UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 8, 2018 (August 8, 2018)
Riviera Resources, Inc.
(Exact name of registrant specified in its charter)
| Delaware | 333-225927 | 82-5121920 | ||
| (State or Other Jurisdiction Of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) | ||
| 600 Travis Street Houston, Texas |
77002 | |||
| (Address of principal executive offices) | (Zip Code) | |||
(281) 840-4000
(Registrant’s telephone number, including area code)
Riviera Resources, LLC
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
On August 8, 2018, Linn Energy, Inc. (“LINN”) issued a press release announcing its earnings for the quarter ended June 30, 2018, and its updated guidance for 2018. The results of operations reported in the press release include the business of Riviera Resources, Inc. (the “Company”), because the spin-off of the Company from LINN (the “Spin-Off”) occurred after the quarter ended. The press release is being furnished as Exhibit 99.1 to this Current Report on Form 8- K and is incorporated herein by reference.
This Form 8-K and the exhibit hereto shall be deemed “furnished” and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit |
Description | |
| Exhibit 99.1 | Press release dated August 8, 2018, issued by Linn Energy, Inc. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: August 8, 2018 | LINN ENERGY, INC. | |||||
| By: | /s/ David B. Rottino | |||||
| Name: | David B. Rottino | |||||
| Title: | President and Chief Executive Officer | |||||
Exhibit 99.1
|
NEWS RELEASE |
LINN ENERGY REPORTS SECOND-QUARTER 2018 RESULTS
HOUSTON, Aug. 8, 2018 (GLOBE NEWSWIRE) — LINN Energy, Inc. (OTCQB: LNGG) (“LINN” or the “Company”) announces financial and operating results for the second quarter 2018 and highlights the following:
| • | Executed strategic plan to separate into two public companies, LINN, which owns a 50% equity interest in Roan Resources, LLC (“Roan”), and Riviera Resources, Inc. (“Riviera”), on August 7, 2018 |
| • | Strong balance sheet with no debt and a second quarter ending cash balance of approximately $301 million Returned more than $660 million of capital to LINN shareholders through share repurchases |
| • | Blue Mountain Midstream LLC (“Blue Mountain”) successfully started up the Chisholm Trail III cryogenic gas plant located in the core of the prolific Merge/SCOOP/STACK plays |
| • | Riviera management team to host conference call Thursday, August 23, 2018 at 10 a.m. (Central) |
“It is remarkable what our Company and Board has accomplished since our reorganization. We successfully completed our merger with Citizen Energy to create the largest and only pure play growth company in the prolific Merge/SCOOP/STACK basin. Blue Mountain, a wholly owned subsidiary of Riviera, recently commissioned a state of the art cryogenic natural gas processing facility with 250 mmcfe a day of designed processing capacity to service the rapidly expanding Merge/SCOOP/STACK basin. We sold almost $2 billion of assets, in over 20 separate transactions, at a significant premium to proved developed PV-10. This allowed us tremendous financial flexibility to pay off all our debt, return more than $660 million of capital to our shareholders and build a significant cash balance. Finally, we completed our strategic plan to separate into two public companies, LINN, which owns a 50% equity interest in Roan, and Riviera, allowing us to unlock the value of the two companies. I would like to thank our employees for their hard work in executing our vision and look forward to the bright futures of Roan and Riviera,” said David Rottino, LINN’s President and Chief Executive Officer and President and Chief Executive Officer of Riviera.
The condensed consolidated results herein include the Riviera business, because the spin-off of Riviera from LINN (the “Spin-Off”) occurred after the quarter ended. As such, our financial information after the impact of the Spin-Off may not be meaningful to investors. Please read the “Risk Factors” included in the Company’s Quarterly Report on Form 10-Q for the second quarter 2018, which will be filed later today with the Securities and Exchange Commission.
Key Financial Results (1)
| Second Quarter | ||||||||
| $ in millions | 2018 | 2017 | ||||||
| Average daily production (MMcfe/d) |
312 | 710 | ||||||
| Oil, natural gas and NGL sales |
$ | 87 | $ | 243 | ||||
| Income from continuing operations |
$ | 7 | $ | 223 | ||||
| Loss from discontinued operations, net of income taxes |
$ | 0 | $ | (3 | ) | |||
| Net income |
$ | 7 | $ | 220 | ||||
| Adjusted EBITDAX (a non-GAAP financial measure) (2) |
$ | 11 | $ | 112 | ||||
| LINN Adjusted EBITDAX for Roan (a non-GAAP financial measure)(3) |
$ | 31 | N/A | |||||
| Net cash provided by operating activities |
$ | 4 | $ | 55 | ||||
| Oil and natural gas capital |
$ | 7 | $ | 71 | ||||
| Total capital |
$ | 42 | $ | 96 | ||||
| (1) | All amounts reflect continuing operations with the exception of net income, for the second quarter of 2017 and 2018. The amounts do not, however, reflect the separation of Riviera from LINN, which occurred on August 7, 2018. |
| (2) | Excludes Adjusted EBITDAX from discontinued operations of approximately $12 million for the three months ended June 30, 2017. Includes severance expense of $14 million for the three months ended June 30, 2018. |
| (3) | Represents the Adjusted EBITDAX for LINN’s 50% equity interest in Roan for the period from April 1, 2018, to June 30, 2018. See Schedule 1 below for a reconciliation of Adjusted EBITDA |
Completed Spin-Off of Riviera Resources, Inc.
