rvra-8k_20190228.htm

 

 

 

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): February 28, 2019 (February 28, 2019)

 

 

 

 

Riviera Resources, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

333-225927

82-5121920

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

 

600 Travis Street, Suite 1700

Houston, Texas

77002

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code:  (281) 840-4000

 

NOT APPLICABLE

(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:

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 February 28, 2019, Riviera Resources, Inc. issued a press release announcing its earnings for the fourth quarter and full year 2018, and its guidance for 2019.  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, and shall not be incorporated by reference into any registration statement of the issuer.

Item 9.01      Financial Statements and Exhibits.

(d)     Exhibit.

 

 

 

 

 

Exhibit Number

 

Description

 

 

 

Exhibit 99.1

 

Press release dated February 28, 2019.

 


 

SIGNATURE

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.

 

 

 

RIVIERA RESOURCES, INC.

 

 

(Registrant)

 

 

 

Date: February 28, 2019

 

/s/ David B. Rottino

 

 

David B. Rottino

 

 

President and Chief Executive Officer

 

rvra-ex991_6.htm

Exhibit 99.1

RIVIERA RESOURCES REPORTS FOURTH-QUARTER AND YEAR END 2018 RESULTS; PROVIDES 2019 GUIDANCE

HOUSTON, February 28, 2019 – Riviera Resources, Inc. (OTCQX: RVRA) (“Riviera” or the “Company”) announces financial and operating results for the fourth quarter and full year 2018 and provides a strategic update as well as guidance for 2019.

The Company highlights the following accomplishments:

 

Executed the spin-off from LINN Energy, Inc. on August 7, 2018

 

Returned more than $155 million of capital to shareholders through share repurchases

 

Sold Arkoma Basin assets for proceeds of approximately $65 million, a premium to PDP PV-10 value

 

Outperformed adjusted EBITDAX guidance for the last two quarters

 

Fourth quarter 2018 average production exceeded midpoint of guidance

 

Capital investment over the last two quarters of approximately $61 million was 35% lower than guidance

 

Blue Mountain commissioned its Cryo I plant to its design capacity of 250 MMcf/d

 

Blue Mountain signed an agreement to provide water gathering services to Roan Resources beginning in 2019

The Company’s strategic initiatives for 2019 include:

 

Focusing upstream capital on high-return projects that maintain production and delineate the NW STACK while still generating significant  free cash flow

 

Continuing to use cash on hand, free cash flow, and opportunistic asset monetizations to return capital to our shareholders

 

Continuing to grow and diversify Blue Mountain’s midstream business to best position it towards a strategic transaction

David Rottino, Riviera’s President and Chief Executive Officer, commented, “I am very pleased with Riviera’s progress since our spin last August.  In the fourth quarter, our operational performance was excellent as we generated more cash flow than forecasted through higher production, lower G&A costs and lower capital spending.”  Rottino continued, “We remain relentlessly focused on our commitment to maximizing shareholder value through our strategy of capital discipline, returning capital to shareholders and efficiently managing our assets.  We continue to believe our shares are deeply undervalued and we are committed to finding ways to monetize assets and use cash on hand to return capital to shareholders.  In the fourth quarter, we announced the sale of our Arkoma basin assets, which closed in January 2019, we completed an upsized tender offer returning over $133 million to shareholders, and we continued to execute repurchases through our ongoing share repurchase program.  Finally, we intend to grow our exciting Blue Mountain midstream business to best position it towards a strategic transaction.”

Key Financial Results (1)

 

Fourth Quarter

Full Year

$ in millions, except per unit amounts

2018

2017

2018

2017(2)

Average daily production (MMcfe/d)

299

505

328

637

Total oil, natural gas and NGL revenues  

$ 107

$ 180

$ 420

$ 898

Income from continuing operations

$ 11

$ 79

$ 21

$ 2,932

Income from discontinued operations, net of income taxes

$ –

$ 6

$ 20

$ 90

Net income

$ 11

$ 85

$ 41

$ 3,022

Adjusted EBITDAX (a non-GAAP financial measure)(3)

$ 44

$ 75

$ 107

$ 394

Net cash provided by (used in) operating activities

$ 21

$ 76

($ 7)

$ 215

Oil and natural gas capital

$ 12

$ 31

$ 36

$ 239

Total capital

$ 27

$ 61

$ 170

$ 344

(1)

All amounts reflect continuing operations with the exception of net income.

