Increased Scope, Scale, and Upside Potential October 2012 April 4, - - PowerPoint PPT Presentation
Increased Scope, Scale, and Upside Potential October 2012 April 4, - - PowerPoint PPT Presentation
Investor Presentation Anadarko Basin Property Acquisition: Increased Scope, Scale, and Upside Potential October 2012 April 4, 2013 1 Corporate Information Forward-Looking Statements This presentation contains forward-looking statements within
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This presentation contains forward-looking statements within the meaning of the federal Securities laws. All statements included in this presentation, other than statements of historical fact, regarding ¡the ¡Company’s ¡strategy, goals, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and
- bjectives of management are forward-looking ¡statements. ¡When ¡used ¡in ¡this ¡presentation, ¡the ¡words ¡‘‘could,’’ ¡
‘‘believe,’’ ¡‘‘anticipate,’’ ¡‘‘intend,’’ ¡‘‘estimate,’’ ¡‘‘expect,’’ ¡‘‘may,’’ ¡‘‘continue,’’ ¡‘‘predict,’’ ¡‘‘potential,’’ ¡‘‘project,’’ ¡ “guidance,” ¡and similar expressions are intended to identify forward-looking statements, although not all forward- looking statements contain such identifying words. Without limiting the generality of the foregoing, these statements are ¡based ¡on ¡certain ¡assumptions ¡made ¡by ¡the ¡Company ¡based ¡on ¡management’s ¡experience, ¡expectations ¡and ¡ perception of historical trends, current conditions, anticipated future developments and other factors believed to be
- appropriate. Although the Company believes that its plans, intentions and expectations reflected in or suggested by
the forward-looking statements made in this presentation are reasonable, the Company gives no assurance that actual future results will not differ materially from those forecasted in this presentation. Moreover, such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking
- statements. Each investor must assess and bear the risk of uncertainty inherent in the forward looking statements in
this presentation. The Company discloses important factors that could cause our actual results to differ materially from its expectations in the “Risk ¡Factors” ¡and “Management’s ¡Discussion and Analysis of Financial Condition and Results of Operations” ¡sections ¡of ¡the ¡Company’s ¡Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission (“SEC”) ¡and ¡other ¡filings ¡with ¡the ¡SEC. ¡These factors include the Company's ability to integrate the acquisition and realize anticipated benefits therefrom, risks or liabilities assumed as a result of the acquisition, increases in our indebtedness, our ability to meet financial and operating guidance, to achieve our production targets, successfully manage our capital expenditures and to complete and to test and produce the wells and prospects identified in this presentation; risks related to variations in the market demand for, and prices of, oil and ¡natural ¡gas; ¡uncertainties ¡about ¡the ¡Company’s ¡estimated ¡quantities ¡of ¡oil ¡and ¡natural ¡gas ¡reserves; ¡infrastructure for salt water disposal; the adequacy ¡of ¡the ¡Company’s ¡capital ¡resources ¡and ¡liquidity ¡including, ¡but ¡not ¡limited ¡to, ¡ access to additional borrowing capacity under its revolving credit facility; general economic and business conditions; failure ¡to ¡realize ¡expected ¡value ¡creation ¡from ¡property ¡acquisitions; ¡uncertainties ¡about ¡the ¡Company’s ¡ability ¡to ¡ replace ¡reserves ¡and ¡economically ¡develop ¡its ¡current ¡reserves; ¡risks ¡related ¡to ¡the ¡concentration ¡of ¡the ¡Company’s ¡
- perations; drilling results; pending litigation; and potential financial losses or earnings reductions from the
Company’s ¡commodity ¡derivative ¡positions. ¡ Accordingly, ¡you ¡should ¡not ¡place ¡undue ¡reliance ¡on ¡any ¡of ¡the ¡Company’s ¡forward-looking statements. All forward- looking statements speak only as of the date on which such statements are made and the Company undertakes no
- bligation to correct or update any forward-looking statement, whether as a result of new information, future events
- r otherwise, except as required by applicable law.
