Crescent Energy Reports 2021 Financial and Operational Results
Crescent Energy Company (NYSE: CRGY) has declared its fourth-quarter cash dividend of $0.12 per share, payable on March 31, 2022. For 2021, the company reported total revenues of $1,968 million and a net loss of $435 million. Following the Contango Merger, Crescent aims to acquire high-margin oil assets in the Uinta Basin for $815 million, enhancing its production and cash flow. The 2022 guidance anticipates adjusted EBITDAX of $1.1-$1.2 billion and a quarterly dividend increase to $0.17 post-acquisition.
- Declared a quarterly cash dividend of $0.12 per share for Q4 2021, expected to increase to $0.17 post-Uinta acquisition.
- Pro forma total revenues for 2021 were $1,968 million, with adjusted EBITDAX of $682 million and levered free cash flow of $384 million.
- Pending $815 million acquisition of high-margin oil assets in the Uinta Basin expected to boost cash flow and production.
- Reported a net loss of $435 million for 2021.
- Expected net debt to adjusted EBITDAX ratio of 1.4x post-Uinta acquisition, indicating increased leverage.
Company Declares Fourth Quarter 2021 Cash Dividend of
Pro forma 2021 financial and operational results are related to the business combination (the “Contango Merger”) between
2021 Pro Forma Highlights
- Successfully integrated Independence and Contango to form Crescent, a differentiated energy company
-
Closed three transactions in the second half of 2021, including two asset acquisitions totaling approximately
and the transformational Contango Merger$140 million - Scaled business with strong 2021 cash flow and substantial year-end reserves:
Select Results |
2021 Pro Forma |
Total Revenues (GAAP) |
|
Net Loss (GAAP)(1) |
|
Adj. EBITDAX (non-GAAP)(2) |
|
Levered Free Cash Flow (“Levered FCF”) (non-GAAP)(2) |
|
Unhedged Adj. EBITDAX (non-GAAP)(2) |
|
Net Debt / Adj. EBITDAX(2) |
1.3x |
Net Debt / Unhedged Adj. EBITDAX(2) |
0.9x |
Total Proved Standardized Measure(3) |
|
Total Proved PV-10(2)(3) |
|
Proved Developed PV-10(2)(3) |
|
-
Pending
acquisition of high-margin oil assets in the$815 million Uinta Basin , expected to close in 1H’22- Deal consistent with strategy to acquire high-value and accretive cash flowing assets while maintaining financial strength
- Scales Crescent’s production base in the Rockies region and adds multi-year inventory of proven, high-return development locations
-
Increased Adj. EBITDAX(2) guidance to
with$1.1 -$1.2 billion of Levered FCF(2)$375 -$475 million -
Expect to pay a
/ share quarterly dividend(4), post close of$0.17 Uinta transaction, based on10% of 2022E Adjusted EBITDAX(2) guidance - Transaction maintains strong balance sheet with expected post close net leverage ratio of 1.4x(5)
Crescent CEO
Please refer to the Company’s Current Report on Form 8-K which can be found at the SEC’s website at www.sec.gov, for additional details and information regarding the historical financial results of Crescent and Contango and the assumptions made in preparing the pro forma financial statements derived therefrom that are summarized herein.
