Business Context and Reporting Period
This Form 8-K is filed by Midstates Petroleum Company, Inc. (noting the request metadata references Amplify Energy Corp., the filing text identifies Midstates) on September 5, 2012. The report details the acquisition of Eagle Energy Production, LLC ("Eagle Energy") and the launch of a private senior notes offering.
Key Financial Metrics and Guidance
The filing provides updated operational and financial guidance for the combined company following the Eagle Energy Acquisition. Specific historical revenue, profit, or cash flow figures for the current period are not provided in the text; only forward-looking ranges are listed.
| Metric | Q3 2012 (Combined) | Full Year 2012 (Combined) | Full Year 2013 (Combined) |
|---|---|---|---|
| Daily Production (Boe/d) | 8,100 - 8,500 | 9,800 - 10,500 | 20,000 - 23,000 |
| Capital Expenditures ($ millions) | $90 - $100 | $400 - $430 | $400 - $450 |
| Lease Operating & Workover Expense ($/Boe) | $8.25 - $9.25 | $5.50 - $7.00 | N/A |
| Severance & Ad Valorem Tax (% of Revenue) | 10% - 11% | 7% - 8% | N/A |
| General & Administrative Expense ($ millions) | $8 - $9 | $42 - $47 | N/A |
| Depreciation, Depletion & Amortization ($/Boe) | $38 - $39 | $32 - $36 | N/A |
| Income Tax Provision | 40% - 45% rate | 40% rate | N/A |
Debt and Liquidity: The Company launched a private offering of $550,000,000 aggregate principal amount of senior notes. The filing does not provide current total debt or liquidity ratios.
Material Changes
- Asset Acquisition: Midstates Sub entered into an Asset Purchase Agreement on August 11, 2012, to acquire producing oil and natural gas assets and leasehold acreage in Oklahoma and Kansas from Eagle Energy. Eagle Energy held approximately 82,000 net acres prospective in the Mississippian Lime and 15,000 net acres in the Hunton formation.
- Production Mix: The acquisition shifts the production mix. Q3 2012 is estimated at 60-65% oil, while Full Year 2013 is estimated at 50-55% oil, 15-20% NGL, and 30-35% natural gas.
Outlook, Risks, and Contingencies
- Legal Contingency: The Company is involved in litigation with Clovelly Oil Company. On August 15, 2012, the Court of Appeals denied the Company's application for rehearing. The Company intends to file a writ of certiorari to the Louisiana Supreme Court.
- Forward-Looking Statements: The guidance provided is based on reasonable assumptions but is subject to unpredictable variables. The Company undertakes no obligation to update these statements.
- Transition Costs: The Full Year 2012 General and Administrative expense guidance includes $4 million associated with transition costs.
Investor Verification Checklist
- Verify the closing status and final purchase price of the Eagle Energy Acquisition.
- Review the terms of the $550 million senior notes offering (interest rate, maturity, covenants) in the attached press release (Exhibit 99.3).
- Examine the pro forma financial statements (Exhibit 99.6) to understand the combined balance sheet and debt load.
- Monitor the status of the Clovelly Oil Company litigation and potential financial impact of the Louisiana Supreme Court review.
- Confirm the actual production mix and hedging positions detailed in Exhibits 99.1 and 99.2.