Civitas Resources Announces Second Quarter 2023 Results
Company Closes Previously Announced Permian Basin Transactions
Declares Fixed-plus-Variable Dividend to be Paid in September
A conference call to discuss the second quarter results is planned for 8:00 a.m. MT (10:00 a.m. ET), August 3, 2023. Dial-in details can be found in this release. In addition, supplemental slides have been posted to the Company’s website, www.civitasresources.com.
Second Quarter 2023 Highlights
- Average daily sales volumes of 173.5 thousand barrels of oil equivalent per day ("MBoe/d") and 84.4 thousand barrels of oil per day
-
Total capital expenditures of
$226.8 million -
GAAP net income of
$139.3 million $454.3 million -
Net cash provided by operating activities of
$337.2 million $189.2 million -
Approximately 312,800 shares of outstanding common stock repurchased under the Company's stock repurchase program for a total of
$20.2 million $64.55 -
Fixed-plus-variable dividend, to be paid in September, of
$1.74 -
Total liquidity was
$3.7 billion $2.7 billion
| (1) | Non-GAAP financial measure; see attached reconciliation schedules at the end of this release. |
| (2) | Liquidity as of June 30, 2023 does not take into account the acquisitions. |
“This is a great day for Civitas, an organization with scale, portfolio diversity, and durability,” said Civitas CEO Chris Doyle. “We continue to perform exceptionally well and have strengthened our company with the addition of top-tier assets in the heart of the Permian Basin. Our diversified portfolio of oil assets will provide us with capital allocation flexibility and a greater ability to direct investments to our highest return opportunities. Our focus today is on effectively integrating our Permian assets into Civitas and delivering on our plan to profitably grow our business, while reducing debt and returning significant cash to shareholders.”
Shareholder Return Update
During the second quarter of 2023, the Company repurchased approximately 312,800 shares of outstanding common stock under its stock repurchase program for a total of
The Company's board of directors approved a dividend of
Second Quarter 2023 Financial and Operating Results
During the second quarter of 2023, the Company reported average daily sales of 173.5 MBoe/d, of which
|
|
Three Months Ended June 30, |
|||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
|
Avg. Daily Sales Volumes: |
|
|
|
|
|
|
|||||
Crude oil (Bbls/d) |
|
|
84,369 |
|
|
|
80,312 |
|
|
5 |
% |
Natural gas (Mcf/d) |
|
|
289,547 |
|
|
|
317,621 |
|
|
(9 |
)% |
Natural gas liquids (Bbls/d) |
|
|
40,864 |
|
|
|
41,974 |
|
|
(3 |
)% |
Crude oil equivalent (Boe/d) |
|
|
173,491 |
|
|
|
175,223 |
|
|
(1 |
)% |
|
|
|
|
|
|
|
|||||
Product Mix |
|
|
|
|
|
|
|||||
Crude oil |
|
|
49 |
% |
|
|
46 |
% |
|
|
|
Natural gas |
|
|
28 |
% |
|
|
30 |
% |
|
|
|
Natural gas liquids |
|
|
23 |
% |
|
|
24 |
% |
|
|
|
|
|
|
|
|
|
|
|||||
Average Sales Prices (before derivatives): |
|
|
|
|
|||||||
Crude oil (per Bbl) |
|
$ |
70.43 |
|
|
$ |
106.48 |
|
|
(34 |
)% |
Natural gas (per Mcf) |
|
$ |
1.67 |
|
|
$ |
7.10 |
|
|
(76 |
)% |
Natural gas liquids (per Bbl) |
|
$ |
19.93 |
|
|
$ |
43.79 |
|
|
(54 |
)% |
Crude oil equivalent (per Boe) |
|
$ |
41.73 |
|
|
$ |
72.17 |
|
|
(42 |
)% |
Capital expenditures during the quarter were
Net crude oil, natural gas, and natural gas liquids revenue in the second quarter of 2023 was
Lease operating expense for the second quarter of 2023, on a unit basis, increased to
The Company's general and administrative expenses ("G&A") for the second quarter were
Permian Assets Operational Update
During the second quarter, production for the Permian assets acquired from Hibernia and Tap Rock was approximately 107 thousand barrels of oil equivalent per day, which included 53 thousand barrels of oil per day. This information was provided to the Company by Hibernia and Tap Rock and has not been independently verified by the Company. The Permian transactions closed August 2, 2023.
