Rosehill Resources Inc. (“Rosehill” or the “Company”) (NASDAQ:
ROSE, ROSEW, ROSEU) today reported financial and operational
results for the fourth quarter and year ended December 31, 2018.
Fourth Quarter 2018 Highlights and Recent
Items:
- Grew average net production to 22,779 barrels of oil equivalent
per day (“BOEPD”) (73% oil and 87% total liquids), an increase of
15% compared to the third quarter of 2018
- Reported net income attributable to Rosehill of $50.2 million,
or $2.35 per fully diluted share, for the fourth quarter of 2018,
which included a $199.4 million non-cash, pre-tax gain on commodity
derivative instruments
- Delivered Adjusted EBITDAX (a non-GAAP measure defined and
reconciled below) of $63.6 million, an increase of 12% over the
third quarter of 2018
- Reduced combined lease operating and general and administrative
expenses (“LOE” and “G&A,” respectively), excluding stock-based
compensation, per barrel of oil equivalent (“BOE”) by $1.06, or
12%, compared to third quarter of 2018
- Received commitments from lenders to increase the borrowing
base under the Company’s credit facility to $300 million as of
March 27, 2019, up from $220 million as of December 2018
- Entered into agreement for sale of assets in Lea County, New
Mexico and expect net proceeds of approximately $22 million,
subject to customary purchase price adjustments
Full Year 2018 Highlights:
- Grew average net production to 18,337 BOEPD (73% oil and 87%
total liquids), an increase of 214% compared to 2017
- Reported net income attributable to Rosehill of $26.7 million,
or $1.76 per diluted share, compared to a net loss $8.5 million, or
$1.43 per share, for 2017
- Delivered Adjusted EBITDAX (a non-GAAP measure defined and
reconciled below) of $204.4 million, an increase of 337% over
2017
- Reduced combined LOE and G&A, excluding stock-based
compensation, per BOE by $1.42, or 13%, compared to 2017
Management Comments
Gary C. Hanna, Rosehill’s Chairman and Interim
President and Chief Executive Officer, commented, “2018 was a year
of tremendous accomplishments for Rosehill. We met or
exceeded all of the targets we set, highlighted by production and
Adjusted EBITDAX surpassing the upper end of our guidance
range. While pursuing these achievements, we remained
focused on cost, highlighted by lease operating and general and
administrative expense per BOE reaching all-time lows for the
company. These efforts translated into strong year-end reserves for
2018, underscored by an increase in proved reserves of 55% and an
$80 million increase in liquidity from our borrowing base
redetermination this month.”
Mr. Hanna continued, “As we begin the year, we
remain focused on several key fronts including an aggressive
development pace in our Southern Delaware area and executing on our
2019 program that provides year over year production and Adjusted
EBITDAX growth at approximately 40% less in capital expenditures.
We’re also excited about our recently announced farm-in agreement
in Southern Delaware and several projects currently underway to
optimize existing production in our Northern Delaware area.
We are very encouraged by the early 2019 results from both of our
asset areas.”
Operational Results
For the fourth quarter of 2018, the Company’s
net production averaged 22,779 BOEPD, a 15% increase compared to
the average for the third quarter of 2018, comprised of 16,604
barrels of oil per day, 3,178 barrels of natural gas liquids
(“NGLs”) per day and 18.0 million cubic feet of gas (“MMCF”) per
day. Rosehill operated two rigs, drilled eight gross horizontal
wells and completed three wells in the fourth quarter of 2018 and
had eight drilled uncompleted wells at the end of the fourth
quarter of 2018.
For the full year 2018, the Company’s net daily
production averaged 18,337 net BOEPD, which was comprised of 13,460
barrels of oil per day, 2,488 barrels of NGLs per day and 14.3 MMCF
of gas per day, an increase (net BOEPD) of 214% compared to the
full year 2017 average. Rosehill drilled 33 gross horizontal wells
and completed 30 wells in 2018.
In December, the Company began flowback on a
three well pad on the Z&T 32 lease in Loving County, with the
wells producing from the Lower Wolfcamp A formation. These wells
reached average IP 30 rates of 1,560 BOEPD, 68% oil, or 373 BOEPD
per 1,000 feet.
In October, the Company placed on to production
its first 2nd Bone Spring Shale delineation well on the Kyle 26
lease located in Loving County. The Kyle 26 E007 well reached
an IP 30 of 781 BOEPD, 72% oil, or 182 BOEPD per 1,000 feet.
Financial Results
For the fourth quarter of 2018, the Company
reported net income attributable to Rosehill of $50.2 million, or
$2.35 per diluted share, as compared to a net loss of $31.4
million, or a $4.76 loss per share, in the third quarter of 2018.
The fourth quarter of 2018 included a $199.4 million non-cash,
pre-tax gain on commodity derivative instruments compared to a
$62.3 million non-cash, pre-tax loss on commodity derivative
instruments in the third quarter of 2018.
For the year ended December 31, 2018, the
Company reported net income attributable to Rosehill of $26.7
million, or $1.76 per diluted share, as compared to a net loss of
$8.5 million, or $1.43 per share, in the same period in 2017. The
full year 2018 included a $108.1 million non-cash, pre-tax gain on
commodity derivative instruments. The full year 2017 included a
$16.6 million non-cash, pre-tax loss on commodity derivative
instruments and a $5.0 million pre-tax gain on sale of assets
Adjusted EBITDAX totaled $63.6 million for the
fourth quarter of 2018, as compared to $56.7 million in the third
quarter of 2018 and $18.7 million for the fourth quarter of 2017.