Corporate Information
Midstates Petroleum Company, Inc. 4400 Post Oak Parkway, Suite 1900 Houston, TX 77027 Ph: (713) 595-9400 www.midstatespetroleum.com John Crum Chairman, Chief Executive Officer & President Tom Mitchell Executive VP & Chief Financial Officer Al Petrie Investor Relations Coordinator (713) 595-9427 Al.Petrie@midstatespetroleum.com Garrett Galloway (713) 595-9323 Garrett.Galloway@midstatespetroleum.com
Forward-Looking Statements
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This presentation also includes financial measures that are not in accordance with generally accepted accounting principles (“GAAP”), ¡including Adjusted
- EBITDA. While management believes such measures are useful for investors because they allow for greater transparency with respect to key financial metrics,
they should not be used as a replacement for financial measures that are in accordance with GAAP. The SEC permits oil and gas companies, in their filings with the SEC, to disclose proved reserves, which are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. SEC rules also permit the disclosure of “probable” ¡ and “possible” ¡reserves. We disclose proved reserves but do not disclose probable or possible reserves. We may use certain broader terms such as “EUR” ¡(as ¡ defined below) and other descriptions of volumes of potentially recoverable hydrocarbon resources throughout this presentation that the SEC does not permit to be included in SEC filings. These broader classifications do not constitute "reserves" as defined by the SEC, and we do not attempt to distinguish these classifications from probable or possible reserves as defined by SEC guidelines. We define EUR as the cumulative oil and gas production expected to be economically recovered from a reservoir or individual well from initial production until the end of its useful life. Our estimates of EURs and resource potential have been prepared internally by our engineers and management without review by independent engineers. These estimates are, by their nature, more speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of being actually realized. We include these estimates to demonstrate what we believe to be the potential for future drilling and production by the Company. Actual locations drilled and quantities that may be ultimately recovered from our properties could differ substantially. In addition, we have made no commitment to drill all of the drilling locations which have been attributed to these quantities. Ultimate recoveries will be dependent upon numerous factors including actual encountered geological conditions, the impact of future oil and gas pricing, exploration and development costs, and future drilling decisions and budgets based upon our future evaluation of risk, returns and the availability of capital and, in many areas, the outcome
- f negotiation of drilling arrangements with holders of adjacent or fractional interest leases. Estimates of resource potential and other figures may change
significantly as development of our properties provides additional data. Our forecast and expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells, the undertaking and outcome of future drilling activity and activity that may be affected by significant commodity price declines or drilling cost increases. The ¡Company’s ¡estimates ¡of ¡total proved reserves at December 31, 2012 are based on reports provided by Netherland, Sewell & Associates, Inc., independent petroleum engineers. The ¡Company ¡has ¡estimated ¡total ¡proved ¡reserves ¡at ¡the ¡effective ¡date ¡of ¡the ¡acquisition ¡by ¡updating ¡Panther’s ¡October ¡1, ¡2012 report provided by Cawley, Gillespie & Associates, Inc. to incorporate results and wells drilled through April 1, 2013.
Reserve and Non-GAAP Information
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Midstates to Acquire Panther Energy Assets
› 36.4 MMBoe Proved Reserves (1)
- 45% Oil, 21% NGLs, and 34% Gas
- 34% Proved Developed
› ~140,000 Net Acres
- 60% held by production
› ~8,000 Boe/d Current Production
- 45-50% Oil, 20-25% NGLs, and 30-35% Gas
› ~280 Producing Horizontal Wells
- 69% average WI and 55% average NRI
- Over 80% operated
