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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14-22 |
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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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24-26 |
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27 |
Item 1. |
FINANCIAL STATEMENTS |
March 31, 2022 |
December 31, 2021 |
|||||||
ASSETS |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Accounts receivable, net |
||||||||
Prepaid obligations |
||||||||
Derivative asset |
— | |||||||
Other current assets |
||||||||
Total Current Assets |
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Property and Equipment |
||||||||
Oil and gas properties at cost |
||||||||
Less: Accumulated depletion and depreciation |
( |
) | ( |
) | ||||
Field and office equipment at cost |
||||||||
Less: Accumulated depreciation |
( |
) | ( |
) | ||||
Total Property and Equipment, Net |
||||||||
Derivative asset long-term and other assets |
||||||||
Total Assets |
$ | $ | ||||||
LIABILITIES AND EQUITY |
||||||||
Current Liabilities |
||||||||
Accounts payable |
$ | $ | ||||||
Accrued liabilities |
||||||||
Due to related parties |
— | |||||||
Current portion of asset retirement and other long-term obligations |
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Derivative liability short-term |
||||||||
Total Current Liabilities |
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Long-Term Bank Debt |
||||||||
Asset Retirement Obligations |
||||||||
Derivative Liability Long-Term |
— | |||||||
Deferred Income Taxes |
||||||||
Other Long-Term Obligations |
||||||||
Total Liabilities |
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Commitments and Contingencies |
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Equity |
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Common stock, $ |
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Paid-in capital |
||||||||
Retained earnings |
||||||||
Treasury stock, at cost; 2022: |
( |
) | ( |
) | ||||
Total Equity |
||||||||
Total Liabilities and Equity |
$ | $ | ||||||
2022 |
2021 |
|||||||
Revenues |
||||||||
Oil sales |
$ | $ | ||||||
Natural gas sales |
||||||||
Natural gas liquids sales |
||||||||
Realized (loss) on derivative instruments, net |
( |
) | ( |
) | ||||
Field service income |
||||||||
Unrealized (loss) on derivative instruments, net |
( |
) | ( |
) | ||||
Other income |
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|
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Total Revenues |
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Costs and Expenses |
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Lease operating expense |
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Field service expense |
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Depreciation, depletion, amortization and accretion on discounted liabilities |
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General and administrative expense |
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Total Costs and Expenses |
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Gain on Sale and Exchange of Assets |
— | |||||||
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|
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Income (Loss) from Operations |
( |
) | ||||||
Other Income (Expense) |
||||||||
Interest Expense |
( |
) | ( |
) | ||||
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Income (Loss) Before Provision for (Benefit from) Income Taxes |
( |
) | ||||||
Provision for (Benefit from) Income Taxes |
( |
) | ||||||
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Net Income (Loss) |
( |
) | ||||||
Less: Net (Loss) Attributable to Non-Controlling Interests |
— | ( |
) | |||||
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|
|||||
Net Income (Loss) Attributable to PrimeEnergy Resources |
$ | $ | ( |
) | ||||
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Basic Income (Loss) Per Common Share |
$ | $ | ( |
) | ||||
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Diluted Income (Loss) Per Common Share |
$ | $ | ( |
) | ||||
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|
Shares Outstanding |
Common Stock |
Additional Paid-In Capital |
Retained Earnings |
Treasury Stock |
Total Stockholders’ Equity – PrimeEnergy |
Non- Controlling Interest |
Total Equity |
|||||||||||||||||||||||||
Balance at December 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||
Purchase |
( |
) | $ | — | $ | — | $ | — | $ | ( |
) | $ | ( |
) | $ | — | $ | ( |
) | |||||||||||||
Net Income |
— | — | — | — | ||||||||||||||||||||||||||||
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Balance at March 31, 2022 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||
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Balance at December 31, 2020 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||
Net (Loss) |
— | — | — | ( |
) | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||
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Balance at March 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||
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2022 |
2021 |
|||||||
Cash Flows from Operating Activities: |
||||||||
Net Income (Loss) |
$ | $ | ( |
) | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
Depreciation, depletion, amortization and accretion on discounted liabilities |
||||||||
Gain on sale and exchange of assets |
