Legacy Reserves LP ("Legacy") (NASDAQ:LGCY) today announced first
quarter results for 2017 including the following Q1 highlights:
- Deployed $23.7 million of development capital as follows:-
$16.7 million on drilling 8 and completing 7 Permian horizontal
wells in Howard County, TX and Lea County, NM under our Joint
Development Agreement ("JDA")- $4.1 million on workovers across all
operating regions- $1.5 million on infrastructure and CO2- $1.4
million on non-operated properties
- Spent approximately $4.8 million acquiring additional Midland
Basin leasehold adding 24 gross potential horizontal drilling
locations.
- Generated net income of $16.4 million.
- Obtained the reaffirmation of a $600 million borrowing base
under our revolving credit facility.
Paul T. Horne, Chairman, President and Chief
Executive Officer, commented, “Our company started the year off
well as we grew oil production by 9% relative to Q4 of last year,
driven by our recent Permian horizontal drilling efforts. While LOE
was up 19% relative to Q4, the primary driver was an increase in
returning wells to production and workovers that are now economic
in an improved commodity price environment. This proactive well
work in the Permian Basin and East Texas served to further reduce
oil and gas declines for our portfolio of shallow-decline
properties, the base from which we intend to grow the business in
2017 and beyond.”
Dan Westcott, Executive Vice President and Chief
Financial Officer, commented, “We are extremely proud of our team’s
execution of the Permian horizontal development that we outlined at
year-end. Our front-end weighted capital program is concentrated on
high-return projects and we anticipate continued oil production
growth throughout the year. During the quarter, we again improved
our credit profile as we reduced our borrowings outstanding by $15
million and maintained our $600 million borrowing base. We remain
focused on the prudent management of our shallow-decline properties
and the efficient development of our horizontal Permian
potential.”
LEGACY RESERVES LP |
SELECTED FINANCIAL AND OPERATING
DATA |
|
|
Three Months Ended March 31, |
|
2017 |
|
2016 |
|
(In thousands, except per unit
data) |
Revenues: |
|
|
|
Oil
sales |
$ |
49,142 |
|
|
$ |
30,320 |
|
Natural
gas liquids (NGL) sales |
5,050 |
|
|
2,453 |
|
Natural
gas sales |
45,355 |
|
|
33,086 |
|
Total
revenue |
$ |
99,547 |
|
|
$ |
65,859 |
|
Expenses: |
|
|
|
Oil and
natural gas production, excluding ad valorem taxes |
$ |
49,228 |
|
|
$ |
46,661 |
|
Ad
valorem taxes |
$ |
1,989 |
|
|
$ |
3,362 |
|
Total oil
and natural gas production |
$ |
51,217 |
|
|
$ |
50,023 |
|
Production and other taxes |
$ |
4,159 |
|
|
$ |
2,573 |
|
General
and administrative, excluding trans. related costs and LTIP
|
$ |
8,623 |
|
|
$ |
7,692 |
|
Transaction related costs |
$ |
32 |
|
|
$ |
77 |
|
LTIP
expense |
$ |
1,897 |
|
|
$ |
1,665 |
|
Total
general and administrative |
$ |
10,552 |
|
|
$ |
9,434 |
|
Depletion, depreciation, amortization and accretion |
$ |
28,796 |
|
|
$ |
36,959 |
|
Commodity derivative
cash settlements: |
|
|
|
Oil
derivative cash settlements received |
$ |
3,139 |
|
|
$ |
12,585 |
|
Natural
gas derivative cash settlements received |
$ |
1,097 |
|
|
$ |
10,192 |
|
Production: |
|
|
|
Oil
(MBbls) |
1,037 |
|
|
1,069 |
|
Natural
gas liquids (MGal) |
7,653 |
|
|
8,241 |
|
Natural
gas (MMcf) |
15,592 |
|
|
17,266 |
|
Total
(MBoe) |
3,818 |
|
|
4,143 |
|
Average
daily production (Boe/d) |
42,422 |
|
|
45,527 |
|
Average sales price per
unit (excluding derivative cash settlements): |
|
|
|
Oil price
(per Bbl) |
$ |
47.39 |
|
|
$ |
28.36 |
|
Natural
gas liquids price (per Gal) |
$ |
0.66 |
|
|
$ |
0.30 |
|
Natural
