Berry Corporation (bry) Reports Second Quarter 2021 Results and Announces Quarterly Dividend Increase
Berry Corporation (BRY) announced a 50% increase in its quarterly dividend to $0.06 per share, effective for Q3 2021. This decision reflects a strong second quarter performance, with an Adjusted EBITDA of $41 million and total production up 1% to 27,300 boe/d. Despite a net loss of $13 million, the company has returned 115% of its IPO proceeds to shareholders since going public in 2018. The dividend payment is scheduled for October 15, 2021.
- Dividend increased by 50% to $0.06 per share, reflecting strong financial position.
- Adjusted EBITDA of $41 million demonstrates solid operational performance.
- Returned 115% of IPO proceeds to shareholders, totaling $127 million.
- Net loss of $13 million or $0.16 per diluted share reported for Q2 2021.
- Production loss of approximately 600 bbl/d due to operational issues in California.
DALLAS, Aug. 03, 2021 (GLOBE NEWSWIRE) -- Berry Corporation (bry) (NASDAQ: BRY) (“Berry”, “bry” or the “Company”) announced that it will increase its quarterly common stock dividend to
“Berry’s solid second quarter results were consistent with our expectations and annual guidance. Since going public in 2018, Berry has remained committed to its disciplined financial principles and delivering long-term value for stockholders. In recognition of our strong financial position and continued confidence in Berry’s future, the Board has voted to increase the quarterly dividend by
The Company also reported a net loss of
Quarterly Highlights
- Generated Adjusted EBITDA(1) of
$41 million - Increased sequential total production
1% to 27,300 boe/d - Drilled 58 wells, of which 21 will come on production in Q3
- Increased quarterly dividend
50% to$0.06 per share - Reaffirming annual guidance
_______
(1) Please see “Non-GAAP Financial Measures and Reconciliations” later in this press release for a reconciliation and more information on these Non-GAAP measures.
“Our business model is simple, durable and resilient and able to withstand pandemics, market collapses and political headwinds. We have proven it generates positive cash flow in all but the most extreme market environments. We live within Levered Free Cash Flow (1), which we define to include our expenses, the capital needed to keep production flat, interest and dividends. Our confidence in our ability to generate excess Levered Free Cash Flow is once again evident by the dividend increase announced today. We believe the best current use of capital is to keep production flat, enabling us to return capital and increase shareholder returns," continued Smith. “We continue to execute successfully on our two-year plan that was established in early 2020 following the Covid-19 outbreak and oil market disruption. As promised, we increased production in the second quarter and remain in a good position to meet our 2021 production goals to keep production flat year on year. We maintained our non-energy cost levels, despite increasing commodity prices, while maintaining our high safety and environmental standards. As has been the case for the last several years, no California governmental or regulatory constraints have had a meaningful impact on our operations and we are continuing to receive permits and continuing to drill. The demand for oil and gas is strong in California and is expected to remain strong for the foreseeable future. I look forward to what’s ahead for Berry.”
Second Quarter 2021 Results
Adjusted EBITDA(1), on a hedged basis, was
The Company grew average daily production
The Company-wide hedged realized oil price for the second quarter 2021 was
OpEx consists of lease operating expenses (“LOE”), third-party revenues and expenses from electricity generation, transportation and marketing activities, as well as the effect of derivative settlements (received or paid) for gas purchases, and excludes taxes other than income taxes.
On a hedged basis, operating expenses increased by
General and administrative expenses decreased by
Taxes, other than income taxes were
For the second quarter 2021, capital expenditures were approximately
At June 30, 2021, the Company had liquidity of
“We continued to deliver on our plan and we are seeing better-than-expected results from our capital spending. However, this capital efficiency is being masked by the temporary production loss in one of our fields resulting from a reduction in steam intensity late last year,” stated Cary Baetz, chief financial officer, EVP and director. “We will continue to see a healthy spend in the third quarter that decreases in the fourth quarter, which aligns with our annual guidance. Our oil hedge position will improve in the second half of this year and into next year. While our need for natural gas hedging is being reduced, we are now starting to gain some access to the Kern County pipeline which will allow us to use some of our Rockies gas production in our steam operations. Lastly, we continue to focus on the return of capital and are happy to announce an increase in our quarterly dividend to
Quarterly Dividend
The Company’s Board of Directors declared a regular dividend for the third quarter of 2021 at a rate of
Subject to approval by the Board and depending on a variety of factors, including the Company’s financial condition and results of operations, the Company intends to pay a similar dividend in future quarters.
