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Bonanza Creek Energy Announces First Quarter 2019 Financial Results and Operational Update
Globe Newswire 8-May-2019 4:45 PM
DENVER, May 08, 2019 (GLOBE NEWSWIRE) -- Bonanza Creek Energy, Inc. (NYSE:BCEI) (the "Company" or "Bonanza Creek") today announced its first quarter 2019 financial results and operating outlook and has posted an updated investor presentation on its corporate website.
Highlights of the first quarter 2019 include:
First quarter 2019 sales volumes increased 17% sequentially to 20.7 thousand barrels of oil equivalent per day ("MBoe/d") on capital expenditures of $44.8 million
Net oil and gas revenue of $72.6 million, an increase of 10% sequentially
Lease operating expenses of $2.91 per Boe, a decrease of 11% sequentially
Rocky Mountain Infrastructure ("RMI") operating expenses of $1.24 per Boe
Total general and administrative ("G&A") expense of $10.3 million including $8.9 million or $4.77 per Boe of cash G&A(1) expense. The Company is reiterating full year 2019 cash G&A guidance of $3.70 per Boe to $4.20 per Boe
GAAP net loss of $7.0 million or $0.34 per diluted share, inclusive of $1.82 non-cash loss on derivatives
Adjusted EBITDAX(1) of $49.2 million, or $2.39 per diluted share, an increase of 17% sequentially
Total debt to trailing twelve month Adjusted EBITDAX of less than 0.5x
(1) Non-GAAP measure, see attached reconciliation schedules at the end of this release.
Eric Greager, Chief Executive Officer of Bonanza Creek, commented, "We are pleased with the strong start to 2019. Our skilled technical and operations teams continue to drive positive results, while new well performance in Legacy East continues to demonstrate the quality of our inventory. We remain focused on planning and efficient execution, continuing to improve our cost structure, and generating value for our shareholders."
First Quarter 2019 Results
During the first quarter of 2019, the Company reported daily sales of 20.7 MBoe/d, which increased 17% from fourth quarter 2018. Product mix for the first quarter of 2019 was 65% oil, 16% NGLs, and 19% residue natural gas. During the first quarter of 2019, the Company drilled 13 gross (11.8 net) operated wells, 10 of which were extended reach lateral ("XRL") wells, and turned to sales 22 gross (14.8 net) operated wells, 8 of which were XRL wells.
The table below provides operating statistics for our Wattenberg assets.
Three Months Ended March 31,(1)
2019
2018
% Change
Avg. Daily Sales Volumes:
Crude oil (Bbls/d)
13,425
8,281
62
%
Natural gas (Mcf/d)
24,427
18,257
34
%
Natural gas liquids (Bbls/d)
3,240
2,415
34
%
Crude oil equivalent (Boe/d)
20,736
13,739
51
%
Product Mix
Crude oil
65
%
60
%
Natural gas
19
%
22
%
Natural gas liquids
16
%
18
%
Average Sales Prices (before derivatives):
Crude oil (per Bbl)
$
49.83
$
57.01
Natural gas (per Mcf)
$
3.08
$
2.64
Natural gas liquids (per Bbl)
$
14.91
$
22.33
Crude oil equivalent (per Boe)
$
38.22
$
41.79
(1) Results for three months ended are for Wattenberg only. Please see tables in the back of this press release and our Quarterly Report on Form 10-Q filed on May 8, 2019 for total Company operating statistics.
Net oil and gas revenue for the first quarter of 2019 was $72.6 million compared to $66.2 million for the fourth quarter of 2018. The increase was primarily a result of increased production partially offset by lower realized prices. Crude oil accounted for approximately 84% of total revenue. Differentials for the Company's Wattenberg oil production during the quarter averaged approximately $5.45 per barrel off of NYMEX WTI.
Wattenberg LOE for the first quarter of 2019 on a unit basis decreased by 11% to $2.91 per Boe from $3.27 per Boe in the fourth quarter of 2018 and compared favorably to full year 2019 guidance of $3.00 per Boe to $3.50 per Boe. Additionally, RMI operating expenses for the first quarter were $1.24 per Boe compared to $1.06 per Boe in fourth quarter of 2018 and in line with the Company's expectations.