Guidance
Updated guidance is provided below. Civitas no longer expects to have any cash income tax exposure in 2023.
|
Legacy Civitas |
Permian Aug-Dec 2023 |
Pro Forma 2023 (5 months Permian) |
2024 |
Total Production (Mboe/d) |
160 − 170 |
100 − 110 |
200 − 220 |
270 − 290 |
Oil Production (Mbo/d) |
72 − 77 |
53 − 58 |
95 − 105 |
130 − 140 |
% Liquids |
68 − |
74 − |
70 − |
71 − |
Oil Differential ($/Bbl) |
( |
( |
( |
|
Production Taxes (% of Revenue) |
8 - |
7 - |
~ |
|
Cash Operating Costs ($/Boe)(1) |
|
|
|
|
Capital Expenditures ($ in millions) |
|
|
|
|
Permian transactions closed August 2, 2023. |
||||
(1) Lease operating, Gathering, transportation and processing, Midstream operating, and cash G&A expenses combined. |
||||
Note: Guidance is forward-looking information that is subject to considerable change and numerous risks and uncertainties, many of which are beyond the Company’s control. See “Forward-Looking Statements” below.
Conference Call Information
The Company plans to host a conference call to discuss second quarter results at 8:00 a.m. MT (10:00 a.m. ET) on August 3, 2023. A live webcast and replay will be available on the Investor Relations section of the Company’s website at www.civitasresources.com. Dial-in information for the conference call is included below.
Type |
Phone Number |
Passcode |
Live participant |
888-510-2535 |
4872770 |
Replay |
800-770-2030 |
4872770 |
About Civitas Resources, Inc.
Civitas Resources, Inc. is an independent, domestic oil and gas producer focused on development of its premier assets in the
Forward-Looking Statements and Cautionary Statements
Certain statements in this press release concerning future opportunities for Civitas, future financial performance and condition, guidance, and any other statements regarding Civitas’ future expectations, beliefs, plans, objectives, financial conditions, returns to shareholders, assumptions, or future events or performance that are not historical facts are “forward-looking” statements based on assumptions currently believed to be valid. Forward-looking statements are all statements other than statements of historical facts. The words “anticipate,” “believe,” “ensure,” “expect,” “if,” “intend,” “estimate,” “probable,” “project,” “forecasts,” “predict,” “outlook,” “aim,” “will,” “could,” “should,” “would,” “potential,” “may,” “might,” “anticipate,” “likely,” “plan,” “positioned,” “strategy,” and similar expressions or other words of similar meaning, and the negatives thereof, are intended to identify forward-looking statements. Specific forward-looking statements include statements regarding the Company’s plans and expectations with respect to the transactions contemplated by (i) the membership interest purchase agreement, dated as of June 19, 2023, by and between Civitas, Hibernia Energy III Holdings, LLC, and Hibernia Energy III-B Holdings, LLC (such transactions, the “Hibernia Acquisition”) and (ii) the membership interest purchase agreement, dated as of June 19, 2023, by and between Civitas, Tap Rock Resources Legacy, LLC, Tap Rock Resources Intermediate, LLC, Tap Rock Resources II Legacy, LLC, Tap Rock Resources II Intermediate, LLC, Tap Rock NM10 Legacy Holdings, LLC and Tap Rock NM10 Holdings Intermediate, LLC, solely in its capacity as representative of the sellers thereunder, Tap Rock I Legacy, and solely for the limited purposes set forth therein, Tap Rock Resources, LLC (such transactions, the “Tap Rock Acquisition” and together with the Hibernia Acquisition, the “Acquisitions”) and the anticipated impact of the Acquisitions on the Company’s results of operations, financial position, growth opportunities, reserve estimates and competitive position. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995.
