Sanchez Energy Corporation (NYSE:SN), today announced operating and
financial results for the fourth quarter and full-year 2016.
Highlights include:
- Partnership with Blackstone Energy Partners (“Blackstone”) to
acquire Anadarko Petroleum Corporation (NYSE:APC) (“Anadarko”)
interests in the Western Eagle Ford for approximately $2.3 billion,
subject to normal and customary closing conditions (the “Comanche
Transaction”) announced January 12, 2017;
- Active leasing program over the last twelve months resulted in
the acquisition of 65,000 acres in the oil window of the Western
Eagle Ford, and 45,000 acres in the dry gas window of the Western
Eagle Ford;
- Total 2016 production of 19.5 million barrels of oil equivalent
(“MMBoe”), or approximately 53,350 barrels of oil equivalent per
day (“Boe/d”), exceeded the Company’s 50,000 to 52,000 Boe/d
guidance;
- Year-end Proved Reserves increased by over 55% (excluding
acquisitions and divestitures) to approximately 193 MMBoe, and
generated an approximate 430% reserve replacement ratio;
- Recent development and pilot wells de-risked the Upper Eagle
Ford in Northwestern Catarina, thereby confirming the presence of
this additional zone on the Comanche acreage;
- North Central Catarina Step-out appraisal pad continues to
produce 10-15% above Western Stack type curve forecast with yields
over 250 Bbl of liquids per MMcf of natural gas; derisking the
eastern portion of the West Stack area;
- Drilling and completion costs during 2016 at Catarina and
Maverick averaged approximately $3.0 million per well, which
included larger completion jobs at Catarina and Maverick during the
second half of the year;
- The Company’s 2017 capital budget is estimated between $425 and
$475 million, including expected activity on the Comanche acreage
beginning March 2017;
- The Company reported net income of $48 million for the fourth
quarter 2016;
- For the year ended December 31, 2016, the company reported a
net loss of $273 million;
- Fourth quarter 2016 revenues were approximately $126 million,
an increase of approximately 15% percent when compared to the
fourth quarter 2015; Adjusted revenue (a non-GAAP financial
measure), inclusive of hedge settlement gains, was approximately
$145 million during the fourth quarter 2016;
- Full year 2016 revenues were approximately $431 million;
Adjusted revenue (a non-GAAP) financial measure), inclusive of
hedge settlement gains, was approximately $567 million for the
year;
- Adjusted EBITDA (a non-GAAP financial measure) was
approximately $79 million during the fourth quarter
2016;
- Full year 2016 Adjusted EBITDA (a non-GAAP financial measure)
was approximately $307 million;
- On Feb. 6, 2017, the Company reinforced its strong liquidity
position by closing the previously announced public equity
offering, which resulted in net proceeds of approximately $136
million; and
- As of Dec. 31, 2016, the Company had approximately $800 million
in liquidity with approximately $500 million in cash and cash
equivalents and an undrawn bank credit facility with an elected
commitment amount of $300 million.
MANAGEMENT COMMENTS“Starting in early 2016, we
made the strategic decision to maintain high liquidity levels while
operationally concentrating our efforts in the Western Eagle Ford,
an area where we see considerable growth potential and impressive
returns,” said Tony Sanchez, III, Chief Executive Officer of
Sanchez Energy. “We achieved excellent operating results in 2016
with average production of 53,350 Boe/d for the full year. The
combination of low cost drilling operations and improving well
performance has allowed us to unlock considerable value in our
Western Eagle Ford position. This is evident in our ability to
dramatically reduce capital spending in 2016, compared to 2015, and
still execute our appraisal and development plans to maintain
production levels and significantly increase proved reserves.
With the development and appraisal drilling over the last twelve
months, we increased year-end reserves by over 55%, excluding
acquisitions and divestitures, and generated an approximate 430%
reserve replacement ratio.”