As previously disclosed, the Company completed the Spin-Off on August 7, 2018 after the market closed. The Spin-Off was effected through a pro rata distribution of all of the outstanding shares of Riviera’s common stock to LINN stockholders of record as of 5:00 p.m. on August 3, 2018, the record date for the Spin-Off. On August 7, 2018, the distribution date for the Spin-Off, each LINN stockholder received one share of Riviera common stock for each share of LINN common stock held by such stockholder on the record date.
As of the Spin-Off, LINN stockholders owned one share each of:
| • | LINN (OTCQB: LNGG), which owns a 50% equity interest in Roan Resources LLC, which is focused on the accelerated development of the Merge/SCOOP/STACK play in Oklahoma; |
| • | Riviera (OTCQX: RVRA), an independent oil and gas company with a strategic focus on efficiently operating its mature low-decline assets, developing its growth-oriented assets, and returning capital to shareholders. Riviera’s assets consist of: |
| • | LINN’s legacy properties located in the Hugoton Basin, East Texas, North Louisiana, Michigan/Illinois, the Uinta Basin and Mid- Continent regions; and |
| • | Blue Mountain Midstream LLC, a midstream company centered in the core of the Merge play in the Anadarko Basin. |
Trading of LINN Shares and Riviera Shares
LINN shares continue to trade on the OTCQB Market under the ticker symbol “LNGG”. Riviera is now an independent reporting company that will trade on the OTCQX Market under the ticker symbol “RVRA”.
Strong Balance Sheet
From its successful divestiture program in 2017 and 2018, the Company has extinguished all outstanding debt. As of June 30, 2018, the Company had no borrowings outstanding under its $425 million revolving credit facility and had approximately $378 million available borrowing capacity inclusive of outstanding letters of credit. LINN has a second quarter ending cash balance of approximately $301 million. Prior to the Spin-Off transaction, all but $40 million of cash was transferred to Riviera. The remaining cash at LINN will be available for use by LINN to fund certain obligations of the Company arising after the Spin-Off and prior to any consolidation with Roan. LINN will transfer any such remaining cash to Riviera prior to any consolidation of LINN and Roan.
Share Repurchases
Since its financial reorganization, the Company has returned more than $640 million of capital to LINN shareholders through the share repurchase program, tender offer and the employee liquidity program. The Company also retired approximately $20 million of Class A-2 units related to the Linn Energy HoldCo, LLC profits interest.
Second Quarter 2018 Activity
Production averaged 312 MMcfe/d for the second quarter 2018, exceeding the midpoint of guidance. The Company outperformed guidance despite a production shut-in in the Hugoton field caused by a third party pipeline issue. The Company continued to participate in significant non-operated drilling activity in the NW STACK.
Commissioned Chisholm III Cryogenic Gas Plant
Blue Mountain, a former subsidiary of the Company that became a subsidiary of Riviera in connection with the Spin-Off, completed a major processing capacity addition to its Chisholm Trail system at the end of the second quarter 2018 with the successful start up of the Chisholm Trail III cryogenic gas plant. Located in the core of the prolific Merge/SCOOP/STACK plays, the plant is a state of the art cryogenic processing facility with an initial design capacity of 150 million cubic feet per day (“MMcf/d”) and total designed processing capacity of 250 MMcf/d.
Roan Resources
Roan Resources was formed in the second quarter of 2017 and is focused on the accelerated development of approximately 154,000 net acres in the prolific Merge/SCOOP/STACK play of Oklahoma.
During the second quarter of 2018, Roan operated six to seven drilling rigs in the Merge and drilled 25 operated wells with lateral lengths ranging between one-to-two miles. Completion activity in the second quarter remained slower while awaiting the start-up of Blue Mountain’s Chisolm Trail cryogenic plant. Therefore, net production averaged approximately 36,400 BOE/d, down slightly from first quarter. The cryogenic plant is now operating and current net average production is approximately 45,000 BOE/d. Roan’s exit-rate production for 2018 is projected to be between 58,000 and 64,000 net BOE/d.