These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those anticipated, including, but not limited to, Civitas’ future financial condition, results of operations, strategy and plans; the ability of Civitas to realize anticipated synergies related to the Acquisitions in the timeframe expected or at all; changes in capital markets and the ability of Civitas to finance operations in the manner expected; the effects of commodity prices; the risks of oil and gas activities; and the fact that operating costs and business disruption may be greater than expected. Additionally, risks and uncertainties that could cause actual results to differ materially from those anticipated also include: declines or volatility in the prices we receive for our oil, natural gas, and natural gas liquids; general economic conditions, whether internationally, nationally, or in the regional and local market areas in which we do business, including any future economic downturn, the impact of continued or further increased inflation, disruption in the financial markets, and the availability of credit on acceptable terms; the effects of disruption of our operations or excess supply of oil and natural gas due to world health events, and the actions by certain oil and natural gas producing countries, including
Additional information concerning other risk factors is also contained in Civitas’ most recently filed Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other Securities and Exchange Commission filings. All forward-looking statements speak only as of the date they are made and are based on information available at that time. Civitas does not assume any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.
Schedule 1: Condensed Consolidated Statements of Operations |
|||||||||||||||
(in thousands, except for per share amounts, unaudited) |
|||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Operating net revenues: |
|
|
|
|
|
|
|
||||||||
Oil and natural gas sales |
$ |
660,526 |
|
|
$ |
1,151,364 |
|
|
$ |
1,316,548 |
|
|
$ |
1,969,174 |
|
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Lease operating expense |
|
51,230 |
|
|
|
41,877 |
|
|
|
97,068 |
|
|
|
77,896 |
|
Midstream operating expense |
|
13,319 |
|
|
|
7,469 |
|
|
|
23,380 |
|
|
|
13,181 |
|
Gathering, transportation, and processing |
|
64,873 |
|
|
|
79,519 |
|
|
|
132,225 |
|
|
|
129,922 |
|
Severance and ad valorem taxes |
|
52,443 |
|
|
|
85,870 |
|
|
|
104,805 |
|
|
|
149,174 |
|
Exploration |
|
546 |
|
|
|
1,553 |
|
|
|
1,117 |
|
|
|
2,081 |
|
Depreciation, depletion, and amortization |
|
232,786 |
|
|
|
204,519 |
|
|
|
434,089 |
|
|
|
389,379 |
|
Abandonment and impairment of unproved properties |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
17,975 |
|
Unused commitments |
|
363 |
|
|
|
1,731 |
|
|
|
754 |
|
|
|
2,507 |
|
Bad debt expense |
|
836 |
|
|
|
4 |
|
|
|
583 |
|
|
|
4 |
|
Merger transaction costs |
|
31,145 |
|
|
|
1,418 |
|
|
|
31,627 |
|
|
|
21,952 |
|
General and administrative expense, including |
|
33,541 |
|
|
|
29,666 |
|
|
|
70,399 |
|
|
|
65,386 |
|
Total operating expenses |
|
481,082 |
|
|
|
453,626 |