“We further enhanced our strong liquidity position through a
series of strategic divestitures in 2016, including multiple
transactions that stemmed from our relationship with Sanchez
Production Partners, LP (“SPP”). The strong liquidity position
provided us the financial flexibility to expand our footprint in
the Western Eagle Ford, solidifying our position as one of the
largest operators in the basin. Over the last twelve months,
we actively leased acreage to the north and south of Catarina,
resulting in the addition of 65,000 acres in the Maverick area,
located in the oil window of the Western Eagle Ford, and 45,000
acres in the Javelina area, located in the dry gas window of the
Western Eagle Ford. In January 2017, we announced the
Comanche Transaction which includes approximately 33,500 Boe/d of
net production at the time of announcement and over 4,000 gross
identified Eagle Ford drilling locations. The 132 (gross)
drilled but uncompleted wells (“DUCs”) that will be acquired with
the Comanche assets provide an opportunity to quickly ramp
production and dramatically increase cash flow in the near
term. With rates of return expected to exceed 100 percent, we
see this as an excellent use of capital in 2017 that we believe
will lead to a significantly stronger balance sheet over a
relatively short period of time.
“As we begin our 2017 drilling plans, we remain focused on the
Catarina and Maverick areas of our asset base, along with the
integration of the Comanche assets. New step out wells in
South-Central and Northwestern Catarina have provided further
definition on the extent of their fairways. Recent wells, along
with a pilot-well drilled in North-Central Catarina, have confirmed
the Upper Eagle Ford is extensive across the western side of
Catarina. During 2017, we anticipate bringing on production
from approximately 32 net wells in South-Central Catarina,
approximately 11 net wells with stacked development planned in
Western Catarina, in addition to other drilling and completions
operations in Catarina. At Maverick, we intend to bring
approximately 35 net wells online around Hauser and our other high
rate of return leases.”
OPERATIONS UPDATE The Company is currently
running 2 rigs in Catarina and 2 rigs in Maverick. As of Dec.
31, 2016, the Company had completed its 50 well annual drilling
commitment at Catarina for the period from July 2016 through June
2017. Upon closing of the Comanche Transaction, the Company expects
to ramp up drilling activity on Comanche and exit the year running
5 rigs on the assets.
Drilling and completion costs in the fourth quarter 2016
averaged approximately $3.2 million per well at both Catarina and
Maverick, which includes testing of larger completions and longer
laterals during the quarter. For the full-year 2016, average
drilling and completion costs at Catarina and Maverick were
approximately $3.0 million per well.
As of Dec. 31, 2016, the Company had 611 gross (473 net)
producing wells with 25 gross (22 net) wells in various stages of
completion, as detailed in the following table:
Project Area |
|
Gross Producing Wells |
|
Gross Wells Waiting/ Undergoing Completion |
Catarina |
|
333 |
|
19 |
Maverick |
|
85 |
|
-- |
Marquis |
|
103 |
|
1 |
Palmetto |
|
76 |
|
5 |
TMS / Other |
|
14 |
|
-- |
Total |
|
611 |
|
25 |
PRODUCTION VOLUMES, AVERAGE SALES PRICES, AND OPERATING
COSTS PER BOEThe Company’s production mix during the
fourth quarter 2016 consisted of approximately 34 percent oil, 29
percent NGL, and 37 percent natural gas. By asset area,
Catarina, Marquis, Maverick, and Palmetto/TMS/Other comprised
approximately 82 percent, 4 percent, 12 percent, and 2 percent,
respectively, of the Company’s total fourth quarter 2016 production
volumes.
Revenues of approximately $126 million during the fourth quarter
2016 were up 15% compared to the fourth quarter 2015. Hedge
settlement gains totaled $20 million for the fourth quarter
2016. Commodity price realizations during the fourth
quarter 2016, including the impact of derivative instrument
settlements, were $56.88 per barrel of oil, $18.81 per barrel of
NGL and $3.25 per thousand cubic feet (“Mcf”) of natural
gas.