Q4 Dividend
Crescent’s Board of Directors approved a quarterly cash dividend of
Commitment to ESG
Crescent continues to advance its sustainability initiatives and has achieved the following milestones since closing the Contango Merger in
-
Issued its inaugural ESG report in
December 2021 , with updated disclosures planned for mid-2022- Reported key ESG performance metrics according to the Value Reporting Foundation’s SASB Standard for Oil & Gas – Exploration & Production
- Established Crescent’s ESG priorities as climate change, environmental, health and safety, water management, community engagement and diversity, equity and inclusion
-
Formed an
ESG Advisory Council to advise management and the Board on ESG-related topics -
Joined the
Oil & Gas Methane Partnership (OGMP) 2.0 initiative to enhance reporting of methane emissions
Operational Update
Crescent produced 116 net MBoe/d for the month of
In 2022, Crescent expects to bring online 32-38 gross operated wells in the Eagle Ford with greater than
Financial Position
As of
As of
Upon the closing of the Contango Merger in December, the Company’s borrowing base increased to
Crescent’s lenders authorized an increase of the Company’s elected commitment amount under the existing revolving credit facility to
2022 Guidance: Standalone and Pro Forma for the Uinta Acquisition
Initial 2022E guidance is below, on both a standalone basis and combined basis for the pending
|
CRGY Standalone Full Year 2022 |
|
Pro Forma CRGY (Nine Months of Uinta Acquisition) |
|
Annualized Pro Forma
|
EBITDAX and Levered Free Cash Flow |
|
|
|
|
|
Adjusted EBITDAX (non-GAAP)(2) |
|
|
|
|
|
Unhedged Adj. EBITDAX (non-GAAP)(2) |
|
|
|
|
|
Levered Free Cash Flow (non-GAAP)(2) |
|
|
|
|
|
Production(7) |
114 - 124 MBoe/d |
|
134 - 148 MBoe/d |
|
148 Mboe/d |
% Oil / % Liquids |
~ |
|
~ |
|
|
Capital (Excl. Potential Acquisitions) |
|
|
|
|
|
Per Unit Expenses |
|
|
|
|
|
Operating Expense(8) |
|
|
|
|
|
Adj. Cash G&A (Incl. Management Comp)(2) |
|
|
|
|
|
Implied 2022 Quarterly Dividend(4) |
|
|
|
|
|
Outstanding Share Count (Class A & B) |
169.5 MM |
|
169.5 MM |
|
|
Net Debt / LTM Adj. EBITDAX(2)(5) |
1.3x |
|
1.4x |
|
|
Pro Forma Net Debt |
|
|
|
|
|
Proved Developed PV-10 at SEC Pricing(3) |
|
|
|
|
|
Note: All amounts are approximations based on currently available information and estimates and are subject to change based on events and circumstances after the date hereof. Please see “Cautionary Statement Regarding Forward-Looking Information.”
Risk Management – Current Commodity Hedging
Crescent is approximately
|
WTI |
Brent |
Natural Gas |
NGLs |
||||
|
Volume (MBbl) |
Avg Price ($/Bbl) |
Volume (MBbl) |
Avg Price ($/Bbl) |
Volume (BBtu) |
Avg Price $/MMBtu |
Volume (MBbl) |
Avg Price $/Bbl |
Q1’22 |
2,862 |
|
123 |
|
22,534 |
|
914 |
|
Q2’22 |
2,714 |
|
125 |
|
21,690 |
|
873 |
|
Q3’22 |
2,690 |
|
126 |
|
20,634 |
|
610 |
|
Q4’22 |
2,534 |
|
126 |
|
20,180 |
|
587 |
|
FY’23 |
7,932 |
|
527 |
|
57,278 |
|
-- |
-- |
FY’24 |
5,537 |
|
217 |
|
9,604 |
|
-- |
-- |
Note: Includes hedges from
Full Year 2021 Conference Call Information
Crescent plans to host a conference call to discuss full-year 2021 financial and operating results as well as its 2022 outlook. Details are below. A webcast replay will be available on the website following the call. In connection with the call, Crescent has provided information in an earnings presentation on its website, www.crescentenergyco.com, regarding its full-year 2021 financial and operating results.