|
|
|
896,047 |
|
|
|
869,457 |
|
Other income (expense): |
|
|
|
|
|
|
|
||||||||
Derivative gain (loss) |
|
4,927 |
|
|
|
(72,650 |
) |
|
|
30,087 |
|
|
|
(368,143 |
) |
Interest expense |
|
(8,753 |
) |
|
|
(8,116 |
) |
|
|
(16,202 |
) |
|
|
(17,182 |
) |
Gain (loss) on property transactions, net |
|
(13 |
) |
|
|
— |
|
|
|
(254 |
) |
|
|
16,797 |
|
Other income |
|
8,045 |
|
|
|
4,313 |
|
|
|
17,068 |
|
|
|
5,096 |
|
Total other income (expense) |
|
4,206 |
|
|
|
(76,453 |
) |
|
|
30,699 |
|
|
|
(363,432 |
) |
Income from operations before income taxes |
|
183,650 |
|
|
|
621,285 |
|
|
|
451,200 |
|
|
|
736,285 |
|
Income tax expense |
|
(44,363 |
) |
|
|
(152,464 |
) |
|
|
(109,452 |
) |
|
|
(175,825 |
) |
Net income |
$ |
139,287 |
|
|
$ |
468,821 |
|
|
$ |
341,748 |
|
|
$ |
560,460 |
|
|
|
|
|
|
|
|
|
||||||||
Net income per common share: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
1.73 |
|
|
$ |
5.52 |
|
|
$ |
4.22 |
|
|
$ |
6.60 |
|
Diluted |
$ |
1.72 |
|
|
$ |
5.48 |
|
|
$ |
4.18 |
|
|
$ |
6.56 |
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
80,393 |
|
|
|
84,993 |
|
|
|
81,052 |
|
|
|
84,917 |
|
Diluted |
|
81,144 |
|
|
|
85,554 |
|
|
|
81,824 |
|
|
|
85,453 |
|
Schedule 2: Condensed Consolidated Statements of Cash Flows |
|||||||||||||||
(in thousands, unaudited) |
|||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
||||||||
Net income |
$ |
139,287 |
|
|
$ |
468,821 |
|
|
$ |
341,748 |
|
|
$ |
560,460 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
||||||||
Depreciation, depletion, and amortization |
|
232,786 |
|
|
|
204,519 |
|
|
|
434,089 |
|
|
|
389,379 |
|
Deferred income tax expense |
|
44,022 |
|
|
|
102,079 |
|
|
|
89,975 |
|
|
|
125,440 |
|
Abandonment and impairment of unproved properties |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
17,975 |
|
Stock-based compensation |
|
9,895 |
|
|
|
6,135 |
|
|
|
17,275 |
|
|
|
14,225 |
|
Amortization of deferred financing costs |
|
1,155 |
|
|
|
1,102 |
|
|
|
2,305 |
|
|
|
2,180 |
|
Derivative (gain) loss |
|
(4,927 |
) |
|
|
72,650 |
|
|
|
(30,087 |
) |
|
|
368,143 |
|
Derivative cash settlement loss |
|
(1,335 |
) |
|
|
(181,631 |
) |
|
|
(11,885 |
) |
|
|
(348,209 |
) |
(Gain) loss on property transactions, net |
|
13 |
|
|
|
— |
|
|
|
254 |
|
|
|
(16,797 |
) |
Other |
|
300 |
|
|
|
87 |
|
|
|
292 |
|
|
|
155 |
|
Changes in current assets and liabilities: |
|
|
|
|
|
|
|
||||||||
Accounts receivable, net |
|
36,240 |
|
|
|
(44,682 |
) |
|
|
176,984 |
|
|
|
(32,776 |
) |
Prepaid expenses and other assets |
|
8,810 |
|
|
|
(4,181 |
) |
|
|
26,338 |
|
|
|
(6,579 |
) |
Accounts payable and accrued liabilities |
|
(122,327 |
) |
|
|
103,864 |
|
|
|
(157,973 |
) |
|
|
192,839 |
|
Settlement of asset retirement obligations |
|
(6,738 |
) |
|
|
(6,536 |
) |
|
|
(13,285 |
) |
|
|
(11,667 |
) |
Net cash provided by operating activities |
|
337,181 |
|
|
|
722,227 |
|
|
|
876,030 |
|
|
|
1,254,768 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
||||||||
Acquisitions of oil and natural gas properties |
|
(20,423 |
) |
|
|
(3,515 |
) |
|
|
(51,247 |
) |
|
|
(303,602 |
) |
