Legacy Reserves Inc. Announces First Quarter 2019 Results

Date : 05/10/2019 @ 12:32AM
Source : PR Newswire (US)
Stock : Legacy Reserves Inc. (MM) (LGCY)
Quote : 0.0395  0.0 (0.00%) @ 1:00AM

Legacy Reserves Inc. Announces First Quarter 2019 Results

Legacy Reserves Inc. (MM) (NASDAQ:LGCY)
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3 Months : From Apr 2019 to Jul 2019

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MIDLAND, Texas, May 9, 2019 /PRNewswire/ -- Legacy Reserves Inc. ("Legacy") (NASDAQ:LGCY) today announced 2019 first quarter results including the following highlights:

  • Generated quarterly oil production of 17,922 Bbls/d, a 4% increase relative to Q1'18;
  • Reduced lease operating expense by 9% quarter-over-quarter; and
  • Generated net loss of $78.4 million and adjusted EBITDA of $63.9 million.

Legacy Reserves LP Logo (PRNewsfoto/Legacy Reserves LP)

As previously announced, Legacy is evaluating and exploring potential strategic alternatives. These alternatives include, among others, a sale or other business combination transaction, sales of assets, financing transactions, or some combination of these.

Financial and Operating Results - Three-Month Period Ended March 31, 2019 Compared to Three-Month Period Ended March 31, 2018

  • Production increased 1% to 46,389 Boe/d from 46,078 Boe/d primarily due to additional oil production from our Permian Basin horizontal drilling program. This was partially offset by natural production declines.
  • Average realized price, excluding net cash settlements from commodity derivatives, decreased 14% to $28.38 per Boe in 2019 from $33.15 per Boe in 2018 driven by a decrease in average realized price due to a decrease in the average West Texas Intermediate ("WTI") crude price of  $8.09 per Bbl coupled with the widening Mid-Cush and other regional differentials, and a decrease in the realized NGL price of 44% to $0.45 per gallon in 2019 from $0.80 per gallon in 2018. These decreases were partially offset by an average realized natural gas price increase of 1% to $2.60 per Mcf in 2019 from $2.57 per Mcf in 2018.
  • Production expenses, excluding ad valorem taxes, were relatively flat at $45.0 million in 2019, a decrease from $45.6 million in 2018.
  • General and administrative expenses, excluding unit-based Long-Term Incentive Plan ("LTIP") compensation expense, increased to $12.4 million in 2019 from $11.3 million in 2018 due to a $0.9 million increase in costs related to our strategic alternative process.
  • Cash settlements received on our commodity derivatives during 2019 were $9.6 million compared to $2.8 million paid in 2018. The increase in cash settlements is a result of lower commodity prices.
  • Total development capital expenditures decreased to $39.4 million in 2019 from $59.7 million in 2018. The 2019 activity was in line with our previously announced capital budget and was primarily related to our Permian horizontal drilling program.

Quarterly Report on Form 10-Q

Financial results contained herein are preliminary and subject to the final, unaudited financial statements and related footnotes included in Legacy's Form 10-Q which will be filed on or about May 10, 2019.

About Legacy Reserves Inc.

Legacy is an independent energy company engaged in the development, production and acquisition of oil and natural gas properties in the United States. Its current operations are focused on the horizontal development of unconventional plays in the Permian Basin and the cost-efficient management of shallow-decline oil and natural gas wells in the Permian Basin, East Texas, Rocky Mountain and Mid-Continent regions. Additional information is available at www.LegacyReserves.com.

 

LEGACY RESERVES INC.

SELECTED FINANCIAL AND OPERATING DATA


Three Months Ended


March 31,


2019


2018


(In thousands, except per unit data)

Revenues:




Oil sales

$

77,761


$

93,411

Natural gas liquids (NGL) sales

4,515


7,396

Natural gas sales

36,221


36,672

Total revenue

$

118,497


$

137,479

Expenses:




Oil and natural gas production, excluding ad valorem taxes

$

44,964


$

45,585

Ad valorem taxes

2,513


2,382

Total oil and natural gas production

$

47,477


$

47,967

Production and other taxes

$

6,149


$

7,326

General and administrative, excluding transaction costs and LTIP

$

9,705


$

9,502

Transaction costs

2,669


1,782

LTIP expense

4,156


12,806

Total general and administrative

$

16,530


$

24,090

Depletion, depreciation, amortization and accretion

$

42,549


$

36,547

Commodity derivative cash settlements:




Oil derivative cash settlements (paid) received

$

7,045


$

(4,894)

Natural gas derivative cash settlements received

$

2,534


$

2,099

Production:




Oil (MBbls)

1,613


1,547

Natural gas liquids (MGal)

10,020


9,244

Natural gas (MMcf)

13,938


14,280

Total (MBoe)