( |
) | ||||||
Unrealized loss on derivative instruments, net |
||||||||
Deferred income taxes |
( |
) | ||||||
Changes in assets and liabilities: |
||||||||
Accounts receivable |
( |
) | ( |
) | ||||
Due to related parties |
( |
) | — | |||||
Prepaids and other assets |
( |
) | ||||||
Accounts payable |
( |
) | ||||||
Accrued liabilities |
( |
) | ||||||
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|
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Net Cash provided by Operating Activities |
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Cash Flows from Investing Activities: |
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Capital expenditures, including exploration expense |
( |
) | ( |
) | ||||
Proceeds from sale of properties and equipment |
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|
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Net Cash Provided by (Used in) Investing Activities |
( |
) | ||||||
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Cash Flows from Financing Activities: |
||||||||
Purchase of stock for treasury |
( |
) | — | |||||
Proceeds from long-term bank debt |
||||||||
Repayment of long-term bank debt |
( |
) | ( |
) | ||||
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|
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Net Cash (Used in) Financing Activities |
( |
) | ( |
) | ||||
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|
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Net (Decrease) Increase in Cash and Cash Equivalents |
( |
) | ||||||
Cash and Cash Equivalents at the Beginning of the Period |
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|
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Cash and Cash Equivalents at the End of the Period |
$ | $ | ||||||
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Supplemental Disclosures: |
||||||||
Income taxes paid |
$ | $ | ||||||
Interest paid |
$ | $ |
(Thousands of dollars) |
March 31, 2022 |
December 31, 2021 |
||||||
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) |
Operating Leases |
|||
2022 |
$ | |||
2023 |
||||
Total undiscounted lease payments |
$ | |||
Less: Amount associated with discounting |
( |
) | ||
Net operating lease liabilities |
$ | |||
(Thousands of dollars) |
March 31, 2022 |
|||
Asset retirement obligation at December 31, 2021 |
$ | |||
Liabilities incurred |
||||
Liabilities settled |
( |
) | ||
Accretion expense |
||||
Asset retirement obligation at March 31, 2022 |
$ | |||
March 31, 2022 |
Quoted Prices in Active Markets For Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Balance at March 31, 2022 |
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(Thousands of dollars) |
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Assets |
||||||||||||||||
Commodity derivative contracts |
$ | — | $ | — | $ | $ | ||||||||||
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Total assets |
$ | — | $ | — | $ | $ | ||||||||||
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Liabilities |
||||||||||||||||
Commodity derivative contracts |
$ | — | $ | — | $ | ( |
) | $ | ( |
) | ||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities |
$ | — | $ | — | $ | ( |
) | $ | ( |
) | ||||||
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|
|
December 31, 2021 |
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, 2021 |
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(Thousands of dollars) |
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Assets |
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Commodity derivative contracts |
$ | — | $ | — | $ | $ | ||||||||||
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Total assets |
$ | — | $ | — | $ | $ | ||||||||||
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Liabilities |
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Total liabilities |
$ | — | $ | — | $ | ( |
) | $ | ( |
) | ||||||
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|
|
|
|
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|
|
(Thousands of dollars) |
||||
Net Liabilities – December 31, 2021 |
$ | ( |
) | |
Total realized and unrealized (gains) losses: |
||||
Included in earnings (a) |
( |
) | ||
Purchases, sales, issuances and settlements |
||||
|
|
|||
Net Liabilities — March 31, 2022 |
$ | ( |
) | |
|
|
(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 |
March 31, 2022 |
December 31, 2021 |
|||||||||
Asset Derivatives: |
||||||||||||
Derivatives not designated as cash-flow hedging instruments: |
||||||||||||
Crude Oil commodity contracts |
Derivative asset short-term |
$ | $ | — | ||||||||
|
|
|
|
|||||||||
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 |
$ | ( |
) | $ | ( |
) | ||||||
|
|
|
|
Location of gain/loss recognized in income |
Amount of gain/loss recognized in income |
|||||||||
(Thousands of dollars) |
2022 |
2021 |
||||||||
Derivatives not designated as cash-flow hedge instruments: |
||||||||||
Natural gas commodity contracts |
Unrealized (loss) on derivative instruments, net |
$ | ( |
) | $ | ( |
) | |||
Crude oil commodity contracts |
Unrealized (loss) on derivative instruments, net |
( |
) | ( |
) | |||||
Natural gas commodity contracts |
Realized (loss) on derivative instruments, net |
( |
) | ( |
) | |||||
Crude oil commodity contracts |
Realized (loss) on derivative instruments, net |
( |
) | ( |
) | |||||
|
|
|
|
|||||||
$ | ( |
) | $ | ( |
) | |||||
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|
Quarter Ended March 31, |
