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CST: 12/11/2019 15:03:57   

Halcón Resources Announces Second Quarter 2019 Results

95 Days ago

DENVER, Aug. 08, 2019 (GLOBE NEWSWIRE) -- Halcón Resources Corporation (OTC PINK:HKRS) (“Halcón” or the “Company”) today announced its second quarter 2019 results and provided an update on operations and other matters.

Net production for the three months ended June 30, 2019 averaged 18,055 barrels of oil equivalent per day (Boe/d).  Production was comprised of 57% oil, 17% natural gas liquids (NGLs) and 26% natural gas for the quarter.

Halcón generated total revenues of $56.4 million for the second quarter of 2019.  The Company reported a net loss available to common stockholders of $(640.8) million or net loss per basic and diluted share of $(4.03) for the second quarter of 2019.  Adjusted EBITDA (see EBITDA Reconciliation table for additional information) totaled $27.4 million during the second quarter of 2019 compared to $21.9 million in the first quarter. 

Excluding the impact of hedges, Halcón realized 95% of the average NYMEX oil price, 25% of the average NYMEX oil price for NGLs and -25% of the average NYMEX natural gas price (see Selected Operating Data table for additional information) during the second quarter of 2019.  Realized hedge gains totaled approximately $6.2 million during the second quarter. 

Total operating costs per unit, after adjusting for selected items (see Selected Operating Data table for additional information), were $21.45 per Boe for the second quarter of 2019, compared to $21.73 per Boe for the first quarter of 2019. 

Liquidity and Capital Spending

As of June 30, 2019, Halcón’s liquidity was $37 million consisting of $2 million in cash on hand plus $37 million available under the revolving credit facility less $2 million in letters of credit outstanding. 

During the second quarter of 2019, Halcón incurred capital costs of approximately $29 million on drilling and completions and $35 million on infrastructure, seismic and other. 

Hedging Update

As of August 8, 2019, Halcón had ~8,500 barrels per day (Bbl/d) of oil hedged for the last six months of 2019 at an average price of $55.73 per barrel.  For 2020, the Company had ~5,000 Bbl/d of oil hedged at an average price of $58.85 per barrel.  Halcón also had Magellen East Houston vs. Cushing basis swaps in place for ~5,000 Bbl/d in the fourth quarter of 2019 at +$3.72 per barrel and ~9,000 Bbl/d in 2020 at +$2.95 per barrel.

As of August 8, 2019, Halcón had 22,342 MMBtu/d of natural gas hedged for the last six months of 2019 at an average price of $2.81 per MMBtu.  The Company had WAHA vs. NYMEX basis differential swaps in place for 25,500 MMBtu/d for last six months of 2019 at an average swap price of -$1.18 per MMBtu/d.

As of August 8, 2019, Halcón had ~3,500 barrels per day of natural gas liquids hedged for the last six months of 2019 at $29.21 per barrel. 

Restructuring Update

As previously announced, the Company entered into a restructuring support agreement (the “RSA”) on August 2, 2019 and filed a pre-packaged bankruptcy plan on August 7, 2019.  Halcón will continue to operate as usual during the bankruptcy and will continue pay its vendors, employees and other operating partners in the normal course of business.  Pursuant to the restructuring plan, Halcón will launch a $165 million equity rights offering of which $150 million is backstopped by certain bondhonders.  The Company expects this offering to close and fund concurrent with its emergence from bankruptcy in late September or early October of 2019.  Halcón also received a commitment for a new senior secured revolving credit facility with an expected $275 million borrowing base which will go effective upon emergence from bankruptcy.  The Company expects its liquidity to be in excess of $150 million upon emergence from bankruptcy with a leverage profile of less than 1.5x (net debt/LTM EBITDA). 

About Halcón Resources

Halcón Resources Corporation is an independent energy company focused on the acquisition, production, exploration and development of liquids-rich onshore oil and natural gas assets in the United States.

