Approach Resources (AREX) saw its loss widen to $140.77 million, or $2 a share for the quarter ended Mar. 31, 2017. In the previous year period, the company reported a loss of $13.66 million, or $0.33 a share. On the other hand, adjusted net loss for the quarter narrowed to $7.83 million, or $0.11 a share from a loss of $13.04 million or $0.32 a share, a year ago. Revenue during the quarter surged 49.62 percent to $26.36 million from $17.62 million in the previous year period. Gross margin for the quarter expanded 2026 basis points over the previous year period to 84.18 percent. Operating margin for the quarter stood at negative 19.37 percent as compared to a negative 97.95 percent for the previous year period.
Operating loss for the quarter was $5.10 million, compared with an operating loss of $17.25 million in the previous year period.
Ross Craft, Approach's chairman and chief executive officer commented, "We accomplished a great deal this quarter and our transformation is on track. We reduced our senior notes outstanding by approximately $145 million and increased our financial flexibility with the completion of a strategic recapitalization that passed with 82% shareholder approval. The resulting interest expense savings, coupled with improving commodity prices, allow us to substantially increase our capital budget to $50 million - $70 million in 2017, to be entirely funded out of operating cash flow. Approach continues to benefit from the strength of our core asset, the cash flow that it generates and our tireless focus on capital efficiency and operating cost improvement. As a result of our focus on day-to-day execution and enhancing our well stimulation design, our recent wells show production results meaningfully above our type curve. We will reevaluate our type curve between now and year-end and these strong results suggest an upward revision in our production profile and expectations for ultimate recovery. In addition, Approach has a longstanding focus on building strong, collaborative relationships with our key suppliers. To that end I am pleased to announce two new long-term agreements that allow us to secure pricing and availability of completions and compression services and limit our exposure to service cost escalation as activity picks up in the basin."
Working capital remains negative
Working capital of Approach Resources was negative $15.44 million on Mar. 31, 2017 compared with negative $11.73 million on Mar. 31, 2016. Current ratio was at 0.41 as on Mar. 31, 2017, down from 0.58 on Mar. 31, 2016. Days sales outstanding went down to 20 days for the quarter compared with 50 days for the same period last year.
Debt comes down significantly
Approach Resources has recorded a decline in total debt over the last one year. It stood at $357.79 million as on Mar. 31, 2017, down 27.86 percent or $138.17 million from $495.96 million on Mar. 31, 2016. Approach Resources has recorded a decline in long-term debt over the last one year. It stood at $357.79 million as on Mar. 31, 2017, down 27.86 percent or $138.17 million from $495.96 million on Mar. 31, 2016. Total debt was 32.58 percent of total assets as on Mar. 31, 2017, compared with 42.94 percent on Mar. 31, 2016. Debt to equity ratio was at 0.64 as on Mar. 31, 2017, down from 0.83 as on Mar. 31, 2016.
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