This increase of 12% was driven primarily by higher production and
lower per unit operating expenses. Adjusted EBITDAX for the
year ended December 31, 2018 was $204.4 million, up from $46.8
million for the same period in 2017.
For the fourth quarter of 2018, average realized
prices (all prices excluding the effects of derivatives) were
$48.51 per barrel of oil, $1.64 per Mcf of natural gas and $21.14
per barrel of NGLs, resulting in a total equivalent price of $39.60
per BOE, down 13% from the third quarter of 2018 and down 7% from
the fourth quarter of 2017.
Rosehill’s cash operating costs for the fourth
quarter of 2018 were $10.17 per BOE, which includes LOE, gathering
and transportation, production taxes and G&A and excludes costs
associated with stock-based compensation. Fourth quarter cash
operating costs per BOE decreased 11% as compared to third quarter
of 2018 and decreased 30% as compared to the fourth quarter of
2017, primarily attributable to reduced LOE and G&A.
During 2018 and the fourth quarter of 2018, Rosehill incurred
capital costs, excluding asset retirement costs, of $373.7 million
and $73.0 million, respectively. The portion of capital costs
related to facilities during 2018 and the fourth quarter of 2018
was $94.1 million and $25.9 million, respectively.
Development Update
In the Southern Delaware area, the Company has
drilled nine wells since the third quarter of 2018, bringing the
total wells drilled in this area to thirteen. The
Company has recently finished completion operations on six wells in
the Southern Delaware. Activity relating to these wells is
provided below.
Well |
Formation |
Current Status |
Expected Future Status |
State
Blanco 58 G003 |
Wolfcamp A |
Recently began flowback |
Production results in April |
State
Blanco 58 G001 |
Wolfcamp B |
Recently began flowback |
Production results in April |
State
Blanco 58 H001 |
Wolfcamp B |
Recently began flowback |
Production results in April |
Trees
Estate 77 H001 |
Wolfcamp A |
Preparing for flowback |
Production results in May |
Trees
Estate 77 H003 |
Wolfcamp B |
Preparing for flowback |
Production results in May |
Trees
Estate 77 A001 |
Wolfcamp B |
Preparing for flowback |
Production results in May |
In the Northern Delaware area, the Company has
begun testing the use of electric submersible pumps (“ESPs”) to
improve production on mature producing wells. In February, an
ESP was installed on the Kyle 24 G001 well, which was first placed
on production in May of 2016 targeting the Lower Wolfcamp A
formation. Shortly after installation of the ESP, the well
reached production of 684 BOEPD, 77% oil, and approximately 200%
above production levels just prior to installation of the
ESP. Based on these encouraging results, the Company plans to
install additional ESPs on mature producing wells throughout the
year in the Northern Delaware area.
Capital Structure and
Liquidity
As of December 31, 2018, Rosehill had $20.2
million in cash on hand and $288.3 million in long-term debt. As of
December 31, 2018, total liquidity was approximately $46.2 million
which included cash on hand and availability under the revolving
credit facility. When including the effects of the Company’s
recently redetermined borrowing base, described below, liquidity as
of December 31, 2018 was approximately $126 million. The Company
recently entered into an agreement to sell its assets in Lea
County, New Mexico for approximately $22 million, subject to
customary purchase price adjustments. The transaction is
expected to close in early April with the net proceeds used to pay
down outstanding borrowings under the revolving credit
facility.
On March 27, 2019, the Company received
commitments from lenders to increase the borrowing base under the
Company's revolving credit facility from $220 million to $300
million. The borrowing base was evaluated using reserve data as of
December 31, 2018 and is expected to close on March 28, 2019.
The Company’s redetermined borrowing base primarily consisted of
proved reserves associated with its Northern Delaware area due to
the limited number of producing wells in the Southern Delaware.
Transportation & Hedging
Update
The Company recently began piped transportation
of oil in its Southern Delaware area on the infield gathering
system and intra-basin transportation pipeline. As a result,
the Company is now transporting approximately 99% of its produced
oil through pipe.
Included below is a summary of the Company’s
derivative contracts as of December 31, 2018. Subsequent to
December 31, 2018 and through March 27, 2019, the Company entered
into additional derivative contracts, including approximately 5.0
million barrels of crude oil basis swaps that settle from 2020
through 2022 at a weighted average price of $0.38 per barrel, 1.0
MMbtu of natural gas swaps that settle in 2019 at a weighted
average price of $2.88 per MMbtu, and 1.0 MMbtu of natural gas
basis swaps that settle in 2019 at a weighted average price of
($1.28) per MMbtu.