Date:
Time:
Conference Dial-In: 877-407-0989 / 201-389-0921 (Domestic / International)
Webcast Link: https://ir.crescentenergyco.com/events-presentations/
(1) |
Includes |
|
(2) |
Non-GAAP financial measure. Please see “Reconciliation of Non-GAAP Measures” for discussion and reconciliations of such measures to their most directly comparable financial measures calculated and presented in accordance with |
|
(3) |
Standardized measure, PV-10 and proved developed reserve estimates based on |
|
(4) |
Dividends are subject to approval by the Board of Directors (the “Board”) and applicable law. |
|
(5) |
Calculated with estimated LTM Adjusted EBITDAX(2) as of |
|
(6) |
Annualized pro forma mid-point includes annualized cash flows from the acquisition. |
|
(7) |
In addition to its production, the Company projects generating |
|
(8) |
Includes costs that are indexed to commodity prices, including production taxes and certain other input costs, such as CO2 purchase costs related to CO2 flood asset in |
|
(9) |
|
About
Crescent is a well-capitalized,
Cautionary Statement Regarding Forward-Looking Information
This communication contains 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, as amended. These statements are based on current expectations, including with respect to the Uinta Acquisition. The words and phrases “should”, “could”, “may”, “will”, “believe”, “plan”, “intend”, “expect”, “potential”, “possible”, “anticipate”, “estimate”, “forecast”, “view”, “efforts”, “goal” and similar expressions identify forward-looking statements and express the Company’s expectations about future events. All statements, other than statements of historical facts, included in this communication that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the Company’s control. Such risks and uncertainties include, but are not limited to, the ability of the parties to consummate the Uinta Acquisition in a timely manner or at all; satisfaction of the conditions precedent to consummation of the transaction, including the ability to secure required consents and regulatory approvals in a timely manner or at all; the possibility of litigation (including related to the transaction itself),weather, political, economic and market conditions, including a decline in the price and market demand for natural gas, natural gas liquids and crude oil, the impact of pandemics such as COVID-19, actions by the
The transactions and outlook announced today is based on information currently available to the Company, depends on certain estimates and assumptions and is subject to change.
Historical Financial Information
As discussed above, Independence is the “predecessor” of Crescent for financial reporting purposes. As a result, unless otherwise indicated, the historical financial and operating data presented in this release for the period from
Selected Unaudited Pro Forma Condensed Combined Financial Information
The following selected unaudited pro forma condensed combined financial information of Crescent (the “selected pro forma information”) is based on the historical financial statements of Independence, as its predecessor, for the period from
The selected pro forma information has been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial statements of Crescent included in the Current Report on Form 8-K, which can be found at the SEC’s website at www.sec.gov and the accompanying notes to the unaudited pro forma condensed combined financial statements. The unaudited pro forma condensed combined financial statements have been prepared from, and should be read in conjunction with, the historical consolidated financial statements of Independence and Contango and the accompanying notes thereto, each of which were also included on such Current Report on Form 8-K or the Current Report on Form 8-K/A filed on