(2)

All amounts reflect the combined results of the ten months ended December 31, 2017 (successor) and the two months ended February 28, 2017 (predecessor).

(3)

Excludes Adjusted EBITDAX from discontinued operations of approximately $164,000 and $30 million for the three months and the year ended December 31, 2017, respectively.  Includes severance costs and spin-off related costs of approximately $1 million and $39 million, for the three months and the year ended December 31, 2018, respectively.

 


 

Strategic Plan to Transform Assets to Drive Shareholder Value

The Board and management continue to believe the Company is trading at a significant discount to its sum-of-the-parts net asset value.  To enhance shareholder value, the Company plans to increase the scale, scope and reach of Blue Mountain while preparing Blue Mountain for its eventual separation as a standalone entity or for another transaction that maximizes shareholder value.  In addition, based on the Company’s successful track record of monetizing assets, the Company will continue to return capital to shareholders through further upstream asset monetizations.

Continuation of Share Repurchase Plan

On August 16, 2018, the Company’s Board of Directors authorized the repurchase of up to $100 million of the Company’s outstanding shares of common stock.  Under this program, the Company repurchased an aggregate of 1,167,767 shares at an average price of $18.46 for a total cost of approximately $22 million, and approximately $78 million was available for share repurchase as of February 22, 2019.

Fourth Quarter 2018 Activity – Upstream Assets

Riviera’s production for the fourth quarter averaged approximately 299 MMcfe/d, 4% above the mid-point of our guidance range.  The outperformance in production was mainly due to higher production from non-operated drilling in the NW Stack, production enhancing projects in East Texas and North Louisiana, and lower downtime across our mature asset base.  The production outperformance, low annual decline of approximately 10%, and consistent operating expenses, all illustrate the predictability of our upstream assets.  Additionally, we believe the development opportunities throughout our NW STACK, East Texas, and North Louisiana acreage positions provide significant upside.

With respect to costs, the Company had strong results in the fourth quarter.  Capital expenditures were approximately $12 million compared to guidance of $29 million.  Adjusted G&A expenses were approximately $15 million, 16% below the mid-point of our guidance range for the quarter.  Operating expenses for the fourth quarter were in-line with guidance at approximately $53 million.

Initiation of Northwest STACK / North Louisiana Operated Drilling Program

In December 2018, the Company initiated an operated drilling program in the NW STACK.  To date, Riviera has finished drilling three wells and is currently drilling its fourth well.  The Company has completed two wells and is encouraged by the early flow-back data.

The Company also began drilling in North Louisiana in late December 2018.  It is currently drilling the second well of a two-well pad targeting the Upper Red formation.  This pad is scheduled to be completed in March with first production expected in April 2019.  At current prices, the Company expects to generate over 100% IRR on these wells.

Blue Mountain Business Update

The fourth quarter of 2018 ended a transformative year for Blue Mountain.  During the year, Blue Mountain constructed and placed in-service a cryogenic processing facility at its full 250 MMcf/d capacity and made significant progress toward setting up its organization and systems consistent with a standalone operating entity.

For the fourth quarter 2018, Blue Mountain’s operating margin, also referred to as other revenues, net, came in at the top end of its guidance range.  Fourth quarter 2018 average throughput was within the guidance range.  On average, natural gas throughput was 132 MMcf/d and NGLs produced were 8,700 bpd, compared with 35 MMcf/d and 1,080 bpd for the fourth quarter of 2017.

During the fourth quarter of 2018, Blue Mountain continued to make progress on its strategic objective to diversify its service offerings through scalable growth platforms in Central Oklahoma.  Recently, Blue Mountain finalized an agreement with Roan Resources to provide water management services beginning in the second quarter of 2019.  Also, Blue Mountain is in active discussions to develop oil gathering infrastructure to capture additional midstream value in the Merge play.

In addition, Blue Mountain is currently developing opportunities to further extend its natural gas and water capabilities in the region and is in discussions with third-party producers to meet their needs in the expanding Merge/SCOOP/STACK plays.  These expansion opportunities will allow Blue Mountain to grow its asset base and further diversify its producer counterparties, while leveraging existing infrastructure, capabilities and expertise.