_______
(1) Please see “Non-GAAP Financial Measures and Reconciliations” later in this press release for a reconciliation and more information on these Non-GAAP measures.
Earnings Conference Call
The Company will host a conference call August 4, 2021, to discuss these results:
| Live Call Date: | Wednesday, August 4, 2021 |
| Live Call Time: | 9:00 a.m. Eastern Time (6 a.m. Pacific Time) |
| Live Call Dial-in: | 877-491-5169 from the U.S. |
| 720-405-2254 from international locations | |
| Live Call Passcode: | 5973754 |
A live audio webcast will be available at bry.com/category/events.
An audio replay will be available shortly after the broadcast:
| Replay Dates: | Through Wednesday, August 18, 2021 |
| Replay Dial-in: | 855-859-2056 from the U.S. |
| 404-537-3406 from international locations | |
| Replay Passcode: | 5973754 |
A replay of the audio webcast will also be archived at ir.bry.com/reports-resources.
About Berry Corporation (bry)
Bry is a publicly traded (NASDAQ: BRY) western United States independent upstream energy company with a focus on the conventional, long-lived oil reserves in the San Joaquin basin of California. More information can be found at the Company’s website at bry.com.
Forward-Looking Statements
The information in this press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address plans, activities, events, objectives, goals, strategies, or developments that the Company expects, believes or anticipates will or may occur in the future, such as those regarding financial position; liquidity; cash flows; anticipated financial and operating, results; capital program and development and production plans; operations and business strategy; potential acquisition opportunities; reserves; hedging activities; capital expenditures, return of capital; payment, payment of or improvement of future dividends; future repurchases of stock or debt; capital investments, recovery factors and other guidance are forward-looking statements. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although we believe that these assumptions were reasonable when made, these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control. Therefore, such forward-looking statements involve significant risks and uncertainties that could materially affect our expected results of operations, liquidity, cash flows and business prospects.
Bry cautions you that these forward-looking statements are subject to all of the risks and uncertainties, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil most of which are difficult to predict and many of which are beyond bry’s control. These risks include, but are not limited to, commodity price volatility; legislative and regulatory processes and actions that may prevent, delay or otherwise restrict our ability to drill and develop our assets, including regulatory approval and permitting requirements; legislative and regulatory initiatives in California or our other areas of operation addressing climate change or other environmental concerns; drilling, production and other operating risks; investment in and development of competing or alternative energy sources; uncertainties inherent in estimating natural gas and oil reserves and in projecting future rates of production; cash flow and access to capital; the timing and funding of development expenditures; environmental, health and safety risks; effects of hedging arrangements; potential shut-ins of production due to lack of downstream demand or storage capacity; the impact and duration of the ongoing COVID-19 pandemic on demand and pricing levels; and the other risks described under the heading “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
You can typically identify forward-looking statements by words such as aim, anticipate, achievable, believe, budget, continue, could, effort, estimate, expect, forecast, goal, guidance, intend, likely, may, might, objective, outlook, plan, potential, predict, project, seek, should, target, will or would and other similar words that reflect the prospective nature of events or outcomes.
Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise except as required by applicable law. Investors are urged to consider carefully the disclosure in our filings with the Securities and Exchange Commission, available from us at via our website or via the Investor Relations contact below, or from the SEC’s website at www.sec.gov.
Tables Following
The financial information and certain other information presented have been rounded to the nearest whole number or the nearest decimal. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column in certain tables. In addition, certain percentages presented here reflect calculations based upon the underlying information prior to rounding and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers, or may not sum due to rounding.