The selected pro forma information has been presented for informational purposes only and is not necessarily indicative of what Crescent’s actual financial position or results of operations would have been had the Pro Forma Transactions been completed as of the dates indicated. In addition, the selected pro forma information does not purport to project the future financial position or operating results of the post-combination business.
Crescent Income Statement |
|||||||||||
|
Actual |
|
Pro Forma Combined |
||||||||
(in thousands, except per share data) |
For the year ended
|
|
For the year ended
|
|
For the year ended
|
||||||
Revenues: |
|
|
|||||||||
Oil |
$ |
883,087 |
|
|
$ |
491,780 |
|
|
$ |
1,112,024 |
|
Natural gas |
|
354,298 |
|
|
|
149,317 |
|
|
|
550,791 |
|
Natural gas liquids |
|
185,530 |
|
|
|
69,902 |
|
|
|
235,600 |
|
Midstream and other |
|
54,062 |
|
|
|
43,222 |
|
|
|
69,421 |
|
Total revenues |
|
1,476,977 |
|
|
|
754,221 |
|
|
|
1,967,836 |
|
Expenses: |
|
|
|
|
|
||||||
Lease operating expense |
|
243,501 |
|
|
|
202,180 |
|
|
|
— |
|
Workover expense |
|
10,842 |
|
|
|
6,385 |
|
|
|
— |
|
Asset operating expense |
|
45,940 |
|
|
|
39,023 |
|
|
|
— |
|
Gathering, transportation and marketing |
|
187,059 |
|
|
|
173,122 |
|
|
|
— |
|
Production and other taxes |
|
108,992 |
|
|
|
61,124 |
|
|
|
— |
|
Operating expense |
|
— |
|
|
|
— |
|
|
|
795,466 |
|
Depreciation, depletion and amortization |
|
312,787 |
|
|
|
372,300 |
|
|
|
416,160 |
|
Impairment of oil and natural gas properties |
|
— |
|
|
|
247,215 |
|
|
|
761 |
|
Exploration expense |
|
1,180 |
|
|
|
486 |
|
|
|
1,661 |
|
Midstream operating expense |
|
13,389 |
|
|
|
9,472 |
|
|
|
15,355 |
|
General and administrative expense |
|
78,342 |
|
|
|
16,542 |
|
|
|
171,327 |
|
Gain on sale of assets |
|
(8,794 |
) |
|
|
— |
|
|
|
(9,232 |
) |
Total expenses |
|
993,238 |
|
|
|
1,127,849 |
|
|
|
1,391,498 |
|
Income (loss) from operations |
|
483,739 |
|
|
|
(373,628 |
) |
|
|
576,338 |
|
Other income (expense): |
|
|
|
|
|
||||||
Interest expense |
|
(50,740 |
) |
|
|
(38,107 |
) |
|
|
(73,698 |
) |
Other income (expense) |
|
120 |
|
|
|
341 |
|
|
|
5,926 |
|
Income from equity method investments |
|
368 |
|
|
|
— |
|
|
|
(1,529 |
) |
Gain on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
3,369 |
|
Gain (loss) on derivatives |
|
(866,020 |
) |
|
|
195,284 |
|
|
|
(970,659 |
) |
Total other income (expense) |
|
(916,272 |
) |
|
|
157,518 |
|
|
|
(1,036,591 |
) |
Income (loss) before taxes |
|
(432,533 |
) |
|
|
(216,110 |
) |
|
|
(460,253 |
) |
Income tax benefit (expense) |
|
306 |
|
|
|
(14 |
) |
|
|
25,561 |
|
Net income (loss) |
|
(432,227 |
) |
|
|
(216,124 |
) |
|
|
(434,692 |
) |
Less: net (income) loss attributable to Predecessor |
|
339,168 |
|
|
|
118,649 |
|
|
|
— |
|
Less: net (income) loss attributable to noncontrolling interests |
|
14,922 |
|
|
|
97,475 |
|
|
|
3,570 |
|
Less: net loss attributable to redeemable noncontrolling interests |
|
58,761 |
|
|
|
— |
|
|
|
333,598 |
|
Net loss attributable to |
$ |
(19,376 |
) |
|
$ |
— |
|
|
$ |
(97,524 |
) |
Net Loss per Share: |
|
|
|
|
|
||||||
Class A common stock - basic and diluted |
$ |
(0.46 |
) |
|
|
|
$ |
(2.32 |
) |
||
Class B common stock - basic and diluted |
$ |