Production, average sales prices, and operating costs and
expenses per barrel of oil equivalent (“Boe”) for the fourth
quarter and full-year 2016 are summarized in the table that
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Twelve Months
Ended |
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
Net Production: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
(MBbl) |
|
1,534 |
|
|
1,793 |
|
|
6,371 |
|
|
7,165 |
|
|
|
Natural
gas liquids (MBbl) |
|
1,340 |
|
|
1,657 |
|
|
5,960 |
|
|
5,754 |
|
|
|
Natural
gas (MMcf) |
|
10,098 |
|
|
11,377 |
|
|
43,189 |
|
|
37,594 |
|
|
|
Total oil
equivalent (MBoe) |
|
4,557 |
|
|
5,347 |
|
|
19,529 |
|
|
19,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Sales Price Excluding
Derivatives(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil ($
per Bbl) |
$ |
45.14 |
|
$ |
35.37 |
|
$ |
37.95 |
|
$ |
42.98 |
|
|
|
Natural
gas liquids ($ per Bbl) |
|
18.81 |
|
|
12.31 |
|
|
13.72 |
|
|
11.99 |
|
|
|
Natural
gas ($ per Mcf) |
|
3.10 |
|
|
2.26 |
|
|
2.50 |
|
|
2.63 |
|
|
|
Oil
equivalent ($ per Boe) |
$ |
27.59 |
|
$ |
20.49 |
|
$ |
22.09 |
|
$ |
24.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Sales Price Including
Derivatives(2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil ($
per Bbl) |
$ |
56.88 |
|
$ |
57.68 |
|
$ |
55.37 |
|
$ |
60.28 |
|
|
|
Natural
gas liquids ($ per Bbl) |
|
18.81 |
|
|
12.31 |
|
|
13.72 |
|
|
11.99 |
|
|
|
Natural
gas ($ per Mcf) |
|
3.25 |
|
|
2.74 |
|
|
3.07 |
|
|
3.12 |
|
|
|
Oil
equivalent ($ per Boe) |
$ |
31.89 |
|
$ |
28.99 |
|
$ |
29.03 |
|
$ |
32.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average unit
costs per Boe: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and
natural gas production expenses |
$ |
7.89 |
|
$ |
8.67 |
|
$ |
8.43 |
|
$ |
8.16 |
|
|
|
Production and ad valorem taxes |
$ |
1.22 |
|
$ |
1.28 |
|
$ |
1.01 |
|
$ |
1.40 |
|
|
|
Depreciation, depletion, amortization and accretion |
$ |
6.98 |
|
$ |
8.98 |
|
$ |
8.18 |
|
$ |
17.96 |
|
|
|
Impairment of oil and natural gas properties |
$ |
— |
|
$ |
— |
|
$ |
8.66 |
|
$ |
71.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes the impact of derivative instrument
settlements. |
|
|
|
|
|
|
|
|
|
|
|
|
(2) Includes the impact of derivative instrument
settlements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL EXPENDITURESCapital outflows related to
capital expenditures incurred during the full-year 2016 totaled
approximately $349.8 million. The Company spent approximately
75.7 percent of its capital expenditures on drilling, completion,
infrastructure, and G&G activities, 13.9 percent related to
leasing and business development, and 10.4 percent related to our
midstream joint ventures that were subsequently sold.
FINANCIAL RESULTSThe Company reported net
income of $48.3 million for the fourth quarter 2016, which includes
a non-cash mark-to-market loss on the value of the Company’s hedge
portfolio of $55.4 million and a $112.3 million gain on an asset
sale.
The Company reported Adjusted EBITDA of approximately $78.7
million and Adjusted Earnings of $9.5 million for the fourth
quarter 2016, which compares to Adjusted Earnings of $2.0 million
reported in the fourth quarter 2015. Adjusted EBITDA and
Adjusted Earnings (Loss) are non-GAAP financial measures defined in
the tables included with today’s news release.
HEDGING UPDATEThe Company’s current hedge
position is 7,000 Bbls/d of oil and 111,795 MMBtu/d of natural gas
in 2017, 80,911 MMBtu/d of natural gas in 2018 and 20,000 MMBtu/d
of natural gas in 2019.
LIQUIDITY AND CREDIT FACILITY The Company had
liquidity of approximately $800 million as of Dec. 31, 2016, which
consisted of approximately $500 million in cash and cash
equivalents and an undrawn bank credit facility with an elected
commitment amount of $300 million and a borrowing base of $350
million. On Feb. 6, 2017 the Company received net proceeds of
approximately $136 million in connection with the closing of its
previously announced common equity offering.
SHARE COUNTAs of Dec. 31, 2016, the Company had
66.2 million total common shares outstanding. Assuming all
Series A Convertible Perpetual Preferred Stock and Series B
Convertible Perpetual Preferred Stock were converted, total
outstanding common shares as of Dec. 31, 2016 would have been 78.7
million. For the three months ended Dec. 31, 2016, the
weighted average number of unrestricted common shares used to
calculate net loss attributable to common stockholders per common
share, basic and diluted, which are determined in accordance with
GAAP, was 59.3 million. On Feb. 6, 2017 the Company closed on its
previously announced common equity offering and issued an
additional 11.5 million common shares.