Balance Sheet and Liquidity

Riviera and Blue Mountain have established separate credit facilities.  As of December 31, 2018, Riviera had $20 million drawn on its revolving credit facility, and borrowing commitments of up to $425 million with available borrowing capacity

2


 

of approximately $371 million, inclusive of outstanding letters of credit.  As of December 31, 2018, Blue Mountain had $4.5 million drawn on its revolving credit facility, borrowing commitments of approximately $76 million, and available borrowing capacity of $72 million.  The Company had a fourth quarter consolidated ending cash balance of approximately $19 million.

In January 2019, the Company closed on the sale of its Arkoma basin assets.  The proceeds were used to pay off the $20 million drawn on Riviera’s credit facility. The sale resulted in a reduction of the borrowing commitment to $385 million.  As of January 31, 2019, Riviera had no borrowings under its credit facility, Blue Mountain had $11.5 million drawn on its revolving credit facility, and the Company had a consolidated ending cash balance of approximately $80 million.

Proved Reserves Update

Proved reserves at December 31, 2018 were approximately 1,618 Bcfe, of which approximately 78% were natural gas, 21% were natural gas liquids and 1% were oil.  Approximately 96% were classified as proved developed, with a total standardized measure of discounted future net cash flows of approximately $747 million.  PV-10 (a non-GAAP measure) was approximately $1.02 billion with exclusion of income taxes and the inclusion of helium.  See Schedule 2 below for a reconciliation of PV-10.

Proved Reserves Table

 

Total Continuing Operations (Bcfe)

Proved reserves at December 31, 2017

1,968

Revisions of previous estimates – Price

87

Revisions of previous estimates – Performance

(80)

Sales of minerals in place

(239)

Extensions and discoveries

2

Production

(120)

Proved reserves at December 31, 2018

1,618

 

3


 

Fourth Quarter Actuals versus Guidance

 

Q4 2018

Actuals

Q4 2018

Guidance

 

 

 

Net Production (MMcfe/d)

299

273 – 303

Natural gas (MMcf/d)

241

220 – 245

Oil (Bbls/d)

1,373

1,350 – 1,500

NGL (Bbls/d)

8,318

7,500 – 8,100

 

 

 

Other revenues, net (in thousands) (1)

$ 20,422(2)

$ 15,000 $ 21,000

Blue Mountain

$ 11,122

$ 8,000 – $ 12,000

Other

$ 9,300

$ 7,000 – $ 9,000

 

 

 

Costs (in thousands)

$ 53,147

$ 49,000 – $ 55,000

Lease operating expenses

$ 25,195

$ 23,000 – $ 25,000

Transportation expenses

$ 20,951

$ 20,000 – $ 22,000

Taxes, other than income taxes

$ 7,001

$ 6,000 – $ 8,000

 

 

 

Adjusted general and administrative expenses (3)

$ 15,488(4)

$ 17,000 – $ 20,000

Upstream adjusted general and administrative expenses (3)

$ 11,786

 

Blue Mountain adjusted general and administrative expenses (3)

$ 3,702

 

 

 

 

General and administrative- severance expenses

$ 1,158

$ 1,000 – $ 2,000

 

 

 

Targets (Mid-Point) (in thousands)

 

 

Adjusted EBITDAX

$ 43,658(5)

$ 30,000(6)

Interest expense (7)

$ 179

$ 150

Oil and natural gas capital

$ 11,594

$ 29,000

Blue Mountain capital

$ 12,306

$ 13,000

Total capital

$ 27,358

$ 44,000

 

 

 

(1)

Includes other revenues and margin on marketing activities

(2)

Includes other revenues of approximately $5.7 million, plus marketing revenues of approximately $88.6 million, less marketing expenses of approximately $73.9 million for the three months ended December 31, 2018.  Excludes gains and losses on derivative instruments included in marketing expenses

(3)

Adjusted general and administrative expenses is a non-GAAP measure that excludes share-based compensation expenses and severance expenses presented for the purpose of comparing to guidance

(4)

For the three months ended December 31, 2018 represents general and administrative expenses of approximately $17.2 million, excluding share-based compensation expenses of approximately $0.5 million and severance expenses of approximately $1.2 million

(5)

Includes a reduction to Adjusted EBITDAX for certain non-recurring estimated G&A expenses, including severance expenses of $1.4 million

(6)

Includes a reduction to Adjusted EBITDAX for certain non-recurring estimated G&A expenses, including severance expenses of $1.5 million, land diligence costs of $1 million

(7)

Excludes non cash amortization

4


 

Upstream Segment - First Quarter and Full Year 2019 Guidance

The guidance below is for the upstream assets only. The Company anticipates providing 2019 guidance estimates for Blue Mountain by early second quarter.