Unit operating expenses continue to benefit from lower regulatory, compliance, compression, and labor costs. Additionally, the Company is benefiting from RMI as incremental production is absorbed into existing central production facilities without the need for additional tank batteries, compression or labor. Given positive results to date, the Company is lowering annual LOE guidance to a range of $2.75 per Boe to $3.25 per Boe.
The Company continued to benefit from multiple delivery points on the RMI system in the first quarter. As previously mentioned, the Company's fourth gas processor (Cureton Midstream) brought online a 60 MMcf per day cryogenic gas processing plant in the fourth quarter of 2018, further enhancing the Company's downstream optionality. This delivery point flexibility, combined with consistently low line pressures on RMI, has helped minimize production constraints. Line pressure on the Company's RMI system has remained consistent between 50 and 100 psi, well below typical field-wide operating pressures outside of RMI. Additionally, construction of the Company's new oil gathering line to Riverside Terminal is underway and is expected to lower oil differentials in the second half of 2019 by $1.25 to $1.50 for each barrel flowing through the line.
The Company's general and administrative ("G&A") expense was $10.3 million for the first quarter of 2019, which included $1.4 million in stock compensation. Cash G&A expense, which excludes stock compensation, was $8.9 million for the first quarter. Cash G&A is a non-GAAP measure. Please see Schedule 7 at the end of this release for a reconciliation from GAAP G&A to cash G&A.
Guidance Summary
Guidance
1Q19 Actuals
FY19 Guidance
Production (MBoe/d)
20.7
20.0 - 24.0
LOE ($/Boe)
$2.91
$2.75 - $3.25
RMI Opex ($/Boe)
$1.24
$1.10 - $1.40
Cash G&A ($/Boe)
$4.77
$3.70 - $4.20
Severance Ad/Valorem (% of rev)
5.9%
8% - 9%
Oil Differential ($/bbl)(1)
$5.45
$4.25 - $5.25
Total Capex ($MM)
$45
$230 - $255
D&C Capex ($MM)
$39
$210 - $220
(1) Oil differential guidance predicated on $50 WTI and $3 Henry Hub pricing environment.
Conference Call Information
The Company will host a conference call to discuss these results on May 9, 2019 at 9:00 a.m. Mountain Time (11:00 a.m. Eastern Time). A live webcast and replay of this event will be available on the Investor Relations section of the Company's website at www.bonanzacrk.com. Dial-in information for the conference call is included below.
Type
Phone Number
Passcode
Live participant
877-793-4362
4198955
Replay
855-859-2056
4198955
About Bonanza Creek Energy, Inc.
Bonanza Creek Energy, Inc. is an independent oil and natural gas company engaged in the acquisition, exploration, development and production of onshore oil and associated liquids-rich natural gas in the United States. The Company's assets and operations are concentrated in the Rocky Mountain region in the Wattenberg Field, focused on the Niobrara and Codell formations. The Company's common shares are listed for trading on the NYSE under the symbol: "BCEI." For more information about the Company, please visit www.bonanzacrk.com. Please note that the Company routinely posts important information about the Company under the Investor Relations section of its website.