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2022 |
2021 |
|||||||||||||||||||||||
Net Income (In 000’s) |
Weighted Average Number of Shares Outstanding |
Per Share Amount |
Net Loss (In 000’s) |
Weighted Average Number of Shares Outstanding |
Per Share Amount |
|||||||||||||||||||
Basic |
$ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||
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Effect of dilutive securities: |
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Options(a) |
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Diluted |
$ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||
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(a) |
The effect of the |
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, 2021 (MBoe) |
||||||||||||||||||||
Developed |
906 | 2,383 | 8,957 | 6 | 12,252 | |||||||||||||||
Undeveloped |
— | — | — | — | — | |||||||||||||||
Total |
906 | 2,383 | 8,957 | 6 | 12,252 | |||||||||||||||
Average Net Daily Production (Boe per day) |
336 | 747 | 2,878 | 3 | 3,964 | |||||||||||||||
Gross Productive Wells (Working Interest and ORRI Wells) |
207 | 549 | 576 | 200 | 1,532 | |||||||||||||||
Gross Productive Wells (Working Interest Only) |
189 | 400 | 530 | 88 | 1,207 | |||||||||||||||
Net Productive Wells (Working Interest Only) |
105 | 189 | 263 | 6 | 564 | |||||||||||||||
Gross Operated Productive Wells |
137 | 195 | 321 | — | 653 | |||||||||||||||
Gross Operated Water Disposal, Injection and Supply wells |
7 | 44 | 6 | — | 57 |
Reserve Category |
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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) |
||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
2021 |
5,386 | 2,882 | 23,902 | 12,252 | — | — | — | — | 5,386 | 2,882 | 23,902 | 12,252 |
(a) | In computing total reserves on a barrels 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 |
||||||||||||||||||||||||
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 | $ | 275,227 | $ | 171,906 | $ | — | $ | — | $ | 275,227 | $ | 171,906 | $ | 36,100 | $ | 135,806 |
Three Months Ended March 31, |
||||||||||||||||
2022 |
2021 |
Increase / (Decrease) |
Increase / (Decrease) |
|||||||||||||
Barrels of Oil Produced |
273,000 | 163,000 | 110,000 | 67.48 | % | |||||||||||
Average Price Received |
$ | 96.36 | $ | 56.87 | $ | 39.48 | 69.43 | % | ||||||||
|
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|
|
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|
|||||||||||
Oil Revenue (In 000’s) |
$ | 26,305 | $ | 9,270 | $ | 17,035 | 183.76 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Mcf of Gas Sold |
777,000 | 665,000 | 112,000 | 16.84 | % | |||||||||||
Average Price Received |
$ | 4.82 | $ | 2.49 | $ | 2.33 | 93.37 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Gas Revenue (In 000’s) |
$ | 3,746 | $ | 1,658 | $ | 2,088 | 125.93 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Barrels of Natural Gas Liquids Sold |
104,000 | 86,000 | 18,000 | 20.93 | % | |||||||||||
Average Price Received |
$ | 37.03 | $ | 20.29 | $ | 16.74 | 82.40 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Natural Gas Liquids Revenue (In 000’s) |
$ | 3,851 | $ | 1,745 | $ | 2,106 | 120.69 | % | ||||||||
|
|
|
|
|
|
|||||||||||
Total Oil & Gas Revenue (In 000’s) |
$ | 33,902 | $ | 12,673 | $ | 21,229 | 167.51 | % | ||||||||
|
|
|
|
|
|
2022 |
2021 |
|||||||
Unrealized (loss) on natural gas derivative instruments |
$ | (1,948 | ) | $ | (15 | ) | ||
Unrealized (loss) on crude oil derivative instruments |
(5,191 | ) | (896 | ) | ||||
Realized (loss) on natural gas derivative instruments |
(620 | ) | (60 | ) | ||||
Realized (loss) on crude oil derivative instruments |
(3,199 | ) | (152 | ) | ||||
|
|
|
|
|||||
$ | (10,958 | ) | $ | (1,123 | ) |
2022 |
2021 |
|||||||
Average sales prices per barrel of oil |
$ | 84.52 | $ | 55.70 | ||||
Average sales price per MCF of natural gas |
$ | 4.02 | $ | 2.40 |
2022 |
2023 |
2022 |
2023 |
|||||||||||||
Swap Agreements |
||||||||||||||||
Natural Gas (MMBTU) |
919,000 | 254,000 | $ | 2.96 | $ | 3.60 | ||||||||||
Oil (barrels) |
269,900 | 70,700 | $ | 62.32 | $ | 69.50 |
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 |
2022 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 |
2,981 | $ | 76.21 | 144,740 | ||||||||
February |
5,948 | $ | 73.26 | 138,792 | ||||||||
March |
2,259 | $ | 75.36 | 136,533 | ||||||||
|
|
|
|
|||||||||
Total/Average |
11,188 | $ | 74.48 | |||||||||
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|
(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 |
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith). | |
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith). | |
101.INS | Inline XBRL (eXtensible Business Reporting Language) Instance Document (filed herewith) | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document (filed herewith) | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith) | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith) | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith) | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith) | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
PrimeEnergy Resources Corporation | ||||
(Registrant) | ||||
May 20, 2022 | /s/ Charles E. Drimal, Jr. | |||
(Date) | Charles E. Drimal, Jr. | |||
President | ||||
Principal Executive Officer | ||||
/s/ Beverly A. Cummings | ||||
May 20, 2022 | Beverly A. Cummings | |||
Executive Vice President | ||||
Principal Financial Officer |