Approach Resources, Inc. (NASDAQ:AREX) Q1 2019 Earnings Conference Call Transcript
May 10, 2019 • 11:00 am ET
of our presentation. In 2018, we maintained an industry-leading average drilling and completion cost of $4.6 million on horizontal well. And based on a recent rebid of services, we anticipate that we will be able to reduce this cost to as low as $3.8 million for a standard lateral within existing infrastructure. Overall, our LOE decreased in the quarter, but due to declining production, the LOE per Boe increased slightly to $5.38 per Boe from $5.21 per Boe in the fourth quarter of 2018. Production for the first quarter of 2019 was 906 MBoe or 10,100 Boe per day, which is in line with our previous annual guidance.
In light of our restructuring activities and new management's review, we are revisiting our 2019 capital budget and drilling schedule. As a result, we are withdrawing our prior guidance. Due to the low decline nature of our assets, we believe that in the event no new wells are brought online in 2019, we anticipate our annual daily production to average 9,400 to 9,600 Boes per day. We were not guiding towards that number but want to provide a decline expectation in a zero completions environment.
Now, I will turn the call over to Ian to go over the financial results.
Thanks, Troy. As of March 31, 2019, we had liquidity of $15.7 million, which represents our cash balance at the end of the quarter. We believe that we have adequate liquidity from cash generated from operations and our cash on hand for current working capital needs and to support our ongoing operations as we pursue potential deleveraging transactions. Additionally, we continue to focus on reducing our cash operating expenses and conserving capital.
In the first quarter, our cash operating costs were $12.09 per Boe, which was a 9% decrease compared to the prior year quarter. We expect our G&A expenses related to management compensation to decrease going forward due to the changes in our senior management structure, and we are working on other cost-saving initiatives.
Net loss for the quarter was $16.8 million, or $0.18 per diluted share. Excluding the decrease in the fair value of our commodity derivatives of $4.3 million, restructuring expenses of $6.3 million and an impairment loss of $0.3 million, adjusted net loss was $8.2 million, or $0.09 per diluted share.
Lease operating expense for the first quarter was $5.38 per Boe. Production and ad valorem taxes were $2.13 per Boe.
Cash general and administrative expense was $4.38 per Boe and DD&A was $15.02 per Boe.
Now, I'll turn the call back to Sergei.
As we have in the past, we intend to continue to focus on aligning our capital expenditures substantially within operating cash flows. Our special committee, which I noted earlier has been formed to explore additional strategic and deleveraging alternatives, continues to work with advisers and management to identify the best path forward for the Company. As you can appreciate, we will not be able to answer questions regarding our ongoing restructuring and negotiations. However,