SUMMARY OF RESULTS
| Three Months Ended | ||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | ||||||||||||
| ($ and shares in thousands, except per share amounts) | ||||||||||||||
| Statement of Operations Data: | ||||||||||||||
| Revenues and other: | ||||||||||||||
| Oil, natural gas and natural gas liquids sales | $ | 147,775 | $ | 135,265 | $ | 70,515 | ||||||||
| Electricity sales | 6,888 | 10,069 | 4,884 | |||||||||||
| Losses on oil and gas sales derivatives | (55,653 | ) | (53,504 | ) | (42,267 | ) | ||||||||
| Marketing revenues | 121 | 2,234 | 292 | |||||||||||
| Other revenues | 118 | 137 | 29 | |||||||||||
| Total revenues and other | 99,249 | 94,201 | 33,453 | |||||||||||
| Expenses and other: | ||||||||||||||
| Lease operating expenses | 45,543 | 62,284 | 40,733 | |||||||||||
| Electricity generation expenses | 4,712 | 7,648 | 3,022 | |||||||||||
| Transportation expenses | 1,757 | 1,576 | 1,789 | |||||||||||
| Marketing expenses | 44 | 2,227 | 280 | |||||||||||
| General and administrative expenses | 16,065 | 17,070 | 18,777 | |||||||||||
| Depreciation, depletion and amortization | 35,850 | 33,840 | 37,512 | |||||||||||
| Taxes, other than income taxes | 11,603 | 9,557 | 10,449 | |||||||||||
| (Gains) losses on natural gas purchase derivatives | (11,639 | ) | (27,730 | ) | 925 | |||||||||
| Other operating expenses (income) | 42 | 799 | (1,192 | ) | ||||||||||
| Total expenses and other | 103,977 | 107,271 | 112,295 | |||||||||||
| Other (expenses) income: | ||||||||||||||
| Interest expense | (8,217 | ) | (8,485 | ) | (8,676 | ) | ||||||||
| Other, net | (8 | ) | (143 | ) | (6 | ) | ||||||||
| Total other (expenses) income | (8,225 | ) | (8,628 | ) | (8,682 | ) | ||||||||
| Loss before income taxes | (12,953 | ) | (21,698 | ) | (87,524 | ) | ||||||||
| Income tax benefit | (72 | ) | (376 | ) | (22,623 | ) | ||||||||
| Net loss | $ | (12,881 | ) | $ | (21,322 | ) | $ | (64,901 | ) | |||||
| Net loss per share: | ||||||||||||||
| Basic | $ | (0.16 | ) | $ | (0.27 | ) | $ | (0.81 | ) | |||||
| Diluted | $ | (0.16 | ) | $ | (0.27 | ) | $ | (0.81 | ) | |||||
| Weighted-average shares of common stock outstanding - basic | 80,471 | 80,115 | 79,795 | |||||||||||
| Weighted-average shares of common stock outstanding - diluted | 80,471 | 80,115 | 79,795 | |||||||||||
| Adjusted Net (Loss) Income(1) | $ | (6,293 | ) | $ | 5,627 | $ | 4,609 | |||||||
| Weighted-average shares of common stock outstanding - diluted | 80,471 | 82,276 | 80,640 | |||||||||||
| Diluted earnings per share on Adjusted Net (Loss) Income | $ | (0.08 | ) | $ | 0.07 | $ | 0.06 | |||||||
| Three Months Ended | ||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | ||||||||||||
| ($ and shares in thousands, except per share amounts) | ||||||||||||||
| Adjusted EBITDA(1) | $ | 40,599 | $ | 51,829 | $ | 57,433 | ||||||||
| Adjusted EBITDA Unhedged(1) | $ | 78,030 | $ | 50,979 | $ | 5,559 | ||||||||
| Levered Free Cash Flow(1) | $ | (14,298 | ) | $ | 16,301 | $ | 32,057 | |||||||
| Levered Free Cash Flow Unhedged(1) | $ | 23,133 | $ | 15,451 | $ | (19,817 | ) | |||||||
| Adjusted General and Administrative Expenses(1) | $ | 13,302 | $ | 13,401 | $ | 14,081 | ||||||||
| Effective Tax Rate, including discrete items | 1 | % | 2 | % | 26 | % | ||||||||
| Cash Flow Data: | ||||||||||||||
| Net cash provided by operating activities | $ | 21,429 | $ | 38,430 | $ | 41,939 | ||||||||
| Net cash used in investing activities | $ | (40,575 | ) | $ | (19,937 | ) | $ | (22,480 | ) | |||||
| Net cash used in financing activities | $ | (3,298 | ) | $ | (1,688 | ) | $ | (19,460 | ) | |||||
__________
(1) See further discussion and reconciliation in “Non-GAAP Financial Measures and Reconciliations”.
| June 30, 2021 | December 31, 2020 | ||||||
| ($ and shares in thousands) | |||||||
| Balance Sheet Data: | |||||||
| Total current assets | $ | 177,063 | $ | 154,491 | |||
| Total property, plant and equipment, net | $ | 1,262,417 | $ | 1,258,084 | |||
| Total current liabilities | $ | 222,062 | $ | 175,306 | |||
| Long-term debt | $ | 394,009 | $ | 393,480 | |||
| Total stockholders' equity | $ | 678,658 | $ | 714,036 | |||
| Outstanding common stock shares as of | 80,471 | 79,929 | |||||
SUMMARY BY AREA
The following table shows a summary by area of our selected historical financial information and operating data for the periods indicated.