The 2019 upstream guidance reflects the Arkoma Basin divestiture that closed in January, 2019.  In 2019, the Company expects to invest approximately $66 million of capital on its upstream assets. Approximately 80% of upstream capital will be devoted to drilling expected high return wells in the NW STACK and North Louisiana to keep production relatively flat throughout the year while still generating significant free cash flow.

 

Q1 2019E

 

FY 2019E

 

Net Production (MMcfe/d)

252 – 281

252 – 282

Natural gas (MMcf/d)

205 – 230

205 – 230

Oil (Bbls/d)

1,150 – 1,300

1,550 – 1,750

NGL (Bbls/d)

6,600 – 7,300

6,300 – 6,900

 

 

 

Other revenues, net (in thousands) (1)

$ 8,000 - $ 10,000

$ 32,000 –  $ 35,000

 

 

 

Costs (in thousands)

$ 46,000 – $ 52,000

$ 182,000 – $ 202,000

Lease operating expenses

$ 23,000 – $ 25,000

$ 88,000 –  $ 97,000

Transportation expenses

$ 18,000 – $ 20,000

$ 71,000 –  $ 79,000

Taxes, other than income taxes

$ 5,000 – $ 7,000

$ 23,000 – $ 26,000

 

 

 

Adjusted general and administrative expenses (2)

$ 9,000 – $ 10,000

$ 30,000 – $ 35,000

 

 

 

Costs per Mcfe (Mid-Point)

$ 2.02

$ 1.97

Lease operating expenses

$ 0.99

$ 0.95

Transportation expenses

$ 0.78

$ 0.77

Taxes, other than income taxes

$ 0.25

$ 0.25

 

 

 

Targets (Mid-Point) (in thousands)

 

 

Adjusted EBITDAX

$ 21,000

$ 96,000

Oil and natural gas capital

$ 38,000

$ 61,000

Total capital

$ 40,000

$ 66,000

 

 

 

Weighted Average NYMEX Differentials

 

 

Natural gas (MMBtu)

($ 0.35) – ($ 0.25)

($ 0.50) – ($ 0.20)

Oil (Bbl)

($ 2.50) – ($ 2.00)

($ 3.00) – ($ 1.75)

NGL price as a % of crude oil price

40% – 45%

40% – 45%

 

Unhedged Commodity Price Assumptions

Jan 19

Feb 19

Mar 19

2019E

Natural gas (MMBtu)

$3.64

$2.95

$2.63

$2.86

Oil (Bbl)

$51.55

$55.59

$55.59

$56.80

NGL (Bbl)

$23.33

$24.89

$22.20

$23.85

 

 

 

 

(1)

Includes other revenues and margin on marketing activities for Upstream assets, only

 

(2)

Excludes share-based compensation expenses


5


 

Hedging Update

Riviera Upstream Hedges

 

2019

2020

Natural Gas

Volume (MMMBtu/d)

Average Price

(per MMBtu)

Volume (MMMBtu/d)

Average Price

(per MMBtu)

Swaps

141

$2.88

30

$ 2.82

Collars

20

$2.75 – $3.00

$

Oil

Volume

(Bbls/d)

Average Price

(per Bbl)

Volume

(Bbls/d)

Average Price

(per Bbl)

Swaps

1,000

$64.32

500

$64.63

Natural Gas Basis Differential positions

Volume (MMMBtu/d)

Average Price

(per MMBtu)

Volume (MMMBtu/d)

Average Price

(per MMBtu)

PEPL Basis Swaps

70

($0.64)

20

($ 0.45)

MichCon Basis Swaps

20

($0.19)

10

($0.19)

NWPL Basis Swaps

10

($0.61)

$ –

 

Blue Mountain Hedges

 

Q1 2019

Q2 – Q4 2019

Natural Gas

Volume (MMMBtu/d)

Average Price

(per MMBtu)