gas price (per Mcf) |
$ |
2.91 |
|
|
$ |
1.92 |
|
Combined
(per Boe) |
$ |
26.07 |
|
|
$ |
15.90 |
|
Average sales price per
unit (including derivative cash settlements): |
|
|
|
Oil price
(per Bbl) |
$ |
50.42 |
|
|
$ |
40.14 |
|
Natural
gas liquids price (per Gal) |
$ |
0.66 |
|
|
$ |
0.30 |
|
Natural
gas price (per Mcf) |
$ |
2.98 |
|
|
$ |
2.51 |
|
Combined
(per Boe) |
$ |
27.18 |
|
|
$ |
21.39 |
|
Average WTI oil spot
price (per Bbl) |
$ |
51.62 |
|
|
$ |
33.35 |
|
Average Henry Hub
natural gas index price (per MMbtu) |
$ |
3.02 |
|
|
$ |
1.99 |
|
Average unit costs per
Boe: |
|
|
|
Oil and
natural gas production, excluding ad valorem taxes |
$ |
12.89 |
|
|
$ |
11.26 |
|
Ad
valorem taxes |
$ |
0.52 |
|
|
$ |
0.81 |
|
Production and other taxes |
$ |
1.09 |
|
|
$ |
0.62 |
|
General
and administrative excluding trans. related costs and LTIP |
$ |
2.26 |
|
|
$ |
1.86 |
|
Total
general and administrative |
$ |
2.76 |
|
|
$ |
2.28 |
|
Depletion, depreciation, amortization and accretion |
$ |
7.54 |
|
|
$ |
8.92 |
|
Financial and Operating Results - Three-Month Period
Ended March 31, 2017 Compared to Three-Month Period Ended
March 31, 2016
- Production decreased 7% to 42,422 Boe/d from 45,527 Boe/d
primarily due to natural production declines and immaterial
divestitures completed in 2016. This decline was partially offset
by additional production from our drilling operations in Howard
County, Texas and Lea County, New Mexico.
- Average realized price, excluding net cash settlements from
commodity derivatives, increased 64% to $26.07 per Boe in 2017 from
$15.90 per Boe in 2016 driven by the significant increase in
commodity prices. Average realized oil price increased 67% to
$47.39 in 2017 from $28.36 in 2016 driven by an increase in the
average West Texas Intermediate ("WTI") crude oil price of $18.27
per Bbl and improving regional differentials. Average realized
natural gas price increased 52% to $2.91 per Mcf in 2017 from $1.92
per Mcf in 2016. This increase is primarily a result of the
increase in average Henry Hub natural gas index price of $1.03 per
Mcf. Finally, our average realized NGL price increased 120% to
$0.66 per gallon in 2017 from $0.30 per gallon in 2016.
- Production expenses, excluding ad valorem taxes, increased 5%
to $49.2 million in 2017 from $46.7 million in 2016, primarily due
to increased workover and repair activity across all operating
regions. On an average cost per Boe basis, production expenses
excluding ad valorem taxes increased 14% to $12.89 per Boe in 2017
from $11.26 per Boe in 2016.
- General and administrative expenses, excluding unit-based
Long-Term Incentive Plan compensation expense, increased to $8.7
million in 2017 from $7.8 million in 2016 due to settlement of
amounts owed by joint interest owners and cash-based employee
incentive compensation plans.
- Cash settlements received on our commodity derivatives during
2017 were $4.2 million compared to $22.8 million in 2016. The
decline in cash settlements received is a result of the combination
of reduced nominal volumes hedges in Q1 2017 compared to Q1 2016 as
well as lower average hedge prices.
- Total development capital expenditures increased to $23.7
million in 2017 from $4.8 million in 2016. The 2017 activity was
comprised mainly of the drilling and completion of JDA wells and
recompletions and workovers across all of our operating
regions.
Commodity Derivative Contracts
We enter into oil and natural gas derivative
contracts to help mitigate the risk of changing commodity prices.
As of May 1, 2017, we had entered into derivative agreements
to receive average NYMEX WTI crude oil prices and NYMEX Henry Hub,
NWPL, SoCal and San Juan natural gas prices as summarized
below.
