QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. employer Identification No.) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
|
|
Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | |||
Non-Accelerated Filer |
☒ |
Smaller Reporting Company | ||||
Emerging growth company |
Page |
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3 |
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4 |
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5 |
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6 |
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7-13 |
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14 |
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22 |
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22 |
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23 |
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23 |
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23 |
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23 |
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23 |
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23 |
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24 |
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26 |
Item 1. |
FINANCIAL STATEMENTS |
September 30, 2021 |
December 31, 2020 |
|||||||
ASSETS |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Accounts receivable, net |
||||||||
Prepaid obligations |
||||||||
Other current assets |
||||||||
Total Current Assets |
||||||||
Property and Equipment, at cost |
||||||||
Oil and gas properties (successful efforts method), net |
||||||||
Field and office equipment, net |
||||||||
Total Property and Equipment, Net |
||||||||
Other assets |
||||||||
Total Assets |
$ | $ | ||||||
LIABILITIES AND EQUITY |
||||||||
Current Liabilities |
||||||||
Accounts payable |
$ | $ | ||||||
Accrued liabilities |
||||||||
Due to Related Parties |
||||||||
Current portion of long-term debt |
||||||||
Current portion of asset retirement and other long-term obligations |
||||||||
Derivative liability short-term |
||||||||
Total Current Liabilities |
||||||||
Long-Term Bank Debt |
||||||||
Asset Retirement Obligations |
||||||||
Derivative Liability Long-Term |
||||||||
Deferred Income Taxes |
||||||||
Other Long-Term Obligations |
||||||||
Total Liabilities |
||||||||
Commitments and Contingencies |
||||||||
Equity |
||||||||
Common stock, $. |
||||||||
Paid-in capital |
||||||||
Retained earnings |
||||||||
Treasury stock, at cost; |
( |
) | ( |
) | ||||
Total Stockholders’ Equity – PrimeEnergy Resources |
||||||||
Non-controlling interest |
||||||||
Total Equity |
||||||||
Total Liabilities and Equity |
$ | $ | ||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Revenues |
||||||||||||||||
Oil sales |
$ | $ | $ | $ | ||||||||||||
Natural gas sales |
||||||||||||||||
Natural gas liquids sales |
||||||||||||||||
Realized (loss) gain on derivative instruments, net |
( |
) | ( |
) | ||||||||||||
Field service income |
||||||||||||||||
Administrative overhead fees |
||||||||||||||||
Unrealized (loss) on derivative instruments, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Other income |
||||||||||||||||
Total Revenues |
||||||||||||||||
Costs and Expenses |
||||||||||||||||
Lease operating expense |
||||||||||||||||
Field service expense |
||||||||||||||||
Depreciation, depletion, amortization and accretion on discounted liabilities |
||||||||||||||||
General and administrative expense |
||||||||||||||||
Total Costs and Expenses |
||||||||||||||||
Gain on Sale and Exchange of Assets |
||||||||||||||||
(Loss) Income from Operations |
( |
) | ( |
) | ( |
) | ||||||||||
Other Income (Expense) |
||||||||||||||||
Interest Income |
— | — | ||||||||||||||
Interest Expense |
( |
) | ( |
) | ( |
( |
) | |||||||||
(Loss) Income Before Income Taxes |
( |
) | ( |
) | ( |
) | ||||||||||