Volume (MMMBtu/d)

Average Price

(per MMBtu)

Swaps

10

$ 4.19

15

$ 2.81

Oil

Volume

(Bbls/d)

Average Price

(per Bbl)

Volume

(Bbls/d)

Average Price

(per Bbl)

Swaps

99

$ 66.60

99

$ 66.60

Natural Gas Basis Differential positions

Volume (MMMBtu/d)

Average Price

(per MMBtu)

Volume (MMMBtu/d)

Average Price

(per MMBtu)

Southern Star TX OK KS

5

($ 0.565)

5

($ 0.565)

Enable Basis Swaps

5

($ 0.23)

5

($ 0.23)

 

NGL Positions:

Jan 19

Feb 19

Mar 19

Q2 – Q4 2019

Fixed price swap (Mont Belvieu ethane):

 

 

 

 

Hedged volume (gallons/d in thousands)

84

126

126

126

Average price ($/gallon)

$ 0.34

$ 0.34

$ 0.34

$ 0.34

Fixed price swap (Mont Belvieu propane):

 

 

 

 

Hedged volume (gallons/d in thousands)

42

42

42

42

Average price ($/gallon)

$ 0.68

$ 0.68

$ 0.68

$ 0.68

Margin spread (Mont Belvieu propane and Conway propane):

 

 

 

 

Hedged volume (gallons/d in thousands)

63

63

63

63

Average price ($/gallon)

($ 0.07)

($ 0.07)

($ 0.07)

($ 0.07)

Margin spread (Mont Belvieu pentane and Conway pentane):

 

 

 

 

Hedged volume (gallons/d in thousands)

 

 

42

42

Average price ($/gallon)

 

 

($ 0.095)

($ 0.095)

Earnings Call / Form 10‑K

The Company will host a conference call Thursday, February 28, 2019 at 10 a.m. (Central) to discuss the Company’s fourth quarter and full year 2018 results and expects to file its Annual Report on Form 10-K for the year ended December 31, 2018 with the U.S. Securities and Exchange Commission on or around that date.  There will be prepared remarks by executive management followed by a question and answer session.

Investors and analysts are invited to participate in the call by dialing (866) 416-7462, or (409) 217-8223 for international calls using Conference ID: 8616887.  Interested parties may also listen over the internet at www.rivieraresourcesinc.com. A replay of the call will be available on the Company’s website.

Supplemental information can be found at the following link on our website: http://ir.rivieraresourcesinc.com/events-and-presentations

6


 

ABOUT RIVIERA RESOURCES

Riviera Resources, Inc. is an independent oil and natural gas company with a strategic focus on efficiently operating its mature low-decline assets, developing its growth-oriented assets, and returning capital to its stockholders.  Riviera’s properties are located in the Hugoton Basin, East Texas, North Louisiana, Michigan/Illinois, the Uinta Basin and Mid-Continent regions.  Riviera also owns Blue Mountain Midstream LLC, a midstream company centered in the core of the Merge play in the Anadarko Basin.

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.  These statements include, among others, statements regarding our 2019 guidance, planned capital expenditures, increases in oil and gas production, the number of anticipated wells to be drilled or completed after the date hereof, future cash flows and borrowings, our strategic objectives with respect to Blue Mountain Midstream, our financial position, business strategy and other plans and objectives for future operations.  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 the Company’s financial and operational performance and results, low or 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.  The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information or future events.

CONTACT:

Investor Relations

(281) 840-4168

IR@RVRAresources.com

 

7


Consolidated Balance Sheets (Unaudited)

 

 

December 31,

 

 

 

2018

 

 

2017

 

 

 

(in thousands)

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

18,529

 

 

$

464,477

 

Accounts receivable – trade, net

 

 

114,489

 

 

 

140,485

 

Derivative instruments

 

 

10,758

 

 

 

9,629

 

Restricted cash

 

 

31,248

 

 

 

56,445

 

Other current assets

 

 

26,721

 

 

 

76,683

 

Assets held for sale

 

 

38,396

 

 

 

106,963

 

Total current assets

 

 

240,141

 

 

 

854,682

 

Noncurrent assets:

 

 

 

 

 

 

 

 

Oil and natural gas properties (successful efforts method)

 

 

756,552

 

 

 

950,083

 