For more information contact Quentin Hicks, Executive Vice President - CFO & Treasurer, at 303-802-5541 or qhicks@halconresources.com.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not strictly historical statements constitute forward-looking statements.  Forward-looking statements include, among others, statements about anticipated production, liquidity, capital spending, drilling and completion plans, and forward guidance.  Forward-looking statements may often, but not always, be identified by the use of such words such as "expects", "believes", "intends", "anticipates", "plans", "estimates", “projects”, "potential", "possible", or "probable" or statements that certain actions, events or results "may", "will", "should", or "could" be taken, occur or be achieved.  Forward-looking statements are based on current beliefs and expectations and involve certain assumptions or estimates that involve various risks and uncertainties that could cause actual results to differ materially from those reflected in the statements. These risks include, but are not limited to, the ability to confirm and consummate a plan of reorganization in accordance with the terms of the restructuring support agreement; risks attendant to the bankruptcy process, including the effects thereof on the Company’s business and on the interests of various constituents, the length of time that the Company might be required to operate in bankruptcy and the continued availability of operating capital during the pendency of such proceedings; risks associated with third party motions in any bankruptcy case, which may interfere with the ability to confirm and consummate a plan of reorganization, potential adverse effects on the Company’s liquidity or results of operations; increased costs to execute the reorganization, effects on market price of the Company’s common stock and on the Company’s ability to access the capital markets, and the risks set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and other filings submitted by the Company to the U.S. Securities and Exchange Commission (SEC), copies of which may be obtained from the SEC's website at www.sec.gov or through the Company's website at www.halconresources.com. Readers should not place undue reliance on any such forward-looking statements, which are made only as of the date hereof. The Company has no duty, and assumes no obligation, to update forward-looking statements as a result of new information, future events or changes in the Company's expectations.

 

   
HALCÓN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
                 
    Three Months Ended     Six Months Ended  
    June 30,   June 30,
      2019       2018       2019       2018  
Operating revenues:              
  Oil, natural gas and natural gas liquids sales:              
   Oil  $   53,232     $   48,756     $   98,749     $   91,825  
   Natural gas     (1,655 )       1,560         (194 )       3,879  
   Natural gas liquids     4,297         4,991         9,242         8,703  
   Total oil, natural gas and natural gas liquids sales      55,874         55,307         107,797         104,407  
  Other     504         108         497         263  
   Total operating revenues     56,378         55,415         108,294         104,670  
                 
Operating expenses:              
  Production:              
   Lease operating     13,473         5,314         27,659         10,229  
   Workover and other     1,368         1,956         4,014         3,317  
   Taxes other than income     3,308         3,226         6,201         6,255  
  Gathering and other     11,041         5,956         25,910         12,378  
  Restructuring     654         27         11,925         128  
  General and administrative     12,519         14,255         17,127         29,465  
  Depletion, depreciation and accretion     40,425         16,096         70,400         32,087  
  Full cost ceiling impairment     664,383         -          939,622         -  
  (Gain) loss on sale of oil and natural gas properties     -          2,225         -         5,904  
  (Gain) loss on sale of Water Assets     2,897         -          3,782         -  
   Total operating expenses     750,068         49,055         1,106,640         99,763  
Income (loss) from operations     (693,690 )       6,360         (998,346 )       4,907  
Other income (expenses):              
  Net gain (loss) on derivative contracts     17,010         (12,100 )       (47,789 )       (6,197 )
  Interest expense and other     (14,470 )       (10,534 )       (27,059 )       (17,582 )
     Total other income (expenses) Total other income (expenses)     2,540         (22,634 )       (74,848 )       (23,779 )
Income (loss) before income taxes     (691,150 )       (16,274 )       (1,073,194 )       (18,872 )
Income tax benefit (provision)      50,306         -          95,791         -  
Net income (loss) $   (640,844 )   $   (16,274 )   $   (977,403 )   $   (18,872 )
                 
Net income (loss) per share of common stock:              
  Basic $   (4.03 )   $   (0.10 )   $   (6.15 )   $   (0.12 )
  Diluted $   (4.03 )   $   (0.10 )   $   (6.15 )   $   (0.12 )
Weighted average common shares outstanding:              
  Basic     159,050         157,943         158,801         155,925  
  Diluted     159,050         157,943         158,801         155,925  
                 

 

         
HALCÓN RESOURCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share and per share amounts)
         