| California (San Joaquin and Ventura basins) | |||||||||||
| Three Months Ended | |||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | |||||||||
| ($ in thousands, except prices) | |||||||||||
| Oil, natural gas and natural gas liquids sales | $ | 129,128 | $ | 113,177 | $ | 62,943 | |||||
| Operating income(1) | $ | 11,413 | $ | 18,965 | $ | 32,469 | |||||
| Depreciation, depletion, and amortization (DD&A) | $ | 35,174 | $ | 32,896 | $ | 36,518 | |||||
| Average daily production (mboe/d) | 21.7 | 21.9 | 23.4 | ||||||||
| Production (oil % of total) | 100 | % | 100 | % | 100 | % | |||||
| Realized sales prices: | |||||||||||
| Oil (per bbl) | $ | 65.37 | $ | 57.34 | $ | 29.53 | |||||
| NGLs (per bbl) | $ | — | $ | — | $ | — | |||||
| Gas (per mcf) | $ | — | $ | — | $ | — | |||||
| Capital expenditures(2) | $ | 31,303 | $ | 22,760 | $ | 16,446 | |||||
| Utah (Uinta basin) | Colorado (Piceance basin) | |||||||||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | June 30, 2021 | March 31, 2021 | June 30, 2020 | |||||||||||||||||||
| ($ in thousands, except prices) | ||||||||||||||||||||||||
| Oil, natural gas and natural gas liquids sales | $ | 16,199 | $ | 15,889 | $ | 6,439 | $ | 2,438 | $ | 6,194 | $ | 1,132 | ||||||||||||
| Operating income (loss)(1) | $ | 6,736 | $ | 7,433 | $ | (584 | ) | $ | 1,121 | $ | 5,039 | $ | 6 | |||||||||||
| Depreciation, depletion, and amortization (DD&A) | $ | 630 | $ | 554 | $ | 905 | $ | 38 | $ | 38 | $ | 43 | ||||||||||||
| Average daily production (mboe/d) | 4.4 | 4.0 | 4.4 | 1.2 | 1.2 | 1.3 | ||||||||||||||||||
| Production (oil % of total) | 52 | % | 49 | % | 49 | % | 2 | % | 2 | % | 2 | % | ||||||||||||
| Realized sales prices: | ||||||||||||||||||||||||
| Oil (per bbl) | $ | 58.55 | $ | 52.08 | $ | 23.11 | $ | 56.05 | $ | 25.80 | $ | 20.67 | ||||||||||||
| NGLs (per bbl) | $ | 29.61 | $ | 26.81 | $ | 5.82 | $ | — | $ | — | $ | — | ||||||||||||
| Gas (per mcf) | $ | 3.30 | $ | 6.65 | $ | 1.68 | $ | 3.53 | $ | 9.83 | $ | 1.53 | ||||||||||||
| Capital expenditures(2) | $ | 9,162 | $ | 392 | $ | 81 | $ | — | $ | 1 | $ | 145 | ||||||||||||
__________
(1) Operating income (loss) includes oil, natural gas and NGL sales, and scheduled oil derivative settlements, offset by operating expenses (as defined elsewhere), general and administrative expenses, DD&A, impairment of oil and gas properties, and taxes, other than income taxes.
(2) Excludes corporate capital expenditures.
COMMODITY PRICING
| Three Months Ended | |||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | |||||||||
| Weighted-average realized sales prices: | |||||||||||
| Oil without hedges ($/bbl) | $ | 64.72 | $ | 56.89 | $ | 28.98 | |||||
| Effects of scheduled derivative settlements ($/bbl) | $ | (18.33 | ) | $ | (12.08 | ) | $ | 25.42 | |||
| Oil with hedges ($/bbl) | $ | 46.39 | $ | 44.81 | $ | 54.40 | |||||
| Natural gas ($/mcf) | $ | 3.39 | $ | 7.96 | $ | 1.62 | |||||
| NGLs ($/bbl) | $ | 29.61 | $ | 26.81 | $ | 5.82 | |||||
| Average Benchmark prices: | |||||||||||
| Oil (bbl) – Brent | $ | 69.08 | $ | 61.32 | $ | 33.39 | |||||
| Oil (bbl) – WTI | $ | 66.03 | $ | 57.82 | $ | 28.42 | |||||
| Natural gas (mmbtu) – Kern, Delivered(1) | $ | 3.23 | $ | 7.99 | $ | 1.45 | |||||
| Natural gas (mmbtu) – Henry Hub(2) | $ | 2.95 | $ | 3.50 | $ | 1.70 | |||||
__________
(1) Kern, Delivered Index is the relevant index used for gas purchases in California.