Roan brought online several impressive wells during the quarter. The Dutch 1H-33-28 (9,700’ lateral) and Dutch 1H-4-9 (7,475’ lateral) had an average 30-day IP rate of 1,918 BOE/d (67% liquids) and 1,360 BOE/d (66% liquids), respectively. The Spectacular Bid 18-11-6 2H (4,915’ lateral) had an average 30-day IP rate of 1,728 BOE/d (75% liquids) and the Barbour 1-10-7 1H (4,960’ lateral) had an average 30- day IP rate of 1,487 BOE/d (56% liquids). All four wells are in Canadian county targeting the Woodford or Mayes formation. Roan currently has 13 drilled but uncompleted (“DUC”) wells.
Additional information on Roan’s operations, activity, financials and guidance can be found in the Roan Investor Presentation that was posted to LINN’s website on July 30, 2018 and in the second quarter supplemental presentation located on LINN’s website.
Second Quarter Actuals versus Guidance
| Q2 Actuals | Q2 Guidance | |||||
| Net Production (MMcfe/d) |
312 | 295 – 325 | ||||
| Natural gas (MMcf/d) |
238 | 230 – 255 | ||||
| Oil (Bbls/d) |
1,800 | 1,650 – 1,750 | ||||
| NGL (Bbls/d) |
10,518 | 9,250 – 10,000 | ||||
| Other revenues, net (in thousands) (1) |
$ | 9,027 | $10,000 - $12,000 | |||
| Operating Costs (in thousands) |
$ | 52,598 | $48,000 – $54,000 | |||
| Lease operating expenses |
$ | 24,088 | $24,000 – $27,000 | |||
| Transportation expenses |
$ | 21,213 | $17,000 – $19,000 | |||
| Taxes, other than income taxes |
$ | 7,297 | $7,000 – $8,000 | |||
| General and administrative expenses (2) |
$ | 20,044 | $20,000 – $22,000 | |||
| General and administrative severance expenses |
$ | 14,163 | $11,000 – $14,000 | |||
| Targets (Mid-Point) (in thousands) |
||||||
| Adjusted EBITDAX (3) |
$ | 11,135 | $6,000 | |||
| Interest expense (4) |
$ | — | $— | |||
| Oil and natural gas capital |
$ | 7,167 | $9,000 | |||
| Total capital |
$ | 42,026 | $54,000 | |||
| Weighted Average NYMEX Differentials |
||||||
| Natural gas (MMBtu) |
($ | 0.32 | ) | ($0.52) – ($0.43) | ||
| Oil (Bbl) |
($ | 1.22 | ) | ($2.90) – ($2.50) | ||
| NGL price as a % of NYMEX oil price |
35 | % | 30% – 34% | |||
| (1) | Includes other revenues and margin on marketing activities |
| (2) | Excludes share-based compensation expenses and severance expenses |
| (3) | Includes a reduction to EBITDAX for estimated severance expenses, costs associated with managing assets divested during 2018, associated divestment costs, required transition services under purchase and sale agreements and estimated separation costs |
| (4) | Excludes non cash interest expense |
Earnings Call / Form 10-Q
The Company will file its second quarter form 10-Q with the Securities and Exchange Commission later today. The Company will not be hosting a conference call or webcast in connection with its second quarter 2018 results. Supplemental information can be found at the following link on our website: http://ir.linnenergy.com/presentations.cfm.
Riviera Resources Investor Conference Call
As previously announced, Riviera will host a conference call Thursday, August 23, 2018 at 10 a.m. (Central) to discuss additional strategic and financial information related to Riviera and its wholly owned subsidiary, Blue Mountain Midstream LLC. Investors and analysts are invited to participate in the call by dialing (844) 625-4392, or (409) 497-0988 for international calls using Conference ID: 2336839. Interested parties may also listen over the internet at www.RivieraResourcesInc.com.
A replay of the call will be available on Riviera’s website or by phone until September 6, 2018. The number for the replay is (855) 859-2056 or (404) 537-3406 for international calls using Conference ID: 2336839. Presentation materials will be made available prior to the start of the call on Riviera’s website www.RivieraResourcesInc.com under the Investor Relations tab on the date of the events.
About LINN Energy
LINN Energy, Inc. was formed in February 2017 as the reorganized successor to LINN Energy, LLC. Headquartered in Houston, Texas, the Company’s current focus is the development of the Merge/SCOOP/STACK in Oklahoma through its equity interest in Roan Resources LLC.