Income Taxes Expense (Benefit) |
( |
) | ( |
) | ( |
) | ||||||||||
Net (Loss) Income |
( |
) | ( |
) | ( |
) | ||||||||||
Less: Net Income (Loss) Attributable to Non-Controlling Interests |
( |
) | ||||||||||||||
Net (Loss) Income Attributable to PrimeEnergy |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Basic (Loss) Income Per Common Share |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Diluted (Loss) Income Per Common Share |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Common Stock |
||||||||||||||||||||||||||||||||
Shares |
Amount |
Additional Paid-In Capital |
Retained Earnings |
Treasury Stock |
Total Stockholders’ Equity – PrimeEnergy |
Non- Controlling Interest |
Total Equity |
|||||||||||||||||||||||||
Balance at December 31, 2020 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||
Net Income (Loss) |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
Purchase of non- controlling interest |
— |
— |
— |
— |
( |
) |
( |
) | ||||||||||||||||||||||||
Balance at September 30, 2021 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||
Balance at December 31, 2019 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||
Purchase |
( |
) | — | — | — | ( |
) | ( |
) | — | ( |
) | ||||||||||||||||||||
Net Income (Loss) |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||
Balance at September 30, 2020 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||
2021 |
2020 |
|||||||
Cash Flows from Operating Activities: |
||||||||
Net (Loss) |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
Depreciation, depletion, amortization and accretion on discounted liabilities |
||||||||
Gain on sale of properties |
( |
) | ( |
) | ||||
Unrealized loss (gain) on derivative instruments, net |
( |
) | ||||||
Provision for deferred income taxes |
( |
) | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
( |
) | ||||||
Due to related parties |
( |
) | — | |||||
Other assets |
( |
) | ||||||
Accounts payable |
( |
) | ||||||
Accrued liabilities |
( |
) | ||||||
|
|
|
|
|||||
Net Cash Provided by Operating Activities |
||||||||
|
|
|
|
|||||
Cash Flows from Investing Activities: |
||||||||
Capital expenditures |
( |
) | ( |
) | ||||
Proceeds from sale of properties and equipment |
||||||||
|
|
|
|
|||||
Net Cash (Used in) Investing Activities |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Cash Flows from Financing Activities: |
||||||||
Purchase of stock for treasury |
— | ( |
) | |||||
Purchase of non-controlling interests |
( |
) | ||||||
Proceeds from long-term bank debt and other long-term obligations |
||||||||
Repayment of long-term bank debt and other long-term obligations |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Net Cash (Used in) Financing Activities |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Net Increase in Cash and Cash Equivalents |
||||||||
Cash and Cash Equivalents at the Beginning of the Period |
||||||||
|
|
|
|
|||||
Cash and Cash Equivalents at the End of the Period |
$ | $ | ||||||
|
|
|
|
|||||
Supplemental Disclosures: |
||||||||
Income taxes paid |
$ | $ | ||||||
Interest paid |
$ | $ | ||||||
|
|
|
|
(Thousands of dollars) |
September, 30, 2021 |
December 31, 2020 |
||||||
Accounts Receivable: |
||||||||
Joint interest billing |
$ | $ | ||||||
Trade receivables |
||||||||
Oil and gas sales |
||||||||
Other |
||||||||
|
|
|
|
|||||
Less: Allowance for doubtful accounts |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total |
$ | $ | ||||||
|
|
|
|
|||||
Accounts Payable: |
||||||||
Trade |
$ | $ | ||||||
Royalty and other owners |
||||||||
Partner advances |
||||||||
Other |
||||||||
|
|
|
|
|||||
Total |
$ | $ | ||||||
|
|
|
|
|||||
Accrued Liabilities: |
||||||||
Compensation and related expenses |
$ | $ | ||||||
Property costs |
||||||||
Taxes |
||||||||
Other |
||||||||
|
|
|
|
|||||
Total |
$ | $ | ||||||
|
|
|
|
(Thousands of dollars) |
