Q Conference Call May 19, 2014

Transcription

1 Q Conference Call May 19, 2014

2 Forward-Looking & Other Cautionary Statements Forward-Looking Statements All statements included in this presentation by Samson Resources Corporation (the Company or we ), other than statements of historical fact, may constitute forward-looking statements, including, but not limited to, statements or information regarding our future capital expenditures, production, growth, results of operations, reserves, operational and financial performance, business prospects and opportunities and other future events. Words such as, but not limited to, potential, goal, foresee, anticipate, continue, estimate, expect, may, might, will, project, should, believe, intend, continue, could, plan, predict, and similar expressions are intended to identify forward-looking statements. In particular, statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance contained in this presentation are forward-looking statements. All forward-looking statements involve risks and uncertainties. The occurrence of the events described and the achievement of the expected results depend on many events and assumptions, some or all of which are not predictable or within our control. Factors that may cause actual results to differ from expected results include, but are not limited to: (i) fluctuations in oil and natural gas prices; (ii) the uncertainty inherent in estimating our reserves, future net revenues and PV-10; (iii) the timing and amount of future production of oil and natural gas; (iv) cash flow and changes in the availability and cost of capital; (v) environmental, drilling and other operating risks, including liability claims as a result of our oil and natural gas operations; (vi) proved and unproved drilling locations and future drilling plans; (vii) the effects of existing and future laws and governmental regulations, including environmental, hydraulic fracturing and climate change regulation; and (viii) any of the risk factors and other cautionary statements described in the 2013 Annual Report of Samson Resources Corporation and its subsidiaries and in Amendment No. 1 to the Registration Statement on Form S-4, filed with the Securities and Exchange Commission (the SEC) on May 13, Readers are cautioned not to place undue reliance on forward-looking statements. Should one or more of the risks or uncertainties referred to in this presentation occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. Further, new factors that could cause actual results to differ materially from those described in forward-looking statements emerge from time to time, and it is not possible to predict all such factors, or to the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement. All forward-looking statements, expressed or implied, included in this presentation 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 we or persons acting on our behalf may issue. Each forward-looking statement speaks only as of the date of this presentation, and we undertake no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. Reserves Disclaimer The SEC requires oil and gas companies, in their filings with the SEC, to disclose proved reserves that a company has demonstrated by actual production or through reliable technology to be economically and legally producible at specific prices and existing economic and operating conditions. The Company may use the terms resource potential and EUR in this presentation to describe estimates of potentially recoverable hydrocarbons that the SEC rules prohibit from being included in filings with the SEC. These quantities do not constitute reserves within the meaning of the Society of Petroleum Engineer s Petroleum Resource Management System or SEC rules. EUR, or estimated ultimate recovery, refers to our management s internal estimates based on per well hydrocarbon quantities that may be potentially recovered from a hypothetical future well completed as a producer in the area. Estimates of resource potential and EUR are by their nature more speculative than estimates of proved reserves, and, accordingly, are subject to substantially more risk of actually being realized. Actual quantities that may be ultimately recovered may differ materially from the estimates contained in this presentation. Factors affecting ultimate recovery include our ability to acquire the acreage we are targeting and the scope of our on-going drilling program, which will be directly affected by the availability of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, transportation constraints, regulatory approvals and other factors; and actual drilling results, including geological and mechanical factors affecting recovery rates. Estimates of resource potential, per well EUR and drilling locations may change significantly as the Company pursues acquisitions. In addition, our production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases. 2