Cash acquired |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
44,310 |
|
Proceeds from sale of oil and natural gas properties |
|
64 |
|
|
|
— |
|
|
|
5,764 |
|
|
|
— |
|
Exploration and development of oil and natural gas properties |
|
(268,560 |
) |
|
|
(206,519 |
) |
|
|
(518,949 |
) |
|
|
(467,186 |
) |
Proceeds from (additions to) other property and equipment |
|
(527 |
) |
|
|
134 |
|
|
|
(1,157 |
) |
|
|
66 |
|
Purchases of carbon offsets |
|
(5,651 |
) |
|
|
(7,196 |
) |
|
|
(5,651 |
) |
|
|
(7,196 |
) |
Deposits for acquisitions |
|
(352,500 |
) |
|
|
— |
|
|
|
(352,500 |
) |
|
|
— |
|
Other |
|
— |
|
|
|
(95 |
) |
|
|
536 |
|
|
|
117 |
|
Net cash used in investing activities |
|
(647,597 |
) |
|
|
(217,191 |
) |
|
|
(923,204 |
) |
|
|
(733,491 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
||||||||
Proceeds from credit facility |
|
— |
|
|
|
100,000 |
|
|
|
— |
|
|
|
100,000 |
|
Payments to credit facility |
|
— |
|
|
|
(100,000 |
) |
|
|
— |
|
|
|
(100,000 |
) |
Proceeds from issuance of senior notes |
|
2,666,250 |
|
|
|
— |
|
|
|
2,666,250 |
|
|
|
— |
|
Redemption of senior notes |
|
— |
|
|
|
(100,000 |
) |
|
|
— |
|
|
|
(100,000 |
) |
Dividends paid |
|
(174,148 |
) |
|
|
(116,172 |
) |
|
|
(347,524 |
) |
|
|
(219,768 |
) |
Common stock repurchased and retired |
|
(20,198 |
) |
|
|
— |
|
|
|
(320,305 |
) |
|
|
— |
|
Proceeds from exercise of stock options |
|
4 |
|
|
|
24 |
|
|
|
444 |
|
|
|
202 |
|
Payment of employee tax withholdings in exchange for the return of common stock |
|
(10,492 |
) |
|
|
(2,812 |
) |
|
|
(12,610 |
) |
|
|
(15,740 |
) |
Payment of deferred financing costs |
|
(4,215 |
) |
|
|
(1,174 |
) |
|
|
(4,215 |
) |
|
|
(1,174 |
) |
Net cash provided by (used in) financing activities |
|
2,457,201 |
|
|
|
(220,134 |
) |
|
|
1,982,040 |
|
|
|
(336,480 |
) |
Net change in cash, cash equivalents, and restricted cash |
|
2,146,785 |
|
|
|
284,902 |
|
|
|
1,934,866 |
|
|
|
184,797 |
|
Cash, cash equivalents, and restricted cash: |
|
|
|
|
|
|
|
||||||||
Beginning of period(1) |
|
556,215 |
|
|
|
154,451 |
|
|
|
768,134 |
|
|
|
254,556 |
|
End of period(1) |
$ |
2,703,000 |
|
|
$ |
439,353 |
|
|
$ |
2,703,000 |
|
|
$ |
439,353 |
|
(1) Includes |
|||||||||||||||
Schedule 3: Condensed Consolidated Balance Sheets |
|||||||
(in thousands, unaudited) |
|||||||
|
June 30, 2023 |
|
December 31, 2022 |
||||
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
2,702,897 |
|
|
$ |
768,032 |
|
Accounts receivable, net: |
|
|
|
||||
Oil and natural gas sales |
|
201,248 |
|
|
|
343,500 |
|
Joint interest and other |
|
100,664 |
|
|
|
135,816 |
|
Derivative assets |
|
4,335 |
|
|
|
2,490 |
|
Prepaid income taxes |
|
2,266 |
|
|
|
29,604 |
|
Deposits for acquisitions |
|
352,500 |
|
|
|
— |
|
Prepaid expenses and other |
|
49,297 |
|
|
|
48,988 |
|
Total current assets |
|
3,413,207 |
|
|
|
1,328,430 |
|
Property and equipment (successful efforts method): |
|
|
|
||||
Proved properties |
|
7,390,897 |
|
|
|
6,774,635 |
|
Less: accumulated depreciation, depletion, and amortization |
|
(1,628,303 |
) |
|
|
(1,214,484 |
) |
Total proved properties, net |
|
5,762,594 |
|
|