    June 30, 2019   December 31, 2018
Current assets:      
  Cash and cash equivalents $   2,238     $   46,866  
  Accounts receivable     34,251         35,718  
  Receivables from derivative contracts     10,648         57,280  
  Prepaids and other     12,075         4,788  
    Total current assets     59,212         144,652  
Oil and natural gas properties (full cost method):      
  Evaluated     2,113,296         1,470,509  
  Unevaluated     439,604         971,918  
    Gross oil and natural gas properties     2,552,900         2,442,427  
  Less - accumulated depletion     (1,646,116 )       (639,951 )
    Net oil and natural gas properties     906,784         1,802,476  
Other operating property and equipment:      
  Other operating property and equipment     191,277         130,251  
  Less - accumulated depreciation     (12,045 )       (8,388 )
  Net other operating property and equipment     179,232         121,863  
Other noncurrent assets:      
  Receivables from derivative contracts     4,820         12,437  
  Operating lease right of use assets     4,290         -  
  Funds in escrow and other     1,135         2,181  
Total assets $   1,155,473     $   2,083,609  
         
Current liabilities:      
  Accounts payable and accrued liabilities $   111,909     $   157,848  
  Liabilities from derivative contracts     11,814         3,768  
  Current portion of long-term debt, net     801,887         -  
  Operating lease liabilities     1,625         -  
  Asset retirement obligations     -         126  
    Total current liabilities     927,235         161,742  
Long-term debt, net     -         613,105  
Other noncurrent liabilities:      
  Liabilities from derivative contracts     4,248         9,139  
  Asset retirement obligations     7,085         6,788  
  Operating lease liabilities     2,748         -  
  Deferred income taxes     -         95,791  
Commitments and contingencies      
Stockholders' equity:      
  Common stock: 1,000,000,000 shares of $0.0001 par value authorized;       
  164,123,186 and 160,612,852 shares issued and outstanding as of       
  June 30, 2019 and December 31, 2018, respectively     16         16  
  Additional paid-in capital     1,089,883         1,095,367  
  Retained earnings (accumulated deficit)     (875,742 )       101,661  
    Total stockholders' equity     214,157         1,197,044  
Total liabilities and stockholders' equity $   1,155,473     $   2,083,609  
                 

 

                 
HALCÓN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
                 
    Three Months Ended     Six Months Ended  
    June 30,   June 30,
      2019       2018       2019       2018  
Cash flows from operating activities:              
Net income (loss) $   (640,844 )   $   (16,274 )   $   (977,403 )   $   (18,872 )
Adjustments to reconcile net income (loss) to net cash              
provided by (used in) operating activities:              
  Depletion, depreciation and accretion     40,425         16,096         70,400         32,087  
  Full cost ceiling impairment     664,383         -         939,622         -  
  (Gain) loss on sale of oil and natural gas properties     -         2,225         -         5,904  
  (Gain) loss on sale of Water Assets     2,897         -         3,782         -  
  Deferred income tax provision (benefit)     (50,306 )       -         (95,791 )       -  
  Stock-based compensation, net     1,025         4,237         (5,757 )       7,818  
  Unrealized loss (gain) on derivative contracts     (10,764 )       37,874         57,405         26,761  
  Amortization and write-off of deferred loan costs     573         359         977         651  
  Amortization of discount and premium     56         51         111         183  
  Other income (expense)     (1,443 )       3         (35 )       109  
Cash flows from operations before changes in working capital     6,002         44,571         (6,689 )       54,641  
Changes in working capital     3,934         11,589         (20,209 )       (11,063 )
Net cash provided by (used in) operating activities     9,936         56,160         (26,898 )       43,578  
                 
Cash flows from investing activities:              
  Oil and natural gas capital expenditures     (58,092 )       (124,076 )       (139,160 )       (251,961 )
  Proceeds received from sale of oil and natural gas properties     1,247         5,813         1,247         1,779  
  Acquisition of oil and natural gas properties     -         (200,437 )       (2,809 )       (332,901 )
  Other operating property and equipment capital expenditures     (34,023 )       (22,521 )       (64,576 )       (53,242 )
  Proceeds received from sale of other operating property and equipment     -         -         -         1,899  
  Funds held in escrow and other     (4 )       (2 )       (5 )       155  
Net cash provided by (used in) investing activities     (90,872 )       (341,223 )       (205,303 )       (634,271 )
                 