About Roan Resources LLC
Roan is an independent oil and natural gas company headquartered in Oklahoma City, Oklahoma, focused on the development, exploration and acquisition of unconventional oil and natural gas reserves in the Merge, SCOOP and STACK plays in Oklahoma. Roan was formed in the second quarter of 2017 by LINN and Citizen Energy II, LLC (“Citizen”). In exchange for their contributions, LINN and Citizen each received a 50% equity interest in Roan. Roan’s operations team took over field operations from LINN and Citizen in early 2018. For more information, please visit www.RoanResources.com.
About Riviera Resources
Riviera Resources is an independent oil and gas company with a strategic focus on efficiently operating its mature low-decline assets, developing its growth-oriented assets, and returning capital to shareholders. Riviera’s assets consist of properties located in the Hugoton Basin, East Texas, North Louisiana, Michigan/Illinois, the Uinta Basin and Mid-Continent regions; and Blue Mountain Midstream LLC, a wholly owned subsidiary centered in the core of the Merge play in the Anadarko Basin. More information about Riviera and Blue Mountain Midstream LLC, is available at Riviera’s website, www.RivieraResourcesInc.com.
Forward-Looking Statements
Statements made in this press release that are not historical facts are “forward-looking statements.” These statements are based on certain assumptions and expectations made by the Company which reflect management’s experience, estimates and perception of historical trends, current conditions, and anticipated future developments. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or anticipated in the forward-looking statements. These include risks relating to financial and operational performance and results of the Company and Roan Resources LLC, uncertainties relating to the Company’s and Riviera’s ability to realize the anticipated benefits of the Spin-Off, the potential negative effects of the Spin-Off, continued low or further declining commodity prices and demand for oil, natural gas and natural gas liquids, ability to hedge future production, ability to replace reserves and efficiently develop current reserves, the capacity and utilization of midstream facilities and the regulatory environment. These and other important factors could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. Please read “Risk Factors” in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other public filings. We undertake no obligation to publicly update any forward- looking statements, whether as a result of new information or future events.
CONTACTS: LINN Energy, Inc.
Investor Relations
(281) 840-4110
ir@linnenergy.com
Condensed Consolidated Balance Sheets (Unaudited)
| June 30, 2018 |
December 31, 2017 |
|||||||
| (in thousands) | ||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 301,365 | $ | 464,508 | ||||
| Accounts receivable – trade, net |
64,686 | 140,485 | ||||||
| Derivative instruments |
3,934 | 9,629 | ||||||
| Restricted cash |
43,387 | 56,445 | ||||||
| Other current assets |
46,659 | 79,771 | ||||||
| Assets held for sale |
22 | 106,963 | ||||||
|
|
|
|
|
|||||
| Total current assets |
460,053 | 857,801 | ||||||
|
|
|
|
|
|||||
| Noncurrent assets: |
||||||||
| Oil and natural gas properties (successful efforts method) |
785,815 | 950,083 | ||||||
| Less accumulated depletion and amortization |
(59,870 | ) | (49,619 | ) | ||||
|
|
|
|
|
|||||
| 725,945 | 900,464 | |||||||
| Other property and equipment |
566,861 | 480,729 | ||||||
| Less accumulated depreciation |
(44,412 | ) | (28,658 | ) | ||||
|
|
|
|
|
|||||
| 522,449 | 452,071 | |||||||
| Derivative instruments |
1,254 | 469 | ||||||
| Deferred income taxes |
169,691 | 198,417 | ||||||
| Equity method investments |
473,269 | 464,926 | ||||||
| Other noncurrent assets |
5,264 | 6,975 | ||||||
|
|
|
|
|
|||||
| 649,478 | 670,787 | |||||||
|
|
|
|
|
|||||
| Total noncurrent assets |
1,897,872 | 2,023,322 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 2,357,925 | $ | 2,881,123 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable and accrued expenses |
$ | 179,887 | $ | 253,975 | ||||