(2) Henry Hub is the relevant index used for gas sales in the Rockies.
CURRENT HEDGING SUMMARY
As of June 30, 2021, we had the following crude oil production and gas purchases hedges.
| Q3 2021 | Q4 2021 | FY 2022 | |||||||||
| Fixed Price Oil Swaps (Brent): | |||||||||||
| Hedged volume (mbbls) | 1,318 | 1,318 | 1,095 | ||||||||
| Weighted-average price ($/bbl) | $ | 48.66 | $ | 48.66 | $ | 60.00 | |||||
| Fixed Price Gas Purchase Swaps (Kern, Delivered): | |||||||||||
| Hedged volume (mmbtu) | 4,830,000 | 2,085,000 | — | ||||||||
| Weighted-average price ($/mmbtu) | $ | 2.83 | $ | 2.95 | $ | — | |||||
We recently entered into new pipeline capacity agreements for the shipment of natural gas from the Rockies to our assets in California that will reduce our exposure to fuel gas purchase price fluctuations. These capacity agreements are for approximately 10,000 mmbtu/d beginning October 2021 through October 2036 and approximately 5,500 mmbtu/d beginning November 2021 through December 2024 for a total commitment of
OPERATING EXPENSES
| Three Months Ended | ||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | ||||||||||||
| ($ in thousands except per boe amounts) | ||||||||||||||
| Lease operating expenses | $ | 45,543 | $ | 62,284 | $ | 40,733 | ||||||||
| Electricity generation expenses | 4,712 | 7,648 | 3,022 | |||||||||||
| Electricity sales(1) | (6,888 | ) | (10,069 | ) | (4,884 | ) | ||||||||
| Transportation expenses | 1,757 | 1,576 | 1,789 | |||||||||||
| Transportation sales(1) | (118 | ) | (137 | ) | (29 | ) | ||||||||
| Marketing expenses | 44 | 2,227 | 280 | |||||||||||
| Marketing revenues(1) | (121 | ) | (2,234 | ) | (292 | ) | ||||||||
| Derivative settlements (received) paid for gas purchases(1) | (1,913 | ) | (26,239 | ) | 7,362 | |||||||||
| Total operating expenses(1) | $ | 43,016 | $ | 35,056 | $ | 47,981 | ||||||||
| Lease operating expenses ($/boe) | $ | 18.33 | $ | 25.58 | $ | 15.37 | ||||||||
| Electricity generation expenses ($/boe) | 1.90 | 3.14 | 1.14 | |||||||||||
| Electricity sales ($/boe) | (2.77 | ) | (4.13 | ) | (1.84 | ) | ||||||||
| Transportation expenses ($/boe) | 0.70 | 0.65 | 0.67 | |||||||||||
| Transportation sales ($/boe) | (0.05 | ) | (0.06 | ) | (0.01 | ) | ||||||||
| Marketing expenses ($/boe) | 0.02 | 0.92 | 0.11 | |||||||||||
| Marketing revenues ($/boe) | (0.05 | ) | (0.92 | ) | (0.11 | ) | ||||||||
| Derivative settlements (received) paid for gas purchases ($/boe) | (0.77 | ) | (10.78 | ) | 2.78 | |||||||||
| Total operating expenses ($/boe) | $ | 17.31 | $ | 14.40 | $ | 18.11 | ||||||||
| Total unhedged operating expenses ($/boe)(2) | $ | 18.08 | $ | 25.18 | $ | 15.33 | ||||||||
| Total non-energy operating expenses(3) | $ | 12.71 | $ | 12.74 | $ | 12.81 | ||||||||
| Total energy operating expenses(4) | $ | 4.60 | $ | 1.66 | $ | 5.30 | ||||||||
| Total mboe | 2,485 | 2,435 | 2,650 | |||||||||||
__________
(1) We report electricity, transportation and marketing sales separately in our financial statements as revenues in accordance with GAAP. However, these revenues are viewed and used internally in calculating operating expenses which is used to track and analyze the economics of development projects and the efficiency of our hydrocarbon recovery. We purchase third-party gas to generate electricity through our cogeneration facilities to be used in our field operations activities and view the added benefit of any excess electricity sold externally as a cost reduction/benefit to generating steam for our thermal recovery operations. Marketing revenues and expenses mainly relate to natural gas purchased from third parties that moves through our gathering and processing systems and then is sold to third parties. Transportation sales relate to water and other liquids that we transport on our systems on behalf of third parties and have not been significant to date. Operating expenses also include the effect of derivative settlements (received or paid) for gas purchases.