September 30, |
December 31, 2020 |
||||||
Proved oil and gas properties, at cost |
$ | $ | ||||||
Less: Accumulated depletion and depreciation |
( |
) | ( |
) | ||||
Oil and Gas Properties, Net |
$ | $ | ||||||
Field and office equipment |
$ | $ | ||||||
Less: Accumulated depreciation |
( |
) | ( |
) | ||||
Field and Office Equipment, Net |
$ | $ | ||||||
Total Property and Equipment, Net |
$ | $ | ||||||
(Thousands of dollars) |
Operating Leases |
|||
2021 |
$ | |||
2022 |
||||
2023 |
||||
Total undiscounted lease payments |
$ | |||
Less: Amount associated with discounting |
( |
) | ||
Net operating lease liabilities |
$ | |||
(Thousands of dollars) |
September 30, |
|||
Asset retirement obligation at December 31, 2020 |
$ | |||
Liabilities incurred |
||||
Liabilities settled |
( |
) | ||
Accretion expense |
||||
Asset retirement obligation at September 30, 2021 |
$ | |||
September 30, 2021 |
Quoted Prices in Active Markets For Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Balance at September 30, 2021 |
||||||||||||
(Thousands of dollars) |
||||||||||||||||
Liabilities |
||||||||||||||||
Commodity derivative contracts |
$ | — | $ | — | $ | ( |
) | $ | ( |
) | ||||||
Total liabilities |
$ | — | $ | — | $ | ( |
) | $ | ( |
) | ||||||
December 31, 2020 |
Quoted Prices in Active Markets For Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Balance at December 31, 2020 |
||||||||||||
(Thousands of dollars) |
||||||||||||||||
Assets |
||||||||||||||||
Commodity derivative contracts |
$ | — | $ | — | $ | $ | ||||||||||
Total assets |
$ | — | $ | — | $ | $ | ||||||||||
Liabilities |
||||||||||||||||
Commodity derivative contract |
$ | — | $ | — | $ | ( |
) | $ | ( |
) | ||||||
Total liabilities |
$ | — | $ | — | $ | ( |
) | $ | ( |
) | ||||||
(Thousands of dollars) |
||||
Net Liabilities – December 31, 2020 |
$ | ( |
) | |
Total realized and unrealized (gains) losses: |
||||
Included in earnings (a) |
( |
) | ||
Purchases, sales, issuances and settlements |
||||
Net Liabilities — September 30, 2021 |
$ | ( |
) | |
(a) | Derivative instruments are reported in revenues as realized gain/loss and on a separately reported line item captioned unrealized gain/loss on derivative instruments. |
Fair Value |
||||||||||
(Thousands of dollars) |
Balance Sheet Location |
September 30, |
December 31, 2020 |
|||||||
Asset Derivatives: |
||||||||||
Derivatives not designated as cash-flow hedging instruments: |
||||||||||
Natural gas commodity contracts |
Derivative asset long-term and other assets |
— | $ | |||||||
Total |
$ | — | $ | |||||||
Liability Derivatives: |
||||||||||
Derivatives not designated as cash-flow hedging instruments: |
||||||||||
Crude oil commodity contracts |
Derivative liability short-term | $ | ( |
) | $ | ( |
) | |||
Natural gas commodity contracts |
Derivative liability short-term | ( |
) | ( |
) | |||||
Crude oil commodity contracts |
Derivative liability long-term | ( |
) | — | ||||||
Natural gas commodity contracts |
Derivative liability long-term | ( |
) | ( |
) | |||||
Total |
$ | ( |
) | $ | ( |
) | ||||
Total derivative instruments |
$ | ( |
) | $ | ( |
) | ||||
Amount of gain/loss recognized in income |
||||||||||
(Thousands of dollars) |
Location of gain/loss recognized in income |
2021 |
2020 |
|||||||
Derivatives not designated as cash-flow hedge instruments: |
||||||||||
Natural gas commodity contracts |
Unrealized |
( |
) | ( |
) | |||||
Crude oil commodity contracts |
Unrealized |
( |
) | |||||||
Natural gas commodity contracts |
Realized gain (loss) on derivative instruments, net |
( |
) | |||||||
Crude oil commodity contracts |
Realized (loss) on derivative instruments, net |
( |
) | |||||||
$ | ( |
$ | ||||||||
Nine Months Ended September 30, |
||||||||||||||||||||||||
2021 |
2020 |
|||||||||||||||||||||||
Net Loss (In000’s) |
Weighted Average Number of Shares Outstanding |