— |
|
|
|
|
$ |
— |
|
||
Weighted Average Shares Outstanding: |
|
|
|
|
|
||||||
Class A common stock - basic and diluted |
|
41,954 |
|
|
|
|
|
41,954 |
|
||
Class B common stock - basic and diluted |
|
127,536 |
|
|
|
|
|
127,536 |
|
Crescent Balance Sheet |
|||||||
|
Actual |
||||||
|
|
|
|
||||
|
(in thousands, except share and unit data) |
||||||
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
128,578 |
|
|
$ |
36,861 |
|
Accounts receivable, net |
|
321,855 |
|
|
|
111,821 |
|
Accounts receivable – affiliates |
|
20,341 |
|
|
|
— |
|
Derivative assets – current |
|
— |
|
|
|
30,926 |
|
Drilling advances |
|
200 |
|
|
|
38,892 |
|
Prepaid and other current assets |
|
8,644 |
|
|
|
1,948 |
|
Total current assets |
|
479,618 |
|
|
|
220,448 |
|
Property, plant and equipment: |
|
|
|
||||
Oil and natural gas properties at cost, successful efforts method |
|
|
|
||||
Proved |
|
6,043,602 |
|
|
|
4,910,059 |
|
Unproved |
|
308,721 |
|
|
|
288,459 |
|
Oil and natural gas properties at cost, successful efforts method |
|
6,352,323 |
|
|
|
5,198,518 |
|
Field and other property and equipment, at cost |
|
144,318 |
|
|
|
138,371 |
|
Total property, plant and equipment |
|
6,496,641 |
|
|
|
5,336,889 |
|
Less: accumulated depreciation, depletion, amortization and impairment |
|
(1,941,528 |
) |
|
|
(1,694,742 |
) |
Property, plant and equipment, net |
|
4,555,113 |
|
|
|
3,642,147 |
|
|
|
76,564 |
|
|
|
— |
|
Derivative assets – noncurrent |
|
579 |
|
|
|
22,352 |
|
Investment in equity affiliates |
|
15,415 |
|
|
|
— |
|
Other assets |
|
30,173 |
|
|
|
22,422 |
|
TOTAL ASSETS |
$ |
5,157,462 |
|
|
$ |
3,907,369 |
|
|
|
|
|
||||
|
|
|
|
||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable and accrued liabilities |
$ |
337,881 |
|
|
$ |
80,688 |
|
Accounts payable – affiliates |
|
8,675 |
|
|
|
9,019 |
|
Derivative liabilities – current |
|
253,525 |
|
|
|
26,392 |
|
Financing lease obligations – current |
|
1,606 |
|
|
|
— |
|
Other current liabilities |
|
14,438 |
|
|
|
4,572 |
|
Total current liabilities |
|
616,125 |
|
|
|
120,671 |
|
Long-term debt |
|
1,030,406 |
|
|
|
751,075 |
|
Derivative liabilities – noncurrent |
|
133,471 |
|
|
|
23,958 |
|
Asset retirement obligations |
|
258,102 |
|
|
|
106,403 |
|
Deferred tax liability |
|
82,537 |
|
|
|
— |
|
Financing lease obligations – noncurrent |
|
3,512 |
|
|
|
— |
|
Other liabilities |
|
13,652 |
|
|
|
12,102 |
|
Total liabilities |
|
2,137,805 |
|
|
|
1,014,209 |
|
Commitments and contingencies |
|
|
|
||||
Redeemable noncontrolling interests |
|
2,325,013 |
|
|
|
— |
|
Equity: |
|
|
|
||||
Members’ equity – Class A units, no units and 1,220,421 units outstanding as of |
|
— |
|
|
|
2,716,892 |
|
Class A common stock, |
|
4 |
|
|
|
— |
|
Class B common stock, |
|
13 |
|
|
|
— |
|
Preferred stock, |
|
— |
|
|
|
— |
|
|
|
(18,448 |
) |
|
|
— |
|
Additional paid-in capital |
|
720,016 |
|
|
|
— |
|
Accumulated deficit |
|
(19,376 |
) |
|
|
— |
|
Noncontrolling interests |
|
12,435 |
|
|
|
176,268 |
|
Total equity |
|
694,644 |
|
|
|
2,893,160 |
|
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY |
$ |
5,157,462 |
|
|
$ |
3,907,369 |
|
Crescent Cash Flow Statement |
|||||||
|
Actual |
||||||
|
For the year ended
|
|
For the year ended
|
||||
|
(in thousands) |
||||||
Cash flows from operating activities: |
|
|
|
||||
Net income (loss) |
$ |
(432,227 |
) |
|
$ |
(216,124 |
) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
||||
Depreciation, depletion and amortization |
|
312,787 |
|
|
|
372,300 |
|