| Stock-based payment liability |
111,792 | — | ||||||
| Derivative instruments |
5,536 | 10,103 | ||||||
| Other accrued liabilities |
19,830 | 58,617 | ||||||
| Liabilities held for sale |
— | 43,302 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
317,045 | 365,997 | ||||||
|
|
|
|
|
|||||
| Noncurrent liabilities: |
||||||||
| Derivative instruments |
24 | 2,849 | ||||||
| Asset retirement obligations and other noncurrent liabilities |
105,531 | 160,720 | ||||||
|
|
|
|
|
|||||
| Total noncurrent liabilities |
105,555 | 163,569 | ||||||
|
|
|
|
|
|||||
| Equity: |
||||||||
| Class A common stock |
79 | 84 | ||||||
| Additional paid-in capital |
1,427,458 | 1,899,642 | ||||||
| Retained earnings |
507,788 | 432,860 | ||||||
|
|
|
|
|
|||||
| Total common stockholders’ equity |
1,935,325 | 2,332,586 | ||||||
| Noncontrolling interests |
— | 18,971 | ||||||
|
|
|
|
|
|||||
| Total equity |
1,935,325 | 2,351,557 | ||||||
|
|
|
|
|
|||||
| Total liabilities and equity |
$ | 2,357,925 | $ | 2,881,123 | ||||
|
|
|
|
|
|||||
Condensed Consolidated Statements of Operations (Unaudited)
| Successor | ||||||||
| Three Months Ended June 30, | ||||||||
| 2018 | 2017 | |||||||
| (in thousands, except per share amounts) | ||||||||
| Revenues and other: |
||||||||
| Oil, natural gas and natural gas liquids sales |
$ | 87,004 | $ | 243,167 | ||||
| Gains (losses) on oil and natural gas derivatives |
(7,525 | ) | 45,714 | |||||
| Marketing revenues |
42,967 | 12,547 | ||||||
| Other revenues |
6,387 | 6,391 | ||||||
|
|
|
|
|
|||||
| 128,833 | 307,819 | |||||||
|
|
|
|
|
|||||
| Expenses: |
||||||||
| Lease operating expenses |
24,088 | 71,057 | ||||||
| Transportation expenses |
21,213 | 37,388 | ||||||
| Marketing expenses |
40,327 | 6,976 | ||||||
| General and administrative expenses |
92,395 | 34,458 | ||||||
| Exploration costs |
53 | 811 | ||||||
| Depreciation, depletion and amortization |
21,980 | 51,987 | ||||||
| Taxes, other than income taxes |
7,297 | 17,871 | ||||||
| Gains on sale of assets and other, net |
(101,777 | ) | (306,878 | ) | ||||
|
|
|
|
|
|||||
| 105,576 | (86,330 | ) | ||||||
|
|
|
|
|
|||||
| Other income and (expenses): |
||||||||
| Interest expense, net of amounts capitalized |
(584 | ) | (7,551 | ) | ||||
| Earnings (losses) from equity method investments |
(9,327 | ) | 91 | |||||
| Other, net |
538 | (1,163 | ) | |||||
|
|
|
|
|
|||||
| (9,373 | ) | (8,623 | ) | |||||
|
|
|
|
|
|||||
| Reorganization items, net |
(1,259 | ) | (3,377 | ) | ||||
|
|
|
|
|
|||||
| Income from continuing operations before income taxes |
12,625 | 382,149 | ||||||
| Income tax expense |
5,722 | 158,770 | ||||||
|
|
|
|
|
|||||
| Income from continuing operations |
6,903 | 223,379 | ||||||
| Loss from discontinued operations, net of income taxes |
— | (3,322 | ) | |||||
|
|
|
|
|
|||||
| Net income |
6,903 | 220,057 | ||||||
| Net income attributable to noncontrolling interests |
1,799 | — | ||||||
|
|
|
|
|
|||||
| Net income attributable to common stockholders |
$ | 5,104 | $ | 220,057 | ||||
| Income (loss) per share/unit attributable to common stockholders: |
||||||||
| Income from continuing operations per share – Basic |
$ | 0.06 | $ | 2.49 | ||||
|
|
|
|
|
|||||
| Income from continuing operations per share – Diluted |
$ | 0.06 | $ | 2.47 | ||||
|
|
|
|
|
|||||
| Loss from discontinued operations per share – Basic |
$ | — | $ | (0.04 | ) | |||
|
|
|
|
|
|||||
| Loss from discontinued operations per share – Diluted |
$ | — | $ | (0.04 | ) | |||
|
|
|
|
|
|||||
| Net income per share – Basic |
$ | 0.06 | $ | 2.45 | ||||
|
|
|
|
|
|||||
| Net income per share – Diluted |
$ | 0.06 | $ | 2.43 | ||||
|
|
|
|
|
|||||
| Weighted average shares outstanding – Basic |
78,718 | 89,849 | ||||||
|
|
|
|
|
|||||
| Weighted average shares outstanding – Diluted |
79,277 | 90,484 | ||||||
|
|
|
|
|
|||||
Condensed Consolidated Statements of Operations (Unaudited)
| Successor | Predecessor | |||||||||||||
| Six Months Ended June 30, 2018 |
Four Months Ended June 30, 2017 |
Two Months Ended February 28, 2017 |
||||||||||||
| (in thousands, except per share and per unit amounts) | ||||||||||||||
| Revenues and other: |
||||||||||||||