(2) Total unhedged operating expenses equals total operating expenses, excluding the derivative settlements paid (received) for gas purchases.
(3) Total non-energy operating expenses equals total operating expenses, excluding fuel, electricity sales and gas purchase derivative settlement (gains) losses.
(4) Total energy operating expenses equals fuel and gas purchase derivative settlement (gains) losses less electricity sales.
PRODUCTION STATISTICS
| Three Months Ended | |||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | |||
| Net Oil, Natural Gas and NGLs Production Per Day(1): | |||||
| Oil (mbbl/d) | |||||
| California | 21.7 | 21.9 | 23.4 | ||
| Utah | 2.3 | 2.0 | 2.2 | ||
| Colorado | — | — | — | ||
| Total oil | 24.0 | 23.9 | 25.6 | ||
| Natural gas (mmcf/d) | |||||
| California | — | — | — | ||
| Utah | 10.3 | 10.0 | 11.5 | ||
| Colorado | 7.2 | 6.9 | 7.7 | ||
| Total natural gas | 17.5 | 16.9 | 19.2 | ||
| NGLs (mbbl/d) | |||||
| California | — | — | — | ||
| Utah | 0.4 | 0.3 | 0.3 | ||
| Colorado | — | — | — | ||
| Total NGLs | 0.4 | 0.3 | 0.3 | ||
| Total Production (mboe/d)(2) | 27.3 | 27.1 | 29.1 | ||
__________
(1) Production represents volumes sold during the period.
(2) Natural gas volumes have been converted to boe based on energy content of six Mcf of gas to one bbl of oil. Barrels of oil equivalence does not necessarily result in price equivalence. The price of natural gas on a barrel of oil equivalent basis is currently substantially lower than the corresponding price for oil and has been similarly lower for a number of years. For example, in the three months ended June 30, 2021, the average prices of Brent oil and Henry Hub natural gas were
CAPITAL EXPENDITURES (ACCRUAL BASIS)
| Three Months Ended | |||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | |||||||||
| (in thousands) | |||||||||||
| Capital expenditures (accrual basis)(1) | $ | 43,461 | $ | 23,569 | $ | 16,700 | |||||
__________
(1) Excludes acquisitions and asset retirement spending.
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
Adjusted Net Income (Loss) is not a measure of net income (loss), Levered Free Cash Flow is not a measure of cash flow, and Adjusted EBITDA is not a measure of either, in all cases, as determined by GAAP. Adjusted Net Income (Loss), Adjusted EBITDA, Levered Free Cash Flow and Adjusted General and Administrative Expenses are supplemental non-GAAP financial measures used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. We define Adjusted Net Income (Loss) as net income (loss) adjusted for derivative gains or losses net of cash received or paid for scheduled derivative settlements, other unusual and infrequent items, and the income tax expense or benefit of these adjustments using our effective tax rate. We define Adjusted EBITDA as earnings before interest expense; income taxes; depreciation, depletion, and amortization; derivative gains or losses net of cash received or paid for scheduled derivative settlements; impairments; stock compensation expense; and other unusual and infrequent items. We define Levered Free Cash Flow as Adjusted EBITDA less capital expenditures, interest expense and dividends. We define Adjusted General and Administrative Expenses as general and administrative expenses adjusted for non-cash stock compensation expense and unusual and infrequent costs.
Adjusted Net Income (Loss) excludes the impact of unusual and infrequent items affecting earnings that vary widely and unpredictably, including non-cash items such as derivative gains and losses. This measure is used by management when comparing results period over period. Our management believes Adjusted EBITDA provides useful information in assessing our financial condition, results of operations and cash flows and is widely used by the industry and the investment community. The measure also allows our management to more effectively evaluate our operating performance and compare the results between periods without regard to our financing methods or capital structure. Levered Free Cash Flow is used by management as a primary metric to plan capital allocation to sustain production levels and for internal growth opportunities, as well as hedging needs. It also serves as a measure for assessing our financial performance and our ability to generate excess cash from operations to service debt and pay dividends. Management believes Adjusted General and Administrative Expenses is useful because it allows us to more effectively compare our performance from period to period. We exclude the items listed above from general and administrative expenses in arriving at Adjusted General and Administrative Expenses because these amounts can vary widely and unpredictably in nature, timing, amount and frequency and stock compensation expense is non-cash in nature.