Commodity Hedging
As of December 31, 2018, the Company had the
following outstanding derivative contracts:
|
|
2019 |
|
2020 |
|
2021 |
|
2022 |
Commodity derivative swaps |
Oil: |
|
|
|
|
|
|
|
|
Notional volume
(Bbls) |
2,664,000 |
|
|
1,960,000 |
|
|
2,160,000 |
|
|
1,100,000 |
|
|
Weighted average fixed
price ($/Bbl) |
$ |
53.59 |
|
|
$ |
60.09 |
|
|
$ |
61.21 |
|
|
$ |
58.42 |
|
Natural gas: |
|
|
|
|
|
|
|
|
Notional volume
(MMBtu) |
2,220,000 |
|
|
1,500,000 |
|
|
1,200,000 |
|
|
1,200,000 |
|
|
Weighted average fixed
price ($/MMbtu) |
$ |
2.88 |
|
|
$ |
2.84 |
|
|
$ |
2.85 |
|
|
$ |
2.87 |
|
Ethane: |
|
|
|
|
|
|
|
|
Notional volume
(Gallons) |
12,444,138 |
|
|
— |
|
|
— |
|
|
— |
|
|
Weighted average fixed
price ($/Gallons) |
$ |
0.28 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Propane: |
|
|
|
|
|
|
|
|
Notional volume
(Gallons) |
8,296,218 |
|
|
— |
|
|
— |
|
|
— |
|
|
Weighted average fixed
price ($/Gallons) |
$ |
0.79 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Pentanes: |
|
|
|
|
|
|
|
|
Notional volume
(Gallons) |
2,765,700 |
|
|
— |
|
|
— |
|
|
— |
|
|
Weighted average fixed
price ($/Gallons) |
$ |
1.47 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Commodity derivative two-way collars |
Oil: |
|
|
|
|
|
|
|
|
Notional volume
(Bbls) |
601,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
Weighted average
ceiling price ($/Bbl) |
$ |
61.30 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Weighted average floor
price ($/Bbl) |
$ |
55.21 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Commodity derivative three-way collars |
Oil: |
|
|
|
|
|
|
|
|
Notional volume
(Bbls) |
1,531,832 |
|
|
3,294,000 |
|
|
— |
|
|
— |
|
|
Weighted average
ceiling price ($/Bbl) |
$ |
68.52 |
|
|
$ |
70.29 |
|
|
$ |
— |
|
|
$ |
— |
|
|
Weighted average floor
price ($/Bbl) |
$ |
57.62 |
|
|
$ |
57.50 |
|
|
$ |
— |
|
|
$ |
— |
|
|
Weighted average sold
put option price ($/Bbl) |
$ |
45.51 |
|
|
$ |
47.50 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Crude oil basis swaps |
Midland / Cushing: |
|
|
|
|
|
|
|
|
Notional volume
(Bbls) |
4,800,832 |
|
|
3,513,600 |
|
|
— |
|
|
— |
|
|
Weighted average fixed
price ($/Bbl) |
$ |
(4.93 |
) |
|
$ |
(1.43 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Natural gas basis swaps |
EP
Permian: |
|
|
|
|
|
|
|
|
Notional volume
(MMBtu) |
1,781,472 |
|
|
2,096,160 |
|
|
— |
|
|
— |
|
|
Weighted average fixed
price ($/MMBtu) |
$ |
(1.03 |
) |
|
$ |
(1.03 |
) |
|
$ |
— |
|
|
$ |
— |
|
Annual Report on Form 10-K
The Company’s financial statements and related footnotes are
available in its Annual Report on Form 10-K for the year ended
December 31, 2018, which will be filed with the U.S. Securities and
Exchange Commission.
Conference Call, Webcast and Presentation
The Company will hold a conference call to
discuss its fourth quarter and full year 2018 financial and
operating results on Thursday, March 28, 2019, at 10:00 a.m.
Central Time (11:00 a.m. Eastern Time). Interested parties may
participate by dialing (866) 601-1105 from the United States or
(430) 775-1347 from outside the United States. The conference call
I.D. number is 6248448. The call will also be available as a live
webcast on the “News/Events” tab of the Investors section of the
Company’s website, www.rosehillresources.com. The webcast will be
available for replay for at least 30 days. An updated investor
presentation in conjunction with this earnings release will be
available on the Company’s website under the Investor Relations
section.
About Rosehill Resources Inc.
Rosehill Resources Inc. is an oil and gas
exploration company with producing assets in Texas and New Mexico
with its investment activity focused in the Delaware Basin portion
of the Permian Basin. The Company’s strategy for growth includes
the organic development of its two core acreage areas in the
Northern Delaware Basin and the Southern Delaware basin, as well as
focused acquisitions in the Delaware Basin.
