Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM 8-K


Current Report

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 6, 2019


SRC Energy Inc.
(Exact name of registrant as specified in its charter)
______________________________

COLORADO
(State or other jurisdiction of
incorporation or organization)
001-35245
(Commission
File Number)
20-2835920
(I.R.S. Employer
Identification Number)


1675 Broadway, Suite 2600
Denver, Colorado 80202

Registrant’s telephone number, including area code: (720) 616-4300

N/A
(Former name or former address, if changed since last report)


______________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.




14452752.2



Item 2.02 Results of Operations and Financial Condition.

On February 6, 2019, SRC Energy Inc. (the “Company”) issued a press release describing preliminary financial highlights for the year ended December 31, 2018 and certain related information. A copy of the press release is attached hereto as Exhibit 99.1.

The information in this Current Report on Form 8-K, including the information set forth in Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing by the Company under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
See Exhibit Index.

 





SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 7, 2019
SRC Energy Inc.


By:
/s/ James Henderson    
James Henderson
EVP and Chief Financial Officer








Exhibit Index
 
 
 
Exhibit
Number
 
Description
 
 
99.1
 



Exhibit

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12686342&doc=3

SRC Energy Inc. Issues Preliminary Fourth Quarter 2018 Results and Provides 2019 Guidance
DENVER, CO February 6, 2019 (GlobeNewswire)—SRC Energy Inc. (NYSE American: SRCI) (“SRC” or the “Company”), an oil and gas exploration and production company focused in the Denver-Julesburg Basin, today issues preliminary fourth quarter 2018 operating results and year-end 2018 reserves, issues 2019 guidance and announces its fourth quarter 2018 earnings release and conference call dates. The following table summarizes the Company's preliminary financial and operational results for these periods:
FINANCIAL & OPERATIONS SUMMARY
 
 
 
 
 
 
3 Months Ended
12 Months Ended
Sequential % Chg.
 
 
 
12/31/2018
12/31/2018
12/31/2017
12/31/2017
Average Daily Volumes
 
 
 
Total Production (BOE)
59,821
50,543
34,194
48%
Oil %
47%
45%
47%
 
Product Price Received
 
 
 
 
Crude Oil ($/Bbl) *
$52.56
$57.79
$44.35
30%
Natural Gas Liquids ($/Bbl)
$19.66
$19.12
$17.10
12%
Natural Gas ($/Mcf) *
$2.68
$2.09
$2.33
(10)%
Differentials
 
 
 
 
NYMEX WTI *
$(6.520)
$(7.150)
$(6.580)
9%
NYMEX Henry Hub *
$(0.960)
$(1.000)
$(0.670)
49%
Unit Costs
 
 
 
 
Lease Operating Expense ($/BOE)
$2.44
$2.35
$1.56
51%
Activity Summary
 
 
 
 
D&C Capital Expenditures ($MM)
$175
$584
$462
 
Total Capital Expenditures ($MM) **
$196
$766
$1,139
 
Operated Wells Drilled (gross/net)
28/25
117/106
115/103
 
Operated Wells Completed (gross/net)
38/31
127/112
115/102
 
* Includes transportation and gathering expense ** Excludes capitalized interest, capitalized G&A & other
OIL AND NATURAL GAS RESERVES
 
2018
2017
 
Reserves Category
Oil (MMbbls)
Gas (Bcf)
NGL (MMbbls)
Net MMBOE
Net MMBOE
Sequential % Chg.
Proved Developed
37
324
36
128
88
45%
Proved
51
448
53
178
139
28%
Total Proved
88
772
89
306
227
35%
 
 
 
 
 
 
 





2019 Guidance
The Company’s 2019 budget was developed using a flat $50 NYMEX oil and $3 Henry Hub natural gas price assumption, anticipated gas processing expansion in the D-J Basin and assumed continued gas processing allocations as the system reaches designed capacity. Importantly, this budget has been developed to balance operating cash flows with total corporate expenditures and is expected to generate free cash flow. Under this plan, total capital expenditures in 2019 are projected to be between $425 million and $450 million, comprised primarily of operated drilling and completion costs, limited leasehold acquisition costs and selected non-operated drilling and completion costs. This capital program is expected to deliver a year over year increase in production of approximately 20%. Both the drilling and completion cadences will be interrupted during the year in an effort to align production growth with the Basin’s gas processing expansion.
 