WTI Crude Oil Swaps:
Time Period |
|
Volumes (Bbls) |
|
Average Price per Bbl |
|
Price Range per Bbl |
April-December
2017 |
|
137,500 |
|
|
$84.75 |
|
$84.75 |
2018 |
|
730,000 |
|
|
$55.04 |
|
$55.00 - $55.15 |
WTI Crude Oil Costless Collars. At an annual WTI
market price of $40.00, $50.00 and $65.00, the summary
positions below would result in a net price of $45.00, $50.00
and $59.02, respectively for 2017 and $47.06, $50.00 and $60.29,
respectively for 2018.
|
|
|
|
Average Long |
|
Average Short |
Time Period |
|
Volumes (Bbls) |
|
Put Price per Bbl |
|
Call Price per Bbl |
April-December
2017 |
|
1,650,000 |
|
$45.00 |
|
$59.02 |
2018 |
|
1,551,250 |
|
$47.06 |
|
$60.29 |
WTI Crude Oil 3-Way Collars. At an annual
average WTI market price of $40.00, $50.00 and $65.00,
the summary position below would result in a net price of
$65.00, $75.00 and $85.00, respectively.
|
|
|
|
Average Short Put |
|
Average Long Put |
|
Average Short Call |
Time Period |
|
Volumes (Bbls) |
|
Price per Bbl |
|
Price per Bbl |
|
Price per Bbl |
April-June 2017 |
|
36,400 |
|
|
$60.00 |
|
$85.00 |
|
$104.20 |
WTI Crude Oil Enhanced Swaps. At an annual
average WTI market price of $40.00, $50.00 and $65.00,
the summary positions below would result in a net price of
$65.85, $65.85 and $73.85, respectively
for 2017 and $65.50, $65.50 and $73.50,
respectively for 2018.
|
|
|
|
Average Long Put |
|
Average Short Put |
|
Average Swap |
Time Period |
|
Volumes (Bbls) |
|
Price per Bbl |
|
Price per Bbl |
|
Price per Bbl |
April-December
2017 |
|
137,500 |
|
|
$57.00 |
|
$82.00 |
|
$90.85 |
2018 |
|
127,750 |
|
|
$57.00 |
|
$82.00 |
|
$90.50 |
Midland-to-Cushing WTI Crude Oil Differential Swaps:
Time Period |
|
Volumes (Bbls) |
|
Average Price per Bbl |
|
Price Range per Bbl |
April-December
2017 |
|
1,650,000 |
|
|
$(0.30) |
|
$(0.75) - $(0.05) |
2018 |
|
2,190,000 |
|
|
$(1.22) |
|
$(1.25) - $(1.15) |
Natural Gas Swaps (Henry Hub):
|
|
|
|
Average |
|
Price Range per |
Time Period |
|
Volumes (MMBtu) |
|
Price per MMBtu |
|
MMBtu |
April-December
2017 |
|
20,700,000 |
|
|
$3.36 |
|
$3.29 - $3.39 |
2018 |
|
42,200,000 |
|
|
$3.25 |
|
$3.04 - $3.39 |
2019 |
|
25,800,000 |
|
|
$3.36 |
|
$3.29 - $3.39 |
Natural Gas Costless Collars (Henry Hub). At an
annual Henry Hub price of $2.50, $3.00 and $3.50, the summary
position below would result in a net price of $2.90, $3.00 and
$3.44, respectively.
|
|
|
|
Average Long Put |
|
Average Short Call |
Time Period |
|
Volumes (MMBtu) |
|
Price per MMBtu |
|
Price per MMBtu |
April-December
2017 |
|
11,000,000 |
|
$2.90 |
|
$3.44 |
Natural Gas 3-Way Collars (Henry Hub). At an
annual average Henry Hub market price of $2.50, $3.00 and
$3.50, the summary position below would result in a net price of
$3.00, $3.50 and $4.00, respectively for 2017.
|
|
Volumes |
|
Average Short Put |
|
Average Long Put |
|
Average Short Call |
Time Period |
|
(MMBtu) |
|
Price per MMBtu |
|
Price per MMBtu |
|
Price per MMBtu |
April-December
2017 |
|
3,780,000 |
|
$3.75 |
|
$4.25 |
|
$5.53 |
Natural Gas Basis Swaps (NWPL, SoCal and San Juan):
|
|
April-December 2017 |
|
|
|
|
Average |
|
|
Volumes (MMBtu) |
|
Price per MMBtu |
NWPL |
|
5,500,000 |
|
$(0.16) |
SoCal |
|
1,883,750 |
|
$0.11 |
San Juan |
|
1,883,750 |
|
$(0.10) |
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.