Impairment of oil and natural gas properties |
|
— |
|
|
|
247,215 |
|
Deferred income taxes (benefit) |
|
(935 |
) |
|
|
— |
|
Gain on sale of oil and natural gas properties |
|
(8,794 |
) |
|
|
— |
|
(Gain) loss on derivatives |
|
866,020 |
|
|
|
(195,284 |
) |
Net cash (paid) received on settlement of derivatives |
|
(535,269 |
) |
|
|
186,495 |
|
Non-cash equity-based compensation expense |
|
39,919 |
|
|
|
(797 |
) |
Amortization of debt issuance costs and discount |
|
7,647 |
|
|
|
4,941 |
|
Write-off of debt issuance costs |
|
2,541 |
|
|
|
— |
|
Write-off of other long-term assets and other |
|
(928 |
) |
|
|
(29 |
) |
Changes in operating assets and liabilities: |
|
|
|
||||
Accounts receivable |
|
(71,301 |
) |
|
|
14,652 |
|
Accounts receivable – affiliates |
|
(20,333 |
) |
|
|
— |
|
Prepaid and other current assets |
|
39,986 |
|
|
|
17,886 |
|
Accounts payable and accrued liabilities |
|
31,110 |
|
|
|
(15,138 |
) |
Accounts payable – affiliates |
|
(358 |
) |
|
|
657 |
|
Other |
|
3,282 |
|
|
|
(5,746 |
) |
Net cash provided by operating activities |
|
233,147 |
|
|
|
411,028 |
|
Cash flows from investing activities: |
|
|
|
||||
Development of oil and natural gas properties |
|
(155,607 |
) |
|
|
(126,164 |
) |
Acquisitions of oil and natural gas properties, net of cash acquired |
|
(115,076 |
) |
|
|
— |
|
Proceeds from the sale of oil and natural gas properties |
|
25,723 |
|
|
|
9,362 |
|
Purchases of restricted investment securities – HTM |
|
(8,537 |
) |
|
|
(9,071 |
) |
Maturities of restricted investment securities – HTM |
|
11,703 |
|
|
|
9,052 |
|
Due from related party and other |
|
(2,801 |
) |
|
|
(8,119 |
) |
Net cash used in investing activities |
|
(244,595 |
) |
|
|
(124,940 |
) |
Cash flows from financing activities: |
|
|
|
||||
Proceeds from issuance of the Senior Notes, net of discount |
|
490,625 |
|
|
|
— |
|
Revolving Credit Facility borrowings |
|
702,000 |
|
|
|
— |
|
Revolving Credit Facility repayments |
|
(159,000 |
) |
|
|
— |
|
Payment of debt issuance costs |
|
(14,611 |
) |
|
|
(3,333 |
) |
Prior Credit Agreement borrowings |
|
53,900 |
|
|
|
275,850 |
|
Prior Credit Agreement repayments |
|
(804,975 |
) |
|
|
(496,875 |
) |
Repayments of debt acquired in Merger Transactions |
|
(140,000 |
) |
|
|
— |
|
Member contributions |
|
110 |
|
|
|
5,186 |
|
Noncontrolling interest contributions |
|
35,460 |
|
|
|
— |
|
Repurchase of noncontrolling interest |
|
(2,462 |
) |
|
|
— |
|
Member distributions |
|
(35,331 |
) |
|
|
(61,422 |
) |
Noncontrolling interest distributions |
|
(1,695 |
) |
|
|
(1,145 |
) |
Cash paid for treasury stock acquired for equity-based compensation tax withholding |
|
(18,448 |
) |
|
|
— |
|
Due to related party and other |
|
(428 |
) |
|
|
9,650 |
|
Net cash provided by (used in) financing activities |
|
105,145 |
|
|
|
(272,089 |
) |
Net change in cash, cash equivalents and restricted cash |
|
93,697 |
|
|
|
13,999 |
|
Cash, cash equivalents and restricted cash, beginning of period |
|
41,420 |
|
|
|
27,421 |
|
Cash, cash equivalents, and restricted cash, end of period |
$ |
135,117 |
|
|
$ |
41,420 |
|
Reconciliation of Non-GAAP Measures
This release includes financial measures that have not been calculated in accordance with GAAP. These non-GAAP measures include Adjusted EBITDAX, Levered Free Cash Flow, Unhedged Adjusted EBITDAX, Adjusted Cash G&A and PV-10. These non-GAAP measures should be read in conjunction with the information contained in Crescent’s audited combined and consolidated financial statements prepared in accordance with GAAP.