Cash flows from financing activities:              
  Proceeds from borrowings     120,000         -         244,000         206,000  
  Repayments of borrowings     (37,000 )       -         (56,000 )       -  
  Debt issuance costs     -         (634 )       -         (4,005 )
  Common stock issued     -         -         -         63,480  
  Offering costs and other     (21 )       (508 )       (427 )       (2,983 )
Net cash provided by (used in) financing activities     82,979         (1,142 )       187,573         262,492  
                 
Net increase (decrease) in cash and cash equivalents     2,043         (286,205 )       (44,628 )       (328,201 )
                 
Cash and cash equivalents at beginning of period     195         382,075         46,866         424,071  
Cash and cash equivalents at end of period $   2,238     $   95,870     $   2,238     $   95,870  
                 

 

 
HALCÓN RESOURCES CORPORATION
SELECTED OPERATING DATA (Unaudited)
 
               
  Three Months Ended June 30,   Six Months Ended June 30,
    2019       2018       2019       2018  
               
Production volumes:              
Crude oil (MBbls)     939         795         1,860         1,488  
Natural gas (MMcf)     2,516         1,083         4,457         1,969  
Natural gas liquids (MBbls)     285         187         578         333  
Total (MBoe)     1,643         1,162         3,181         2,149  
Average daily production (Boe/d)     18,055         12,769         17,575         11,873  
               
Average prices:              
Crude oil (per Bbl) $   56.69     $   61.33     $   53.09     $   61.71  
Natural gas (per Mcf), as adjusted (1)     (0.66 )       1.44         (0.02 )       1.97  
Natural gas liquids (per Bbl)     15.08         26.69         15.99         26.14  
Total per Boe     34.01         47.60         33.89         48.58  
               
Cash effect of derivative contracts:              
Crude oil (per Bbl) $   (0.58 )   $   32.24     $   0.05     $   13.67  
Natural gas (per Mcf)     1.44         0.13         1.00         0.11  
Natural gas liquids (per Bbl)     11.16         -          8.74         -   
Total per Boe     3.80         22.18         3.02         9.57  
               
Average prices computed after cash effect of settlement of derivative contracts:              
Crude oil (per Bbl) $   56.11     $   93.57     $   53.14     $   75.38  
Natural gas (per Mcf)     0.78         1.57         0.98         2.08  
Natural gas liquids (per Bbl)     26.24         26.69         24.73         26.14  
Total per Boe     37.81         69.78         36.91         58.15  
               
Average cost per Boe:              
Production:              
Lease operating $   8.20     $   4.57     $   8.70     $   4.76  
Workover and other     0.83         1.68         1.26         1.54  
Taxes other than income     2.01         2.78         1.95         2.91  
Gathering and other, as adjusted (1)     5.42         4.73         4.22         5.11  
Restructuring     0.40         0.02         3.75         0.06  
General and administrative, as adjusted (1)     4.99         8.68         5.47         9.91  
Depletion     23.26         12.30         20.92         13.38  
               
(1) Represents natural gas average prices per Mcf, gathering and other and general and administrative costs per Boe, adjusted for items noted in the reconciliation below:    
               
Natural gas, as reported $   (0.66 )   $   1.44     $   (0.04 )   $   1.97  
  Gas treating fees      -          -          0.02         -   
Natural gas, as adjusted(2) $   (0.66 )   $   1.44     $   (0.02 )   $   1.97  
               
General and administrative:              
General and administrative, as reported $   7.62     $   12.27     $   5.38     $   13.71  
Stock-based compensation:              
Non-cash     (0.62 )       (3.65 )       1.81         (3.64 )
Transaction costs and other:              
Cash      (2.01 )       0.06         (1.72 )       (0.16 )
General and administrative, as adjusted(3) $   4.99     $   8.68     $   5.47     $   9.91  
               
Gathering and other, as reported $   6.72     $   5.13     $   8.15     $   5.76  
  Gas treating fees, rig stacking charges, and other      (1.30 )       (0.40 )       (3.93 )       (0.65 )
Gathering and other, as adjusted(4) $   5.42     $   4.73     $   4.22     $   5.11  
               
Total operating costs, as reported $   25.38     $   26.43     $   25.44     $   28.68  
  Total adjusting items     (3.93 )       (3.99 )       (3.84 )       (4.45 )
Total operating costs, as adjusted(5) $   21.45     $   22.44     $   21.60     $   24.23  
               