Rosehill Resources
Inc.Operational Highlights
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues: (in thousands) |
|
|
|
|
|
|
|
|
Oil
sales |
|
$ |
74,125 |
|
|
$ |
25,132 |
|
|
$ |
271,539 |
|
|
$ |
61,596 |
|
Natural
gas sales |
|
2,706 |
|
|
1,579 |
|
|
9,392 |
|
|
7,171 |
|
NGL
sales |
|
6,174 |
|
|
2,064 |
|
|
20,944 |
|
|
7,469 |
|
Total
revenues |
|
$ |
83,005 |
|
|
$ |
28,775 |
|
|
$ |
301,875 |
|
|
$ |
76,236 |
|
Average sales price (1): |
|
|
|
|
|
|
|
|
Oil (per
Bbl) |
|
$ |
48.51 |
|
|
$ |
52.69 |
|
|
$ |
55.27 |
|
|
$ |
48.46 |
|
Natural
gas (per Mcf) |
|
1.64 |
|
|
2.54 |
|
|
1.80 |
|
|
2.65 |
|
NGLs (per
Bbl) |
|
21.14 |
|
|
21.50 |
|
|
23.07 |
|
|
18.31 |
|
Total
(per Boe) |
|
$ |
39.60 |
|
|
$ |
42.57 |
|
|
$ |
45.10 |
|
|
$ |
35.77 |
|
Total,
including effects of gain (loss) on settled commodity derivatives,
net (per Boe) |
|
$ |
40.42 |
|
|
$ |
42.66 |
|
|
$ |
42.79 |
|
|
$ |
35.85 |
|
Net Production: |
|
|
|
|
|
|
|
|
Oil
(MBbls) |
|
1,528 |
|
|
477 |
|
|
4,913 |
|
|
1,271 |
|
Natural
gas (MMcf) |
|
1,654 |
|
|
621 |
|
|
5,231 |
|
|
2,709 |
|
NGLs
(MBbls) |
|
292 |
|
|
96 |
|
|
908 |
|
|
408 |
|
Total
(MBoe) |
|
2,096 |
|
|
676 |
|
|
6,693 |
|
|
2,131 |
|
Average daily net production volume: |
|
|
|
|
|
|
|
|
Oil
(Bbls/d) |
|
16,604 |
|
|
5,188 |
|
|
13,460 |
|
|
3,483 |
|
Natural
gas (Mcf/d) |
|
17,981 |
|
|
6,747 |
|
|
14,332 |
|
|
7,423 |
|
NGLs
(Bbls/d) |
|
3,178 |
|
|
1,039 |
|
|
2,488 |
|
|
1,118 |
|
Total
(Boe/d) |
|
22,779 |
|
|
7,352 |
|
|
18,337 |
|
|
5,838 |
|
Average costs (per BOE): |
|
|
|
|
|
|
|
|
Lease
operating expense |
|
$ |
4.63 |
|
|
$ |
6.51 |
|
|
$ |
5.83 |
|
|
$ |
5.11 |
|
Production taxes |
|
1.90 |
|
|
2.01 |
|
|
2.17 |
|
|
1.66 |
|
Gathering
and transportation |
|
0.81 |
|
|
0.96 |
|
|
0.74 |
|
|
1.40 |
|
Depreciation, depletion and amortization |
|
17.67 |
|
|
14.71 |
|
|
21.19 |
|
|
16.94 |
|
Impairment of oil and natural gas properties |
|
— |
|
|
1.57 |
|
|
— |
|
|
0.50 |
|
Exploration costs |
|
0.34 |
|
|
0.80 |
|
|
0.65 |
|
|
0.82 |
|
General
and administrative, excluding stock-based compensation |
|
2.83 |
|
|
5.10 |
|
|
3.58 |
|
|
5.72 |
|
Stock-based compensation |
|
0.55 |
|
|
1.84 |
|
|
0.97 |
|
|
0.58 |
|
Transaction expenses |
|
— |
|
|
— |
|
|
— |
|
|
1.23 |
|
(Gain)
loss on sale of property and equipment |
|
0.08 |
|
|
(7.37 |
) |
|
0.07 |
|
|
(2.34 |
) |
Total
(per Boe) |
|
$ |
28.81 |
|
|
$ |
26.13 |
|
|
$ |
35.20 |
|
|
$ |
31.62 |
|
(1) Excluding the effects of realized and
unrealized commodity derivative transactions unless noted
otherwise
ROSEHILL RESOURCES
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share amounts)
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues: |
|
|
|
|
|
|
|
|
Oil
sales |
|
$ |
74,125 |
|
|
$ |
25,132 |
|
|
$ |
271,539 |
|
|
$ |
61,596 |
|
Natural
gas sales |
|
2,706 |
|
|
1,579 |
|
|
9,392 |
|
|
7,171 |
|
Natural
gas liquids sales |
|
6,174 |
|
|
2,064 |
|
|
20,944 |
|
|
7,469 |
|
Total
revenues |
|
83,005 |
|
|
28,775 |
|
|
301,875 |
|
|
76,236 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Lease
operating expenses |
|
9,695 |
|
|
4,402 |
|
|
39,010 |
|
|
10,881 |
|
Production taxes |
|
3,991 |
|
|
1,361 |
|
|
14,506 |
|
|
3,535 |
|
Gathering
and transportation |
|
1,693 |
|
|
647 |
|
|
4,939 |
|
|
2,976 |
|
Depreciation, depletion, amortization and accretion |
|
37,031 |
|
|
9,941 |
|
|
141,815 |
|
|
36,091 |
|
Impairment of oil and natural gas properties |
|
— |
|
|
1,061 |
|
|
— |
|
|
1,061 |
|
Exploration costs |
|
715 |
|
|
539 |
|
|
4,374 |
|
|
1,747 |
|
General
and administrative |
|
7,100 |
|
|
4,690 |
|
|
30,469 |
|
|
13,428 |
|
Transaction costs |
|
— |
|
|
— |
|
|
— |
|
|
2,618 |
|
(Gain)
loss on disposition of property and equipment |
|
174 |
|
|
(4,984 |
) |
|
499 |
|
|
(4,995 |
) |
Total
operating expenses |
|
60,399 |
|
|
17,657 |
|
|
235,612 |
|
|
67,342 |
|
Operating
income |
|
22,606 |
|
|
11,118 |
|
|
66,263 |
|
|
8,894 |
|
Other income
(expense): |
|
|
|
|
|
|
|
|
Interest
expense, net |
|
(5,597 |
) |
|
(1,258 |
) |
|
(19,489 |
) |
|
(2,532 |
) |
Gain