While Adjusted Net Income (Loss), Adjusted EBITDA, Adjusted EBITDA Unhedged, Levered Free Cash Flow, Levered Free Cash Flow Unhedged and Adjusted General and Administrative Expenses are non-GAAP measures, the amounts included in the calculations of Adjusted Net Income (Loss), Adjusted EBITDA, Adjusted EBITDA Unhedged, Levered Free Cash Flow, Levered Free Cash Flow Unhedged and Adjusted General and Administrative Expenses were computed in accordance with GAAP. These measures are provided in addition to, and not as an alternative for, income and liquidity measures calculated in accordance with GAAP and should not be considered as an alternative to, or more meaningful than, income and liquidity measures calculated in accordance with GAAP. Our computations of Adjusted Net Income (Loss), Adjusted EBITDA, Adjusted EBITDA Unhedged, Levered Free Cash Flow, Levered Free Cash Flow Unhedged and Adjusted General and Administrative Expenses may not be comparable to other similarly titled measures used by other companies. Adjusted Net Income (Loss), Adjusted EBITDA, Adjusted EBITDA Unhedged, Levered Free Cash Flow, Levered Free Cash Flow Unhedged and Adjusted General and Administrative Expenses should be read in conjunction with the information contained in our financial statements prepared in accordance with GAAP.
ADJUSTED NET INCOME (LOSS)
The following table presents a reconciliation of the GAAP financial measure of net income (loss) to the non-GAAP financial measure of Adjusted Net Income (Loss).
| Three Months Ended | ||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | ||||||||||||
| ($ thousands, except per share amounts) | ||||||||||||||
| Net loss | $ | (12,881 | ) | $ | (21,322 | ) | $ | (64,901 | ) | |||||
| Add (Subtract): | ||||||||||||||
| Losses on derivatives | 44,014 | 25,774 | 43,192 | |||||||||||
| Net cash (paid) received for scheduled derivative settlements | (37,431 | ) | 850 | 51,874 | ||||||||||
| Other operating expenses (income) | 42 | 799 | (1,192 | ) | ||||||||||
| Non-recurring costs | — | — | 316 | |||||||||||
| Total additions, net | 6,625 | 27,423 | 94,190 | |||||||||||
| Income tax expense of adjustments at effective tax rate | (37 | ) | (474 | ) | (24,680 | ) | ||||||||
| Adjusted Net (Loss) Income | $ | (6,293 | ) | $ | 5,627 | $ | 4,609 | |||||||
| Basic EPS on Adjusted Net (Loss) Income | $ | (0.08 | ) | $ | 0.07 | $ | 0.06 | |||||||
| Diluted EPS on Adjusted Net (Loss) Income | $ | (0.08 | ) | $ | 0.07 | $ | 0.06 | |||||||
| Weighted average shares of common stock outstanding - basic | 80,471 | 80,115 | 79,795 | |||||||||||
| Weighted average shares of common stock outstanding - diluted | 80,471 | 82,276 | 80,640 | |||||||||||
ADJUSTED EBITDA AND ADJUSTED EBITDA UNHEDGED
The following tables present a reconciliation of the GAAP financial measures of net income (loss) and net cash provided by operating activities to the non-GAAP financial measures of Adjusted EBITDA and Adjusted EBITDA Unhedged.
