Approach Resources Inc. Reports Full Year And Fourth Quarter 2012 Results, Announces 2012 Proved Reserves And Increases Horizontal Wolfcamp Shale Drilling Inventory And Resource Potential
Lease operating expenses increased in 2012 compared to 2011 primarily due to higher workover, compression, water hauling, well repair and maintenance expenses. Production and ad valorem taxes increased due to our increase in oil, NGL and gas sales. General and administrative expenses increased primarily due to higher share-based compensation as well as salaries and benefits, a result of increased staffing. Depletion, depreciation and amortization expense increased primarily due to higher production and oil and gas property carrying costs, relative to estimated proved developed reserves. Higher oil and gas property carrying costs primarily reflect our development of our oil-focused Wolfcamp shale play.
Fourth Quarter 2012 Financial Results
Fourth quarter 2012 production totaled 784 MBoe (8.5 MBoe/d), up 21% from the same period in 2011 and 5% from the prior quarter. Oil production for fourth quarter 2012 increased 75% compared to fourth quarter 2011 and 20% from the prior quarter. Production for fourth quarter 2012 was 38% oil, 30% NGLs and 32% natural gas, compared to 26% oil, 35% NGLs and 39% natural gas in fourth quarter 2011.
Net loss for fourth quarter 2012 was $837,000, or $0.02 per diluted share, on revenues of $35.3 million. This compares to net loss for fourth quarter 2011 of $9.3 million, or $0.30 per diluted share, on revenues of $31.1 million. Fourth quarter 2012 revenues increased $4.2 million due to an increase in production volumes ($10.2 million), partially offset by a decrease in oil, NGL and gas prices ($6.0 million). Net loss for fourth quarter 2012 included an unrealized gain on commodity derivatives of $1.3 million and a realized loss on commodity derivatives of $408,000.Excluding the unrealized loss on commodity derivatives and related income tax effect, adjusted net loss (non-GAAP) for fourth quarter 2012 was $1.7 million, or $0.04 per diluted share, compared to adjusted net income of $5.8 million, or $0.19 per diluted share, for fourth quarter 2011. See “Supplemental Non-GAAP Financial and Other Measures” below for our reconciliation of adjusted net income to net (loss) income.
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