2019 Guidance
 
Production (Boe/d)
59,000
 
-
62,000
 
Oil %
42
%

-
45%
 
Total Capital Expenditures ($mil)
$
425
 
-
$450
 
Production Taxes
9
%

-
10%
 
Lease Operating Expense ($/boe)
$
2.50
 
-
$2.75
 
Wells Drilled (gross/net)
99
 
/
90
 
Wells Completed (gross/net)
68
 
/
62
 
Oil Differential *
$
7.00
 
-
$8.00
 
* Includes all transportation and gathering costs from the wellhead to the settlement point
Management Comment
Lynn A. Peterson, Chairman and CEO of SRC Energy Inc., commented, “SRC’s operations soundly delivered on its 2018 expectations, while navigating through several macro issues beyond our direct control. While the year saw progress in the continued expansion of midstream infrastructure, gas processing capacity in the Basin still lags production and directly impacts our operations. Commodity volatility has impacted the entire energy sector and investor focus has shifted from growth to sustainable free cash flow and financial discipline. Continued uncertainties surrounding Colorado politics have caused ongoing concerns within the investment community. However, from an operational standpoint our



team has done an exceptional job working within the Weld County communities where we operate, and SRC’s development activities have not been materially impacted by the political winds."
Peterson continued, "The Company’s 2019 budget and guidance that we announced today takes into consideration the issues noted above and is designed to deliver value to our shareholders while maintaining SRC's sound financial position and continuing to develop our high-quality inventory. We continue to work with all elected officials and remain optimistic about our vibrant industry.”
Fourth Quarter 2018 Earnings Release and Call
SRC plans to issue its fourth quarter earnings release on Wednesday, February 20, 2019 after the close of trading on the New York Stock Exchange. SRC will host a conference call on Thursday, February 21, 2019 at 11:00 a.m. Eastern time (9:00 a.m. Mountain time) to discuss the results. The call will be conducted by Chairman and CEO Lynn A. Peterson, CFO James Henderson, Chief Development Officer Nick Spence, Chief Operations Officer Mike Eberhard and Manager of Investor Relations John Richardson. A Q&A session will immediately follow the discussion of the results for the quarter.
To participate in this call please dial:
Domestic Dial-in Number: (877) 407-9122
International Dial-in Number: (201) 493-6747
Webcast: https://78449.themediaframe.com/dataconf/productusers/srci/mediaframe/28662/indexl.html
Replay Information:
Conference ID #:  411931
Replay Dial-In (Toll Free US & Canada):  877-660-6853
Replay Dial-In (International):  201-612-7415
Expiration Date:  3/7/2019




Upcoming Investor Conferences
Presentations provided in conjunction with these events will be available on SRC's website at www.srcenergy.com the morning of the respective presentation. Members of SRC senior management will participate in the following hosted investor events, please refer to the Company’s website for specific presentation dates:
Credit Suisse Annual Energy Summit - February 11, 2019 - Vail, CO
JP Morgan High Yield Conference - February 25, 2019 - Miami, FL
Simmons Annual Energy Conference - February 27, 2019 - Las Vegas, NV
Scotia Howard Weil Energy Conference - March 26, 2019 - New Orleans, LA

About SRC Energy Inc.
SRC Energy Inc. is a domestic oil and natural gas exploration and production company. SRC's core area of operations is in the Wattenberg Field of the Denver-Julesburg Basin. The Company's corporate offices are located in Denver, Colorado. More company news and information about SRC is available at www.srcenergy.com.
Important Cautions Regarding Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. The use of words such as "believes", "expects", "anticipates", "intends", "plans", "estimates", "should", "likely", “guidance” or similar expressions indicates a forward-looking statement. Forward-looking statements herein include statements regarding expected 2019 results, including production, product mix, capital expenditures and projects, expenses, prices, pace of development, midstream capacity and cash generation. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management, and information currently available to management. The actual results could differ materially from a conclusion, forecast or projection in the forward-looking



information. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. The identification in this press release of factors that may affect the Company's future performance and the accuracy of forward-looking statements is meant to be illustrative and by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Factors that could cause the Company's actual results to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: the success of the Company's exploration and development efforts; the price of oil and gas; worldwide economic situation; change in interest rates or inflation; willingness and ability of third parties to honor their contractual commitments; the Company's ability to raise additional capital, as it may be affected by current conditions in the stock market and competition in the oil and gas industry for risk capital; the Company's capital costs, which may be affected by delays or cost overruns; costs of production; environmental and other regulations, as the same presently exist or may later be amended; the Company's ability to identify, finance and integrate any future acquisitions; the volatility of the Company's stock price; the possibility that additional midstream facilities will not be constructed within anticipated time periods or that such facilities will not have the anticipated effect on operations; and the other factors described in the “Risk Factors” sections of the Company’s filings with the Securities and Exchange Commission, all of which are incorporated by reference in this release. Results presented for the fourth quarter of 2018 and full-year 2018 are preliminary and subject to change as the Company finalizes its financial statements for the relevant periods.
Company Contact:
John Richardson (Investor Relations Manager)
SRC Energy Inc.
Tel 720-616-4308
E-mail: jrichardson@srcenergy.com