| Oil, natural gas and natural gas liquids sales |
$ | 223,880 | $ | 323,492 | $ | 188,885 | ||||||||
| Gains (losses) on oil and natural gas derivatives |
(22,555 | ) | 33,755 | 92,691 | ||||||||||
| Marketing revenues |
89,234 | 15,461 | 6,636 | |||||||||||
| Other revenues |
12,281 | 8,419 | 9,915 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| 302,840 | 381,127 | 298,127 | ||||||||||||
|
|
|
|
|
|
|
|||||||||
| Expenses: |
||||||||||||||
| Lease operating expenses |
71,972 | 95,687 | 49,665 | |||||||||||
| Transportation expenses |
40,307 | 51,111 | 25,972 | |||||||||||
| Marketing expenses |
82,082 | 9,515 | 4,820 | |||||||||||
| General and administrative expenses |
137,174 | 44,869 | 71,745 | |||||||||||
| Exploration costs |
1,255 | 866 | 93 | |||||||||||
| Depreciation, depletion and amortization |
50,445 | 71,901 | 47,155 | |||||||||||
| Taxes, other than income taxes |
15,749 | 24,948 | 14,877 | |||||||||||
| (Gains) losses on sale of assets and other, net |
(207,852 | ) | (306,394 | ) | 829 | |||||||||
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|
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|
|||||||||
| 191,132 | (7,497 | ) | 215,156 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| Other income and (expenses): |
||||||||||||||
| Interest expense, net of amounts capitalized |
(988 | ) | (11,751 | ) | (16,725 | ) | ||||||||
| Earnings from equity method investments |
16,018 | 130 | 157 | |||||||||||
| Other, net |
369 | (1,551 | ) | (149 | ) | |||||||||
|
|
|
|
|
|
|
|||||||||
| 15,399 | (13,172 | ) | (16,717 | ) | ||||||||||
|
|
|
|
|
|
|
|||||||||
| Reorganization items, net |
(3,210 | ) | (5,942 | ) | 2,331,189 | |||||||||
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations before income taxes |
123,897 | 369,510 | 2,397,443 | |||||||||||
| Income tax expense (benefit) |
45,896 | 153,455 | (166 | ) | ||||||||||
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations |
78,001 | 216,055 | 2,397,609 | |||||||||||
| Loss from discontinued operations, net of income taxes |
— | (3,254 | ) | (548 | ) | |||||||||
|
|
|
|
|
|
|
|||||||||
| Net income |
78,001 | 212,801 | 2,397,061 | |||||||||||
| Net income attributable to noncontrolling interests |
3,073 | — | — | |||||||||||
|
|
|
|
|
|
|
|||||||||
| Net income attributable to common stockholders/unitholders |
$ | 74,928 | $ | 212,801 | $ | 2,397,061 | ||||||||
|
|
|
|
|
|
|
|||||||||
| Income (loss) per share/unit attributable to common stockholders/unitholders: |
||||||||||||||
| Income from continuing operations per share/unit – Basic |
$ | 0.95 | $ | 2.41 | $ | 6.80 | ||||||||
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations per share/unit – Diluted |
$ | 0.93 | $ | 2.40 | $ | 6.80 | ||||||||
|
|
|
|
|
|
|
|||||||||
| Loss from discontinued operations per share/unit – Basic |
$ | — | $ | (0.04 | ) | $ | (0.01 | ) | ||||||
|
|
|
|
|
|
|
|||||||||
| Loss from discontinued operations per share/unit – Diluted |
$ | — | $ | (0.04 | ) | $ | (0.01 | ) | ||||||
|
|
|
|
|
|
|
|||||||||
| Net income per share/unit – Basic |
$ | 0.95 | $ | 2.37 | $ | 6.79 | ||||||||
|
|
|
|
|
|
|
|||||||||
| Net income per share/unit – Diluted |
$ | 0.93 | $ | 2.36 | $ | 6.79 | ||||||||
|
|
|
|
|
|
|
|||||||||
| Weighted average shares/units outstanding – Basic |
78,817 | 89,849 | 352,792 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| Weighted average shares/units outstanding – Diluted |
79,764 | 90,065 | 352,792 | |||||||||||
|
|
|
|
|
|
|
|||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited)
| Successor | Predecessor | |||||||||||||
| Six Months | Four Months | Two Months | ||||||||||||
| Ended | Ended | Ended | ||||||||||||
| June 30, 2018 | June 30, 2017 | February 28, 2017 | ||||||||||||
| (in thousands) | ||||||||||||||
| Cash flow from operating activities: |
||||||||||||||
| Net income |
$ | 78,001 | $ | 212,801 | $ | 2,397,061 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||||
| Loss from discontinued operations |
— | 3,254 | 548 | |||||||||||
| Depreciation, depletion and amortization |
50,445 | 71,901 | 47,155 | |||||||||||
| Deferred income taxes |
46,031 | 131,055 | (166 | ) | ||||||||||
| (Gains) losses on derivatives |