4,175


4,147

Average daily production (Boe/d)

46,389


46,078

Average sales price per unit (excluding derivative cash settlements):




Oil price (per Bbl)

$

48.21


$

60.38

Natural gas liquids price (per Gal)

$

0.45


$

0.80

Natural gas price (per Mcf)

$

2.60


$

2.57

Combined (per Boe)

$

28.38


$

33.15

Average sales price per unit (including derivative cash settlements):




Oil price (per Bbl)

$

52.58


$

57.22

Natural gas liquids price (per Gal)

$

0.45


$

0.80

Natural gas price (per Mcf)

$

2.78


$

2.72

Combined (per Boe)

$

30.68


$

32.48

Average WTI oil spot price (per Bbl)

$

54.82


$

62.91

Average Henry Hub natural gas index price (per MMbtu)

$

2.92


$

3.08

Average unit costs per Boe:




Oil and natural gas production, excluding ad valorem taxes

$

10.77


$

10.99

Ad valorem taxes

$

0.60


$

0.57

Production and other taxes

$

1.47


$

1.77

General and administrative excluding transaction costs and LTIP

$

2.32


$

2.29

Total general and administrative

$

3.96


$

5.81

Depletion, depreciation, amortization and accretion

$

10.19


$

8.81

 

LEGACY RESERVES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



Three Months Ended


March 31,


2019


2018


(In thousands, except per share / unit data)

Revenues:




Oil sales

$

77,761


$

93,411

Natural gas liquids (NGL) sales

4,515


7,396

Natural gas sales

36,221


36,672

Total revenues

118,497


137,479





Expenses:




Oil and natural gas production

47,477


47,967

Production and other taxes

6,149


7,326

General and administrative

16,530


24,090

Depletion, depreciation, amortization and accretion

42,549


36,547

Impairment of long-lived assets

7,398


(Gains) losses on disposal of assets

1,034


(20,395)

Total expenses

121,137


95,535





Operating income (loss)

(2,640)


41,944





Other income (expense):




Interest income

6


12

Interest expense

(37,119)


(27,368)

Gain on extinguishment of debt

13,105


51,693

Equity in income (loss) of equity method investees


17

Net gains (losses) on commodity derivatives

(51,460)


(1,704)

Other

(270)


275

Loss before income taxes

(78,378)


64,869

Income tax expense


(487)

Net loss

$

(78,378)


$

64,382





Loss per share / unit - basic & diluted

$

(0.70)


$

0.62

Weighted average number of shares / units used in computing net loss per share / unit -




Basic

111,225


103,994

Diluted

111,225


104,301

 

LEGACY RESERVES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

ASSETS



March 31, 2019


December 31, 2018



(In thousands)

Current assets:





Cash


$

1,491


$

1,098

Accounts receivable, net:





Oil and natural gas


63,542


56,615

Joint interest owners


16,142


15,370

Other


283


Fair value of derivatives


9,708


66,662

Prepaid expenses and other current assets


13,335


11,347

Total current assets


104,501


151,092

Oil and natural gas properties using the successful efforts method, at cost:





Proved properties


3,507,534


3,471,456

Unproved properties


19,680


19,863

Accumulated depletion, depreciation, amortization and impairment


(2,221,624)


(2,177,006)



1,305,590


1,314,313

Other property and equipment, net of accumulated depreciation and amortization of $2,432 and $2,464, respectively (Note 11)


6,743


2,456

Operating rights, net of amortization of $806 and $894, respectively





Fair value of derivatives



3,135

Other assets


3,304


3,935

Total assets


$

1,420,138


$

1,474,931

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:





Current debt, net


$

883,092


$

856,646

Accounts payable


28,658


11,227

Accrued oil and natural gas liabilities


76,284


98,886

Fair value of derivatives


2,207


Asset retirement obligation


3,938


3,938

Other


18,455


13,953

Total current liabilities


1,012,634


984,650

Long-term debt, net


416,328


432,923

Asset retirement obligation


250,867


248,796

Fair value of derivatives



550

Other long-term liabilities


3,190


643

Total liabilities


1,683,019


1,667,562

Commitments and contingencies





Partners' deficit





Common stock, $0.01 par value; 945,000,000 shares authorized, 114,810,671 and 109,442,278 shares outstanding at March 31, 2019 and December 31, 2018, respectively


1,148


1,094

Additional paid-in capital


32,571


24,752

Accumulated deficit


(296,600)


(218,477)

Total stockholders' deficit


(262,881)


(192,631)

Total liabilities and stockholders'  / partners' deficit


$

1,420,138


$

1,474,931

Non-GAAP Financial Measures

"Adjusted EBITDA" is a non-generally accepted accounting principles ("non-GAAP") measure which may be used periodically by management when discussing our financial results with investors and analysts. The following presents a reconciliation of this non-GAAP financial measure to its nearest comparable generally accepted accounting principles ("GAAP") measure.