(loss) on commodity derivative instruments, net |
|
201,157 |
|
|
(18,087 |
) |
|
92,604 |
|
|
(16,336 |
) |
Other
expense, net |
|
(3,583 |
) |
|
(179 |
) |
|
(3,254 |
) |
|
(284 |
) |
Total
other income (expense), net |
|
191,977 |
|
|
(19,524 |
) |
|
69,861 |
|
|
(19,152 |
) |
Income (loss)
before income taxes |
|
214,583 |
|
|
(8,406 |
) |
|
136,124 |
|
|
(10,258 |
) |
Income
tax expense |
|
12,639 |
|
|
2,340 |
|
|
18,162 |
|
|
1,690 |
|
Net income
(loss) |
|
201,944 |
|
|
(10,746 |
) |
|
117,962 |
|
|
(11,948 |
) |
Net income (loss)
attributable to noncontrolling interest |
|
143,799 |
|
|
(10,802 |
) |
|
59,926 |
|
|
(18,811 |
) |
Net income attributable
to Rosehill Resources Inc. before preferred stock dividends |
|
58,145 |
|
|
56 |
|
|
58,036 |
|
|
6,863 |
|
Series A Preferred
Stock dividends and deemed dividends |
|
2,031 |
|
|
2,922 |
|
|
7,938 |
|
|
12,936 |
|
Series B Preferred
Stock dividends, deemed dividends, and return |
|
5,943 |
|
|
2,447 |
|
|
23,437 |
|
|
2,447 |
|
Net income
(loss) attributable to Rosehill Resources Inc. common
stockholders |
|
$ |
50,171 |
|
|
$ |
(5,313 |
) |
|
$ |
26,661 |
|
|
$ |
(8,520 |
) |
Earnings (loss)
per common share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
3.72 |
|
|
$ |
(0.87 |
) |
|
$ |
3.25 |
|
|
$ |
(1.43 |
) |
Diluted |
|
$ |
2.35 |
|
|
$ |
(0.87 |
) |
|
$ |
1.76 |
|
|
$ |
(1.43 |
) |
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
13,477 |
|
|
6,123 |
|
|
8,196 |
|
|
5,945 |
|
Diluted |
|
22,229 |
|
|
6,123 |
|
|
46,499 |
|
|
5,945 |
|
ROSEHILL RESOURCES
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands,
except share and per share amounts) |
|
December 31, 2018 |
|
December 31, 2017 |
ASSETS |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
20,157 |
|
|
$ |
20,677 |
|
Restricted cash |
|
— |
|
|
4,005 |
|
Accounts
receivable |
|
32,260 |
|
|
1,527 |
|
Accounts
receivable, related parties |
|
78 |
|
|
16,022 |
|
Derivative assets |
|
30,819 |
|
|
— |
|
Prepaid
and other current assets |
|
1,371 |
|
|
1,312 |
|
Total
current assets |
|
84,685 |
|
|
43,543 |
|
Property and
equipment: |
|
|
|
|
Oil and
natural gas properties (successful efforts), net |
|
666,797 |
|
|
431,332 |
|
Other
property and equipment, net |
|
2,592 |
|
|
1,283 |
|
Total
property and equipment, net |
|
669,389 |
|
|
432,615 |
|
Other
assets, net |
|
4,678 |
|
|
824 |
|
Derivative assets |
|
58,314 |
|
|
— |
|
Total
assets |
|
$ |
817,066 |
|
|
$ |
476,982 |
|
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’
EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
21,013 |
|
|
$ |
31,868 |
|
Accounts
payable, related parties |
|
287 |
|
|
223 |
|
Derivative liabilities |
|
— |
|
|
10,772 |
|
Accrued
liabilities and other |
|
27,335 |
|
|
15,492 |
|
Accrued
capital expenditures |
|
30,529 |
|
|
45,045 |
|
Total
current liabilities |
|
79,164 |
|
|
103,400 |
|
Long-term
liabilities: |
|
|
|
|
Long-term
debt, net |
|
288,298 |
|
|
93,199 |
|
Asset
retirement obligations, net of current portion |
|
13,524 |
|
|
8,522 |
|
Deferred
tax liabilities |
|
9,278 |
|
|
153 |
|
Derivative liabilities |
|
696 |
|
|
8,008 |
|
Other
liabilities |
|
3,658 |
|
|
168 |
|
Total
long-term liabilities |
|
315,454 |
|
|
110,050 |
|
Total
liabilities |
|
394,618 |
|
|
213,450 |
|
Commitments and
contingencies |
|
|
|
|
Mezzanine
equity |
|
|
|
|
Series B
Preferred Stock; $0.0001 par value, 10.0% Redeemable, $1,000 per
share liquidation preference; of the 1,000,000 shares of Preferred
Stock authorized, 210,000 shares designated, 156,746 and 150,626
shares issued and outstanding as of December 31, 2018 and 2017,
respectively |
|
155,111 |
|
|
140,868 |
|
Stockholders’
equity |
|
|
|
|
Series A
Preferred Stock; $0.0001 par value, 8.0% Cumulative Perpetual
Convertible, $1,000 per share liquidation preference; of the
1,000,000 shares of Preferred Stock authorized, 150,000 shares
designated, 101,669 and 97,698 shares issued and outstanding as of
December 31, 2018 and 2017, respectively |
|
84,631 |
|
|
80,660 |
|
Class A
Common Stock; $0.0001 par value, 250,000,000 and 95,000,000 shares