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 3, 2017.
Conference Call
As announced on April 19, 2017, Legacy will host
an investor conference call to discuss Legacy's results on
Thursday, May 4, 2017 at 9:00 a.m. (Central Time). Those wishing to
participate in the conference call should dial 877-266-0479. A
replay of the call will be available through Thursday, May 11,
2017, by dialing 855-859-2056 or 404-537-3406 and entering replay
code 7772631. Those wishing to listen to the live or archived
webcast via the Internet should go to the Investor Relations tab of
our website at www.LegacyLP.com. Following our prepared remarks, we
will be pleased to answer questions from securities analysts and
institutional portfolio managers and analysts; the complete call is
open to all other interested parties on a listen-only basis.
About Legacy Reserves LP
Legacy Reserves LP is a master limited
partnership headquartered in Midland, Texas, focused on the
acquisition and development of oil and natural gas properties
primarily located in the Permian Basin, East Texas, Rocky Mountain
and Mid-Continent regions of the United States. Additional
information is available at www.LegacyLP.com.
Additional Information for Holders of
Legacy Units
Although Legacy has suspended distributions to
both the 8% Series A and Series B Fixed-to-Floating Rate Cumulative
Redeemable Perpetual Preferred Units (the "Preferred Units"), such
distributions continue to accrue. Pursuant to the terms of Legacy's
partnership agreement, Legacy is required to pay or set aside for
payment all accrued but unpaid distributions with respect to the
Preferred Units prior to or contemporaneously with making any
distribution with respect to Legacy's units. Accruals of
distributions on the Preferred Units are treated for tax purposes
as guaranteed payments for the use of capital that will generally
be taxable to the holders of such Preferred Units as ordinary
income even in the absence of contemporaneous distributions.
In addition, Legacy’s unitholders, just like
unitholders of other master limited partnerships, are allocated
taxable income irrespective of cash distributions paid. Because
Legacy’s unitholders are treated as partners that are allocated a
share of Legacy’s taxable income irrespective of the amount of
cash, if any, distributed by Legacy, unitholders will be required
to pay federal income taxes and, in some cases, state and local
income taxes on their share of Legacy’s taxable income, including
its taxable income associated with cancellation of debt ("COD
income") or a disposition of property by Legacy, even if they
receive no cash distributions from Legacy. As of January 21, 2016,
Legacy has suspended all cash distributions to unitholders and
holders of the Preferred Units. Legacy may engage in transactions
to de-lever the Partnership and manage its liquidity that may
result in the allocation of income and gain to its unitholders
without a corresponding cash distribution. For example, during the
year ended December 31, 2016, Legacy closed 26 divestitures
generating net proceeds of $97.4 million, and Legacy may sell
additional assets and use the proceeds to repay existing debt or
fund capital expenditures, in which case Legacy’s unitholders may
be allocated taxable income and gain resulting from the sale, all
or a portion of which may be subject to recapture rules and taxed
as ordinary income rather than capital gain, without receiving a
cash distribution. Further, Legacy may pursue other opportunities
to reduce its existing debt, such as debt exchanges, debt
repurchases, or modifications that would result in COD income being
allocated to its unitholders as ordinary taxable income. The
ultimate effect of any income allocations will depend on the
unitholder's individual tax position with respect to that holder's
units, including the availability of any current or suspended
passive losses that may offset some portion of the COD income
allocable to a unitholder. Unitholders are encouraged to consult
their tax advisors with respect to the consequences of potential
transactions that may result in income and gain to unitholders.
Additionally, if Legacy’s unitholders, just like
unitholders of other master limited partnerships, sell any of their
units, they will recognize gain or loss equal to the difference
between the amount realized and their tax basis in those units.
Prior distributions to unitholders that in the aggregate exceeded
the cumulative net taxable income they were allocated for a unit
decreased the tax basis in that unit, and will, in effect, become
taxable income to Legacy’s unitholders if the unit is sold at a
price greater than their tax basis in that unit, even if the price
received is less than original cost. A substantial portion of the
amount realized, whether or not representing gain, may be ordinary
income to Legacy’s unitholders due to the potential recapture
items, including depreciation, depletion and intangible
drilling.