Less accumulated depletion and amortization

 

 

(93,507

)

 

 

(49,619

)

 

 

 

663,045

 

 

 

900,464

 

Other property and equipment

 

 

606,244

 

 

 

480,729

 

Less accumulated depreciation

 

 

(62,368

)

 

 

(28,658

)

 

 

 

543,876

 

 

 

452,071

 

Derivative instruments

 

 

4,603

 

 

 

469

 

Deferred income taxes

 

 

129,091

 

 

 

188,538

 

Other noncurrent assets

 

 

12,078

 

 

 

14,256

 

Noncurrent assets of discontinued operations

 

 

 

 

 

457,645

 

 

 

 

145,772

 

 

 

660,908

 

Total noncurrent assets

 

 

1,352,693

 

 

 

2,013,443

 

Total assets

 

$

1,592,834

 

 

$

2,868,125

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

159,228

 

 

$

253,975

 

Derivative instruments

 

 

4,719

 

 

 

10,103

 

Other accrued liabilities

 

 

34,474

 

 

 

58,130

 

Liabilities held for sale

 

 

3,725

 

 

 

43,302

 

Total current liabilities

 

 

202,146

 

 

 

365,510

 

Noncurrent liabilities:

 

 

 

 

 

 

 

 

Long-term debt

 

 

24,500

 

 

 

 

Derivative instruments

 

 

 

 

 

2,849

 

Asset retirement obligations and other noncurrent liabilities

 

 

103,814

 

 

 

160,720

 

Total noncurrent liabilities

 

 

128,314

 

 

 

163,569

 

Equity:

 

 

 

 

 

 

 

 

Preferred Stock

 

 

 

 

 

 

Common Stock

 

 

692

 

 

 

 

Additional paid-in capital

 

 

1,256,730

 

 

 

 

Retained earnings

 

 

4,952

 

 

 

 

Net parent company investment

 

 

 

 

 

2,339,046

 

Total equity

 

 

1,262,374

 

 

 

2,339,046

 

Total liabilities and equity

 

$

1,592,834

 

 

$

2,868,125

 

 

 

8


Consolidated and Combined Statements of Operations (Unaudited)

 

 

Successor

 

 

Predecessor

 

 

 

Year Ended

December 31,

2018

 

 

Ten Months

Ended

December 31,

2017

 

 

Two Months

Ended

February 28,

2017

 

 

Year Ended

December 31,

2016

 

(in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues and other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil, natural gas and natural gas liquids sales

 

$

420,102

 

 

$

709,363

 

 

$

188,885

 

 

$

874,161

 

Gains (losses) on commodity derivatives

 

 

(23,404

)

 

 

13,533

 

 

 

92,691

 

 

 

(164,330

)

Marketing revenues

 

 

245,081

 

 

 

82,943

 

 

 

6,636

 

 

 

36,505

 

Other revenues

 

 

23,880

 

 

 

20,839

 

 

 

9,915

 

 

 

93,308

 

 

 

 

665,659

 

 

 

826,678

 

 

 

298,127

 

 

 

839,644

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating expenses

 

 

120,097

 

 

 

208,446

 

 

 

49,665

 

 

 

296,891

 

Transportation expenses

 

 

83,562

 

 

 

113,128

 

 

 

25,972

 

 

 

161,574

 

Marketing expenses

 

 

220,971

 

 

 

69,008

 

 

 

4,820

 

 

 

29,736

 

General and administrative expenses

 

 

245,291

 

 

 

117,347

 

 

 

71,745

 

 

 

237,841

 

Exploration costs

 

 

5,178

 

 

 

3,137

 

 

 

93

 

 

 

4,080

 

Depreciation, depletion and amortization

 

 

94,958

 

 

 

133,711

 

 

 

47,155

 

 

 

342,614

 

Impairment of long-lived assets

 

 

15,697

 

 

 

 

 

 

 

 

 

165,044

 

Taxes, other than income taxes

 

 

29,730

 

 

 

47,553

 

 

 

14,877

 

 

 

67,644

 

(Gains) losses on sale of assets and other, net

 

 

(208,598

)

 

 

(623,583

)

 

 

672

 

 

 

15,558

 

 

 

 

606,886

 

 

 

68,747

 

 

 

214,999

 

 

 

1,320,982

 