authorized at December 31, 2018 and 2017, respectively, and
13,760,136 and 6,222,299 shares issued and outstanding as of
December 31, 2018 and 2017, respectively |
|
1 |
|
|
1 |
|
Class B Common Stock; $0.0001 par value, 30,000,000 shares
authorized, 29,807,692 shares issued and outstanding as of December
31, 2018 and 2017, respectively |
|
3 |
|
|
3 |
|
Additional paid-in capital |
|
42,271 |
|
|
29,946 |
|
Retained
earnings |
|
26,661 |
|
|
— |
|
Total
common stockholders’ equity |
|
68,936 |
|
|
29,950 |
|
Noncontrolling interest |
|
113,770 |
|
|
12,054 |
|
Total
stockholders’ equity |
|
267,337 |
|
|
122,664 |
|
Total
liabilities, mezzanine and stockholders’ equity |
|
$ |
817,066 |
|
|
$ |
476,982 |
|
ROSEHILL RESOURCES
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(In Thousands)
|
|
Year Ended December 31, |
|
|
2018 |
|
2017 |
Cash flows from
operating activities: |
|
|
|
|
Net
income (loss) |
|
117,962 |
|
|
$ |
(11,948 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
Depreciation, depletion, amortization, accretion and impairment of
oil and gas properties |
|
141,815 |
|
|
37,152 |
|
Deferred
income taxes |
|
18,162 |
|
|
1,690 |
|
Stock-based compensation |
|
6,522 |
|
|
1,245 |
|
(Gain)
loss on sale of fixed assets |
|
499 |
|
|
(4,995 |
) |
(Gain)
loss on derivative instruments |
|
(92,534 |
) |
|
16,706 |
|
Net cash
received (paid) in settlement of derivative instruments |
|
(14,683 |
) |
|
74 |
|
Amortization of debt issuance costs |
|
2,139 |
|
|
274 |
|
Settlement of asset retirement obligations |
|
(801 |
) |
|
(840 |
) |
Tax
Receivable Agreement Expense |
|
3,518 |
|
|
— |
|
Changes
in operating assets and liabilities: |
|
|
|
|
(Increase) in accounts receivable and accounts receivable, related
parties |
|
(14,816 |
) |
|
(8,230 |
) |
(Increase) decrease in prepaid and other assets |
|
(59 |
) |
|
(451 |
) |
Increase
in accounts payable and accrued liabilities and other |
|
8,521 |
|
|
7,476 |
|
Increase
(decrease) in accounts payable, related parties |
|
64 |
|
|
(394 |
) |
Net cash
provided by operating activities |
|
176,309 |
|
|
37,759 |
|
Cash flows from
investing activities: |
|
|
|
|
Additions
to oil and natural gas properties |
|
(377,897 |
) |
|
(149,832 |
) |
Acquisition of White Wolf |
|
(4,005 |
) |
|
(114,843 |
) |
Acquisition of land and leasehold, royalty and mineral
interest |
|
(15,281 |
) |
|
(6,500 |
) |
Additions
to other property and equipment |
|
(2,160 |
) |
|
(574 |
) |
Proceeds
from sale of other property and equipment |
|
— |
|
|
6,252 |
|
Net cash
used in investing activities |
|
(399,343 |
) |
|
(265,497 |
) |
Cash flows from
financing activities: |
|
|
|
|
Proceeds
from revolving credit facility |
|
274,000 |
|
|
66,000 |
|
Repayment
on revolving credit facility |
|
(80,000 |
) |
|
(121,000 |
) |
Repayment
of long-term debt |
|
— |
|
|
— |
|
Proceeds
from Class A Common Stock offering |
|
40,511 |
|
|
— |
|
Class A
Common Stock offering issuance costs |
|
(1,155 |
) |
|
|
Proceeds
from issuance of Series A Preferred Stock and Warrants |
|
— |
|
|
95,000 |
|
Series A
Preferred Stock issuance costs |
|
— |
|
|
(4,220 |
) |
Proceeds
from issuance of Series B Preferred Stock |
|
— |
|
|
150,000 |
|
Series B
Preferred Stock upfront fees and transaction costs |
|
(20 |
) |
|
(10,017 |
) |
Proceeds
from Second lien notes, net |
|
— |
|
|
97,000 |
|
Net
proceeds from the Transaction |
|
— |
|
|
18,688 |
|
Distribution to noncontrolling interest |
|
— |
|
|
(40,487 |
) |
Distribution to Tema |
|
— |
|
|
(2,267 |
) |
Debt
issuance costs |
|
(3,330 |
) |
|
(4,640 |
) |
Dividends
paid on preferred stock |
|
(10,716 |
) |
|
(38 |
) |
Restricted stock used for tax withholdings |
|
(749 |
) |
|
— |
|
Payment
on capital lease obligation |
|
(32 |
) |
|
(33 |
) |
Net cash
provided by (used in) financing activities |
|
218,509 |
|
|
243,986 |
|
Net
increase (decrease) in cash, cash equivalents, and restricted
cash |
|
(4,525 |
) |
|
16,248 |
|
Cash, cash
equivalents, and restricted cash beginning of period |
|
24,682 |
|
|
8,434 |
|
Cash, cash
equivalents, and restricted cash end of period |