CONFERENCE CALLSanchez Energy will host a
conference call for investors on Wednesday, Feb. 22, 2017, at 1:00
p.m. Central Time (2:00 p.m. Eastern Time). Interested
investors can listen to the call via webcast, both live and
rebroadcast, over the Internet
at: http://edge.media-server.com/m/p/bdc66442/lan/en.
ABOUT SANCHEZ ENERGY
CORPORATIONSanchez Energy Corporation (NYSE:SN) is an
independent exploration and production company focused on the
acquisition and development of U.S. onshore unconventional oil and
natural gas resources, with a current focus on the Eagle Ford Shale
in South Texas where we have assembled over 335,000 net acres. For
more information about Sanchez Energy Corporation, please visit our
website: www.sanchezenergycorp.com.
FORWARD LOOKING STATEMENTSThis
press release contains, and our officers and representatives may
from time to time make, forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
All statements, other than statements of historical facts,
included in this press release that address activities, events or
developments that Sanchez Energy expects, believes or anticipates
will or may occur in the future are forward-looking statements,
including statements relating to the anticipated closing of the
transaction, the expected financial and operational results of the
Comanche assets, and the expected synergies and benefits related to
the Comanche Transaction. 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," "strategy," "future," 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.
Such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond the
control of Sanchez Energy, which may cause actual results to differ
materially from those implied or expressed by the forward-looking
statements, including, but not limited to our inability to close
the Comanche Transaction, the failure of the acquired assets and
our joint ventures to perform as anticipated, failure or delays on
the part of our joint venture partners, failure to continue to
produce oil and gas at historical rates, costs of operations,
delays, and any other difficulties related to producing oil or gas
or completing our ongoing joint venture projects, the price of oil
or gas, marketing and sales of produced oil and gas, estimates made
in evaluating reserves, competition, general economic conditions
and the ability to manage our growth, our expectations regarding
our future liquidity, our expectations regarding the results of our
efforts to improve the efficiency of our operations to reduce our
costs and other factors described in Sanchez Energy's most recent
Annual Report on Form 10-K and any updates to those risk factors
set forth in Sanchez Energy's Quarterly Reports on Form 10-Q or
Current Reports on Form 8-K. Further information on such
assumptions, risks and uncertainties is available in Sanchez
Energy's filings with the U.S. Securities and Exchange Commission
(the "SEC"). Sanchez Energy's filings with the SEC are
available on our website at www.sanchezenergycorp.com and on the
SEC's website at www.sec.gov. In light of these risks,
uncertainties and assumptions, the events anticipated by Sanchez
Energy's forward-looking statements may not occur, and, if any of
such events do occur, Sanchez Energy may not have correctly
anticipated the timing of their occurrence or the extent of their
impact on its actual results. Accordingly, you should not place any
undue reliance on any of Sanchez Energy's forward-looking
statements. Any forward-looking statement speaks only as of