Cautionary Statement Relevant to
Forward-Looking Information
This press release contains forward-looking
statements relating to our operations that are based on
management's current expectations, estimates and projections about
its operations. 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 statements are not guarantees of
future performance and are subject to certain risks, uncertainties
and other factors, some of which are beyond our control and are
difficult to predict. Among the important factors that could cause
actual results to differ materially from those in the
forward-looking statements are: 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 our annual and quarterly reports filed with the SEC.
Therefore, actual outcomes and results may differ materially from
what is expressed or forecasted in such forward-looking statements.
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.
LEGACY RESERVES LP |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(UNAUDITED) |
|
|
Three Months Ended |
|
|
March 31, |
|
|
2017 |
|
2016 |
|
|
(In thousands, except per unit
data) |
Revenues: |
|
|
|
|
Oil
sales |
|
$ |
49,142 |
|
|
$ |
30,320 |
|
Natural
gas liquids (NGL) sales |
|
5,050 |
|
|
2,453 |
|
Natural
gas sales |
|
45,355 |
|
|
33,086 |
|
Total
revenues |
|
99,547 |
|
|
65,859 |
|
|
|
|
|
|
Expenses: |
|
|
|
|
Oil and
natural gas production |
|
51,217 |
|
|
50,023 |
|
Production and other taxes |
|
4,159 |
|
|
2,573 |
|
General
and administrative |
|
10,552 |
|
|
9,434 |
|
Depletion, depreciation, amortization and accretion |
|
28,796 |
|
|
36,959 |
|
Impairment of long-lived assets |
|
8,062 |
|
|
15,447 |
|
Gain on
disposal of assets |
|
(5,524 |
) |
|
(31,701 |
) |
Total
expenses |
|
97,262 |
|
|
82,735 |
|
|
|
|
|
|
Operating
income (loss) |
|
2,285 |
|
|
(16,876 |
) |
|
|
|
|
|
Other income
(expense): |
|
|
|
|
Interest
income |
|
1 |
|
|
38 |
|
Interest
expense |
|
(20,133 |
) |
|
(25,176 |
) |
Gain on
extinguishment of debt |
|
— |
|
|
130,804 |
|
Equity in
income (loss) of equity method investees |
|
11 |
|
|
(5 |
) |
Net gains
on commodity derivatives |
|
34,669 |
|
|
17,038 |
|
Other |
|
(40 |
) |
|
(94 |
) |
Incomes before income taxes |
|
16,793 |
|
|
105,729 |
|
Income tax expense |
|
(421 |
) |
|
(400 |
) |
Net
income |
|
$ |
16,372 |
|
|
$ |
105,329 |
|
Distributions to Preferred unitholders |
|
(4,750 |
) |
|
(3,958 |
) |
Net
income attributable to unitholders |
|
$ |
11,622 |
|
|
$ |
101,371 |
|
|
|
|
|
|
Income
per unit - basic and diluted |
|
$ |
0.16 |
|
|
$ |
1.47 |
|
Weighted
average number of units used in computing net income per unit
- |
|
|
|
|
Basic and
diluted |
|
72,103 |
|
|
68,964 |
|
LEGACY RESERVES LP |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(UNAUDITED) |
|
ASSETS |
|
|
March 31, 2017 |
|
December 31, 2016 |
|
|
(In thousands) |
Current assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
1,860 |
|
|
$ |
2,555 |
|
Accounts
receivable, net: |
|
|
|
|
Oil and
natural gas |
|
45,890 |
|
|
43,192 |
|
Joint
interest owners |
|
21,116 |
|
|
23,414 |
|
Other |
|
2 |
|
|
2 |
|
Fair
value of derivatives |
|
14,080 |
|
|
6,162 |
|
Prepaid
expenses and other current assets |
|
10,343 |
|
|
7,447 |
|
Total current assets |
|
93,291 |
|
|
82,772 |
|
Oil and natural gas
properties using the successful efforts method, at cost: |
|
|
|
|
Proved
properties |
|
3,328,625 |
|
|
3,305,856 |
|
Unproved
properties |
|
18,518 |
|
|
13,448 |
|
Accumulated depletion, depreciation, amortization and
impairment |
|
(2,169,324 |
) |
|
(2,137,395 |
) |
|
|
1,177,819 |
|
|
