HOUSTON, Nov. 4, 2015/PRNewswire / -- Goodrich Petroleum Corporation (NYSE: GDP) (the 'Company') today announced financial results for the quarter ended September 30, 2015and a financial update.

FINANCIAL UPDATE:

• To date, the Company has reduced total debt by approximately $198 million(31%) and annual interest expense by approximately $9.5 million(debt exchanges and conversions only) since the end of the second quarter through the following transactions:
  • In September the Company exchanged $55 millionof (old) 2032 convertible notes into $27.5 millionof (new) 2032 convertible notes resulting in $27.5 millionof net debt reduction;
  • In September the Company closed on the sale of its Eagle Ford Shale production, proved reserves and associated acreage which allowed for a reduction in net debt through the third quarter of approximately $72.5 million. Approximately $14 millionof sales proceeds is still held in escrow pending a post-closing settlement;
  • In October the Company exchanged $158.2 millionof 2019 senior notes into $75 millionof second lien notes resulting in $83.2 millionof net debt reduction. The Company expects to book an estimated gain of $62.6 millionin the fourth quarter for the debt exchange;
  • In October the Company exchanged $17.1 millionof (old) 2032 convertible notes into $8.5 millionof (new) 2032 convertible notes resulting in $8.6 millionof net debt reduction;
  • In September and October the Company reduced total debt by an additional $6.2 millionthrough conversion of (new) 2032 convertible notes into common stock.

The Company remains focused on transactions that will reduce debt and interest expense.

• The borrowing base under the Company's senior credit facility was reaffirmed at $75 millionand covenants amended to provide for flexibility through February 2017.

THIRD QUARTER HIGHLIGHTS:

• Capital expenditures for the quarter totaled $16.4 million. Full year capital expenditures expected to be lower by 10-15% versus previous guidance;
• Production for the quarter totaled 645,000 barrels of oil equivalent ('Boe') (50% oil), which was affected by deferred completions and the sale of the Company's Eagle Ford production, proved reserves and associated acreage;
• Adjusted Revenues, which includes the benefit of realized gains on the Company's oil hedges, were $31.5 millionfor the quarter versus $55.1 millionin the prior year period;
• Operating Expenses were lower by $114.5 millionin the quarter versus the prior year period primarily due to a decrease in the amount of impairment expense recognized of $52.9 millionand a $42.8 milliongain recognized on the sale of the Company's producing interest and associated acreage in the Eagle Ford Shale. Sequentially Operating Expenses were lower by $9.2 million;
• ('Adjusted EBITDAX') defined as earnings before interest, taxes, non-cash general & administrative ('G&A') expenses and exploration was $20.3 millionin the quarter, compared to $37.1 millionin the prior year period.

(See accompanying tables at the end of this press release that reconcile Adjusted Revenues and Adjusted EBITDAX, non-US GAAP measures, to their most directly comparable US GAAP financial measure.)

THE COMPANY HAS POSTED A NEW PRESENTATION ON THE COMPANY'S WEBSITE WHICH WILL BE REVIEWED ON THE EARNINGS CONFERENCE CALL. INVESTORS CAN ACCESS THE SLIDES AT: http://goodrichpetroleum.investorroom.com/events-and-presentations

FINANCIAL RESULTS

LIQUIDITY

The Company exited the quarter with credit facility borrowings, net of cash on hand, of $13.5 millionwith a borrowing base of $105 million. The Company's borrowing base was reduced to $75 millionon October 1, 2015in conjunction with the exchange of $158.2 millionof our 2019 Notes for the issuance of $75.0 millionof 8.875% Second Lien Notes due 2018. The borrowing base was re-affirmed on November 3, 2015at $75 million. In addition, the covenants in the credit facility were amended to 1.25 to 1 First Lien Debt to EBITDAX and 1.25 to 1 EBITDAX to Cash Interest expense. The Current Ratio as defined in the credit agreement remains the same. The Company expects to finance the remainder of its 2015 capital expenditures budget from cash flow from operations.

CASH FLOW

Adjusted EBITDAX was $20.3 millionin the quarter, compared to $37.1 millionin the prior year period.

Discretionary cash flow ('DCF'), defined as net cash provided by operating activities before changes in working capital, was $8.8 millionin the quarter, compared to $26.8 millionin the prior year period. Net cash used in operating activities was $6.3 millionin the quarter, compared to net cash provided by operating activities of $25.3 millionin the prior year period. The Company estimates the vast majority of its negative change in working capital occurred in the first three quarters of the year.

DCF and Adjusted EBITDAX for the quarter were negatively impacted by the sale of the Company's producing Eagle Ford Shale properties and the sale in December 2014of its non-core, Beckville/Mindenfield in East Texaswhen compared to the previous year period.

(See accompanying tables at the end of this press release that reconcile Adjusted EBITDAX and DCF, each of which are non-US GAAP financial measures, to their most directly comparable US GAAP financial measure.)