the date on which such statement is made and Sanchez Energy
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.
|
SANCHEZ ENERGY CORPORATION |
CONSOLIDATED STATEMENT OF OPERATIONS DATA
(unaudited) |
(in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Twelve Months
Ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
REVENUES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
sales |
$ |
69,257 |
|
|
$ |
63,417 |
|
|
$ |
241,766 |
|
|
$ |
307,971 |
|
|
|
Natural
gas liquid sales |
|
25,209 |
|
|
|
20,409 |
|
|
|
81,744 |
|
|
|
69,011 |
|
|
|
Natural
gas sales |
|
31,269 |
|
|
|
25,706 |
|
|
|
107,816 |
|
|
|
98,797 |
|
|
|
Total
revenues |
|
125,735 |
|
|
|
109,532 |
|
|
|
431,326 |
|
|
|
475,779 |
|
|
|
OPERATING COSTS
AND EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and
natural gas production expenses |
|
35,958 |
|
|
|
46,362 |
|
|
|
164,567 |
|
|
|
156,528 |
|
|
|
Production and ad valorem taxes |
|
5,581 |
|
|
|
6,859 |
|
|
|
19,633 |
|
|
|
26,870 |
|
|
|
Depreciation, depletion, amortization and accretion |
|
31,801 |
|
|
|
48,031 |
|
|
|
159,760 |
|
|
|
344,572 |
|
|
|
Impairment of oil and natural gas properties |
|
— |
|
|
|
— |
|
|
|
169,046 |
|
|
|
1,365,000 |
|
|
|
General
and administrative (inclusive of stock-based compensation expense
of $11,065 and ($1,093), respectively, for the three months ended
December 31, 2016 and 2015, and $37,090 and $14,831, respectively,
for the year ended December 31, 2016 and 2015) |
|
39,682 |
|
|
|
14,870 |
|
|
|
110,081 |
|
|
|
74,160 |
|
|
|
Total
operating costs and expenses |
|
113,022 |
|
|
|
116,122 |
|
|
|
623,087 |
|
|
|
1,967,130 |
|
|
|
Operating income
(loss) |
|
12,713 |
|
|
|
(6,590 |
) |
|
|
(191,761 |
) |
|
|
(1,491,351 |
) |
|
|
Other income
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income |
|
227 |
|
|
|
193 |
|
|
|
856 |
|
|
|
442 |
|
|
|
Other
income (expense) |
|
330 |
|
|
|
(552 |
) |
|
|
134 |
|
|
|
(2,605 |
) |
|
|
Gain on
disposal of assets |
|
112,294 |
|
|
|
— |
|
|
|
112,294 |
|
|
|
— |
|
|
|
Interest
expense |
|
(31,748 |
) |
|
|
(31,899 |
) |
|
|
(126,973 |
) |
|
|
(126,399 |
) |
|
|
Earnings
from equity investments |
|
312 |
|
|
|
— |
|
|
|
3,466 |
|
|
|
— |
|
|
|
Net gains
(losses) on commodity derivatives |
|
(35,796 |
) |
|
|
61,336 |
|
|
|
(53,149 |
) |
|
|
172,886 |
|
|
|
Total
other income (expense) |
|
45,619 |
|
|
|
29,078 |
|
|
|
(63,372 |
) |
|
|
44,324 |
|
|
|
Income (loss) before
income taxes |
|
58,332 |
|
|
|
22,488 |
|
|
|
(255,133 |
) |
|
|
(1,447,027 |
) |
|
|
Income tax
expense |
|
384 |
|
|
|
— |
|
|
|
1,825 |
|
|
|
7,600 |
|
|
|
Net income
(loss) |
|
57,948 |
|
|
|
22,488 |
|
|
|
(256,958 |
) |
|
|
(1,454,627 |
) |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock dividends |
|
(4,032 |
) |
|
|
(4,035 |
) |
|
|
(15,993 |
) |
|
|
(16,008 |
) |
|
|
Net
income allocable to participating securities |
|
(5,596 |
) |
|
|
(1,317 |
) |
|
|
— |
|
|
|
— |
|
|
|
Net income
(loss) attributable to common stockholders |
$ |
48,320 |
|
|
$ |
17,136 |
|
|
$ |
(272,951 |
) |
|
$ |
(1,470,635 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
common share - basic |
$ |
0.82 |
|
|
$ |
0.30 |
|
|
$ |
(4.63 |
) |
|
$ |
(25.70 |
) |
|
|
Weighted
average number of shares used to calculate net income (loss)
attributable to common stockholders - basic |
|
59,252 |
|
|
|
57,490 |
|
|
|
58,900 |
|
|
|
57,229 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
common share - diluted |
$ |
0.73 |
|
|
$ |
0.30 |
|
|
$ |
(4.63 |
) |
|
$ |
