Recent IPO WildHorse Resource Development (WRD) issued its 4Q16 results after the close last night, it's first quarterly report since going public on December 14, 2016. It has been a bumpy ride for WRD, down about 20% from its IPO price. Over the past couple of days, though, the stock had made a strong push higher, up 8% since Monday. It seems traders were anticipating a good report out of the oil & gas exploration company, but, as we discuss below, WRD came up well short of expectations. Consequently, shares have traded lower by as much as 12% so far this morning. That said, as we write this report, that stock has bounced back impressively, now nearly unchanged.
Taking a closer look at its results, WRD reported a loss per share of ($0.11), missing the Capital IQ Consensus by a significant margin -- $0.15 to be exact. While revenue was up a healthy 39% year/year to $39.3 million, it also missed the mark here, coming up short versus the $46.2 million consensus. Interestingly, its commodity hedging program actually had a negative impact on the quarter. For instance, before the effect of hedging, the realized price per barrel of oil was $47.41, up 21% year/year. But, after derivatives, the price sank to $46.23, representing a gain of only 14% from a year ago. Overall, including natural gas and NGL, the total realize price per Boe was up 15% to $28.68. Without commodity derivatives, prices would have been higher by 38%.
From a production standpoint, there was little improvement from last year. Specifically, net production came in at 14.3 MBoe/d (40% oil, 50% natural gas, 10% NGL) compared to 14.1 MBoe/d in 4Q15. The modest increase in net production from last year is somewhat surprising and disappointing given the increase in commodity prices. Relative to other exploration and production companies, WRD seems to have been more conservative in its drilling program.
Another headwind was that its lease operating expense (LOE) increased a bit to $3.52 Boe vs. $3.43 in the year ago period. Still, its Adjusted EBITDAX did improve slightly, coming in at $21.2 million versus $19.9 million a year ago.
In its earnings press release, WRD also provided an update on its 2017 development plan. It reaffirmed its expectation to spend $450-$600 million on its D&C capital budget and to bring 80-100 gross wells online. So far, the company has brought online 7 wells in the Eagle Ford play. Based on the mid-point of 2017 guidance of 23.0 -27.0 MBoe/d, WRD expects to grow production by 36% pro-forma for the Burleson North acquisition. Furthermore, in North Louisiana, WRD expects to bring online two gross wells in 2Q17 and 7 gross wells in 4Q17. In 2Q17, WRD plans to add an additional drilling rig in North Louisiana.
Wrapping up, it was a disappointing report from WRD, as reflected in the stock diving lower this morning. Typically, recent IPOs tend to do fairly well relative to analysts' estimates for its first quarterly report on the chute. That could help explain why the stock was shooting higher ahead of the report. The magnitude of the miss also likely caught traders by surprise.
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