3 Q1 14 Financial Results Key Takeaways Unhedged Revenue Higher Year over Year Driven primarily by improved NYMEX pricing Increasing total company price realizations per Mcfe Offsetting in large part lower production (dry gas run off) Operating Expenses Lifting costs flat Production taxes up per unit due to higher price realizations Cash G&A (2) up in aggregate from $27 MM to $31 MM due to several one time items Q1'14 Q1'13 Difference (1) Production (MMcfe/d) Total Production (7%) Liquids Mix 30% 26% +15% Revenue ($MM) Excluding Derivatives $308 $ % Including Realized Derivatives $271 $277 (2%) Realized Price ($/Mcfe) Excluding Derivatives $6.46 $ % Including Realized Derivatives $5.67 $ % Operating Expenses ($/Mcfe) LOE $0.95 $ % Production Tax $0.43 $ % (2) Cash G&A $0.65 $ % Total $2.03 $ % (3) Cash Margin ($/Mcfe) $3.64 $ % (1) Pro forma for all divestitures in 2013 (2) Income Statement G&A excluding non-cash G&A compensation (3) Realized price including realized derivatives less total operating expense Adjusted EBITDA ($MM) $179 $190 (6%) 3

4 Q1 14 Capital Expenditures Highlights: Disciplined Capital Approach D&C and LGG significantly down year over year Executing on Cash Flow Neutral Capital Plan Progressing with planned non-core asset sales ~$25 million in net proceeds YTD; anticipate achieving another $75+ million by June 30 th (in millions) Q1'14 Q1'13 Difference Oil & Gas Capex D&C $125 $183 (32%) (1) LGG, Facilities & Other $12 $18 (32%) Total $137 $201 (32%) Capitalized Internal Costs G&A $8 $7 +10% Cash Interest Paid $123 $127 (3%) Total Capital Expenditures $269 $335 (20%) Divestitures $6 $3 +72% (2) Operating Cash Flow $153 $180 (15%) Capital Discipline (3) Drill Bit Capital % 91% 91% +0% Oil & Gas Capex / Op Cash Flow 90% 112% (20%) Note: Q1 14 and Q1 13 numbers are rounded, % difference is calculated on actuals (1) LGG, Facilities & Other for Q1 14 includes LGG of $1.5 MM and Facilities of $5 MM and Tubular Equipment of $5.8 MM; for Q1 13 it includes LGG of $5 MM and Facilities of $13 MM (2) Excludes changes in working capital (3) D&C Capex / Total Oil and Gas Capex 4

5 Current Hedge Position As of May 1, 2014 Natural Gas Swaps & Collars Oil Swaps NGL Swaps Year MMBtu/d (1) Wtd Avg Floor ,300 $ (2) 127,170 $ (3) 116,000 $ ,000 $3.92 Year Bbls/d (1) Swap Price ,500 $ ,500 $90.91 Year Bbls/d (1) Swap Price ,500 $35.43 (1) Volumes are rounded (2) 2015 includes 20,000 MMBtu/d of Cal 15 collars and 10,000 MMBtu/d of Q1 15 collars (3) 2016 includes 30,000 MMBtu/d of natural gas collars to the extent our counterparty elects to exercise their collar options Note: 2014 includes balance of the year only 5

6 RBL Amendment Provides near term flexibility to execute on strategic initiatives to monetize assets through outright sales or through some other vehicle or arrangement Immediately improves financial flexibility by approximately $115 million with potential to further enhance in term loan market Consistent with the long term corporate goal of delevering the balance sheet, covenant reverts to original Q1 16 leverage covenant level of 4.5x Credit Agreement Key Modifications: ($MM) Pro Forma Liquidity as of Q1 14 (1) Reduced Borrowing Base from $1.78 Bn to $1 Bn $1,200 $1,000 $1,035 Modified the Financial Performance Covenant through Q4 15 Permitted to incur an incremental $500 MM of second lien debt without a further related reduction to the Borrowing Base $800 $600 $400 $200 $0 $420 Pre Amendment $535 $115 Post Amendment $615 Post Amendment (2) with 2nd Lien (1) Pro Forma Liquidity excludes Letters of Credit of $1.8 MM (2) Assuming issuance of an additional $500 million in second lien debt 6

7 Total Company Production Summary Q1 14 Total Production of 529 MMcfe/d Total (MMcfe/d) Gas (MMcf/d) Liquids (MBbl/d) Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Divested Production 7