|
5,560,151 |
|
Unproved properties |
|
578,508 |
|
|
|
593,971 |
|
Wells in progress |
|
316,119 |
|
|
|
407,351 |
|
Other property and equipment, net of accumulated depreciation of |
|
49,619 |
|
|
|
49,632 |
|
Total property and equipment, net |
|
6,706,840 |
|
|
|
6,611,105 |
|
Long-term derivative assets |
|
1,800 |
|
|
|
794 |
|
Right-of-use assets |
|
41,572 |
|
|
|
24,125 |
|
Other noncurrent assets |
|
7,567 |
|
|
|
6,945 |
|
Total assets |
$ |
10,170,986 |
|
|
$ |
7,971,399 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable and accrued expenses |
$ |
240,555 |
|
|
$ |
295,297 |
|
Production taxes payable |
|
389,392 |
|
|
|
258,932 |
|
Oil and natural gas revenue distribution payable |
|
522,308 |
|
|
|
538,343 |
|
Derivative liability |
|
21,438 |
|
|
|
46,334 |
|
Asset retirement obligations |
|
25,557 |
|
|
|
25,557 |
|
Lease liability |
|
21,841 |
|
|
|
13,464 |
|
Total current liabilities |
|
1,221,091 |
|
|
|
1,177,927 |
|
Long-term liabilities: |
|
|
|
||||
Senior notes |
|
3,048,511 |
|
|
|
393,293 |
|
Ad valorem taxes |
|
153,371 |
|
|
|
412,650 |
|
Derivative liability |
|
2,973 |
|
|
|
17,199 |
|
Deferred income tax liabilities |
|
409,593 |
|
|
|
319,618 |
|
Asset retirement obligations |
|
268,366 |
|
|
|
265,469 |
|
Lease liability |
|
20,394 |
|
|
|
11,324 |
|
Total liabilities |
|
5,124,299 |
|
|
|
2,597,480 |
|
Commitments and contingencies |
|
|
|
||||
Stockholders’ equity: |
|
|
|
||||
Preferred stock, |
|
— |
|
|
|
— |
|
Common stock, |
|
4,869 |
|
|
|
4,918 |
|
Additional paid-in capital |
|
3,957,513 |
|
|
|
4,211,197 |
|
Retained earnings |
|
1,084,305 |
|
|
|
1,157,804 |
|
Total stockholders’ equity |
|
5,046,687 |
|
|
|
5,373,919 |
|
Total liabilities and stockholders’ equity |
$ |
10,170,986 |
|
|
$ |
7,971,399 |
|
| Schedule 4: Adjusted EBITDAX | |||||||||||||||
| (in thousands, unaudited) | |||||||||||||||
Adjusted EBITDAX represents earnings before interest, income taxes, depreciation, depletion, and amortization, exploration expense, and other non-cash and non-recurring charges. Adjusted EBITDAX excludes certain items that we believe affect the comparability of operating results and can exclude items that are generally non-recurring in nature or whose timing and/or amount cannot be reasonably estimated. Adjusted EBITDAX is a non-GAAP measure that we present because we believe it provides useful additional information to investors and analysts, as a performance measure, for analysis of our ability to internally generate funds for exploration, development, acquisitions, and to service debt. We are also subject to financial covenants under our Credit Facility based on adjusted EBITDAX ratios. In addition, adjusted EBITDAX is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and natural gas exploration and production industry. Adjusted EBITDAX should not be considered in isolation or as a substitute for net income, net cash provided by operating activities, or other profitability or liquidity measures prepared under GAAP. Because adjusted EBITDAX excludes some, but not all items that affect net income and may vary among companies, the adjusted EBITDAX amounts presented may not be comparable to similar metrics of other companies. |