Forward-Looking Statements
This press release 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. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by the Company based on management's experience, perception of historical trends and technical analyses, current conditions, anticipated future developments and other factors believed to be appropriate and reasonable by management. When used in this press release, the words "will," "potential," "believe," "estimate," "intend," "expect," "may," "should," "anticipate," "could," "plan," "predict," "project," "profile," "model" or their negatives, other similar expressions or the statements that include those words, are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These statements include statements regarding development and completion expectations and strategy; decreasing operating and capital costs; impact of the Company's reorganization; and updated 2019 guidance. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, that may cause actual results to differ materially from those implied or expressed by the forward-looking statements, including the following: changes in natural gas, oil and NGL prices; general economic conditions, including the performance of financial markets and interest rates; drilling results; shortages of oilfield equipment, services and personnel; operating risks such as unexpected drilling conditions; ability to acquire adequate supplies of water; risks related to derivative instruments; access to adequate gathering systems and pipeline take-away capacity; and pipeline and refining capacity constraints. Further information on such assumptions, risks and uncertainties is available in the Company's SEC filings. We refer you to the discussion of risk factors in our Annual Report on Form 10-K for the year ended December 31, 2018, filed on February 28, 2019, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, filed on May 8, 2019, and other filings submitted by us to the Securities Exchange Commission. The Company's SEC filings are available on the Company's website at www.bonanzacrk.com and on the SEC's website at www.sec.gov. All of the forward-looking statements made in this press release are qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, including guidance, and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
For further information, please contact: Doug Atkinson Senior Manager, Investor Relations 720-225-6690 datkinson@bonanzacrk.com
Scott Landreth Director, Finance & Treasurer 720-225-6679 slandreth@bonanzacrk.com
Schedule 1: Statements of Operations (in thousands, expect for per share amounts, unaudited)
Three Months Ended March 31, 2019
Three Months Ended March 31, 2018
Operating net revenues:
Oil and gas sales
$
72,594
$
64,193
Operating expenses:
Lease operating expense
5,426
10,459
Gas plant and midstream operating expense
2,321
3,613
Gathering, transportation, and processing
4,022
2,338
Severance and ad valorem taxes
4,248
5,233
Exploration
97
29
Depreciation, depletion, and amortization
15,759
7,508
Abandonment and impairment of unproved properties
879
2,502
Unused commitments
—
21
General and administrative expense (including $1,380 and $1,008, respectively, of stock-based compensation)
10,278
9,533
Total operating expenses
43,030
41,236
Income from operations
29,564
22,957
Other income (expense):
Derivative loss
(36,544
)
(8,742
)
Interest expense
(1,151
)
(357
)
Gain on sale of properties
1,126
—
Other income
12
12
Total other expense
(36,557
)
(9,087
)
Income (loss) from operations before taxes
(6,993
)
13,870
Income tax benefit (expense)
—
—
Net income (loss)
$
(6,993
)
$
13,870
Comprehensive income (loss)
$
(6,993
)
$
13,870
Basic net income (loss) per common share
$
(0.34
)
$
0.68
Diluted net income (loss) per common share
$
(0.34
)
$
0.68
Basic weighted-average common shares outstanding
20,557
20,454
Diluted weighted-average common shares outstanding
20,557
20,470
Schedule 2: Statements of Cash Flows (in thousands, unaudited)
Three Months Ended March 31, 2019
Three Months Ended March 31, 2018
Cash flows from operating activities:
Net income (loss)
$
(6,993
)
$
13,870
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion, and amortization
15,759
7,508
Abandonment and impairment of unproved properties
879
2,502
Well abandonment costs and dry hole expense
62
—
Stock-based compensation
1,380
1,008
Amortization of deferred financing costs
125
—
Derivative loss
36,544
8,742
Derivative cash settlements
936
(4,312
)
Gain on sale of oil and gas properties