CAPITAL EXPENDITURES

Capital expenditures totaled $16.4 millionin the quarter, of which $12.7 millionwas spent on completion costs, $0.7 millionon leasehold acquisition and $3.0 millionon facilities, capital workovers and other expenditures. While the Company booked capital expenditures of $16.4 millionin the quarter, the Company paid out cash amounts totaling $22.6 million. Approximately 96% of the quarter's total capital expenditures were spent drilling and completing wells and extending leases for future drilling operations in the TMS. The Company currently has no rigs running in any of its areas and has two TMS wells waiting on completion. The Company will establish its preliminary capital expenditure budget for 2016 in December, which will be dependent on commodity prices as to whether it allocates capital to the TMS and Haynesville Shale areas. The Company anticipates minimum capital expenditures in the fourth quarter and expects to be 10-15% below its full year preliminary capital expenditure budget of $90- $110 million.

PRODUCTION

Production totaled approximately 645,000 Boe in the quarter, or an average of 7,008 Boe per day, versus 1,021,000 Boe, or an average of 11,096 Boe per day, in the prior year period. Oil production totaled 320,000 barrels of oil in the quarter (50% of total production), or an average of approximately 3,477 Bbls per day. Oil production for the quarter was negatively impacted by the sale of the Eagle Ford Shale producing properties in September 2015. Natural gas production totaled 2.0 Bcf in the quarter, or an average of approximately 21,184 Mcf per day, versus 3.5 Bcf, or an average of 37,957 Mcf per day, in the prior year period. Natural gas production for the quarter was negatively impacted by the Company's sale of its Eagle Ford Shale producing properties in September 2015as well as the sale in December 2014of its non-core, Beckville/Mindenfield in East Texaswhen compared to the previous year period.

REVENUES

Revenues prior to realized gain on derivatives totaled $17.7 millionin the quarter versus $54.9 millionin the prior year period. Average realized price per unit was $28.10per Boe in the quarter versus $53.76per Boe in the prior year period. When factoring in the net cash received in settlement of derivative instruments, Adjusted Revenues totaled $31.5 millionin the quarter versus $55.1 millionin the prior year period, and average realized price per unit was $49.39per Boe ($88.83per Bbl and $1.76per Mcf) versus $53.98per Boe ($92.34per Bbl and $3.63per Mcf) in the prior year period. Revenues for the quarter were negatively impacted by the Company's sale of its producing Eagle Ford Shale properties in September 2015.

(See accompanying tables at the end of this press release that reconcile Adjusted Revenues, a non-US GAAP measure, to its most directly comparable US GAAP financial measure.)

CRUDE OIL AND NATURAL GAS DERIVATIVES

The Company had a gain of $7.9 millionon its derivatives not designated as hedges in the quarter, versus a gain of $20.3 millionduring the prior year period. The Company received net cash proceeds and realized a gain of $13.7 millionthis quarter for the settlement of its oil derivatives, and incurred an unrealized loss of $5.8 millionfor the change of the fair value of its oil and natural gas contracts. For 2015, the Company has a total of 3,500 Bbls/day swapped at an average price of $96.11per Bbl.

OPERATING EXPENSES

Operating expenses for the quarter were lower by $114.5 million, or 80%, in the quarter versus the prior year period primarily due to a decrease in the amount of impairment expense recognized of $52.9 millionand a $42.8 milliongain recognized on the sale of the Company's producing interest and associated acreage in the Eagle Ford Shale. Operating expenses for the quarter decreased by $9.2 millionsequentially. Operating expenses for the quarter are broken out as follows:

Lease operating expense ('LOE') was lower by $2.8 million to $3.9 millionin the quarter, versus $6.7 millionin the prior year period. LOE for the quarter included $0.5 millionfor workovers, versus $0.6 millionin the prior year period. The decrease in LOE was primarily due to (i) field level cost cutting results; (ii) the divestment of our East Texasassets during the fourth quarter of 2014; and (iii) the divestment of our producing Eagle Ford Shale properties in September 2015.

Production and other taxes were lower by $1.6 million to $1.3 millionin the quarter versus $2.9 millionin the prior year period. The decrease in production and other taxes was primarily due to significantly lower crude oil prices during the quarter, lower oil production from our Eagle Ford Shale and more oil production from the TMS, which has severance tax abatement for a minimum of twenty-four months after initial production.

Transportation and processing expense was lower by $0.7 million to $1.4 millionin the quarter versus $2.1 millionin the prior year period. The decrease in transportation and processing expense pertains to lower operated natural gas production due to the divestment of our East Texasassets during the fourth quarter of 2014.

Depreciation, depletion and amortization ('DD&A') expense was lower by $14.2 million to $21.8 millionin the quarter versus $36.0 millionin the prior year period. The decrease in DD&A expense was primarily due to the divestment of our East Texasassets during the fourth quarter of 2014 and lower Eagle Ford Shale Trend DD&A.

Impairment expense was $32.5 millionfor the quarter versus $85.3 millionin the prior year period. Approximately 83% of the impairment for the quarter was from the Company's Angelina River Trendacreage.