|||||||||||||||
The following table presents a reconciliation of the GAAP financial measure of net income to the non-GAAP financial measure of adjusted EBITDAX. |
|||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income |
$ |
139,287 |
|
|
$ |
468,821 |
|
|
$ |
341,748 |
|
|
$ |
560,460 |
|
Exploration |
|
546 |
|
|
|
1,553 |
|
|
|
1,117 |
|
|
|
2,081 |
|
Depreciation, depletion, and amortization |
|
232,786 |
|
|
|
204,519 |
|
|
|
434,089 |
|
|
|
389,379 |
|
Abandonment and impairment of unproved properties |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
17,975 |
|
Stock-based compensation(1) |
|
9,895 |
|
|
|
6,135 |
|
|
|
17,275 |
|
|
|
14,225 |
|
Non-recurring general and administrative expense(1) |
|
— |
|
|
|
3,449 |
|
|
|
— |
|
|
|
6,335 |
|
Merger transaction costs |
|
31,145 |
|
|
|
1,418 |
|
|
|
31,627 |
|
|
|
21,952 |
|
Unused commitments |
|
363 |
|
|
|
1,731 |
|
|
|
754 |
|
|
|
2,507 |
|
(Gain) loss on property transactions, net |
|
13 |
|
|
|
— |
|
|
|
254 |
|
|
|
(16,797 |
) |
Interest expense |
|
8,753 |
|
|
|
8,116 |
|
|
|
16,202 |
|
|
|
17,182 |
|
Interest income(2) |
|
(6,588 |
) |
|
|
— |
|
|
|
(12,807 |
) |
|
|
— |
|
Derivative (gain) loss |
|
(4,927 |
) |
|
|
72,650 |
|
|
|
(30,087 |
) |
|
|
368,143 |
|
Derivative cash settlements loss |
|
(1,335 |
) |
|
|
(181,631 |
) |
|
|
(11,885 |
) |
|
|
(348,209 |
) |
Income tax expense |
|
44,363 |
|
|
|
152,464 |
|
|
|
109,452 |
|
|
|
175,825 |
|
Adjusted EBITDAX |
$ |
454,301 |
|
|
$ |
739,225 |
|
|
$ |
897,739 |
|
|
$ |
1,211,058 |
|
|
|
|
|
|
|
|
|
||||||||
(1) Included as a portion of general and administrative expense in the condensed consolidated statements of operations. |
|||||||||||||||
(2) Included as a portion of other income in the condensed consolidated statements of operations. |
|||||||||||||||
Schedule 5: Free Cash Flow |
||||||||||||||||
(in thousands, unaudited) |
||||||||||||||||
Free cash flow is a supplemental non-GAAP financial measure that is calculated as net cash provided by operating activities before changes in current assets and liabilities and less exploration and development of oil and natural gas properties, changes in working capital related to capital expenditures, and purchases of carbon offsets. We believe that free cash flow provides additional information that may be useful to investors in evaluating our ability to generate cash from our existing oil and natural gas assets to fund future exploration and development activities and to return cash to shareholders. Free cash flow is a supplemental measure of liquidity and should not be viewed as a substitute for cash flows from operations because it excludes certain required cash expenditures. |
||||||||||||||||
The following table presents a reconciliation of the GAAP financial measure of net cash provided by operating activities to the non-GAAP financial measure of free cash flow: |
||||||||||||||||
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net cash provided by operating activities |
|
$ |
337,181 |
|
|
$ |
722,227 |
|