(2) Natural gas, as adjusted, is a non-GAAP measure that excludes gas treating fees to remove hydrogen sulfide from natural gas produced from our Monument Draw properties. The Company believes that it is useful to understand the effects that these charges have on natural gas sales and that exclusion of such charges is useful for comparison to prior periods.
(3) General and administrative, as adjusted, is a non-GAAP measure that excludes non-cash stock- based compensation charges relating to equity awards under our incentive stock plans, as well as other cash charges associated with certain transactions. The Company believes that it is useful to understand the effects that these charges have on general and administrative expenses and total operating costs and that exclusion of such charges is useful for comparison to prior periods. 
(4) Gathering and other, as adjusted, is a non-GAAP measure that excludes rig stacking charges, c ertain gas treating fees to remove hydrogen sulfide from natural gas produced from our Monument Draw properties and other costs.  The Company believes that it is useful to understand the effects that these charges have on gathering and other expense and total operating costs and that exclusion of such charges is useful for comparison to prior periods. 
(5) Represents lease operating, workover and other expense, taxes other than income, gathering a nd other expense and general and administrative costs per Boe, adjusted for items noted in the reconciliation above. 
 

 

 
HALCÓN RESOURCES CORPORATION  
SELECTED ITEM REVIEW AND RECONCILIATION (Unaudited)  
(In thousands, except per share amounts)  
               
  Three Months Ended June 30,   Six Months Ended June 30,
    2019       2018       2019       2018  
As Reported:              
Net income (loss), as reported $   (640,844 )   $   (16,274 )   $   (977,403 )   $   (18,872 )
               
Impact of Selected Items:              
Unrealized loss (gain) on derivatives contracts:              
Crude oil $   (13,160 )   $   37,835     $   50,840     $   27,710  
Natural gas      2,819         (564 )       2,484         (1,552 )
Natural gas liquids     (423 )       603         4,081         603  
Total mark-to-market non-cash charge     (10,764 )       37,874         57,405         26,761  
Full cost ceiling impairment     664,383         -          939,622         -   
(Gain) loss on sale of oil and natural gas properties     -          2,225         -          5,904  
(Gain) loss on sale of Water Assets     2,897         -          3,782         -   
Restructuring     654         27         11,925         128  
Gas treating fees, rig stacking charges, transaction costs and other     5,614         387         18,507         1,606  
Selected items, before income taxes     662,784         40,513         1,031,241         34,399  
Income tax effect of selected items (1)      (17,909 )       -          (99,555 )       -   
Selected items, net of tax     644,875         40,513         931,686         34,399  
               
As Adjusted:              
Net income (loss), excluding selected items (2)(3) $   4,031     $   24,239     $   (45,717 )   $   15,527  
               
Basic net income (loss) per common share, as reported $   (4.03 )   $   (0.10 )   $   (6.15 )   $   (0.12 )
Impact of selected items     4.06         0.25         5.86         0.22  
Basic net income (loss) per common share, excluding selected items (2) $   0.03     $   0.15     $   (0.29 )   $   0.10  
               
               
Diluted net income (loss) per common share, as reported $   (4.03 )   $   (0.10 )   $   (6.15 )   $   (0.12 )
Impact of selected items     4.06         0.25         5.86         0.22  
Diluted net income (loss) per common share, excluding selected items (2)(4) $   0.03     $   0.15     $   (0.29 )   $   0.10  
               
               
Net cash provided by (used in) operating activities $   9,936     $   56,160     $   (26,898 )   $   43,578  
Changes in working capital     (3,934 )       (11,589 )       20,209         11,063  
Cash flows from operations before changes in working capital     6,002         44,571         (6,689 )       54,641  
Cash components of selected items     7,694         318         30,746         294  
Income tax effect of selected items (1)     (1,616 )       -          (6,457 )       -   
Cash flows from operations before changes in working capital, adjusted for selected items (2)(3) $   12,080     $   44,889     $   17,600     $   54,935  
               