Exploration expense was higher by $3.4 million to $4.3 millionin the quarter versus $0.9 millionin the prior year period. Non-cash lease expiration expense, which represents 95% of total exploration expense in the quarter, was mostly for non-core acreage in the Eagle Ford and Tuscaloosa Marine Shale.

General and Administrative expense was lower by $2.9 million to $5.4 millionin the quarter versus $8.3 millionin the prior year period. G&A expense related to non-cash, stock based compensation totaled $0.9 millionin the quarter versus $2.0 millionin the prior year period. G&A was lower versus the prior year period primarily due to the Company's cost cutting efforts and staff reductions. The Company expects year over year cash G&A for 2015 to be down 20 - 25% versus the prior year period.

Gain on Sale of assets was $42.8 millionfor the quarter due to the sale of the Company's producing Eagle Ford Shale properties in September 2015. The Company did not have a gain on sale of assets in the prior year period.

OPERATING INCOME

Operating income, defined as revenues minus operating expenses, totaled a loss of $10.1 millionin the quarter, versus an operating loss of $87.4 millionin the prior year period. Adjusted operating income, when adjusted for cash received in settlement of derivative instruments of $13.7 million, impairment expense of $32.5 millionand gain on sale of assets of $42.8 millionwas a $6.6 millionloss for the quarter. Operating income for the quarter was negatively impacted by completion deferrals, the sale of its producing Eagle Ford Shale properties in September 2015and the Company's sale in December 2014of its non-core, Beckville/Mindenfield in East Texaswhen compared to the previous year period.

(See accompanying tables at the end of this press release that reconcile adjusted operating loss, a non-US GAAP financial measure to its most directly comparable US GAAP financial measure.)

INTEREST EXPENSE

Interest expense totaled $15.6 millionin the quarter versus $12.6 millionin the prior year period. Non-cash interest expense associated with the Company's debt totaled $4.7 million(representing 30% of total interest expense) in the quarter versus $2.7 millionin the prior year period. As referenced above, annual interest expense will be reduced going forward by approximately $9.5 millionannually through the recent debt exchanges and conversions.

NET INCOME

The Company announced a net loss applicable to common stock of $25.2 millionin the quarter, or ($0.44)per basic share, versus a net loss applicable to common stock of $87.1 million, or ($1.96)per basic share in the prior year period. Adjusted net loss applicable to common stock was $25.6 millionfor the quarter, or ($0.44)per basic share, versus an adjusted net loss applicable to common stock of $21.8 million, or ($0.49)per basic share in the prior year period. Net income for the quarter was negatively impacted by the sale of its producing Eagle Ford Shale properties and the sale in December 2014of its non-core, Beckville/Mindenfield in East Texaswhen compared to the previous year period.

(See accompanying tables at the end of this press release that reconcile adjusted net loss applicable to common stock, a non-US GAAP measure, to its most directly comparable US GAAP financial measure.)

OTHER INFORMATION

In this press release, the Company refers to several non-US GAAP financial measures, including Adjusted EBITDAX, DCF, Adjusted revenues, Adjusted operating income (loss), Adjusted net loss applicable to common stock and Cash operating margin. Management believes Adjusted EBITDAX, DCF, Adjusted Revenues, Adjusted operating income (loss), Adjusted net loss applicable to common stock and Cash operating margin are good financial indicators of the Company's performance and ability to internally generate operating funds. Neither DCF nor Cash operating margin, should be considered an alternative to net cash provided by operating activities, as defined by US GAAP. Adjusted revenues should not be considered an alternative to total revenues, as defined by US GAAP. Adjusted operating income (loss) should not be considered an alternative to operating income (loss), as defined by US GAAP. Adjusted net loss applicable to common stock and Adjusted EBITDAX should not be considered an alternative to net loss applicable to common stock, as defined by US GAAP. Management believes that all of these non-US GAAP financial measures provide useful information to investors because they are monitored and used by Company management and widely used by professional research analysts in the valuation and investment recommendations of companies within the oil and gas exploration and production industry.

Initial production rates are subject to decline over time and should not be regarded as reflective of sustained production levels. In particular, production from horizontal drilling in shale oil and natural gas resource plays and tight natural gas plays that are stimulated with extensive pressure fracturing are typically characterized by significant early declines in production rates.

Unless otherwise stated, oil production volumes include condensate.

Certain statements in this news release regarding future expectations and plans for future activities may be regarded as 'forward looking statements' within the meaning of the Securities Litigation Reform Act. They are subject to various risks, such as financial market conditions, changes in commodities prices and costs of drilling and completion, operating hazards, drilling risks, and the inherent uncertainties in interpreting engineering data relating to underground accumulations of oil and gas, as well as other risks discussed in detail in the Company's Annual Report on Form 10-K for the year ended December 31, 2014and other subsequent filings with the Securities and Exchange Commission. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.

Goodrich Petroleum is an independent oil and natural gas exploration and production company listed on the New York Stock Exchange.

SOURCE Goodrich Petroleum Corporation