(25.70 |
) |
|
|
Weighted
average number of shares used to calculate net income (loss)
attributable to common stockholders - diluted |
|
71,772 |
|
|
|
57,490 |
|
|
|
58,900 |
|
|
|
57,229 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SANCHEZ ENERGY CORPORATION |
CONSOLIDATED BALANCE SHEET (unaudited) |
(in thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2016 |
|
|
2015 |
|
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
501,917 |
|
|
$ |
435,048 |
|
|
|
Oil and
natural gas receivables |
|
41,057 |
|
|
|
30,668 |
|
|
|
Joint
interest billings receivables |
|
496 |
|
|
|
1,259 |
|
|
|
Accounts
receivable - related entities |
|
6,401 |
|
|
|
3,697 |
|
|
|
Fair
value of derivative instruments |
|
— |
|
|
|
172,494 |
|
|
|
Deferred
tax asset |
|
— |
|
|
|
— |
|
|
|
Other
current assets |
|
12,934 |
|
|
|
23,452 |
|
|
|
Total
current assets |
|
562,805 |
|
|
|
666,618 |
|
|
|
Oil and natural gas
properties, at cost, using the full cost method: |
|
|
|
|
|
|
|
Proved
oil and natural gas properties |
|
3,164,115 |
|
|
|
2,914,867 |
|
|
|
Unproved
oil and natural gas properties |
|
231,424 |
|
|
|
253,529 |
|
|
|
Total oil
and natural gas properties |
|
3,395,539 |
|
|
|
3,168,396 |
|
|
|
Less: Accumulated
depreciation, depletion, amortization and impairment |
|
(2,736,951 |
) |
|
|
(2,412,293 |
) |
|
|
Total oil and natural
gas properties, net |
|
658,588 |
|
|
|
756,103 |
|
|
|
|
|
|
|
|
|
|
|
Other assets: |
|
|
|
|
|
|
|
Fair
value of derivative instruments |
|
— |
|
|
|
5,789 |
|
|
|
Investments (Investment in SPP measured at fair value of $26.8
million and $0 as of December 31, 2016 and 2015, respectively) |
|
39,656 |
|
|
|
49,985 |
|
|
|
Other
assets |
|
25,231 |
|
|
|
22,809 |
|
|
|
Total assets |
$ |
1,286,280 |
|
|
$ |
1,501,304 |
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Accounts
payable |
$ |
1,076 |
|
|
$ |
4,184 |
|
|
|
Other
payables |
|
2,251 |
|
|
|
2,004 |
|
|
|
Accrued
liabilities: |
|
|
|
|
|
|
|
Capital
expenditures |
|
35,154 |
|
|
|
51,983 |
|
|
|
Other |
|
82,458 |
|
|
|
69,974 |
|
|
|
Deferred
premium liability |
|
2,079 |
|
|
|
24,548 |
|
|
|
Fair
value of derivative instruments |
|
31,778 |
|
|
|
— |
|
|
|
Other
current liabilities |
|
22,201 |
|
|
|
14,813 |
|
|
|
Total
current liabilities |
|
176,997 |
|
|
|
167,506 |
|
|
|
Long
term debt |
|
|
|
|
|
|
|
Long
term debt, net of premium, discount and debt issuance costs |
|
1,712,767 |
|
|
|
1,705,927 |
|
|
|
Asset retirement
obligations |
|
25,087 |
|
|
|
25,907 |
|
|
|
Fair value of
derivative instruments |
|
3,236 |
|
|
|
— |
|
|
|
Other liabilities |
|
64,333 |
|
|
|
58,133 |
|
|
|
Total
liabilities |
|
1,982,420 |
|
|
|
1,957,473 |
|
|
|
Commitments and
contingencies (Note 16) |
|
|
|
|
|
|
|
Stockholders'
equity: |
|
|
|
|
|
|
|
Preferred
stock ($0.01 par value, 15,000,000 shares authorized; 1,838,985
shares issued and outstanding as of December 31, 2016 and 2015 of
4.875% Convertible Perpetual Preferred Stock, Series A; 3,527,830
and 3,532,330 shares issued and outstanding as of December 31, 2016
and 2015 of 6.500% Convertible Perpetual Preferred Stock, Series B,
respectively) |
|
53 |
|
|
|
53 |
|
|
|
Common
stock ($0.01 par value, 150,000,000 shares authorized; 66,156,378
and 61,928,089 shares issued and outstanding as of December 31,
2016 and 2015, respectively) |
|
670 |
|
|
|
619 |
|
|
|
Additional paid-in capital |
|
1,112,397 |
|
|
|
1,079,513 |
|
|
|
Accumulated deficit |
|
(1,809,260 |
) |
|
|
(1,536,354 |
) |
|
|
Total
stockholders' deficit |
