Chaparral Steel Company (CHAP) Misses Q3 EPS by 31c, Revenues Beat

Chaparral Steel Company (NYSE: CHAP) reported Q3 EPS of ($0.27), $0.31 worse than the analyst estimate of $0.04. Revenue for the quarter came in at $66.72 million versus the consensus estimate of $58.56 million.

“Chaparral continued to deliver strong operational and financial results in the third quarter,” said Chief Executive Officer Earl Reynolds. “Our STACK wells on average continued to outperform type curve expectations and drove considerable STACK production growth of almost 20% quarter-over-quarter. In addition, we saw extremely encouraging early results from our initial Canadian County Merge Miss partial section spacing test. The three-well Denali pad, which came online in August, had an average 30-day peak initial production rate of more than 1,200 Boe/d per well, with 75% liquids. Based on these results we believe our Canadian County Merge Miss acreage could have as many as eight to nine wells per section. We will continue to conduct more spacing tests, which in the near-term includes a Kingfisher County partial section, five-well test scheduled to come online during the fourth quarter and an 11-well spacing test in Canadian County. Our 11-well spacing test, which includes a nine-well Merge Miss full section test and a two-well Woodford partial section test, is slated to come online in early 2019. As a result of our consistent STACK drilling success and our strong balance sheet, we added a fourth drilling rig in October and increased our full year guidance for both total company and STACK production.”

“In addition, we also saw continued improvement in our STACK LOE/Boe during the quarter, with costs below $4.50 per barrel,” said Reynolds. “We expect to sustain these lower LOE costs moving forward and, as such, are lowering our full year total company LOE/Boe guidance to a range of $7.25 - $7.65. For the quarter, we also saw significant growth in our adjusted EBITDA, which was driven by our production growth, cost management and higher realized pricing. Adjusted EBITDA for the third quarter rose 27% quarter-over-quarter to $34.3 million, and we now have delivered $90.6 million of adjusted EBITDA year-to-date.”

“Finally, the company achieved a significant milestone during the early part of the third quarter with the uplisting of our common stock in July from the OTCQB market to the NYSE. This move provides us access to a much larger potential investor base and should ultimately generate more liquidity for our stock as we work to create long-term value for our stockholders,” concluded Reynolds.

For earnings history and earnings-related data on Chaparral Steel Company (CHAP) click here.

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