22,555 | (33,755 | ) | (92,691 | ) | |||||||||
| Cash settlements on derivatives |
(25,037 | ) | 7,929 | (11,572 | ) | |||||||||
| Share-based compensation expenses |
66,374 | 19,599 | 50,255 | |||||||||||
| Amortization and write-off of deferred financing fees |
824 | 82 | 1,338 | |||||||||||
| (Gains) losses on sale of assets and other, net |
(224,091 | ) | (293,800 | ) | 1,069 | |||||||||
| Reorganization items, net |
— | — | (2,359,364 | ) | ||||||||||
| Changes in assets and liabilities: |
||||||||||||||
| (Increase) decrease in accounts receivable – trade, net |
76,465 | 27,212 | (7,216 | ) | ||||||||||
| (Increase) decrease in other assets |
35,828 | (9,146 | ) | 528 | ||||||||||
| Increase (decrease) in accounts payable and accrued expenses |
(52,538 | ) | (89,755 | ) | 20,949 | |||||||||
| Increase (decrease) in other liabilities |
(22,955 | ) | 22,421 | 2,801 | ||||||||||
|
|
|
|
|
|
|
|||||||||
| Net cash provided by operating activities – continuing operations |
51,902 | 69,798 | 50,695 | |||||||||||
| Net cash provided by operating activities – discontinued operations |
— | 13,966 | 8,781 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| Net cash provided by operating activities |
51,902 | 83,764 | 59,476 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| Cash flow from investing activities: |
||||||||||||||
| Development of oil and natural gas properties |
(45,938 | ) | (61,534 | ) | (50,597 | ) | ||||||||
| Purchases of other property and equipment |
(87,377 | ) | (27,287 | ) | (7,409 | ) | ||||||||
| Proceeds from sale of properties and equipment and other |
369,489 | 697,829 | (166 | ) | ||||||||||
|
|
|
|
|
|
|
|||||||||
| Net cash provided by (used in) investing activities – continuing operations |
236,174 | 609,008 | (58,172 | ) | ||||||||||
| Net cash used in investing activities – discontinued operations |
— | (1,645 | ) | (584 | ) | |||||||||
|
|
|
|
|
|
|
|||||||||
| Net cash provided by (used in) investing activities |
236,174 | 607,363 | (58,756 | ) | ||||||||||
|
|
|
|
|
|
|
|||||||||
| Cash flow from financing activities: |
||||||||||||||
| Proceeds from rights offerings, net |
— | — | 514,069 | |||||||||||
| Repurchases of shares |
(393,647 | ) | — | — | ||||||||||
| Proceeds from borrowings |
— | 160,000 | — | |||||||||||
| Repayments of debt |
— | (876,570 | ) | (1,038,986 | ) | |||||||||
| Payment to holders of claims under the Predecessor’s second lien notes |
— | — | (30,000 | ) | ||||||||||
| Distributions to noncontrolling interests |
(12,174 | ) | (2,973 | ) | — | |||||||||
| Cash settlements of equity classified RSUs |
(58,162 | ) | — | — | ||||||||||
| Other |
(294 | ) | (87 | ) | (6,015 | ) | ||||||||
|
|
|
|
|
|
|
|||||||||
| Net cash used in financing activities – continuing operations |
(464,277 | ) | (719,630 | ) | (560,932 | ) | ||||||||
| Net cash used in financing activities – discontinued operations |
— | — | — | |||||||||||
|
|
|
|
|
|
|
|||||||||
| Net cash used in financing activities |
(464,277 | ) | (719,630 | ) | (560,932 | ) | ||||||||
|
|
|
|
|
|
|
|||||||||
| Net decrease in cash, cash equivalents and restricted cash |
(176,201 | ) | (28,503 | ) | (560,212 | ) | ||||||||
| Cash, cash equivalents and restricted cash: |
||||||||||||||
| Beginning |
520,953 | 144,022 | 704,234 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| Ending |
$ | 344,752 | $ | 115,519 | $ | 144,022 | ||||||||
|
|
|
|
|
|
|
|||||||||
Schedule 1 - Adjusted EBITDAX (Non-GAAP Measure)
The non-GAAP financial measure of adjusted EBITDAX, as defined by the Company, may not be comparable to similarly titled measures used by other companies. Therefore, this non-GAAP measure should be considered in conjunction with net income (loss) and other performance measures prepared in accordance with GAAP. Adjusted EBITDAX should not be considered in isolation or as a substitute for GAAP.
Adjusted EBITDAX is a measure used by Company management to evaluate the Company’s operational performance and for comparisons to the Company’s industry peers. Management also believes this information may be useful to investors and analysts to gain a better understanding of the Company’s financial results.