8 Production by Business Unit (MMcfe/d) Sequential Year over Year Q4'13 Q1'14 Change Q1'13 Q1'14 Change West Division Green River % % Powder River % (12%) San Juan (5%) (14%) Williston (6%) % East Division East Texas (8%) (22%) Mid-con East % % Mid-con West (4%) (9%) Company Total (1) (2%) (7%) Note: Production pro forma for all divestitures in 2013 (1) Inclusive of Other production of 2.4 MMcfe/d, 3.0 MMcfe/d and 2.2 MMcfe/d for Q1 13, Q4 13 and Q1 14 respectively 8

9 First Sales Activity Over Last Twelve Months Q1 14 and Q2 14 first sales activity increasing as a result of pad drilling timing Q2'13 Q3'13 Q4'13 Q1'14 April'14 May'14E MID-CON EAST TEXAS WILLISTON GREEN RIVER POWDER RIVER 9

10 2014 Activity Update Area Rig Count (1) Operations Update: Williston 1 Bakken One rig development plan focused on increased spacing concept Powder River 1 North Tree Field (Shannon) Four pads (twelve wells) turned to sales year-to-date; initial production results slightly higher than expected Green River 2-3 Ft. Union Finalizing plans; program designed to target high confidence horizontals and delineate and test through vertical completions San Juan 1 San Juan Four directional wells, first spud in mid May Mid-Con West 1 Mid-Con East 2 East Texas Granite Wash Production results continue to be less than expected; reducing rig count to one with a focus on Cleveland oil horizontals for the remainder of the year Marmaton Continue one rig development Mississippi Solid Drilling ahead on our Shawna/Dietz four-well pad Cotton Valley B & C Three-well Biggs pad turned to sales in April and four of seven wells from the Werner-Caraway pad flowing to sales as of mid May Cotton Valley Taylor Our first well (Texas Scottish Rite #1) turned to sales early May (1) Estimated as June 2014 (except Green River/Ft Union which is August through December). 10

11 2014 Capital Outlook Mid-Con and Powder River driving D&C capital plan reduction ($ MM) Current $ % 2014 Base Plan 2014 Forecast Difference Difference East Texas $121 $112 ($9) (8%) Mid-Con (54) (25%) Green River % Powder River (24) (13%) San Juan % Williston (7) (8%) Total $671 $579 ($91) (14%) Note: All numbers rounded 11

12 Q Adjusted EBITDA Reconciliation Three Months Twelve Months Ended Ended March 31, 2014 March 31, 2014 (dollars in thousands) Net Loss $ (1,022) $ (1,048,167) Interest expense, net 20,476 20,476 Benefit for income taxes (449) (582,022) Depreciation, depletion and amortization (a) 119, ,995 EBITDA $ 138,349 $ (1,060,718) Adjustment for unrealized hedging losses (gains) 19,637 (2,971) Adjustment for non-cash stock compensation expense (b) 13,237 37,549 Adjustment for fees paid to co-investors (c) 5,512 21,262 Adjustment for fees paid for public company compliance 173 1,690 (Gain) loss on sale of other property and equipment 162 (2,526) Provision to reduce carrying value of oil and gas properties - 1,748,401 Unusual or non-recurring charges described in credit agreement 1,841 20,394 Adjusted EBITDA $ 178,911 $ 763,081 Consolidated Adjusted EBITDA (d) $ 751,670 (a) Includes depreciation, depletion and amortization of oil and gas properties and depreciation and amortization of other property and equipment and accretion of ARO. (b) Stock compensation expense recognized in earnings, net of capitalization (c) Quarterly management fee (d) Excludes sold EBITDA of approximately $11.4 MM per Credit Agreement Note: Calculated as of 3/31/14 with respect to Samson Resources Corporation and its consolidated subsidiaries by reference to the applicable terms of the credit agreement governing the RBL Revolver 12