% |
|
67% |
Product Price Received |
|
|
|
|
Crude Oil ($/Bbl)* |
$63.48 |
$61.22 |
4% |
$42.37 |
Natural Gas Liquids ($/Bbl) |
$19.93 |
$17.65 |
13% |
$17.32 |
Natural Gas ($/Mcf) |
$1.79 |
$1.64 |
9% |
$2.35 |
Differentials |
|
|
|
|
NYMEX WTI* |
$(6.27) |
$(6.81) |
8% |
$(5.81) |
NYMEX Henry Hub |
$(1.11) |
$(1.16) |
4% |
$(0.64) |
Unit Costs |
|
|
|
|
Lease Operating Expense ($/BOE) |
$2.29 |
$2.68 |
-15% |
$1.17 |
* Includes transportation and
gathering expense |
Lynn A. Peterson, Chairman and CEO of SRC Energy Inc.,
commented, “The commissioning of Mewbourn 3 progressed as
anticipated and operators have experienced varying levels of
relief, depending upon the location of production. During
September, we were able to maintain more consistent production
flows and to systematically turn recently completed wells to sales.
However, as expected, the plant reached capacity quickly but
we expect to continue to see some incremental improvement
throughout the entire system as pressures stabilize. With the
continued completion of high quality wells in the Basin, it is
imperative that planned midstream expansions, including DCP
Midstream’s O’Connor 2 plant, continue to move forward as
expected.”
Operations and Guidance Update
The table below details current activity:
|
|
|
Gross Well Count by
Zone |
|
Pad Name |
Lateral Length |
Avg. WI |
Niobrara |
Codell |
Status |
Ag |
12 LL |
86% |
7 |
5 |
TTS – Q2/Q3 |
Goetzel II |
12 ML |
93% |
8 |
4 |
TTS – Q3 |
Falken |
12 LL, 6 SL |
95% |
11 |
7 |
TTS – Q3 |
Boomerang |
12 ML, 4 LL |
84% |
10 |
6 |
TTS – Q4 |
Donn |
13 LL |
97% |
8 |
5 |
TTS – Q4 |
Harvesters |
12 ML |
88% |
8 |
4 |
TTS – Q4 |
Troudt I |
12 LL |
93% |
9 |
3 |
Completing |
Greeley Rothe |
12 LL |
67% |
8 |
4 |
Completing |
Troudt II |
12 ML |
100% |
7 |
5 |
WOC |
Lincoln |
12 ML |
68% |
9 |
3 |
Drilling |
McNear |
12 LL |
92% |
8 |
4 |
Drilling |
TTS - Turned to sales | WOC
- Waiting on completion | DCNP - Drilled & completed but not
producing | SL -Standard Lateral | ML - Mid-Reach Lateral | LL-
Long Lateral |
In anticipation of the Mewbourn 3 plant opening, SRC added a
second completion crew in June 2018 and will maintain the two crews
through year-end to complete certain pads ahead of the onset of
winter and in anticipation of the O’Connor 2 plant expansion in the
spring of 2019. Drilling and completion capital expenditures
for the three and nine months ended September 30, 2018 were
approximately $178 million and $408 million, respectively, the
majority of which continues to be funded by operating cash
flows.
The table below details selected results for the three and nine
months ended September 30, 2018 and current full-year guidance:
|
3rd Qtr 2018Actual |
9 Months2018 Actual |
Original 2018Guidance |
Adjusted 2018Guidance |
|
|
|
|
|
Production (Boe/d) |
49,165 |
47,416 |
48,000 – 52,000 |
50,000 |
Oil % |
42% |
45% |
47% |
45% |
D&C Capex ($mil) |
$178 |
$408 |
$540 |
$580 |
Wells Drilled (Gross/net) |
30/26 |
89/77 |
117/100 |
118/101 |
Wells Completed (Gross/net) |
44/39 |
89/81 |
116/103 |
127/112 |
Wells TTS (Gross/net) |
38/35 |
54/49 |
|
101/92 |
The Company has tightened its full year 2018 production guidance
to approximately 50 Mboe/d as a result of gas processing
developments and incremental increases reflecting the second
closing of the GCII acquisition. In addition, SRC has
adjusted guidance for drilling and completion capital expenditures
to approximately $580 million from prior guidance of $540 million.
The increase reflects a combination of the additional wells that
are now expected to be completed during the year due to efficiency
gains, recent acreage trades and acquisitions that have led to
higher working interests across our operating areas, as well as
higher than expected non-operated activities.
Greeley Crescent II - 2nd Closing
The Company recently closed the second portion of the Greeley
Crescent II transaction, acquiring both vertical and horizontal
producing wells. Production associated with these wells at
the time of closing was approximately 3,000 BOE/d and the final
purchase price was $64 million.