Per Share Amount |
Net Income (In 000’s) |
Weighted Average Number of Shares Outstanding |
Per Share Amount |
|||||||||||||||||||
Basic |
$ | ( |
) | $ | ( |
$ | $ | |||||||||||||||||
Effect of dilutive securities: |
||||||||||||||||||||||||
Options (a) |
||||||||||||||||||||||||
Diluted |
$ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||
Three Months Ended September 30, |
||||||||||||||||||||||||
2021 |
2020 |
|||||||||||||||||||||||
Net Loss (In 000’s) |
Weighted Average Number of Shares Outstanding |
Per Share Amount |
Net Income (In 000’s) |
Weighted Average Number of Shares Outstanding |
Per Share Amount |
|||||||||||||||||||
Basic |
$ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||
Effect of dilutive securities: |
||||||||||||||||||||||||
Options (a) |
— | |||||||||||||||||||||||
Diluted |
$ | ( |
) | $ | ( |
) | $ | $ | ||||||||||||||||
(a) | The effect of the outstanding stock options is antidilutive for the nine and three months ended September 30, 2021 due to net loss for these periods. |
Item 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Gulf Coast |
Mid- Continent |
West Texas |
Other |
Total |
||||||||||||||||
Proved Reserves as of December 31, 2020 (MBoe) |
||||||||||||||||||||
Developed |
517 | 1,575 | 5,116 | 6 | 7,214 | |||||||||||||||
Undeveloped |
— | 95 | 3,126 | — | 3,221 | |||||||||||||||
Total |
517 | 1,670 | 8,242 | 6 | 10,435 | |||||||||||||||
Average Daily Production (Boe per day) |
297 | 788 | 3,178 | 2 | 4,265 | |||||||||||||||
Gross Productive Wells (Working Interest and ORRI Wells) |
239 | 549 | 556 | 170 | 1,514 | |||||||||||||||
Gross Productive Wells (Working Interest Only) |
209 | 485 | 518 | 69 | 1,281 | |||||||||||||||
Net Productive Wells (Working Interest Only) |
124 | 217 | 263 | 2 | 606 | |||||||||||||||
Gross Operated Productive Wells |
158 | 209 | 325 | — | 692 | |||||||||||||||
Gross Operated Water Disposal, Injection and Supply wells |
9 | 53 | 6 | — | 68 |
Reserve Category |
||||||||||||||||||||||||||||||||||||||||||||||||
Proved Developed |
Proved Undeveloped |
Total |
||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, |
Oil (MBbls) |
NGLs (MBbls) |
Gas (MMcf) |
Total (MBoe) |
Oil (MBbls) |
NGLs (MBbls) |
Gas (MMcf) |
Total (MBoe) |
Oil (MBbls) |
NGLs (MBbls) |
Gas (MMcf) |
Total (MBoe) |
||||||||||||||||||||||||||||||||||||
2018 |
6,404 | 2,707 | 21,065 | 12,622 | 10 | 12 | 124 | 43 | 6,414 | 2,719 | 21,189 | 12,665 | ||||||||||||||||||||||||||||||||||||
2019 |
4,381 | 2,914 | 19,995 | 10,268 | 1,833 | 1,017 | 4,547 | 3,608 | 6,214 | 3,931 | 24,542 | 14,235 | ||||||||||||||||||||||||||||||||||||
2020 |
2,684 | 2,258 | 13,633 | 7,214 | 1,784 | 787 | 3,897 | 3,221 | 4,468 | 3,045 | 17,530 | 10,435 |
(a) | In computing total reserves on a barrel of oil equivalent (Boe) basis, gas is converted to oil based on its relative energy content at the rate of six Mcf of gas to one barrel of oil, and NGLs are converted based upon volume; one barrel of natural gas liquids equals one barrel of oil. |
Proved Developed |
Proved Undeveloped |
Total |
||||||||||||||||||||||||||||||
As of December 31, |
Future Net Revenue |
Present Value 10 Of Future Net Revenue |
Future Net Revenue |
Present Value 10 Of Future Net Revenue |
Future Net Revenue |
Present Value 10 Of Future Net Revenue |
Present Value 10 Of Future Income Taxes |
Standardized Measure of Discounted Cash flow |
||||||||||||||||||||||||
2018 | $ | 239,337 | $ | 161,376 | $ | 767 | $ | 525 | $ | 240,104 | $ | 161,901 | $ | 23,992 | $ | 137,909 | ||||||||||||||||
2019 | $ | 116,592 | $ | 82,155 | $ | 42,700 | $ | 17,876 | $ | 159,292 | $ | 100,031 | $ | 18,419 | $ | 81,612 | ||||||||||||||||
2020 | $ | 43,886 | $ | 34,717 | $ | 37,346 | $ | 21,823 | $ | 81,232 | $ | 56,539 | $ | 14,920 | $ | 41,619 |
2021 |
2022 |
2023 |
2021 |
2022 |
2023 |
|||||||||||||||||||
Swap Agreements |