Adjusted EBITDAX and Levered Free Cash Flow
Crescent defines Adjusted EBITDAX as net income (loss) before interest expense, realized (gain) loss on interest rate derivatives, income tax expense, depreciation, depletion and amortization, exploration expense, non-cash gain (loss) on derivatives, impairment of oil and natural gas properties, equity-based compensation, (gain) loss on sale of assets, other (income) expense, certain redeemable noncontrolling interest distributions made by
Crescent defines Levered Free Cash Flow as Adjusted EBITDAX less interest expense, excluding noncash deferred financing cost amortization, realized gain (loss) on interest rate derivatives, current income tax provision, tax-related redeemable noncontrolling interest distributions made by OpCo and development of oil and natural gas properties. Levered Free Cash Flow does not take into account amounts incurred on acquisitions. Levered Free Cash Flow is not a measure of performance as determined by GAAP. Levered Free Cash Flow is a supplemental non-GAAP performance measure that is used by Crescent’s management and external users of its financial statements, such as industry analysts, investors, lenders and rating agencies. Management believes Levered Free Cash Flow is a useful performance measure because it allows for an effective evaluation of operating and financial performance and the ability of the Company’s operations to generate cash flow that is available to reduce leverage or distribute to equity holders. Levered Free Cash Flow should not be considered as an alternative to, or more meaningful than, net income (loss) as determined in accordance with GAAP, of which such measure is the most comparable GAAP measure, or as an indicator of actual operating performance or investing activities. The Company’s computations of Levered Free Cash Flow may not be comparable to other similarly titled measures of other companies.
The following table presents a reconciliation of pro forma Adjusted EBITDAX (non-GAAP) and pro forma Levered Free Cash Flow (non-GAAP) to pro forma net income (loss), the most directly comparable financial measure calculated in accordance with GAAP:
|
Actual |
|
Pro Forma Combined |
||||||||
|
For the year ended
|
|
For the year
|
|
For the year
|
||||||
|
(in thousands) |
||||||||||
Net income (loss) |
$ |
(432,227 |
) |
|
$ |
(216,124 |
) |
|
$ |
(434,692 |
) |
Adjustments to reconcile to Adjusted EBITDAX: |
|
|
|
|
|
||||||
Interest expense |
|
50,740 |
|
|
|
38,107 |
|
|
|
73,698 |
|
Realized (gain) loss on interest rate derivatives |
|
7,373 |
|
|
|
12,435 |
|
|
|
7,373 |
|
Income tax expense (benefit) |
|
(306 |
) |
|
|
14 |
|
|
|
(25,561 |
) |
Depreciation, depletion and amortization |
|
312,787 |
|
|
|
372,300 |
|
|
|
416,160 |
|
Exploration expense |
|
1,180 |
|
|
|
486 |
|
|
|
1,661 |
|
Non-cash (gain) loss on derivatives |
|
330,368 |
|
|
|
(10,910 |
) |
|
|
391,347 |
|
Impairment of oil and natural gas properties |
|
— |
|
|
|
247,215 |
|
|
|
761 |
|
Non-cash equity-based compensation expense |
|
39,919 |
|
|
|
(797 |
) |
|
|
65,010 |
|
(Gain) loss on sale of assets |
|
(8,794 |
) |
|
|
— |
|
|
|
(9,232 |
) |
Other (income) expense |
|
(120 |
) |
|
|
(341 |
) |
|
|
(9,295 |
) |
Certain redeemable noncontrolling interest distributions made by OpCo related to Management Compensation |
|
(2,706 |
) |
|
|
— |
|
|
|
(40,107 |
) |
Transaction and nonrecurring expenses(1) |
|
23,149 |
|
|
|
22,679 |
|
|
|
46,191 |
|
Early settlement of derivative contracts(2) |
|
198,688 |
|
|
|
— |
|
|
|
198,688 |
|
Adjusted EBITDAX (non-GAAP) |
$ |
520,051 |
|
|
$ |
465,064 |
|
|
$ |
682,002 |
|
Adjustments to reconcile to Levered Free Cash Flow: |
|
|
|
|
|
||||||
Interest expense, excluding non-cash deferred financing cost amortization |
|
(40,551 |
) |
|
|
(33,166 |
) |
|
|
(59,193 |
) |
Realized (gain) loss on interest rate derivatives |
|
(7,373 |
) |
|
|
(12,435 |
) |
|
|
(7,373 |
) |
Current income tax provision |
|
(629 |
) |
|
|
(14 |
) |
|
|
84 |
|
Current tax-related redeemable noncontrolling interest distributions by OpCo |
|
— |
|
|
|
— |
|
|
|
— |
|
Development of oil and natural gas properties |
|
(194,828 |
) |
|
|
(110,126 |
) |
|
|
(231,646 |
) |
Levered Free Cash Flow (non-GAAP) |
$ |
276,670 |
|
|
$ |
309,323 |
|
|
$ |
383,874 |
|
(1) |