|
$ |
20,157 |
|
|
$ |
24,682 |
|
ROSEHILL RESOURCES
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Continued)(In thousands)
Supplemental cash flow information and noncash
activity:
|
|
Year Ended December 31, |
|
|
2018 |
|
2017 |
|
2016 |
Supplemental
disclosures: |
|
|
|
|
|
|
Cash paid for
interest |
|
$ |
17,065 |
|
|
$ |
1,889 |
|
|
$ |
1,794 |
|
|
|
|
|
|
|
|
Supplemental
noncash activity: |
|
|
|
|
|
|
Asset retirement
obligations incurred |
|
$ |
4,697 |
|
|
$ |
5,766 |
|
|
$ |
1,641 |
|
Net settlement of
related party receivable and payable |
|
— |
|
|
— |
|
|
— |
|
Changes in accrued
capital expenditures |
|
14,516 |
|
|
42,602 |
|
|
(1,434 |
) |
Changes in accounts
payable for capital expenditures |
|
7,456 |
|
|
25,541 |
|
|
— |
|
White Wolf Acquisition
escrow deposit |
|
— |
|
|
4,005 |
|
|
— |
|
Series A Preferred
Stock dividends paid-in-kind |
|
3,971 |
|
|
5,530 |
|
|
— |
|
Series A Preferred
Stock dividends declared and payable |
|
1,015 |
|
|
— |
|
|
— |
|
Series B Preferred
Stock dividends paid-in-kind |
|
6,120 |
|
|
626 |
|
|
— |
|
Series B Preferred
Stock cash dividends declared and payable |
|
2,347 |
|
|
937 |
|
|
— |
|
Series B Preferred
Stock return |
|
6,798 |
|
|
710 |
|
|
— |
|
Series B Preferred
Stock deemed dividend |
|
1,345 |
|
|
174 |
|
|
— |
|
Reconciliation of cash, cash equivalents and
restricted cash presented on the Consolidated Statement of Cash
Flows:
|
|
December 31, |
|
|
2018 |
|
2017 |
|
2016 |
Cash and cash
equivalents |
|
$ |
20,157 |
|
|
$ |
20,677 |
|
|
$ |
8,434 |
|
Restricted cash |
|
— |
|
|
4,005 |
|
|
— |
|
Total cash, cash
equivalents and restricted cash |
|
$ |
20,157 |
|
|
$ |
24,682 |
|
|
$ |
8,434 |
|
As of December 31, 2017, restricted cash was
attributable to the White Wolf Acquisition purchase price in an
escrow account. The full amount of the escrow account was released
to the sellers in March 2018.
Non-GAAP Measures
Adjusted EBITDAX
Adjusted EBITDAX is a supplemental non-GAAP
financial measure that is used by Rosehill’s management and
external users of Rosehill’s financial statements, such as industry
analysts, investors, lenders and rating agencies. The Company
defines Adjusted EBITDAX as net income (loss) before interest
expense, income taxes, depreciation, depletion, and amortization,
accretion and impairment of oil and natural gas properties, (gains)
losses on commodity derivatives excluding net cash receipts
(payments) on settled commodity derivatives, gains and losses from
the sale of assets, exploration costs, transaction costs incurred
in connection with the Transaction and other non-cash operating
items. Adjusted EBITDAX is not a measure of net income as
determined by United States generally accepted accounting
principles (“GAAP”).
Management believes Adjusted EBITDAX is useful
because it allows for more effective evaluation and comparison of
Rosehill’s operating performance and results of operations from
period to period without regard to the Company’s financing methods
or capital structure. Rosehill excludes the items listed above from
net income in arriving at Adjusted EBITDAX because these amounts
can vary substantially from company to company within the industry
depending upon accounting methods and book values of assets,
capital structures, and the method by which the assets were
acquired. Adjusted EBITDAX should not be considered as an
alternative to, or more meaningful than, net income as determined
in accordance with GAAP or as an indicator of the Company’s
operating performance or liquidity. Certain items excluded from
Adjusted EBITDAX are significant components in understanding and
assessing a company’s financial performance, such as a company’s
cost of capital and tax structure, as well as the historic costs of
depreciable assets, none of which are components of Adjusted
EBITDAX. Rosehill’s computations of Adjusted EBITDAX may not be
comparable to other similarly titled measures of other
companies.
We have provided below a reconciliation of
Adjusted EBITDAX to net loss, the most directly comparable GAAP
financial measure.