Other income and (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net of amounts capitalized

 

 

(2,417

)

 

 

(12,380

)

 

 

(16,725

)

 

 

(184,870

)

Other, net

 

 

(677

)

 

 

(6,233

)

 

 

(149

)

 

 

(2,345

)

 

 

 

(3,094

)

 

 

(18,613

)

 

 

(16,874

)

 

 

(187,215

)

Reorganization items, net

 

 

(5,159

)

 

 

(8,533

)

 

 

2,521,137

 

 

 

336,120

 

Income (loss) from continuing operations before income taxes

 

 

50,520

 

 

 

730,785

 

 

 

2,587,391

 

 

 

(332,433

)

Income tax expense (benefit)

 

 

29,587

 

 

 

385,654

 

 

 

(166

)

 

 

11,300

 

Income (loss) from continuing operations

 

 

20,933

 

 

 

345,131

 

 

 

2,587,557

 

 

 

(343,733

)

Income (loss) from discontinued operations, net of income taxes

 

 

19,674

 

 

 

90,064

 

 

 

(548

)

 

 

(18,354

)

Net income (loss)

 

$

40,607

 

 

$

435,195

 

 

$

2,587,009

 

 

$

(362,087

)

Income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations per share – Basic

 

$

0.28

 

 

$

4.53

 

 

$

33.96

 

 

$

(4.51

)

Income (loss) from continuing operations per share – Diluted

 

$

0.28

 

 

$

4.53

 

 

$

33.96

 

 

$

(4.51

)

Income (loss) from discontinued operations per share – Basic

 

$

0.26

 

 

$

1.18

 

 

$

(0.01

)

 

$

(0.24

)

Income (loss) from discontinued operations per share – Diluted

 

$

0.26

 

 

$

1.18

 

 

$

(0.01

)

 

$

(0.24

)

Net income (loss) per share – Basic

 

$

0.54

 

 

$

5.71

 

 

$

33.95

 

 

$

(4.75

)

Net income (loss) per share – Diluted

 

$

0.54

 

 

$

5.71

 

 

$

33.95

 

 

$

(4.75

)

Weighted average shares outstanding – Basic

 

 

74,935

 

 

 

76,191

 

 

 

76,191

 

 

 

76,191

 

Weighted average shares outstanding – Diluted

 

75,360

 

 

 

76,191

 

 

 

76,191

 

 

 

76,191

 

 

 

9


Consolidated and Combined Statements of Cash Flows (Unaudited)

 

 

Successor

 

 

Predecessor

 

 

 

Year

Ended

December 31,

2018

 

 

Ten

Months

Ended

December 31,

2017

 

 

Two

Months

Ended

February 28,

2017

 

 

Year

Ended

December 31,

2016

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

40,607

 

 

$

435,195

 

 

$

2,587,009

 

 

$

(362,087

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Income) loss from discontinued operations

 

(19,674

)

 

 

(90,064

)

 

 

548

 

 

 

18,354

 

Depreciation, depletion and amortization

 

94,958

 

 

 

133,711

 

 

 

47,155

 

 

 

342,614

 

Impairment of long-lived assets

 

15,697

 

 

 

 

 

 

 

 

 

165,044

 

Deferred income taxes

 

29,701

 

 

 

378,512

 

 

 

(166

)

 

 

11,367

 

Total (gains) losses on derivatives, net

 

25,243

 

 

 

(13,533

)

 

 

(92,691

)

 

 

164,330

 

Cash settlements on derivatives

 

(38,739

)

 

 

26,793

 

 

 

(11,572

)

 

 

860,778

 

Share-based compensation expenses

 

16,605

 

 

 

41,285

 

 

 

50,255

 

 

 

44,218

 

Amortization and write-off of deferred financing fees

 

1,909

 

 

 

3,711

 

 

 

1,338

 

 

 

13,356

 

(Gains) losses on sale of assets and other, net

 

(204,534

)

 

 

(656,198

)

 

 

1,069

 

 

 

13,007

 

Reorganization items, net

 

 

 

 

 

 

 

(2,456,074

)

 

 

(390,367

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Increase) decrease in accounts receivable – trade, net

 

26,956

 

 

 

41,094

 

 

 

(7,216

)

 

 

(71,059

)

(Increase) decrease in other assets

 

64,033

 

