PR Newswire | Aug 11, 2020 06:01AM EDT

08/11 05:00 CDT

Goodrich Petroleum Announces Second Quarter 2020 Financial Results HOUSTON, Aug. 11, 2020

HOUSTON, Aug. 11, 2020 /PRNewswire/ -- Goodrich Petroleum Corporation (NYSE American: GDP) (the "Company") today announced financial results for the second quarter ended June 30, 2020.

QUARTER HIGHLIGHTS

* Adjusted EBITDA: Adjusted EBITDA was $15.4 million in the quarter. * Discretionary Cash Flow was $14.5 million and Capital Expenditures totaled $10.2 million in the quarter; * Net Loss: Net Loss was $15.7 million in the quarter. Factoring into the net loss for the quarter were a mark-to-market loss representing the change of the fair value of our open natural gas and oil derivative contracts of $9.0 million and an impairment charge of $6.8 million. * Production: Production averaged approximately 138,000 Mcfe per day for the quarter. The Company completed 1 gross (0.8 net) wells in the quarter. * Cash Expenses: Per unit cash expense was $1.09 per Mcfe for the quarter, with $1.01 in cash operating expense and $0.08 per Mcfe in cash interest expense. Per unit cash operating expense was broken out as follows: * Lease operating expense ("LOE") was $0.26 per Mcfe * Production and other taxes were $0.07 per Mcfe * Transportation and processing expense was $0.43 per Mcfe * General and Administrative ("G&A") expense payable in cash was $0.25 per Mcfe

Haynesville Acreage:The Company has recently entered into an agreement to develop certain acreage in the vicinity of the Company's Bethany-Longstreet area, which increases its Haynesville acreage to approximately 24,000 net acres. The Company has now added approximately 2,000 net acres this year on a drill to earn basis, with no upfront consideration.

THE COMPANY HAS POSTED A NEW PRESENTATION ON THE COMPANY'S WEBSITE WHICH WILL BE REVIEWED ON THE EARNINGS CONFERENCE CALL. INVESTORS CAN ACCESS THE SLIDES AT: http://goodrichpetroleumcorp.investorroom.com/events

2Q20 FINANCIAL RESULTS

CASH FLOW

Adjusted EBITDA was $15.4 million in the quarter and discretionary cash flow ("DCF"), defined as net cash provided by operating activities before changes in working capital, was $14.5 million in the quarter, versus Adjusted EBITDA of $21.5 million and DCF of $20.6 million in the prior year period.

(See accompanying tables at the end of this press release that reconcile Adjusted EBITDA and DCF, each of which are non-US GAAP financial measures, to their most directly comparable US GAAP financial measure.)

NET INCOME/LOSS

The Company announced a net loss of $15.7 million ($1.25 per basic and fully diluted share) in the quarter, versus net income of $11.8 million ($0.96 per basic and $0.82 per fully diluted share) in the prior year period. Net loss for the quarter, as adjusted for the Company's mark-to-market loss on unsettled derivatives of $9.0 million and $6.8 million of impairment expense, was an adjusted income of $0.1 million.

PRODUCTION

Production totaled approximately 12.6 Bcfe in the quarter, or an average of approximately 138,000 Mcfe (98% natural gas) per day, versus 12.6 Bcfe, or an average of approximately 138,200 Mcfe (98% natural gas) per day, in the prior year period.

REVENUES

Oil and natural gas revenues adjusted for cash settled derivatives of $7.3 million was $27.8 million. Oil and natural gas revenues prior to cash settled derivatives was $20.5 million. Oil and gas revenues including cash settled derivatives was $33.9 million in the prior year period. Average realized price per unit was $1.63 per Mcfe ($1.54 per Mcf of gas and $40.41 per barrel of oil) in the quarter, versus $2.54 per Mcfe in the prior year period ($2.35 per Mcf of gas and $65.00 per barrel of oil). Average realized price per unit when incorporating the Company's settled derivatives, including $1.8 million received for July 2020 natural gas positions settled at the end of the quarter, was $2.21 per Mcfe.