Transaction and nonrecurring expenses primarily relate to legal, consulting and other fees incurred for certain acquisitions and restructuring transactions in 2020 and 2021, as well as the termination of a midstream contract at the Eagle Ford business in 2020. |
|
(2) |
Represents the settlement in |
Due to the forward-looking nature of certain non-GAAP measures presented in this release for the year ending
Unhedged Adjusted EBITDAX
Crescent defines Unhedged Adjusted EBITDAX as Adjusted EBITDAX plus realized (gain) loss on commodity derivatives. Management believes Unhedged Adjusted EBITDAX is a useful performance measure because it allows for an effective evaluation of the Company’s operating performance when compared against its peers, without regard to commodity derivatives, which can vary substantially within its industry depending upon peers hedging strategies and when hedges were entered into. Unhedged Adjusted EBITDAX should not be considered as an alternative to, or more meaningful than, net income (loss) as determined in accordance with GAAP, of which such measure is the most comparable GAAP measure. Certain items excluded from Unhedged Adjusted EBITDAX are significant components in understanding and assessing a company’s financial performance, such as a company’s realized derivative loss or gain, cost of capital and tax burden, as well as the historic costs of depreciable assets, none of which are reflected in Unhedged Adjusted EBITDAX. The Company’s presentation of Unhedged Adjusted EBITDAX should not be construed as an inference that its results will be unaffected by unusual or nonrecurring items. Crescent’s computations of Unhedged Adjusted EBITDAX may not be identical to other similarly titled measures of other companies.
The following table presents a reconciliation of pro forma Unhedged Adjusted EBITDAX (non-GAAP) to pro forma Adjusted EBITDAX (non-GAAP). In the table above, pro forma Adjusted EBITDAX (non-GAAP) is reconciled to pro forma net income (loss), the most directly comparable financial measure calculated in accordance with GAAP:
|
Actual |
|
Pro Forma Combined |
||||||
|
For the year ended
|
|
For the year ended
|
|
For the year ended
|
||||
|
(in thousands) |
||||||||
Adjusted EBITDAX (non-GAAP) |
$ |
520,051 |
|
$ |
465,064 |
|
|
$ |
682,002 |
Plus realized (gain) loss on commodity derivatives |
|
329,590 |
|
|
(196,809 |
) |
|
|
373,250 |
Unhedged Adjusted EBITDAX (non-GAAP) |
$ |
849,641 |
|
$ |
268,255 |
|
|
$ |
1,055,252 |
Adjusted Cash G&A
Crescent defines Adjusted Cash G&A as General and Administrative Expense, excluding noncash equity-based compensation, and including certain redeemable noncontrolling interest distributions made by OpCo related to the Management Compensation.
PV-10
Pre-tax present value discounted at ten percent (“PV-10”) is a considered non-GAAP measure. The most directly comparable GAAP financial measure is standardized measure of discounted future net cash flows. Neither PV-10 nor standardized measure represent an estimate of the fair market value of Crescent’s oil and natural gas properties. The Company believes that the presentation of PV-10 is relevant and useful to investors as supplemental disclosure to the standardized measure of future net cash flows, or after tax amount, because it presents the undiscounted or discounted, as applicable, future net cash flows attributable to reserves prior to taking into account future income taxes and the Company’s current tax structure. Crescent and others in the industry use PV-10 as a measure to compare the relative size and value of proved reserves held by companies without regard to the specific tax characteristics of such entities. Investors should be cautioned that neither PV-10 nor standardized measure represent an estimate of the fair market value of Crescent’s proved reserves.
|
Actual |
|
Pro Forma Combined |
||
|
For the year ended
|
|
For the year ended
|
|
For the year ended
|
|
(in thousands) |
||||
Standardized measure of discounted future net cash flows |
|
|
|
|
|
Tax annual discount of |
200,524 |
|
16,131 |
|
200,524 |
Total Proved PV-10 |
|
|
|
|
|
Company Contact
For additional information, please reach out to IR@crescentenergyco.com.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220309005983/en/
IR@crescentenergyco.com
Source:
FAQ
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