› Greater than 100 MMBoe resource potential › Seller: Panther Energy, LLC and its Partners › Assets: Anadarko Basin in Texas and Oklahoma › Purchase Price: $620 million Cash › Expected closing date: June 1, 2013
- Effective date: April 1, 2013
› Financing:
- $620 million bridge loan commitment
- Anticipate raising $725 to $750 million
- $100 to $125 million in equity(2), balance in debt
› Borrowing Base: $425 million at closing
Key Terms Key Statistics and Benefits
(1) Panther proved reserves: 10/1/2012 Cawley, Gillespie, & Associates, Inc. report updated to 4/1/2013 (2) Pending market conditions
MPO Focus Areas
New Anadarko Basin Assets
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Anadarko Basin Acquisition Strategic Fit
- Strong oil-weighted assets
- Current Production: 45-50% Oil and 20-25% NGLs
OIL-WEIGHTED ASSETS
- Third new focus area with lower overall risk and more predictability
- New investment opportunities that complement portfolio
- Leverages Mid-Continent presence
ENHANCED DIVERSIFICATION
- Grows proved reserves by almost 50%
- Stabilizes base, adds >50% to Q4 2012 production
- Enhances financing capabilities
INCREASED SCALE
- Cash flow per share accretive in 2013, increasing to double-digit
accretion in full year 2014
- Also accretive to EBITDA, earnings, reserves, and production in 2013
STRONG ACCRETION
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Oil-Weighted Acquisition Complements Portfolio
› Acquisition is consistent with an oil-weighted strategy › Focused on oil and NGL production and reserve growth
Gas 32% NGLs 20% Oil 48%
Gas 31% NGLs 19% Oil 50%
75.5 MMBoe 111.9 MMBoe
+ 36.4 MMBoe
Gas 32 - 37% NGLs 17 - 22% Oil 45 - 50% Gas 32 - 37% NGLs 17 - 22% Oil 45 - 50%
15,592 Boe/d 23,592 Boe/d
+ 8,000 Boe/d
Stand-Alone Pro Forma Acquisition Proved Reserves(1) Production(2)
(1) MPO proved reserves are 2012 year-end SEC numbers; Panther proved reserves: 10/1/12 Cawley Gillespie report updated to 4/1/13 (2) MPO: Q4 2012 average; Panther: MPO management estimate as of 4/1/13
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Third Focus Area Enhances Diversification
Stand-Alone(2) Pro Forma Acquisition(2) Proved Reserves(1) 2013 Production 2013 Capital
(1) MPO proved reserves are 2012 year-end SEC numbers; Panther proved reserves: 10/1/12 Cawley Gillespie report updated to 4/1/13 (2) Miss Lime includes Mississippian Lime and Hunton
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Acquisition Increases Scope and Scale
Proved Reserves(1)(2) Current Production(3) Net Acres(5)
(1) MPO proved reserves are 2012 year-end SEC numbers (2) Panther proved reserves: 10/1/2012 Cawley Gillespie report updated to 4/1/2013 (3) MPO Q4 2012 average; Panther: MPO management estimate as of 4/1/13 (4) Proved reserves ÷ (current production * 365 days) (5) MPO net acres as of December 31, 2012
Panther 33% MPO 67% Panther 34% MPO 66% Panther 36% MPO 64%
111.9 MMBoe 23.6 MBoe/d 390,000 Net Acres 48% increase 51% increase 56% increase
Existing Assets % Panther Assets % Pro Forma MPO Proved Reserves (MMBoe)(1)(2) 75.5 67% 36.4 33% 111.9 % Oil 50% 45% 48% % NGLs 19% 21% 20% Proved Developed Reserves (MMBoe)(1)(2) 27.8 69% 12.5 31% 40.3 % Proved Developed 37% 34% 36% Current Production (MBoe/d)(3) 15.6 66% 8.0 34% 23.6 Reserve Life (Years)(4) 13.3 12.5 13.0 Net Acreage(5) 250,000 64% 140,000 36% 390,000
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Increased Scale: New Focus Area, Anadarko Basin
› Approximately 70,000 square miles › De-risked target formations › Drilled by the industry for ~100 years › Estimated cumulative production 5.4 billion barrels of oil and 125 trillion cubic feet of gas(1) › Over 4,000 horizontal wells have been completed in the formations › Active Industry Participants
- Apache
- Chesapeake
- Unit Corporation
- Newfield Exploration
- QEP Resources
(1) Based on state data as of March 2012
Panther Acreage
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MARMATON
Increased Scale: Multiple Target Formations
DOUGLAS TONKAWA COTTAGE GROVE CLEVELAND MARMATON BIG LIME OSWEGO PRUE SKINNER RED FORK BARTLESVILLE MISSOURIAN DES MOINES
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Increased Scale: Creating Value
› Acreage position provides exposure to multiple plays › Main drilling targets include Cleveland, Marmaton, Cottage Grove, and Tonkawa