(See accompanying table at the end of this press release that reconciles oil and natural gas revenues adjusted for cash settled derivatives, which is a non-US GAAP financial measure, to its most directly comparable US GAAP financial measure.)

OPERATING EXPENSES

Lease operating expense ("LOE") was $3.2 million, or $0.26 per Mcfe, in the quarter, versus $3.0 million, or $0.24 per Mcfe, in the prior year period. LOE for the quarter included $0.5 million, or $0.04 per Mcfe, for workovers, versus $0.2 million, or $0.02 per Mcfe, in the prior year period. Lease operating expense for the quarter excluding workovers was $2.7 million, or $0.22 per Mcfe, versus $2.8 million, or $0.22 per Mcfe in the prior year period.

Production and other taxes were $0.9 million in the quarter, or $0.07 per Mcfe, versus $0.6 million, or $0.05 per Mcfe, in the prior year period. The increase year over year is the result of reaching the end of the severance tax abatement period on certain wells since last year.

Transportation and processing expense was $5.4 million, or $0.43 per Mcfe, in the quarter, versus $5.8 million, or $0.46 per Mcfe, in the prior year period.

Depreciation, depletion and amortization ("DD&A") expense was $11.9 million, or $0.95 per Mcfe, in the quarter, versus $13.3 million, or $1.06 per Mcfe, in the prior year period.

General and administrative expense was $4.5 million, or $0.36 per Mcfe, in the quarter, versus $4.9 million, or $0.39 per Mcfe, in the prior year period. G&A expense payable in cash was $3.2 million, or $0.25 per Mcfe, versus $3.4 million or $0.27 per Mcfe, in the prior year period.

Impairment expense was $6.8 million in the quarter as a result of our full cost ceiling test due to low natural gas prices over the trailing twelve months, while we recorded no impairment charge in the prior year period.

OPERATING INCOME/LOSS

Operating loss adjusted for cash settled derivatives was $4.9 million for the quarter, which included $7.3 million received for cash settled derivatives. Operating loss, defined as revenues minus operating expenses, totaled $12.3 million in the quarter prior to cash settled derivatives. Operating income adjusted for cash settled derivatives was $6.3 million in the prior year period, which included $2.0 million received for cash settled derivatives. Operating income totaled $4.4 million in the prior year period prior to cash settled derivatives.

(See accompanying table at the end of this press release that reconciles operating income (loss) adjusted for cash settled derivatives, which is a non-US GAAP financial measure, to its most directly comparable US GAAP financial measure.)

INTEREST EXPENSE

Interest expense totaled $1.7 million in the quarter, which included interest payable in cash of $1.0 million incurred on the credit facility and non-cash interest of $0.7 million incurred primarily on the Company's second lien notes, which included $0.5 million paid in-kind interest and $0.2 million amortization of debt discount and issuance costs. Interest expense for the prior year period was $3.4 million, which included interest payable in cash of $1.0 million incurred on the credit facility and non-cash interest of $2.4 million incurred on the Company's second lien notes, which included $1.4 million paid in-kind interest and $1.0 million amortization of debt discount and issuance costs.

(See accompanying table at the end of this press release that reconciles interest payable in cash, which is a non-US GAAP financial measure, to its most directly comparable US GAAP financial measure.)

CAPITAL EXPENDITURES

Capital expenditures totaled $10.2 million in the quarter, of which a majority was spent on drilling and completion costs, versus $25.0 million in the prior year period, of which $24.5 million was spent on drilling and completion costs and $0.5 million on other expenditures. The Company conducted drilling operations on 6 gross (2.2 net) wells in the quarter and added 1 gross (0.8 net) wells to production. The Company had 13 gross (4.7 net) wells in the drilling or completion process at the end of the quarter, which the Company plans to complete in the future.

