PDC Energy Inc. (Nasdaq: PDCE) reported its 3Q 2013 financial and operating results from continuing operations.
Third Quarter 2013 Highlights
"We are very excited about the Garvin well in Washington County, Ohio, based on early production and pressure data. The Garvin is our first horizontal Utica well on our southern acreage in the play. We are equally excited about the production results we are seeing in our Wattenberg downspacing project. We anticipate strong production in the fourth quarter with the Wattenberg and Utica wells coming on-line and expect to be within our full-year production guidance range of 19,200 to 20,500 BOE/d," James Trimble, CEO and president, said in the release.
Third Quarter 2013 Results
Net loss for 3Q 2013 was $16 million, or $0.48 per diluted share, compared to a net loss of $32.6 million, or $1.08 per diluted share, in 3Q 2012. Adjusted net loss, a non-GAAP financial measure defined below, was $2.3 million for 3Q 2013, which included a non-recurring pre-tax impairment of $3.8 million, compared to an adjusted net loss of $4.8 million for the same 2012 period. Net cash from operating activities was $77.5 million for 3Q 2013, compared to net cash from operating activities of $57.5 million for the same 2012 period. Adjusted cash flows from operations, a non-GAAP financial measure, were $36.7 million for 3Q 2013, compared to $34.2 million in the same 2012 period.
Production for 3Q 2013 increased 29% to 18,600 BOE/d, from 14,400 BOE/d in the third quarter of last year. The increase in production was primarily due to ongoing successful horizontal drilling in the Wattenberg Field and Marcellus shale plays.
Third Quarter 2013 Operations Update
On the company's southern Utica acreage in Washington County, Ohio, PDC initiated production from its Garvin #1H well to a long-term midstream provider in mid-October. The well was rested for 60 days after completion operations were finished in mid-August. The company began testing the well with a 12/64 choke for the first several days, increasing the choke size over the next four days to a 20/64 choke on the well's eighth day of production. On the 20/64 choke over a 24-hour period, the well produced 5.2 million cubic feet of natural gas and 183 barrels of condensate. PDC estimates NGLs, assuming full ethane recovery, over the 24-hour period to be 655 barrels for a combined three-stream total of 1,530 BOE/d, consisting of 54% liquids.
PDC began initial testing of its Stiers three-well pad in Guernsey County, Ohio during the third quarter. Early production testing and pressure data from the three wells are very positive although testing has been constrained by the limited capacity of an existing low-pressure midstream gathering system. The company anticipates the Stiers pad will be connected to a long-term midstream facility in early November.
In Wattenberg Field, the company recently initiated production on its 16-wells per section downspacing project (known as the waste management section). Drilling on this project was completed in early October and eight of the 16 wells are currently on production. Initial production from the four Codell wells has been tracking above the company's established Codell type curve and production from the four Niobrara wells has been tracking between the company's outer core and middle core Niobrara type curves. The remaining eight wells are expected to be on production in early November.
"Initial results from our waste management downspacing project are very positive and provide further confidence in at least 16-wells per section, as well as the quality of our more than 2,000 potential locations in the Wattenberg Field. Initial data from the Garvin well is also extremely encouraging, particularly with the sustained pressures and permeability we observed during early testing," Bart Brookman, executive vice president and chief operating officer, said in the release.
The Denver-based company's Wattenberg Field operations were affected by the severe flooding in Colorado in mid-September. In advance of the flood, PDC elected to shut-in 214 wells that were potentially in the flood zone or that were likely to experience access issues. 125 of the company's vertical wells in the field remain shut-in pending repairs to roads and facilities. As of Sept. 30, the company accrued $0.9 million based on initial assessments of costs to perform remediation operations. Additional direct costs associated with the flood, not including lost production, are estimated to be between $3 million and $5 million and are expected to be incurred primarily in 4Q 2013 and 1Q 2014.
PDC Energy Inc. is an independent energy company that acquires, explores, develops, and produces crude oil, natural gas, and NGLs in the U.S. The company is headquartered in Denver.