|
(696,140 |
) |
|
|
(456,169 |
) |
|
|
Total
liabilities and stockholders' deficit |
$ |
1,286,280 |
|
|
$ |
1,501,304 |
|
|
|
|
|
|
|
|
|
|
SANCHEZ ENERGY CORPORATIONNon-GAAP Reconciliation
– Adjusted EBITDA
Adjusted EBITDA is a non‑GAAP financial measure
that is used as a supplemental financial measure by our management
and by external users of our financial statements, such as
investors, commercial banks and others, to assess our operating
performance as compared to that of other companies in our industry,
without regard to financing methods, capital structure or
historical costs basis. It is also used to assess our ability to
incur and service debt and fund capital expenditures. Our
Adjusted EBITDA should not be considered an alternative to net
income (loss), operating income (loss), cash flows provided by
(used in) operating activities or any other measure of financial
performance or liquidity presented in accordance with
U.S. GAAP. Our Adjusted EBITDA may not be comparable to
similarly titled measures of another company because all companies
may not calculate Adjusted EBITDA in the same manner. The
following table presents a reconciliation of our net loss to
Adjusted EBITDA (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedDecember
31, |
|
Twelve Months EndedDecember
31, |
|
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
$ |
57,948 |
|
|
$ |
22,486 |
|
|
$ |
(256,958 |
) |
|
$ |
(1,454,627 |
) |
|
|
Plus: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
|
31,748 |
|
|
|
31,899 |
|
|
|
126,973 |
|
|
|
126,399 |
|
|
|
Net
losses (gains) on commodity derivative contracts |
|
|
35,796 |
|
|
|
(61,336 |
) |
|
|
53,149 |
|
|
|
(172,886 |
) |
|
|
Net
settlements received on commodity derivative contracts (1) |
|
|
19,602 |
|
|
|
45,487 |
|
|
|
135,600 |
|
|
|
142,468 |
|
|
|
Depreciation, depletion, amortization and accretion |
|
|
31,801 |
|
|
|
48,031 |
|
|
|
159,760 |
|
|
|
344,572 |
|
|
|
Impairment of oil and natural gas properties |
|
|
— |
|
|
|
— |
|
|
|
169,046 |
|
|
|
1,365,000 |
|
|
|
Stock-based compensation expense |
|
|
11,065 |
|
|
|
(1,093 |
) |
|
|
37,090 |
|
|
|
14,831 |
|
|
|
Acquisition and divestiture costs included in general and
administrative |
|
|
6,575 |
|
|
|
3,814 |
|
|
|
8,130 |
|
|
|
3,814 |
|
|
|
Write off
of joint venture receivable, non-recurring |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,251 |
|
|
|
Income
tax expense |
|
|
384 |
|
|
|
— |
|
|
|
1,825 |
|
|
|
7,600 |
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on
disposal of assets |
|
|
(112,294 |
) |
|
|
— |
|
|
|
(112,294 |
) |
|
|
— |
|
|
|
Amortization of deferred gain on Western Catarina Midstream
Divestiture |
|
|
(3,702 |
) |
|
|
(3,086 |
) |
|
|
(14,812 |
) |
|
|
(3,086 |
) |
|
|
Interest
income |
|
|
(227 |
) |
|
|
(192 |
) |
|
|
(856 |
) |
|
|
(441 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
78,696 |
|
|
$ |
86,010 |
|
|
$ |
306,653 |
|
|
$ |
375,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This amount has been reduced by premiums
associated with derivatives that settled during the respective
periods, which may include premiums accrued but not yet paid as of
the end of the quarter based on timing of cash settlement payments
with counterparties. |
|
|
|
SANCHEZ ENERGY CORPORATIONNon-GAAP Reconciliation
– Adjusted Earnings
We present Adjusted Earnings (Loss) attributable
to common stockholders (“Adjusted Earnings (Loss)”) in addition to
our reported net income (loss) in accordance with U.S. GAAP.