BALANCE SHEET

The Company exited the quarter with $1.6 million of cash, $95.4 million outstanding under the Company's credit facility, and total principal debt outstanding, including the credit facility and second lien notes, of $109.3 million.

CRUDE OIL AND NATURAL GAS DERIVATIVES

The Company had a loss of $1.7 million on its derivatives not designated as hedges in the quarter, which was comprised of a gain of $7.3 million on cash settlements and a $9.0 million loss representing the change of the fair value of our open natural gas and oil derivative contracts, versus a gain of $12.7 million on its derivatives not designated as hedges in the prior year period, which was comprised of a gain of $10.7 million representing the change of the fair value of our open natural gas and oil derivative contracts as well as a $2.0 million gain on cash settlement.

OTHER INFORMATION

In this press release, the Company refers to several non-US GAAP financial measures, including Adjusted EBITDA, DCF, operating income (loss) adjusted for cash settled derivatives, oil and natural gas revenues adjusted for cash settled derivatives, G&A expense payable in cash and interest expense payable in cash. Management believes 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. Adjusted EBITDA should not be considered an alternative to net income (loss) applicable to common stock, as defined by US GAAP. Operating income (loss) adjusted for cash settled derivatives should not be considered an alternative for operating income, as defined by US GAAP. Oil and natural gas revenues adjusted for cash settled derivatives should not be considered an alternative for oil and natural gas revenues, as defined by US GAAP. G&A payable in cash should not be considered an alternative to general and administrative expense, as defined by US GAAP. Interest expense payable in cash should not be considered an alternative to interest expense, as defined by US GAAP. Management believes that all of 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.

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, 2019 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 NYSE American under the symbol "GDP".

GOODRICH PETROLEUM CORPORATION

SELECTED INCOME AND PRODUCTION DATA

(In thousands, except per share amounts) (Unaudited)

Three Months Ended Three Months Ended Six Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Volumes

Natural gas 12,349 12,305 24,591 21,366 (MMcf)

Oil and condensate 36 45 74 92 (MBbls)

Mmcfe - Total 12,562 12,577 25,033 21,918

Mcfe per day 138,046 138,208 137,544 121,096

Reconciliation of Oil and natural gas revenues adjusted for cash settledderivativs (non-US GAAP)

Three Months Ended Three Months Ended Six Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Oil and naturalgas revenues (US $ 20,471 $ 31,886 $ 43,454 $ 61,032GAAP)

Net cashreceived (paid)for settlement 7,339 1,973 13,308 213of derivativeinstruments (4)

Oil and naturalgas revenuesadjusted for $ 27,810 $ 33,859 $ 56,762 $ 61,245cash settledderivatives

Oil and natural $ 20,471 $ 31,886 $ 43,454 $ 61,032gas revenues

Other 3 (2) 6 (8)

$ 20,474 $ 31,884 $ 43,460 $ 61,024

OperatingExpenses

Lease operating expense (LOE excluding workovers - 3,225 2,978 6,553 6,313 $2,697, $2,788, $5,539 and $5,474, respectively)

Production and 907 624 1,770 1,255 other taxes

Transportation 5,375 5,754 10,250 10,455 and processing

Depreciation, depletion and 11,876 13,299 25,143 23,345 amortization

General and administrative (payable in cash - $3,170, 4,522 4,936 9,436 10,246 $3,380, $6,950 and $7,146, respectively)

Impairment of oil and natural 6,847 - 6,847 - gas properties

Other (10) (59) (2) (49)

Operating income (12,268) 4,352 (16,537) 9,459(loss)

Other income(expense)

Interest expense (payable in cash - $978, (1,725) (3,398) (3,677) (7,055) $990, $2,148 and $1,454, respectively)

Interest income and other 23 18 142 24 expense

Gain (loss) on commodity derivatives not (1,688) 12,653 7,450 11,645 designated as hedges (4)