(1,126
)
—
Other
(900
)
172
Changes in current assets and liabilities:
Accounts receivable
6,237
(15,758
)
Prepaid expenses and other assets
(440
)
3,402
Accounts payable and accrued liabilities
(10,150
)
(566
)
Settlement of asset retirement obligations
(592
)
(665
)
Net cash provided by operating activities
41,721
15,903
Cash flows from investing activities:
Acquisition of oil and gas properties
(1,362
)
(98
)
Exploration and development of oil and gas properties
(36,503
)
(37,664
)
Proceeds from sale of oil and gas properties
1,153
20
Additions to property and equipment - non oil and gas
(76
)
(103
)
Net cash used in investing activities
(36,788
)
(37,845
)
Cash flows from financing activities:
Proceeds from current credit facility
15,000
—
Proceeds from prior credit facility
—
15,000
Payment of employee tax withholdings in exchange for the return of common stock
(153
)
—
Net cash provided by financing activities
14,847
15,000
Net change in cash, cash equivalents and restricted cash
19,780
(6,942
)
Cash, cash equivalents and restricted cash:
Beginning of period
13,002
12,782
End of period
$
32,782
$
5,840
Schedule 3: Condensed Consolidated Balance Sheets (in thousands, unaudited)
March 31, 2019
December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
32,695
$
12,916
Accounts receivable:
Oil and gas sales
47,281
31,799
Joint interest and other
25,858
47,577
Prepaid expenses and other
5,073
4,633
Inventory of oilfield equipment
2,484
3,478
Derivative assets
6,400
34,408
Total current assets
119,791
134,811
Property and equipment (successful efforts method):
Proved properties
782,323
719,198
Less: accumulated depreciation, depletion and amortization
(67,886
)
(52,842
)
Total proved properties, net
714,437
666,356
Unproved properties
154,599
154,352
Wells in progress
73,993
93,617
Other property and equipment, net of accumulated depreciation of $2,701 in 2019 and $2,546 in 2018
3,570
3,649
Total property and equipment, net
946,599
917,974
Long-term derivative assets
—
3,864
Right-of-use assets
31,999
—
Other noncurrent assets
4,998
4,885
Total assets
$
1,103,387
$
1,061,534
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses
$
56,021
$
79,390
Oil and gas revenue distribution payable
31,314
19,903
Current portion of right-of-use liability
8,429
—
Derivative liability
4,889
183
Total current liabilities
100,653
99,476
Long-term liabilities:
Credit facility
65,000
50,000
Right-of-use liability
24,359
—
Ad valorem taxes
25,850
18,740
Asset retirement obligations for oil and gas properties
29,378
29,405
Total liabilities
245,240
197,621
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 25,000,000 shares authorized, none outstanding
—
—
Common stock, $.01 par value, 225,000,000 shares authorized, 20,558,591 and 20,543,940 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively
4,286
4,286
Additional paid-in capital
697,688
696,461
Retained earnings
156,173
163,166
Total stockholders' equity
858,147
863,913
Total liabilities and stockholders' equity
$
1,103,387
$
1,061,534
Schedule 4: Per unit operating margins (unaudited)
Three Months Ended March 31,(1)
2019
2018
Percent Change
Sales volume
Oil (MBbl)
1,208
895
35
%
Gas (MMcf)
2,198
2,135
3
%
NGL (MBbl)
292
258
13
%
Equivalent (MBoe)
1,866
1,509
24
%
Realized pricing (before derivatives)
Oil ($/Bbl)
$
49.83
$
57.89
(14
)%
Gas ($/Mcf)
$
3.08
$
2.78
11
%
NGL ($/Bbl)
$
14.91
$
23.33
(36
)%
Equivalent ($/Boe)
$
38.22
$
42.27
(10
)%
Per Unit Costs ($/Boe)
Realized price equivalent (before derivatives)
$
38.22
$
42.27
(10
)%
Lease operating expense
2.91
6.93
(58
)%
Gathering, transportation and processing
2.16
1.55
39
%
Gas plant and midstream operating expense
1.24
2.39
(48
)%
Severance and ad valorem
2.28
3.47
(34
)%
Cash general and administrative(2)
4.77
5.65
(16
)%
Total cash operating costs
$
13.36
$
19.99
(33
)%
Cash operating margin (before derivatives)
$
24.86
$
22.28
12
%
Derivative cash settlements
0.50
(2.85
)
—
%
Cash operating margin (after derivatives)
$
25.36
$
19.43
31
%
Non-cash items
Non-cash general and administrative
$
0.74
$
0.67
10
%
(1) The Mid-Continent region assets were sold August 6, 2018, and therefore, the data in the table above excludes the Mid-Continent region activity during the three months ended March 31, 2019 as compared to the three months ended March 31, 2018. (2) Cash general and administrative expense excludes stock-based compensation of $1.4 million and $1.0 million for the three months ended March 31, 2019 and 2018, respectively.