This information is provided because management believes exclusion
of the impact of the items included in our definition of Adjusted
Earnings (Loss) below will help investors compare results between
periods, identify operating trends that could otherwise be masked
by these items and highlight the impact that commodity price
volatility has on our results. Adjusted Earnings (Loss) is
not intended to represent cash flows for the period, nor is it
presented as a substitute for net income (loss), operating income
(loss), cash flows provided by (used in) operating activities or
any other measure of financial performance or liquidity presented
in accordance with U.S. GAAP. The following table
presents a reconciliation of our net income (loss) to Adjusted
Earnings (Loss) (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December
31, |
|
Twelve Months Ended December
31, |
|
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
Net income
(loss) |
|
$ |
57,948 |
|
|
$ |
22,488 |
|
|
$ |
(256,958 |
) |
|
$ |
(1,454,627 |
) |
|
|
Less: Preferred stock
dividends |
|
|
(4,032 |
) |
|
|
(4,035 |
) |
|
|
(15,993 |
) |
|
|
(16,008 |
) |
|
|
Net income
(loss) attributable to common shares and participating
securities |
|
|
53,916 |
|
|
|
18,453 |
|
|
|
(272,951 |
) |
|
|
(1,470,635 |
) |
|
|
Plus: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash
preferred stock dividends associated with conversion |
|
|
— |
|
|
|
48 |
|
|
|
— |
|
|
|
48 |
|
|
|
Non-cash
write off of joint venture receivables |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,251 |
|
|
|
Net
losses (gains) on commodity derivatives contracts |
|
|
35,796 |
|
|
|
(61,336 |
) |
|
|
53,149 |
|
|
|
(172,886 |
) |
|
|
Net
settlements received (paid) on commodity derivative contracts
(1) |
|
|
19,602 |
|
|
|
45,487 |
|
|
|
135,600 |
|
|
|
142,468 |
|
|
|
Impairment of oil and natural gas properties |
|
|
— |
|
|
|
— |
|
|
|
169,046 |
|
|
|
1,365,000 |
|
|
|
Stock-based compensation expense |
|
|
11,065 |
|
|
|
(1,093 |
) |
|
|
37,090 |
|
|
|
14,831 |
|
|
|
Acquisition and divestiture costs included in general and
administrative |
|
|
6,575 |
|
|
|
3,814 |
|
|
|
8,130 |
|
|
|
3,814 |
|
|
|
Gain on
disposal of assets |
|
|
(112,294 |
) |
|
|
— |
|
|
|
(112,294 |
) |
|
|
— |
|
|
|
Amortization of deferred gain on Western Catarina Midstream
Divestiture |
|
|
(3,702 |
) |
|
|
(3,086 |
) |
|
|
(14,812 |
) |
|
|
(3,086 |
) |
|
|
Tax impact of
adjustments to net loss (2) |
|
|
(307 |
) |
|
|
(85 |
) |
|
|
260 |
|
|
|
12,385 |
|
|
|
Adjusted
Earnings (Loss) |
|
|
10,651 |
|
|
|
2,202 |
|
|
|
3,218 |
|
|
|
(105,810 |
) |
|
|
Adjusted
Earnings (Loss) allocable to participating securities
(3) |
|
|
(1,106 |
) |
|
|
(157 |
) |
|
|
(316 |
) |
|
|
— |
|
|
|
Adjusted Earnings (Loss) attributable to common
stockholders |
|
$ |
9,545 |
|
|
$ |
2,045 |
|
|
$ |
2,902 |
|
|
$ |
(105,810 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares used to calculate income (loss)
attributable to common stockholders - basic and diluted |
|
|
59,252 |
|
|
|
57,490 |
|
|
|
58,900 |
|
|
|
57,229 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This amount has been reduced by premiums associated
with derivatives that settled during the respective periods, which
may include premiums accrued but not yet paid as of the end of the
quarter based on timing of cash settlement payments with
counterparties. |
|
|
|
|
|
|
|
|
(2) The tax impact is computed by utilizing the Company’s
effective tax rate on the adjustments to reconcile net income
(loss) to Adjusted Earnings (Loss). |
|
|
|
|
|
|
|
|
(3) The Company's restricted shares of common stock are
participating securities. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SANCHEZ ENERGY CORPORATIONNon-GAAP Reconciliation
– Adjusted Revenue
We present Adjusted Revenue in addition to our
reported Revenue in accordance with U.S. GAAP. The Company defines
Adjusted Revenue as follows: total revenues plus cash settled
derivatives. The Company believes Adjusted Revenue provides
investors with helpful information with respect to the performance
of the Company's operations and management uses Adjusted Revenue to
evaluate its ongoing operations and for internal planning and
forecasting purposes. See the table below which reconciles Adjusted
Revenue and total revenues.
|
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
Total
Revenues |
$ |
125,735 |
|
$ |
109,532 |
|
$ |
431,326 |
|
$ |
475,779 |
|
Net
settlements received on commodity derivative contracts (1) |
|
19,602 |
|
|
45,487 |
|
|
135,600 |
|
|
142,468 |
|
Adjusted
Revenue |
$ |
145,337 |
|
$ |
155,019 |
|
$ |
566,926 |
|
$ |
618,247 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) This amount has been reduced by premiums associated
with derivatives that settled during the respective periods, which
may include premiums accrued but not yet paid as of the end of the
quarter based on timing of cash settlement payments with
counterparties. |
COMPANY CONTACT:
Kevin Smith
VP Investor Relations
(281) 925-4828
Cham King
Investor Relations & Capital Markets
(713) 756-2797