The following presents a reconciliation of net income (loss) to adjusted EBITDAX:
| Three Months Ended June 30, | ||||||||
| 2018 | 2017 | |||||||
| (in thousands) | ||||||||
| Net income |
$ | 6,903 | $ | 220,057 | ||||
| Plus (less): |
||||||||
| Income from discontinued operations |
— | 3,322 | ||||||
| Interest expense |
584 | 7,551 | ||||||
| Income tax expense |
5,722 | 158,770 | ||||||
| Depreciation, depletion and amortization |
21,980 | 51,987 | ||||||
| Exploration costs |
53 | 811 | ||||||
|
|
|
|
|
|||||
| EBITDAX |
35,242 | 442,498 | ||||||
| Plus (less): |
||||||||
| Noncash (gains) losses on oil and natural gas derivatives |
6,955 | (43,567 | ) | |||||
| Accrued settlements on oil derivative contracts related to current production period (2) |
935 | 1,583 | ||||||
| Share-based compensation expenses |
58,188 | 15,422 | ||||||
| (Earnings) losses from equity method investments |
9,327 | (91 | ) | |||||
| Gains on sale of assets and other, net (3) |
(100,771 | ) | (307,290 | ) | ||||
| Reorganization items, net (4) |
1,259 | 3,377 | ||||||
|
|
|
|
|
|||||
| Adjusted EBITDAX |
$ | 11,135 | $ | 111,932 | ||||
|
|
|
|
|
|||||
| Six Months Ended June 30, | ||||||||
| 2018 | 2017(1) | |||||||
| (in thousands) | ||||||||
| Net income |
$ | 78,001 | $ | 2,609,862 | ||||
| Plus (less): |
||||||||
| Income from discontinued operations |
— | 3,802 | ||||||
| Interest expense |
988 | 28,476 | ||||||
| Income tax expense |
45,896 | 153,289 | ||||||
| Depreciation, depletion and amortization |
50,445 | 119,056 | ||||||
| Exploration costs |
1,255 | 959 | ||||||
|
|
|
|
|
|||||
| EBITDAX |
176,585 | 2,915,444 | ||||||
| Plus (less): |
||||||||
| Noncash (gains) losses on oil and natural gas derivatives |
17,491 | (130,089 | ) | |||||
| Accrued settlements on oil derivative contracts related to current production period (2) |
1,568 | 2,885 | ||||||
| Share-based compensation expenses |
75,225 | 69,854 | ||||||
| Earnings from equity method investments |
(16,018 | ) | (287 | ) | ||||
| Gains on sale of assets and other, net (3) |
(206,882 | ) | (307,120 | ) | ||||
| Reorganization items, net (4) |
3,210 | (2,325,247 | ) | |||||
|
|
|
|
|
|||||
| Adjusted EBITDAX |
$ | 51,179 | $ | 225,440 | ||||
|
|
|
|
|
|||||
| (1) | All amounts reflect the combined results of the four months ended June 30, 2017 (successor) and the two months ended February 28, 2017 (predecessor). |
| (2) | Represent amounts related to oil derivative contracts that settled during the respective period (contract terms had expired) but cash had not been received as of the end of the period. |
| (3) | Primarily represent gains or losses on the sale of assets and gains or losses on inventory valuation. |
| (4) | Represent costs and income directly associated with the Company’s filing for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code since the petition date, and also include adjustments to reflect the carrying value of certain liabilities subject to compromise at their estimated allowed claim amounts, as such adjustments are determined. |
Roan Resources LLC Adjusted EBITDAX (LINN’s 50% Equity Interest)
| Three Months ended | ||||
| June 30, 2018 | ||||
| (in thousands) | ||||
| Net loss |
$ | (11,378 | ) | |
| Plus (less): |
||||
| Interest expense |
544 | |||
| Depreciation, depletion and amortization |
12,300 | |||
| Exploration costs |
5,317 | |||
|
|
|
|||
| EBITDAX |
6,783 | |||
| Noncash losses on oil and natural gas derivatives |
22,415 | |||
| Share-based compensation expenses |
1,417 | |||
|
|
|
|||
| Adjusted EBITDAX |
$ | 30,615 | ||
|
|
|
|||
| Six Months ended | ||||
| June 30, 2018 | ||||
| (in thousands) | ||||
| Net income |
$ | 6,162 | ||
| Plus (less): |
||||
| Interest expense |
1,443 | |||
| Depreciation, depletion and amortization |
23,233 | |||
| Exploration costs |
9,242 | |||
|
|
|
|||
| EBITDAX |
40,080 | |||
| Noncash losses on oil and natural gas derivatives |
24,964 | |||
| Share-based compensation expenses |
2,564 | |||
|
|
|
|||
| Adjusted EBITDAX |
$ | 67,608 | ||
|
|
|
|||