||||||||||||||||||||||||
Natural Gas (MMBTU) |
268,000 | 928,000 | 131,000 | $ | 2.48 | $ | 2.67 | $ | 2.81 | |||||||||||||||
Oil (barrels) |
133,500 | 196,200 | 27,200 | $ | 53.60 | $ | 51.99 | $ | 50.31 |
Nine months ended September 30, |
||||||||||||||||
2021 |
2020 |
Increase / (Decrease) |
Increase / (Decrease) |
|||||||||||||
Barrels of Oil Produced |
480,000 | 538,000 | (58,000 | ) | (10.80 | )% | ||||||||||
Average Price Received |
$ | 63.28 | $ | 38.41 | $ | 24.88 | 64.8 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Oil Revenue (In 000’s) |
$ | 30,376 | $ | 20,663 | $ | 9,713 | 47.0 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Mcf of Gas Sold |
2,395,000 | 2,038,000 | 357,000 | 17.5 | % | |||||||||||
Average Price Received |
$ | 3.32 | $ | 1.20 | $ | 2.12 | 177.1 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Gas Revenue (In 000’s) |
$ | 7,948 | $ | 2,441 | $ | 5,507 | 225.6 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Barrels of Natural Gas Liquids Sold |
298,000 | 319,000 | (21,000 | ) | (6.60 | )% | ||||||||||
Average Price Received |
$ | 26.11 | $ | 10.07 | $ | 16.04 | 159.3 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Natural Gas Liquids Revenue (In 000’s) |
$ | 7,781 | $ | 3,212 | $ | 4,569 | 142.2 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Total Oil & Gas Revenue (In 000’s) |
$ | 46,105 | $ | 26,316 | $ | 19,789 | 75.2 | % | ||||||||
|
|
|
|
|
|
Three months ended September 30, |
||||||||||||||||
2021 |
2020 |
Increase / (Decrease) |
Increase / (Decrease) |
|||||||||||||
Barrels of Oil Produced |
152,000 | 160,000 | (8,000 | ) | (5.0 | )% | ||||||||||
Average Price Received |
$ | 68.70 | $ | 39.62 | $ | 29.08 | 73.4 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Oil Revenue (In 000’s) |
$ | 10.442 | $ | 6,339 | $ | 4,103 | 64.7 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Mcf of Gas Sold |
950,000 | 496,000 | 454,000 | 91.5 | % | |||||||||||
Average Price Received |
$ | 4.21 | $ | 2.12 | $ | 2.09 | 98.5 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Gas Revenue (In 000’s) |
$ | 3,998 | $ | 1,052 | $ | 2,946 | 280.0 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Barrels of Natural Gas Liquids Sold |
103,000 | 106,000 | (3,000 | ) | (2.80 | )% | ||||||||||
Average Price Received |
$ | 35.26 | $ | 13.91 | $ | 21.35 | 153.5 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Natural Gas Liquids Revenue (In 000’s) |
$ | 3,632 | $ | 1,474 | $ | 2,158 | 146.4 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Total Oil & Gas Revenue (In 000’s) |
$ | 18,072 | $ | 8,865 | $ | 9,207 | 103.9 | % | ||||||||
|
|
|
|
|
|
Item 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Item 4. |
CONTROLS AND PROCEDURES |
Item 1. |
LEGAL PROCEEDINGS |
Item 1A. |
RISK FACTORS |
Item 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
2021 Month |
Number of shares |
Average price paid per share |
Maximum number of shares that may yet be purchased under the program at month end (1) |
|||||||||
January |
1— | $ | — | 147,921 | ||||||||
February |
— | $ | — | 147,921 | ||||||||
March |
— | $ | — | 147,921 | ||||||||
April |
— | $ | — | 147,921 | ||||||||
May |
— | $ | — | 147,921 | ||||||||
June |
— | $ | — | 147,921 | ||||||||
July |
— | $ | — | 147,921 | ||||||||
August |
— | $ | — | 147,921 | ||||||||
September |
— | $ | — | 147,021 | ||||||||
|
|
|
|
|||||||||
Total/Average |
$ |
(1) |
In December 1993, we announced that the Board of Directors authorized a stock repurchase program whereby we may purchase outstanding shares of the common stock from time-to-time, |
Item 3. |
DEFAULTS UPON SENIOR SECURITIES |
Item 4. |
RESERVED |
Item 5. |
OTHER INFORMATION |
Item 6. |
EXHIBITS |
PRIMEENERGY RESOURCES CORPORATION | ||||||
Dated: November 19, 2021 |
By: |
/s/ Charles E. Drimal, Jr. | ||||
Charles E. Drimal, Jr. | ||||||
Chairman, President |