Approach Resources Inc (AREX) saw its loss widen to $13.48 million, or $0.32 a share for the quarter ended Dec. 31, 2016. In the previous year period, the company reported a loss of $5.76 million, or $0.14 a share. On the other hand, adjusted net loss for the quarter widened to $11.30 million, or $0.27 a share from a loss of $4.98 million or $0.12 a share, a year ago. Revenue during the quarter grew 3.97 percent to $26.50 million from $25.49 million in the previous year period. Gross margin for the quarter expanded 1415 basis points over the previous year period to 85.79 percent. Operating margin for the quarter stood at negative 26.63 percent as compared to a negative 51.70 percent for the previous year period.
Operating loss for the quarter was $7.06 million, compared with an operating loss of $13.18 million in the previous year period.
Ross Craft, Approach’s chairman and chief executive officer commented, “In 2016, we delivered exceptional operational results while maintaining our focus on reducing costs and increasing operating efficiencies. We achieved record low LOE and drilling and completion costs during the year, and successfully managed our natural production decline. We also negotiated, and subsequently closed in January 2017, a transformational, strategic deleveraging transaction that reduced outstanding debt by $130.6 million and future interest expense by $40 million, and launched an exchange offer for our remaining $99.8 million of senior notes. We are excited to have three new board members and to align ourselves with a strategic investor that has the depth of knowledge in the oilfield services and energy business of the Wilks Family Office, our new largest shareholder. Capitalizing on the increase in commodity prices, we hedged approximately 85% of 2017 forecasted natural gas and 50% of NGL production. While continuing to operate within our cash flow in 2017, we expect to resume production growth from our year-end 2016 exit rate. We believe we are well-positioned to create value for our shareholders by strengthening our balance sheet, building on our asset base and continuing to be the lowest-cost operator in the Midland Basin.”
Operating cash flow drops significantly
Approach Resources Inc has generated cash of $26.08 million from operating activities during the year, down 74.61 percent or $76.63 million, when compared with the last year. The company has spent $23.89 million cash to meet investing activities during the year as against cash outgo of $217.35 million in the last year.
The company has spent $2.77 million cash to carry out financing activities during the year as against cash inflow of $114.80 million in the last year period.
Cash and cash equivalents stood at $0.02 million as on Dec. 31, 2016, down 96.50 percent or $0.58 million from $0.60 million on Dec. 31, 2015.
Working capital remains negative
Working capital of Approach Resources Inc was negative $13.88 million on Dec. 31, 2016 compared with negative $8.07 million on Dec. 31, 2015. Current ratio was at 0.47 as on Dec. 31, 2016, down from 0.72 on Dec. 31, 2015.
Debt remains almost stable
Total debt of Approach Resources Inc remained almost stable for the quarter at $498.35 million, when compared with the last year period. Long-term debt of Approach Resources remained almost stable for the quarter at $498.35 million, when compared with the last year period. Total debt was 45.12 percent of total assets as on Dec. 31, 2016, compared with 42.26 percent on Dec. 31, 2015. Debt to equity ratio was at 0.89 as on Dec. 31, 2016, up from 0.82 as on Dec. 31, 2015.
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