|
$ |
876,030 |
|
|
$ |
1,254,768 |
|
Add back: changes in current assets and liabilities |
|
|
84,015 |
|
|
|
(48,465 |
) |
|
|
(32,064 |
) |
|
|
(141,817 |
) |
Cash flow from operations before changes in operating assets and liabilities |
|
|
421,196 |
|
|
|
673,762 |
|
|
|
843,966 |
|
|
|
1,112,951 |
|
Less: exploration and development of oil and natural gas properties |
|
|
(268,560 |
) |
|
|
(206,519 |
) |
|
|
(518,949 |
) |
|
|
(467,186 |
) |
Less: changes in working capital related to capital expenditures |
|
|
42,246 |
|
|
|
(30,681 |
) |
|
|
56,345 |
|
|
|
(2,666 |
) |
Less: purchases of carbon offsets |
|
|
(5,651 |
) |
|
|
(7,196 |
) |
|
|
(5,651 |
) |
|
|
(7,196 |
) |
Free cash flow |
|
$ |
189,231 |
|
|
$ |
429,366 |
|
|
$ |
375,711 |
|
|
$ |
635,903 |
|
Schedule 6: Per unit cash margins |
||||||||||||||||||||||
(unaudited) |
||||||||||||||||||||||
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
Percent Change |
|
|
2023 |
|
|
|
2022 |
|
|
Percent Change |
||
Crude oil equivalent sales volumes (MBoe) |
|
|
15,788 |
|
|
|
15,945 |
|
|
(1 |
)% |
|
|
30,136 |
|
|
|
30,256 |
|
|
— |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Realized price (before derivatives) |
|
$ |
41.73 |
|
|
$ |
72.17 |
|
|
(42 |
)% |
|
$ |
43.59 |
|
|
$ |
65.02 |
|
|
(33 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Per unit costs ($/Boe) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Lease operating expense |
|
$ |
3.24 |
|
|
$ |
2.63 |
|
|
23 |
% |
|
$ |
3.22 |
|
|
$ |
2.57 |
|
|
25 |
% |
Midstream operating expense |
|
$ |
0.84 |
|
|
$ |
0.47 |
|
|
79 |
% |
|
$ |
0.78 |
|
|
$ |
0.44 |
|
|
77 |
% |
Gathering, transportation, and processing |
|
$ |
4.11 |
|
|
$ |
4.99 |
|
|
(18 |
)% |
|
$ |
4.39 |
|
|
$ |
4.29 |
|
|
2 |
% |
Severance and ad valorem taxes |
|
$ |
3.32 |
|
|
$ |
5.39 |
|
|
(38 |
)% |
|
$ |
3.48 |
|
|
$ |
4.93 |
|
|
(29 |
)% |
General and administrative expense |
|
$ |
2.12 |
|
|
$ |
1.86 |
|
|
14 |
% |
|
$ |
2.34 |
|
|
$ |
2.16 |
|
|
8 |
% |
Stock-based compensation |
|
$ |
(0.63 |
) |
|
$ |
(0.38 |
) |
|
66 |
% |
|
$ |
(0.57 |
) |
|
$ |
(0.47 |
) |
|
21 |
% |
Interest expense |
|
$ |
0.55 |
|
|
$ |
0.51 |
|
|
8 |
% |
|
$ |
0.54 |
|
|
$ |
0.57 |
|
|
(5 |
)% |
Total cash costs |
|
$ |
13.55 |
|
|
$ |
15.47 |
|
|
(12 |
)% |
|
$ |
14.18 |
|
|
$ |
14.49 |
|
|
(2 |
)% |
Cash margin (before derivatives) |
|
$ |
28.18 |
|
|
$ |
56.70 |
|
|
(50 |
)% |
|
$ |
29.41 |
|
|
$ |
50.53 |
|
|
(42 |
)% |
Derivative cash settlements |
|
$ |
(0.08 |
) |
|
$ |
(11.39 |
) |
|
(99 |
)% |
|
$ |
(0.39 |
) |
|
$ |
(11.51 |
) |
|
(97 |
)% |
Cash margin (after derivatives) |
|
$ |
28.10 |
|
|
$ |
45.31 |
|
|
(38 |
)% |
|
$ |
29.02 |
|
|
$ |
39.02 |
|
|
(26 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-cash items |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation, depletion, and amortization |
|
$ |
14.74 |
|
|
$ |
12.83 |
|
|
15 |
% |
|
$ |
14.40 |
|
|
$ |
12.87 |
|
|
12 |
% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230802804845/en/
Investor Relations:
John Wren, ir@civiresources.com
Media:
Rich Coolidge, info@civiresources.com
Source: Civitas Resources, Inc.