Adjusted EBITDA is presented as management believes it provides additional information concerning the performance of our business and is used by investors and financial analysts to analyze and compare our current operating and financial performance relative to past performance and such performances relative to that of other exploration and production companies. Adjusted EBITDA may not be comparable to similarly titled measures of other exploration and production companies because all companies may not calculate such measures in the same manner.

Certain factors impacting Adjusted EBITDA may be viewed as temporary, one-time in nature, or being offset by reserves from past performance or near-term future performance. Financial results are also driven by various factors that do not typically occur evenly throughout the year that are difficult to predict, including rig availability, weather, well performance, the timing of drilling and completions and near-term commodity price changes.

"Adjusted EBITDA" should not be considered as an alternative to GAAP measures, such as net income, operating income, cash flow from operating activities, or any other GAAP measure of financial performance.

The following table presents a reconciliation of our consolidated net loss to Adjusted EBITDA:



Three Months Ended



March 31,



2019


2018



(In thousands)

Net (loss) income


$

(78,378)


$

64,382

      Plus:





Interest expense


$

37,119


$

27,368

Gain on extinguishment of debt


(13,105)


(51,693)

Income tax expense



487

Depletion, depreciation, amortization and accretion


42,549


36,547

Impairment of long-lived assets


7,398


(Gain) loss on disposal of assets


1,034


(20,395)

Equity in (income) loss of equity method investees



(17)

Share-based compensation expense


4,156


12,806

Minimum payments received in excess of overriding royalty interest earned(1)


(543)


522

Net (gains) losses on commodity derivatives


51,460


1,704

Net cash settlements (paid) received on commodity derivatives


9,579


(2,795)

Transaction costs


2,669


1,782

Adjusted EBITDA


$

63,938


$

70,698


(1)

Minimum payments received in excess of overriding royalties earned under a contractual agreement expiring December 31, 2019. The remaining amount of the minimum payments is recognized in net income.

Commodity Derivative Contracts

We enter into oil and natural gas derivative contracts to help mitigate the risk of changing commodity prices. As of May 8, 2019, we had entered into derivative agreements to receive average prices as summarized below.

NYMEX WTI Crude Oil Swaps:

Time Period


Volumes (Bbls)


Average Price per
Bbl


Price Range per Bbl

April-December 2019


2,475,000


$61.33


$57.15

-

$67.65


Midland-to-Cushing WTI Crude Oil Differential Swaps:


Time Period


Volumes (Bbls)


Average Price per
Bbl


Price Range per Bbl

April-December 2019


1,743,000


$(3.61)


$(1.15)

-

$(5.60)


Midland-to-Cushing WTI Crude Oil Differential Enhanced Swaps


Time Period


Volumes (Bbls)


Average Short Price
Call per Bbl


Average Swap Price
per Bbl

April-December 2019


1,100,000


$70.00


$(2.91)


NYMEX Natural Gas Swaps (Henry Hub):






Average


Price Range per

Time Period


Volumes (MMBtu)


Price per MMBtu


MMBtu

April-December 2019


26,225,000


$3.30


$3.05

-

$3.39

Location and quality differentials attributable to our properties are not reflected in the above prices. The agreements provide for monthly settlement based on the difference between the agreement fixed price and the actual reference oil and natural gas index prices.

Cautionary Statement Relevant to Forward-Looking Information

This press release includes "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, including, without limitation, the evaluation of financial transactions and other strategic alternatives, statements regarding the expected future growth and dividends of the company, and plans and objectives of management for future operations. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that Legacy expects, believes or anticipates will or may occur in the future, are forward-looking statements. Words such as "anticipates," "expects," "intends," "plans," "targets," "projects," "believes," "seeks," "schedules," "estimated," and similar expressions are intended to identify such forward-looking statements. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties, factors and risks, many of which are outside the control of Legacy, which could cause results to differ materially from those expected by management of Legacy. Such risks and uncertainties include, but are not limited to, the structure and timing of any financial, transactional, or other strategic alternative and whether any such financial, transactional, or other strategic alternative will be completed; whether Legacy will be able to receive extension of it revolving credit facility; realized oil and natural gas prices; production volumes, lease operating expenses, general and administrative costs and finding and development costs; future operating results; and the factors set forth under the heading "Risk Factors" in Legacy's filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Legacy undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

CONTACT:

Legacy Reserves Inc.


Robert L. Norris


Chief Financial Officer


(432) 689-5200

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/legacy-reserves-inc-announces-first-quarter-2019-results-300847794.html

SOURCE Legacy Reserves Inc.

Copyright 2019 PR Newswire

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