Management Comment
Mr. Peterson commented, “Our team continues to operate in a safe
and efficient manner while working closely with the communities
where we operate. We understand what is at stake in the
upcoming elections and feel that our Company, along with our
industry, has taken the appropriate steps to protect the future of
the Colorado oil and gas industry and we look forward to working
with our elected officials.”
Third Quarter 2018 Earnings Release and
Call
SRC plans to issue its third quarter earnings release on
Wednesday, October 31, 2018 after the close of trading on the
New York Stock Exchange. SRC will host a conference call on
Thursday, November 1, 2018 at 11:00 a.m. Eastern time (9:00
a.m. Mountain time) to discuss the results. The call will be
conducted by Chairman and CEO Lynn A. Peterson, CFO James
Henderson, Chief Development Officer Nick Spence, Chief Operations
Officer Mike Eberhard and Manager of Investor Relations John
Richardson. A Q&A session will immediately follow the
discussion of the results for the quarter.
To participate in this call please dial:
Domestic Dial-in Number: (877) 407-9122
International Dial-in Number: (201) 493-6747
Webcast:
https://78449.themediaframe.com/dataconf/productusers/srci/mediaframe/26936/indexl.html
Replay Information:
Conference ID #: 411931
Replay Dial-In (Toll Free US & Canada):
877-660-6853
Replay Dial-In (International): 201-612-7415
Expiration Date: 11/16/18
Upcoming Investor Conferences
Presentations provided in conjunction with these events will be
available on SRC's website at www.srcenergy.com the morning of the
respective presentation. Members of SRC senior management
will participate in the following hosted investor events, please
refer to the Company’s website for specific presentation dates:
Simmons & Company 2nd Annual E&P
Summit – November 13-14, 2018 - Houston, TX
Capital One 2018 Energy Conference - December
4-6, 2018 - New Orleans, LA
Cowen Energy & Natural Resources Conference
- December 4-6, 2018 - New York, NY
About SRC Energy Inc.
SRC Energy Inc. is a domestic oil and natural gas exploration
and production company. SRC's core area of operations is in the
Wattenberg Field of the Denver-Julesburg Basin. The Company's
corporate offices are located in Denver, Colorado. More company
news and information about SRC is available at
www.srcenergy.com.
Important Cautions Regarding Forward Looking
Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements other than statements of historical fact
are forward-looking statements. The use of words such as
"believes", "expects", "anticipates", "intends", "plans",
"estimates", "should", "likely", “guidance” or similar expressions
indicates a forward-looking statement. Forward-looking statements
herein include statements regarding expected third quarter and
full-year 2018 results, including costs, drilling and completion
activities, and production and product mix, and the timing and
impact of additional midstream facilities, and the results and
impact of the November 2018 elections. These statements are
subject to risks and uncertainties and are based on the beliefs and
assumptions of management, and information currently available to
management. The actual results could differ materially from a
conclusion, forecast or projection in the forward-looking
information. Certain material factors or assumptions were applied
in drawing a conclusion or making a forecast or projection as
reflected in the forward-looking information. The identification in
this press release of factors that may affect the Company's future
performance and the accuracy of forward-looking statements is meant
to be illustrative and by no means exhaustive. All forward-looking
statements should be evaluated with the understanding of their
inherent uncertainty. Factors that could cause the Company's actual
results to differ materially from those expressed or implied by
forward-looking statements include, but are not limited to: the
success of the Company's exploration and development efforts; the
price of oil and gas; worldwide economic situation; change in
interest rates or inflation; willingness and ability of third
parties to honor their contractual commitments; the Company's
ability to raise additional capital, as it may be affected by
current conditions in the stock market and competition in the oil
and gas industry for risk capital; the Company's capital costs,
which may be affected by delays or cost overruns; costs of
production; environmental and other regulations, as the same
presently exist or may later be amended; the Company's ability to
identify, finance and integrate any future acquisitions; the
volatility of the Company's stock price; the possibility that
additional midstream facilities will not be constructed within
anticipated time periods or that such facilities will not have the
anticipated effect on operations; and the other factors described
in the “Risk Factors” sections of the Company’s filings with the
Securities and Exchange Commission, all of which are incorporated
by reference in this release. In addition, we cannot predict
the results of the November 2018 election, including whether a
proposal to increase mandatory setbacks between occupied structures
and other designated areas and oil and gas wells will be
approved. The approval of that proposal could have a material
adverse effect on our operations, reserves and opportunities for
future growth. Results presented for the third quarter of 2018 are
preliminary and subject to change as the Company finalizes its
financial statements for the quarter.
Company Contact:
John Richardson (Investor Relations Manager)
SRC Energy Inc.
Tel 720-616-4308
E-mail: jrichardson@srcenergy.com
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