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
2018 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
(In Thousands) |
Net income (loss) |
$ |
201,944 |
|
|
$ |
(84,890 |
) |
|
$ |
(10,746 |
) |
|
$ |
117,962 |
|
|
$ |
(11,948 |
) |
Interest expense,
net |
5,597 |
|
|
5,363 |
|
|
1,258 |
|
|
19,489 |
|
|
2,532 |
|
Income tax expense |
12,639 |
|
|
22,923 |
|
|
2,340 |
|
|
18,162 |
|
|
1,690 |
|
Depreciation,
depletion, amortization and accretion |
37,031 |
|
|
47,469 |
|
|
9,941 |
|
|
141,815 |
|
|
36,091 |
|
Impairment of oil and
natural gas properties |
— |
|
|
— |
|
|
1,061 |
|
|
— |
|
|
1,061 |
|
Unrealized (gain) loss
on commodity derivatives, net |
(199,446 |
) |
|
62,315 |
|
|
18,142 |
|
|
(108,086 |
) |
|
16,553 |
|
Transaction costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,618 |
|
Stock settled
stock-based compensation |
1,203 |
|
|
2,052 |
|
|
1,070 |
|
|
6,477 |
|
|
1,245 |
|
Exploration costs |
715 |
|
|
1,348 |
|
|
539 |
|
|
4,374 |
|
|
1,747 |
|
(Gain) loss on
disposition of property and equipment |
174 |
|
|
29 |
|
|
(4,984 |
) |
|
499 |
|
|
(4,995 |
) |
Other non-cash expense,
net |
3,719 |
|
|
105 |
|
|
72 |
|
|
3,667 |
|
|
172 |
|
Adjusted EBITDAX |
$ |
63,576 |
|
|
$ |
56,714 |
|
|
$ |
18,693 |
|
|
$ |
204,359 |
|
|
$ |
46,766 |
|
PV-10
PV-10 is a non-GAAP financial measures used by
management, investors and analysts to estimate the present value,
discounted at 10% per annum, of estimated future cash flows of the
Company’s estimated proved reserves before income tax and asset
retirement obligations. Management believes that PV-10 provides
useful information to investors because it is widely used by
professional analysts and sophisticated investors in evaluating oil
and natural gas companies. Because there are many unique factors
that can impact an individual company when estimating the amount of
future income taxes to be paid, the Company believes the use of a
pre-tax measure is valuable for evaluating the Company. PV-10
should not be considered as an alternative to the standardized
measure of discounted future net cash flows as computed under
GAAP.
Reserve
values |
Twelve Months Ended December 31, |
(In thousands) |
2018 |
|
2017 |
Standardized measure of
discontinued future net cash flows |
$ |
695,180 |
|
|
$ |
350,065 |
|
Discounted future
income taxes |
47,381 |
|
|
17,808 |
|
Total proved
pre-tax PV-10 |
$ |
742,561 |
|
|
$ |
367,873 |
|
Forward-Looking Statements
This communication includes certain statements
that may constitute “forward-looking statements” for purposes of
the federal securities laws. All statements, other than statements
of historical fact included in this communication, regarding
Rosehill’s opportunities in the Delaware Basin, strategy, future
operations, financial position, estimated results of operations,
future earnings, future capital spending plans, prospects, plans
and objectives of management are forward-looking statements. When
used in this communication, the words “could,” “believe,”
“anticipate,” “intend,” “estimate,” “expect,” “project,”
“guidance,” “forecast” and similar expressions are intended to
identify forward-looking statements, although not all
forward-looking statements contain such identifying words.
You should not place undue reliance on these
forward-looking statements. Although the Company believes that the
plans, intentions and expectations reflected in or suggested by the
forward-looking statements in this communication are reasonable, no
assurance can be given that these plans, intentions or expectations
will be achieved or occur, and actual results could differ
materially and adversely from those anticipated or implied by the
forward-looking statements. Some factors that could cause actual
results to differ include, but are not limited to, the Company’s
ability to consummate the acquisition, the ultimate timing, outcome
and results of integrating the acquired assets into its business
and its ability to realize the anticipated benefits, commodity
price volatility, inflation, lack of availability of drilling and
completion equipment and services, environmental risks, drilling
and other operating risks, regulatory changes, the uncertainty
inherent in estimating oil and natural gas reserves and in
projecting future rates of production, cash flow and access to
capital, the timing of development expenditures and the other
risks and uncertainties discussed under Risk Factors in the
Company’s Form 10-K, and in other public filings with the
Securities and Exchange Commission (the “SEC”) by the Company. The
Company’s SEC filings are available publicly on the SEC’s website
at www.sec.gov. These forward-looking statements are based on
management’s current expectations and assumptions about future
events and are based on currently available information as to the
outcome and timing of future events. All forward-looking statements
speak only as of the date of this communication. Except as
otherwise required by applicable law, the Company disclaims any
duty to update any forward-looking statements, all of which are
expressly qualified by the statements in this section, to reflect
events or circumstances after the date of this communication.
Contact Information:
Gary C.
Hanna |
Craig
Owen |
Chairman
of the Board and |
Chief
Financial Officer |
Interim
Chief Executive Officer |
281-675-3400 |
281-675-3400 |
|
|
|
John
Crain |
|
Director
of Investor Relations |
|
281-675-3493 |
|
Rose Hill Acquisition (NASDAQ:ROSE)
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Rose Hill Acquisition (NASDAQ:ROSE)
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From Apr 2023 to Apr 2024