1,181,909 |
|
Other property and
equipment, net of accumulated depreciation and amortization of
$10,742 and $10,412, respectively |
|
3,154 |
|
|
3,423 |
|
Operating rights, net
of amortization of $5,468 and $5,369, respectively |
|
1,548 |
|
|
1,648 |
|
Fair value of
derivatives |
|
31,631 |
|
|
20,553 |
|
Other assets |
|
7,996 |
|
|
8,874 |
|
Investments in equity
method investees |
|
658 |
|
|
647 |
|
Total assets |
|
$ |
1,316,097 |
|
|
$ |
1,299,826 |
|
LIABILITIES AND PARTNERS' DEFICIT |
Current
liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
4,193 |
|
|
$ |
9,092 |
|
Accrued
oil and natural gas liabilities |
|
72,367 |
|
|
53,248 |
|
Fair
value of derivatives |
|
1,555 |
|
|
9,743 |
|
Asset
retirement obligation |
|
2,980 |
|
|
2,980 |
|
Other |
|
20,003 |
|
|
11,546 |
|
Total
current liabilities |
|
101,098 |
|
|
86,609 |
|
Long-term debt |
|
1,148,151 |
|
|
1,161,394 |
|
Asset retirement
obligation |
|
271,049 |
|
|
269,168 |
|
Fair value of
derivatives |
|
— |
|
|
4,091 |
|
Other long-term
liabilities |
|
643 |
|
|
643 |
|
Total liabilities |
|
1,520,941 |
|
|
1,521,905 |
|
Commitments and
contingencies |
|
|
|
|
Partners' deficit |
|
|
|
|
Series A
Preferred equity - 2,300,000 units issued and outstanding at March
31, 2017 and December 31, 2016 |
|
55,192 |
|
|
55,192 |
|
Series B
Preferred equity - 7,200,000 units issued and outstanding at March
31, 2017 and December 31, 2016 |
|
174,261 |
|
|
174,261 |
|
Incentive
distribution equity - 100,000 units issued and outstanding at March
31, 2017 and December 31, 2016 |
|
30,814 |
|
|
30,814 |
|
Limited
partners' deficit - 72,151,013 and 72,056,097 units issued and
outstanding at March 31, 2017 and December 31, 2016,
respectively |
|
(464,969 |
) |
|
(482,200 |
) |
General
partner's deficit (approximately 0.03%) |
|
(142 |
) |
|
(146 |
) |
Total
partners' deficit |
|
(204,844 |
) |
|
(222,079 |
) |
Total liabilities and
partners' deficit |
|
$ |
1,316,097 |
|
|
$ |
1,299,826 |
|
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 publicly traded partnerships in the
industry. Adjusted EBITDA may not be comparable to similarly titled
measures of other publicly traded limited partnerships or limited
liability 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 income (loss) to Adjusted EBITDA:
|
Three Months Ended |
|
March 31, |
|
2017 |
|
2016 |
|
(In thousands) |
Net
income |
$ |
16,372 |
|
|
$ |
105,329 |
|
Plus: |
|
|
|
Interest
expense |
20,133 |
|
|
25,176 |
|
Gain on
extinguishment of debt |
— |
|
|
(130,804 |
) |
Income
tax expense |
421 |
|
|
400 |
|
Depletion, depreciation, amortization and accretion |
28,796 |
|
|
36,959 |
|
Impairment of long-lived assets |
8,062 |
|
|
15,447 |
|
Gain on
disposal of assets |
(5,524 |
) |
|
(31,701 |
) |
Equity in
(income) loss of equity method investees |
(11 |
) |
|
5 |
|
Unit-based compensation expense |
1,897 |
|
|
1,665 |
|
Minimum
payments received in excess of overriding royalty interest
earned(1) |
445 |
|
|
802 |
|
Net gains
on commodity derivatives |
(34,669 |
) |
|
(17,038 |
) |
Net cash
settlements received on commodity derivatives |
4,236 |
|
|
22,777 |
|
Transaction related expenses |
32 |
|
|
77 |
|
Adjusted
EBITDA |
$ |
40,190 |
|
|
$ |
29,094 |
|
(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.
CONTACT:
Legacy Reserves LP
Dan Westcott
Executive Vice President and Chief Financial Officer
432-689-5200
Legacy Reserves Inc. (MM) (NASDAQ:LGCY)
Historical Stock Chart
From Mar 2024 to Apr 2024
Legacy Reserves Inc. (MM) (NASDAQ:LGCY)
Historical Stock Chart
From Apr 2023 to Apr 2024