Loss on early extinguishment - (1,846) - (1,846) of debt

(3,390) 7,427 3,915 2,768

Income (loss)before income (15,658) 11,779 (12,622) 12,227taxes

Income tax - - - -benefit

Net income $ (15,658) $ 11,779 $ (12,622) $ 12,227(loss)

Discretionary cash flow (see non-US GAAP $ 14,512 $ 20,571 $ 29,897 $ 35,371 reconciliation) (1)

Adjusted EBITDA (see calculation and $ 15,445 $ 21,533 $ 31,850 $ 36,747 non-US GAAP reconciliation) (2)

Weighted averagecommon shares 12,540 12,211 12,536 12,181outstanding -basic

Weighted averagecommon shares 12,540 14,581 12,536 14,498outstanding -diluted (3)

Net income(loss) per share

Net income (loss) per $ (1.25) $ 0.96 $ (1.01) $ 1.00 common share - basic

Net income (loss) per $ (1.25) $ 0.82 $ (1.01) $ 0.85 common share - diluted

(1) Discretionary cash flow is defined as net cash provided by operatingactivities before changes in operating assets and liabilities. Managementbelieves that the non-US GAAP measure of discretionary cash flow is useful asan indicator of an oil and natural gas exploration and production company'sability to internally fund exploration and development activities and toservice or incur additional debt. The company has also included thisinformation because changes in operating assets and liabilities relate to thetiming of cash receipts and disbursements which the company may not control andmay not relate to the period in which the operating activities occurred.Operating cash flow should not be considered in isolation or as a substitutefor net cash provided by operating activities prepared in accordance with USGAAP.

(2) Adjusted EBITDA is defined as earnings before interest expense, income andsimilar taxes, DD&A, share based compensation expense and impairment of oil andnatural gas properties. In calculating adjusted EBITDA, reorganization gains/losses and gains/losses on commodity derivatives not designated as hedges netof cash received or paid in settlement of derivative instruments are alsoexcluded. Other excluded items include interest income and other, adjustmentsper our 2019 Senior Credit Facility agreement for operating leases under ASC842 and any other extraordinary non-cash gains/losses.

(3) Fully diluted shares excludes approximately 2.3 million potentiallydilutive instruments that were anti-dilutive for the three months ended June30, 2020 and approximately 2.1 million potentially dilutive instruments thatwere anti-dilutive for the six months ended June 30, 2020.

(4) Includes $1.8 million gain realized related to July 2020 natural gasderivative contracts settled in June 2020.

GOODRICH PETROLEUM CORPORATION

Per Unit Sales Prices and Costs (Unaudited)

Three Months Ended Three Months Ended Six Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Average salesprice per unit:

Oil (per Bbl)

Including net cash received from/ $ 58.55 $ 59.28 $ 57.35 $ 58.16 paid to settle oil derivatives

Excluding net cash received from/ $ 40.41 $ 65.00 $ 44.15 $ 62.18 paid to settle oil derivatives

Natural gas (per Mcf)

Including net cash received from/ paid to settle $ 2.08 $ 2.54 $ 2.14 $ 2.62 natural gas derivatives (4)

Excluding net cash received from/ $ 1.54 $ 2.35 $ 1.63 $ 2.59 paid to settle natural gas derivatives

Oil and natural gas (per Mcfe)

Including net cash received from/ paid to settle $ 2.21 $ 2.70 $ 2.27 $ 2.80 oil and natural gas derivatives (4)

Excluding net cash received from/ paid to settle $ 1.63 $ 2.54 $ 1.74 $ 2.78 oil and natural gas derivatives

Costs Per Mcfe

Lease operating expense ($0.22, $0.22, $0.22 and $ 0.26 $ 0.24 $ 0.26 $ 0.29 $0.25 excluding workovers, respectively)

Production and $ 0.07 $ 0.05 $ 0.07 $ 0.06 other taxes

Transportation $ 0.43 $ 0.46 $ 0.42 $ 0.48 and processing

Depreciation, depletion and $ 0.95 $ 1.06 $ 1.00 $ 1.07 amortization

General and administrative (payable in cash - $0.25, $ 0.36 $ 0.39 $ 0.38 $ 0.47 $0.27, $0.28 and $0.33, respectively)

Impairment of oil and $ 0.55 $ 0.27 natural gas properties

Other $ - $ - $ - $ -

$ 2.61 $ 2.19 $ 2.40 $ 2.35

.