(1)   For the 2019 columns, this represents tax impact using an estimated tax rate of 21.0%. Thes e columns include a $121.3 million (quarter-to-date) and $117.0 million (year-to-date) adjustment for the net change in valuation allowance and deferred tax liability.
(2) Net income (loss) and earnings per share excluding selected items and cash flows from operations before changes in working capital adjusted for selected items are non-GAAP measures  presented based on management's belief that they will enable a user of the financial information to understand the impact of these items on reported results.  Additionally, this presentation provides a beneficial comparison to similarly adjusted measurements of prior periods. These financial measures are not measures of financial performance under GAAP and should not be considered as an alternative to net income, earnings per share and cash flows from operations, as defined by GAAP. These financial measures may not be comparable to similarly named non-GAAP financial measures that other companies may use and may not be useful in comparing the performance of those companies to Halcón's performance.
(3)   For the three and six months ended June 30, 2019 , net income (loss) and earnings per share excluding selected items and cash flows from operations before changes in working capital  include approximately $4.1 million and $7.7 million, respectively, of proceeds related to hedge monetizations that occurred in 2019. For the three and six months ended June 30, 2018, net income (loss) and earnings per share excluding selected items and cash flows from operations before changes in working capital include approximately $30.8 million of proceeds related to a monetization of MidCush hedges that occurred in the second quarter of 2018.
(4) The impact of selected items for the three months ended June 30, 2019 and 2018 was calculated based upon weighted average diluted shares of 159.1 million and 158.1 million,respectively, due to the net income (loss) available to common stockholders, excluding selected  items. The impact of selected items for the six months ended June 30, 2019 and 2018 was calculated based upon weighted average diluted shares of 158.8 million and 156.2 million, respectively, due to the net Income (loss) available to common stockholders, excluding selected  items.
 

 

 
HALCÓN RESOURCES CORPORATION
ADJUSTED EBITDA RECONCILIATION (Unaudited)  
(In thousands)
               
  Three Months Ended June 30,   Six Months Ended June 30,
    2019       2018       2019       2018  
               
Net income (loss), as reported $   (640,844 )   $   (16,274 )   $   (977,403 )   $   (18,872 )
Impact of adjusting items:              
Interest expense      14,382         11,234         26,354         20,836  
Depletion, depreciation and accretion     40,425         16,096         70,400         32,087  
Full cost ceiling impairment     664,383         -          939,622         -   
Income tax provision (benefit)     (50,306 )       -          (95,791 )       -   
Stock-based compensation     1,025         4,237         (5,757 )       7,818  
Interest income     (17 )       (607 )       (78 )       (1,772 )
Restructuring      654         27         11,925         128  
(Gain) loss on sale of other assets     -          (93 )       416         (1,334 )
(Gain) loss on sale of oil and natural gas properties     -          2,225         -          5,904  
(Gain) loss on sale of Water Assets     2,897         -          3,782         -   
Unrealized loss (gain) on derivatives contracts     (10,764 )       37,874         57,405         26,761  
Gas treating fees, rig stacking charges, transaction costs and other     5,614         387         18,507         1,606  
Adjusted EBITDA(1)(2)(3) $   27,449     $   55,106     $   49,382     $   73,162  
               
(1)   Adjusted EBITDA is a non-GAAP measure, which is presented based on management's belief that it will enable a user of the financial information to understand the impact of these items on reported results. Additionally, this presentation provides a beneficial comparison to similarly adjusted measurements of prior periods. This financial measure is not a measure of financial performance under GAAP and should not be considered as an alternative to GAAP. This financial measure may not be comparable to similarly named non-GAAP financial measures that other companies may use and may not be useful in comparing the performance of those companies to Halcón's performance.
 
(2)   Adjusted EBITDA for the three and six months ended June 30, 2019 includes approximately $4.1 million and $7.7 million, respectively, of proceeds related to hedge monetizations that occurred in 2019.  Adjusted EBITDA for the three and six months ended June 30, 2018 includes approximately $30.8 million of proceeds related to a monetization of MidCush hedges that  occurred in the second quarter of 2018.
 
(3)   Adjusted EBITDA for the three months ended June 30, 2019 and 2018 excludes approximately $1.9 million and $0.3 million, respectively, of costs to remove hydrogen sulfide from natural gas produced from the Company's Monument Draw properties as a consequence of a third party pipeline temporarily going out of service. Adjusted EBITDA for the six months ended June 30, 2019 and 2018 excludes approximately $11.1 million and $0.3 million, respectively, of costs to remove hydrogen sulfide from natural gas produced from the Company's Monument Draw properties as a consequence of a third party pipeline temporarily going out of service.
     

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