Schedule 5: Adjusted Net Income (in thousands, except per share amounts, unaudited)
Adjusted net income is a supplemental non-GAAP financial measure that is used by management to present recurring profitability that is more comparable between periods by excluding items that are non-recurring in nature or items which are not easily estimable. Management believes adjusted net income provides external users of the Company's consolidated financial statements such as industry analysts, investors, creditors, and rating agencies with additional information to assist in their analysis of the Company. The Company defines adjusted net income as net income after adjusting first for (1) the impact of certain non-cash items and one-time transactions and then (2) the non-cash and one time items' impact on taxes based on a tax rate that approximates the Company's effective tax rate in each period. Adjusted net income is not a measure of net income (loss) as determined by GAAP.
The following table presents a reconciliation of the GAAP financial measure of net income (loss) to the non-GAAP financial measure of adjusted net income.
Three Months Ended March 31,
2019
2018
Net income (loss)
$
(6,993
)
$
13,870
Adjustments to net income (loss):
Derivative loss
36,544
8,742
Derivative cash settlements
936
(4,312
)
Gain on sale of oil and gas properties
(1,126
)
—
Abandonment and impairment of unproved properties
879
2,502
Exploratory dry hole expense
62
—
Unused commitments
—
21
Stock-based compensation (1)
1,380
1,008
Severance costs (1)
418
—
Total adjustments before taxes
39,093
7,961
Income tax effect
—
—
Total adjustments after taxes
$
39,093
$
7,961
Adjusted net income
$
32,100
$
21,831
Adjusted net income per diluted share
$
1.56
$
1.07
Diluted weighted-average common shares outstanding
20,557
20,470
(1) Included as a portion of general and administrative expense in the statements of operations.
Schedule 6: Adjusted EBITDAX (in thousands, unaudited)
Adjusted EBITDAX is a supplemental non-GAAP financial measure that is used by management to provide a metric of the Company's ability to internally generate funds for exploration and development of oil and gas properties. The metric excludes items which are non-recurring in nature and/or items which are not reasonably estimable. Management believes adjusted EBITDAX provides external users of the Company's consolidated financial statements such as industry analysts, investors, lenders, and rating agencies with additional information to assist in their analysis of the Company. The Company defines Adjusted EBITDAX as earnings before interest expense, income taxes, depreciation, depletion, amortization, impairment, exploration expenses and other similar non-cash and non-recurring charges. Adjusted EBITDAX is not a measure of net income (loss) or cash flows as determined by GAAP.
The following table presents a reconciliation of the GAAP financial measure of net income (loss) to the non-GAAP financial measure of Adjusted EBITDAX.
Three Months Ended March 31,
2019
2018
Net income (loss)
$
(6,993
)
$
13,870
Exploration
97
29
Depreciation, depletion and amortization
15,759
7,508
Amortization of deferred financing costs
125
—
Abandonment and impairment of unproved properties
879
2,502
Unused commitments
—
21
Stock-based compensation (1)
1,380
1,008
Severance costs (1)
418
—
Interest expense
1,151
357
Derivative loss
36,544
8,742
Derivative cash settlements
936
(4,312
)
Gain on sale of oil and gas properties
(1,126
)
—
Adjusted EBITDAX
$
49,170
$
29,725
(1) Included as a portion of general and administrative expense in the statements of operations.
Schedule 7: Recurring Cash G&A (in thousands, unaudited)
Recurring cash G&A is a supplemental non-GAAP financial measure that is used by management to provide only the cash portion of its G&A expense, which can be used to evaluate cost management and operating efficiency on a comparable basis from period to period. Management believes recurring cash G&A provides external users of the Company's consolidated financial statements such as industry analysts, investors, lenders, and rating agencies with additional information to assist in their analysis of the Company. The Company defines recurring cash G&A as GAAP general and administrative expense exclusive of the Company's stock based compensation and one-time charges. The Company refers to recurring cash G&A to provide typical recurring cash G&A costs that are planned for in a given period. Recurring cash G&A is not a fully inclusive measure of general and administrative expense as determined by GAAP.
The following table presents a reconciliation of the GAAP financial measure of general and administrative expense to the non-GAAP financial measure of recurring cash G&A.