Note: Amountson a per Mcfebasis may nottotal due torounding.

GOODRICH PETROLEUM CORPORATION

Cash Flow Data (In Thousands) (Unaudited)

Reconciliation of discretionary cash flow and net cash provided by operatingactivities (non-US GAAP)

Three Months Ended Three Months Ended Six Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Net cashprovided byoperating $ 16,230 $ 23,346 $ 31,080 $ 41,253activities(US GAAP)

Net changesin working 1,718 2,775 1,183 5,882capital

Discretionary $ 14,512 $ 20,571 $ 29,897 $ 35,371cash flow (1)

Three Months Ended Three Months Ended Six Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

CASH FLOWSFROMOPERATINGACTIVITIES:

Net income $ (15,658) $ 11,779 $ (12,622) $ 12,227(loss)

Adjustmentsto reconcilenet loss tonet cashprovided byoperatingactivities

Depreciation,depletion and 11,876 13,299 25,143 23,345amortization("DD&A")

Right of useasset 313 341 626 626depreciation

Impairment ofoil and 6,847 - 6,847 -natural gasproperties

(Gain) lossonderivatives 1,688 (12,653) (7,450) (11,645)notdesignated ashedges

Net cashreceived from(paid for)settlement of 7,339 1,973 13,308 213derivativeinstruments(4)

Share basedcompensation 1,373 1,580 2,529 3,148(non-cash)

Amortizationof financecost, debtdiscount, 747 4,252 1,529 7,445paid in-kindinterest andaccretion

Other (13) - (13) 12

Change inassets andliabilities:

Accountsreceivable,trade and 90 (1,260) (83) (1,916)other, net ofallowance

Accrued oiland gas 17 (3,641) 3,752 (1,405)revenue

Prepaidexpenses and 48 96 52 131other

Accounts 355 7,522 286 10,163payable

Accrued 1,208 58 (2,824) (1,091)liabilities

Net cashprovided by 16,230 23,346 31,080 41,253operatingactivities

CASH FLOWSFROMINVESTINGACTIVITIES:

Capital (18,158) (26,812) (33,196) (55,066)expenditures

Proceeds fromsale of - - - 1,284assets

Net cashused in (18,158) (26,812) (33,196) (53,782)investingactivities

CASH FLOWSFROMFINANCINGACTIVITIES:

Principalpayments of - (47,500) - (49,500)bankborrowings

Proceeds frombank 2,500 99,900 2,500 106,900borrowings

Repayments ofConvertible - (56,728) - (56,728)Second LienNotes

Proceeds from - 12,000 - 12,000New 2L Notes

Issuance - (2,000) - (2,000)cost, net

Purchase oftreasury (270) (537) (272) (542)stock andother

Net cashprovided by 2,230 5,135 2,228 10,130financingactivities

Net increase(decrease) in 302 1,669 112 (2,399)cash and cashequivalents

Cash and cashequivalents, 1,262 - 1,452 4,068beginning ofperiod

Cash and cashequivalents, $ 1,564 $ 1,669 $ 1,564 $ 1,669end of period

GOODRICH PETROLEUM CORPORATION

Other Information and Reconciliations (In Thousands)

Supplemental Balance Sheet Data (unaudited)