- Upside potential from drilling the deeper lower Pennsylvanian and Mississippian sections
› Low-risk, predictable, and repeatable with strong rates of return
- 100% horizontal development program
› Well-level economics compare favorably with existing portfolio › Experienced team in place to execute a ramped-up drilling program › Greater than 700 locations identified (~33% PUDs) › Drill and complete costs: ~$3 million › 6,000’ ¡to ¡8,000’ ¡total ¡vertical ¡depth
- 4,000’ ¡to ¡4,300’ ¡laterals
- Sand Fracs; 15 to 17 stages
› EUR: 150 to 200 MBoe › IRR: 30% to 70% › Average F&D: $18 to $24 / Boe › Six rigs by the end of summer 2013
- 3-4 rigs targeting the Cleveland
- 2-3 targeting the Marmaton, Cottage Grove,
and Tonkawa
› Drill 40 to 45 wells during 2013 Well Specifics Drilling Plans
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An Accretive Transaction
Pro Forma Proved Reserves(1) Pro Forma Production(2)
› Acquisition is accretive on all key metrics in 2013
- Cash Flow
- Earnings
- EBITDA
- Production
- Reserves
(1) MPO proved reserves are 2012 year-end SEC numbers; Panther proved reserves: 10/1/12 Cawley Gillespie report updated to 4/1/13 (2) Proved reserves ÷ (current production * 365 days) (3) MPO: Q4 2012 average; Panther: MPO management estimate as of 4/1/13
Pro Forma Company Reserve Summary Proved Reserves(1) 111.9 MMBoe Louisiana 36.8 MMBoe (33%) Mississippian/ Hunton 38.7 MMBoe (35%) Panther Acquisition 36.4 MMBoe (32%) Proved Developed(1) 36% R/P (years)(2) 13.0 % Liquids 68% Boe/d (closing) (3) > 24,000 Boe/d
0.0 20.0 40.0 60.0 80.0 100.0 120.0 2010 2011 2012 Pro Forma Acquisition Proved Reserves (MMBoe) 16.9 26.2 75.5 111.9 36.4 Panther 5,000 10,000 15,000 20,000 25,000 2010 2011 Q4 2012 Pro Forma Acquisition Production (Boe/d) 3,820 7,499 15,592 ~24,000 8,000 Panther
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Hedging Summary (as of April 4, 2013)
2013 Q1 Q2 Q3 Q4 2014 2015 Oil
WTI Swaps Volume (Bbls) 478,800 483,460 672,094 672,120 2,425,950 1,460,000 Volume (Bbl/d) 5,320 5,313 7,305 7,306 6,646 4,000 Price ($/Bbl) $94.70 $94.70 $95.01 $95.65 $88.98 $86.69 WTI Collars Volume (Bbls) 50,751 50,751 50,751 50,751 164,400 Volume (Bbl/d) 564 558 552 552 450 Price ($/Bbl) - Floor $85.27 $85.27 $85.27 $85.27 $88.49 Price ($/Bbl) - Ceiling $100.70 $100.70 $100.70 $100.70 $97.94 WTI/LLS Basis Differential Swaps (Louisiana) Volume (Bbls) 419,400 438,970 413,034 330,760 501,000 Volume (Bbl/d) 4,660 4,824 4,490 3,595 1,373 Price ($/Bbl) $6.06 $5.93 $5.76 $5.80 $5.35
Natural Gas Liquids
Swaps Volume (Bbls) 64,500 64,500 64,500 64,500 151,500 Volume (Bbl/d) 717 709 701 701 415 Price ($/Bbl) $63.42 $63.42 $63.42 $63.42 $62.16
Natural Gas
Collars Volume (Mmbtu) 558,249 558,249 558,249 558,249 1,685,004 Volume (Mmbtu/d) 6,203 6,135 6,068 6,068 4,616 Price ($/Mmbtu) - Floor $3.68 $3.68 $3.68 $3.68 $3.99 Price ($/Mmbtu) - Ceiling $4.91 $4.91 $4.91 $4.91 $5.09
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Guidance (as of April 4, 2013)
Q1 2013 STAND ALONE REVISED FULL YEAR 2013 (PRO FORMA)
Daily Production (boe/day) 16,200 - 16,400 (1) 24,000 - 26,000 (2)
~60% OK / 40% LA ~45-50% Existing OK, 25-30% LA., 20-25% Anadarko
Capital Expenditures (3) $120mm - $125mm $525mm - $575mm
~55% OK / ~45% LA ~45% Existing OK, 30% LA, 25% Anadarko
Lease Operating and Workover Expense $7.50 - $8.00 / boe $7.00 - $7.50 / boe Severance and Ad Valorem Tax 8% - 9% of revenue 7% - 8% of revenue General and Administrative Expense (4) (5) $10mm - $12mm $49mm - $53mm DD&A Expense $27.00 - $31.00 / boe $27.00 - $31.00 / boe Income Tax Provision (deferred & non-cash) 40% 40%
Notes: 1) Louisiana estimate: 60-65% Oil, 15-20% NGL, 20-25% Natural Gas Oklahoma estimate: 35-40% Oil, 20-25% NGL, 40-45% Natural Gas 2) Louisiana estimate: 60-65% Oil, 15-20% NGL, 20-25% Natural Gas Oklahoma estimate: 35-40% Oil, 20-25% NGL, 40-45% Natural Gas Anadarko estimate: 45-50% Oil, 20-25% NGL, 30-35% Natural Gas 3) 4) 10-15% non-cash stock compensation; excludes $15-$20mm of transaction-related expenses for 2013 pro forma 5) Includes ~$0.9mm in Q1 and ~ $3mm in 2013 for nonrecurring transition costs related to 2012 Eagle Energy Acquisition Excludes Capitalized Interest of $7-$8mm Q1, and $46-$50mm Yr. & $25-$30mm of capitalized transaction expenses for 2013 pro forma