 

 

(265

)

 

 

528

 

 

 

(15,360

)

Increase (decrease) in accounts payable and accrued expenses

 

(46,792

)

 

 

(92,664

)

 

 

20,949

 

 

 

38,504

 

Increase (decrease) in other liabilities

 

(12,564

)

 

 

7,253

 

 

 

2,801

 

 

 

(662

)

Net cash provided by (used in) operating activities – continuing operations

 

 

(6,594

)

 

 

214,830

 

 

 

143,933

 

 

 

832,037

 

Net cash provided by operating activities – discontinued operations

 

 

 

 

16,191

 

 

 

8,781

 

 

 

43,269

 

Net cash provided by (used in) operating activities

 

 

(6,594

)

 

 

231,021

 

 

 

152,714

 

 

 

875,306

 

Cash flow from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Development of oil and natural gas properties

 

(64,756

)

 

 

(171,721

)

 

 

(50,597

)

 

 

(172,298

)

Purchases of other property and equipment

 

(142,373

)

 

 

(88,595

)

 

 

(7,409

)

 

 

(43,559

)

Proceeds from sale of properties and equipment and other

 

368,291

 

 

 

1,172,025

 

 

 

(166

)

 

 

(4,690

)

Net cash provided by (used in) investing activities – continuing operations

 

 

161,162

 

 

 

911,709

 

 

 

(58,172

)

 

 

(220,547

)

Net cash provided by (used in) investing activities – discontinued operations

 

7,000

 

 

 

345,643

 

 

 

(584

)

 

 

(9,891

)

Net cash provided by (used in) investing activities

 

 

168,162

 

 

 

1,257,352

 

 

 

(58,756

)

 

 

(230,438

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10


Consolidated Statements of Cash Flows (Unaudited) – Continued

 

 

Successor

 

 

Predecessor

 

 

 

Year

Ended

December 31,

2018

 

 

Ten

Months

Ended

December 31,

2017

 

 

Two

Months

Ended

February 28,

2017

 

 

Year

Ended

December 31,

2016

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net transfers (to) from parent

 

(481,449

)

 

 

(202,533

)

 

 

636,000

 

 

 

(213,844

)

Repurchases of shares

 

(153,314

)

 

 

 

 

 

 

 

 

 

Proceeds from borrowings

 

44,500

 

 

 

190,000

 

 

 

 

 

 

978,500

 

Repayments of debt

 

(20,000

)

 

 

(1,090,000

)

 

 

(1,038,986

)

 

 

(913,209

)

Debt issuance costs paid

 

(2,892

)

 

 

(7,729

)

 

 

(151

)

 

 

(752

)

Payment to holders of claims under the Predecessor’s second lien notes

 

 

 

 

 

 

 

(30,000

)

 

 

 

Distributions to unitholders

 

(18,717

)

 

 

 

 

 

 

 

 

 

Other

 

(841

)

 

 

(1,211

)

 

 

(4,593

)

 

 

(14,845

)

Net cash used in financing activities – continuing operations

 

 

(632,713

)

 

 

(1,111,473

)

 

 

(437,730

)

 

 

(164,150

)

Net cash used in financing activities – discontinued operations

 

 

 

 

 

 

 

 

 

 

 

Net cash used in financing activities

 

 

(632,713

)

 

 

(1,111,473

)

 

 

(437,730

)

 

 

(164,150

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

(471,145

)

 

 

376,900

 

 

 

(343,772

)

 

 

480,718

 

Cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning

 

 

520,922

 

 

 

144,022

 

 

 

487,794

 

 

 

7,076

 

Ending

 

$

49,777

 

 

$

520,922

 

 

$

144,022

 

 

$

487,794

 

 

 

11


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 December 31,

 

 

Year Ended December 31,

 

 

2018

 

 

2017

 

 

2018

 

 

2017(1)

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

10,606

 

 

$

84,937

 

 

$

40,607

 

 

$

3,022,204

 

Plus (less):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations

 

 

(5,749

)

 

(19,674

)

 

(89,516

)

Interest expense

835

 

 

406

 

 

2,417

 

 

29,105

 

Income tax expense

4,340

 

 

226,910

 

 

29,587

 

 

385,488

 

Depreciation, depletion and amortization

22,998

 

 

32,153

 

 

94,958