As of

June 30, 2020

Cash and cash $ 1,564 equivalents

Long-term $ 107,925 debt, net

Unamortized debt discount 1,334 and issuance cost

Total principal $ 109,259 amount of debt

Reconciliation of Net income (loss) to Adjusted EBITDA (non-US GAAP)

Three Months Ended Three Months Ended Six Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Net income (loss) (US $ (15,658) $ 11,779 $ (12,622) $ 12,227 GAAP)

Depreciation, depletion and 11,876 13,299 25,143 23,345 amortization ("DD&A")

Share-based compensation 1,374 1,580 2,529 3,148 expense (non-cash)

Impairment of oil and 6,847 - 6,847 - natural gas properties

Interest 1,725 3,398 3,677 7,055 expense

(Gain) loss on commodity derivatives 9,027 (10,680) 5,858 (11,432) not designated as hedges, not settled

Loss on early extinguishment - 1,846 - 1,846 of debt

Other items ** 254 311 418 558

Adjusted $ 15,445 $ 21,533 $ 31,850 $ 36,747 EBITDA (2)

** Other items include $0.3 million, $0.3 million, $0.4 million and $0.6 million, respectively, from the impact of accounting for operating leases under ASC 842 as well as interest income, reorganization items and other non-recurring income and expense.

Derivative Activity

Three Months Ended Three Months Ended Six Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Gain (loss) on commodity derivatives $ (9,027) $ 10,680 $ $ 11,432 not designated (5,858) as hedges, not settled

Net cash received from (paid for) settlement of 7,339 1,973 13,308 213 derivative instruments (4)

Total gain (loss) on $ derivatives $ (1,688) $ 12,653 7,450 $ 11,645 not designated as hedges

Reconciliation of interest payable in cash to interest expense

Three Months Ended Three Months Ended Six Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Interest $ 1,725 $ $ $ expense (GAAP) 3,398 3,677 7,055

Amortization of debt discount and issuance cost (747) (2,408) (1,529) (5,601) and paid-in-kind interest

Interest $ $ $ $ payable in 978 990 2,148 1,454 cash

GOODRICH PETROLEUM CORPORATION

Other Information and Reconciliations continued (In Thousands, except per unitamounts)

Reconciliation of capital expenditures (unaudited)

Three Months Ended Three Months Ended Six Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Net cash usedin investing $ (18,158) $ (26,812) $ (33,196) $ (53,782)activities (USGAAP)

Cash proceedsrelated to sale - - - (1,284)of assets

Miscellaneouscapitalized (253) (239) (429) (441)costs & AROadjustments

Cost incurredin prior period 9,330 9,145 6,175 8,086and paid incurrent period

Capital accrual (1,117) (7,067) (1,117) (7,067)at period end

Total capital $ (10,198) $ (24,973) $ (28,567) $ (54,488)expenditures

Reconciliation of general & administrative expense payable in cash to generaland administrative expense (non-GAAP)

Three Months Ended Three Months Ended Six Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

General &administrative $ 4,522 $ 4,936 $ 9,436 $ 10,246expense (GAAP)

Share based (1,352) (1,556) (2,486) (3,100)compensation

General &administrative $ 3,170 $ 3,380 $ 6,950 $ 7,146expense payablein cash

Oil and natural gas 12,562 12,577 25,033 21,918 production (Mcfe)

General and administrative expense $ 0.25 $ 0.27 $ 0.28 $ 0.33 payable in cash per Mcfe

Reconciliation of Operating income (loss) adjusted for cash settled derivatives(non-GAAP)

Three Months Ended Three Months Ended Six Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Operatingincome (loss) $ (12,268) $ 4,352 $ (16,537) $ 9,459(US GAAP)

Net cashreceived from(paid for) 7,339 1,973 13,308 213settlement ofderivativeinstruments (4)

Operatingincome (loss)adjusted for $ (4,929) $ 6,325 $ (3,229) $ 9,672cash settledderivatives

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SOURCE Goodrich Petroleum Corporation