| Three Months Ended | ||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | ||||||||||||
| ($ thousands) | ||||||||||||||
| Net loss | $ | (12,881 | ) | $ | (21,322 | ) | $ | (64,901 | ) | |||||
| Add (Subtract): | ||||||||||||||
| Interest expense | 8,217 | 8,485 | 8,676 | |||||||||||
| Income tax benefit | (72 | ) | (376 | ) | (22,623 | ) | ||||||||
| Depreciation, depletion and amortization | 35,850 | 33,840 | 37,512 | |||||||||||
| Losses on derivatives | 44,014 | 25,774 | 43,192 | |||||||||||
| Net cash (paid) received for scheduled derivative settlements | (37,431 | ) | 850 | 51,874 | ||||||||||
| Other operating expense (income) | 42 | 799 | (1,192 | ) | ||||||||||
| Stock compensation expense | 2,860 | 3,779 | 4,579 | |||||||||||
| Non-recurring costs | — | — | 316 | |||||||||||
| Adjusted EBITDA | $ | 40,599 | $ | 51,829 | $ | 57,433 | ||||||||
| Net cash paid (received) for scheduled derivative settlements | 37,431 | (850 | ) | (51,874 | ) | |||||||||
| Adjusted EBITDA Unhedged | $ | 78,030 | $ | 50,979 | $ | 5,559 | ||||||||
| Net cash provided by operating activities | $ | 21,429 | $ | 38,430 | $ | 41,939 | ||||||||
| Add (Subtract): | ||||||||||||||
| Cash interest payments | 288 | 14,637 | 648 | |||||||||||
| Non-recurring costs | — | — | 316 | |||||||||||
| Other changes in operating assets and liabilities | 18,882 | (1,238 | ) | 14,530 | ||||||||||
| Adjusted EBITDA | $ | 40,599 | $ | 51,829 | $ | 57,433 | ||||||||
| Net cash paid (received) for scheduled derivative settlements | 37,431 | (850 | ) | (51,874 | ) | |||||||||
| Adjusted EBITDA Unhedged | $ | 78,030 | $ | 50,979 | $ | 5,559 | ||||||||
LEVERED FREE CASH FLOW
The following table presents a reconciliation of Adjusted EBITDA to the non–GAAP measures of Levered Free Cash Flow. The reconciliation of Adjusted EBITDA is presented above.
| Three Months Ended | ||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | ||||||||||||
| ($ thousands) | ||||||||||||||
| Adjusted EBITDA | $ | 40,599 | $ | 51,829 | $ | 57,433 | ||||||||
| Subtract: | ||||||||||||||
| Capital expenditures - accrual basis(1) | (43,461 | ) | (23,569 | ) | (16,700 | ) | ||||||||
| Interest expense | (8,217 | ) | (8,485 | ) | (8,676 | ) | ||||||||
| Cash dividends declared | (3,219 | ) | (3,474 | ) | — | |||||||||
| Levered Free Cash Flow | $ | (14,298 | ) | $ | 16,301 | $ | 32,057 | |||||||
| Net cash paid (received) for scheduled derivative settlements | 37,431 | (850 | ) | (51,874 | ) | |||||||||
| Levered Free Cash Flow Unhedged | $ | 23,133 | $ | 15,451 | $ | (19,817 | ) | |||||||
__________
(1) Capital expenditures excludes acquisitions and asset retirement spending.
ADJUSTED GENERAL AND ADMINISTRATIVE EXPENSES
The following table presents a reconciliation of the GAAP financial measure of general and administrative expenses to the non-GAAP financial measures of Adjusted General and Administrative Expenses.
| Three Months Ended | ||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | ||||||||||||
| ($ in thousands except per mboe amounts) | ||||||||||||||
| General and administrative expenses | $ | 16,065 | $ | 17,070 | $ | 18,777 | ||||||||
| Subtract: | ||||||||||||||
| Non-cash stock compensation expense (G&A portion) | (2,763 | ) | (3,669 | ) | (4,380 | ) | ||||||||
| Non-recurring costs | — | — | (316 | ) | ||||||||||
| Adjusted General and Administrative Expenses | $ | 13,302 | $ | 13,401 | $ | 14,081 | ||||||||
| General and administrative expenses ($/boe) | $ | 6.46 | $ | 7.01 | $ | 7.09 | ||||||||
| Subtract: | ||||||||||||||
| Non-cash stock compensation expense ($/boe) | (1.11 | ) | (1.51 | ) | (1.65 | ) | ||||||||
| Non-recurring costs ($/boe) | — | — | (0.12 | ) | ||||||||||
| Adjusted General and Administrative Expenses ($/boe) | $ | 5.35 | $ | 5.50 | $ | 5.31 | ||||||||
| Total mboe | 2,485 | 2,435 | 2,650 | |||||||||||
FULL YEAR 2021 GUIDANCE
| Low | High | ||
| Average Daily Production (mboe/d) | 27.0 | 29.0 | |
| Oil as % of Production | ~ | ||
| Operating Expenses ($/boe) | |||
| Taxes, Other than Income Taxes ($/boe) | |||
| Adjusted General & Administrative (G&A) expenses ($/boe) | |||
| Capital Expenditures ($ millions) | |||
| New Wells Drilled | 170 | 200 |
FAQ
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