Item 7.01. Regulation
FD Disclosure
The information contained
in this Current Report on Form 8-K is being furnished by Carbon Energy Corporation (the “Company” or “Carbon”)
pursuant to Item 7.01 of Form 8-K in satisfaction of the public disclosure requirements of Regulation FD.
On June 14, 2018, at the
Company’s Annual Meeting of Stockholders, a slide presentation regarding the activities of the Company will be presented
by the Company. The slide presentation can be accessed by going to the Company’s website,
www.carbonenergycorp.com/presentations/
.
The slides contain
certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). Except for historical information, statements made in the slide presentation, including those relating to the
Company’s strategies, estimated and anticipated production, expenditures, infrastructure, estimated costs, number of
wells to be drilled, estimated reserves, reserve potential, recoverable reserves, and financial position are forward-looking
statements as defined by the Securities and Exchange Commission. These statements are based on assumptions and estimates that
management believes are reasonable based on currently available information; however, management’s assumptions and the
Company’s future performance and activities are subject to a wide range of business risks and uncertainties and there
is no assurance that these goals and projections can or will be met or that such activities will be undertaken. Any number of
factors could cause actual results to differ materially from those in the forward-looking statements, including, but not
limited to, the volatility of oil and gas prices, the costs and results of drilling and operations, the timing of production,
mechanical and other inherent risks associated with oil and gas production, weather, the availability of drilling equipment,
changes in interest rates, litigation, uncertainties about reserve estimates, environmental risks, and availability of
capital to implement any such activities.
We caution you not to place undue reliance on
these forward-looking statements, which speak only as of the date reflected in the slide presentation, and we
undertake
no obligation to publicly update or revise any forward-looking statements. Further information on risks and uncertainties is
available in the Company’s filings with the Securities and Exchange Commission, which are incorporated by
reference.
Actual quantities of oil
and gas that may be ultimately recovered from Carbon’s interests will differ substantially from our estimates. Factors affecting
ultimate recovery include the scope of Carbon’s drilling program, which will be directly affected by the availability of
capital, drilling and production costs, commodity prices, availability of drilling services and equipment, drilling results, lease
expirations, transportation constraints, regulatory approvals, field spacing rules, recoveries of gas in place, length of horizontal
laterals, actual drilling results, and geological and mechanical factors affecting recovery rates and other factors. Estimates
of resource potential may change significantly as development of our resource plays provides additional data. Investors are urged
to consider closely the disclosure in our annual report on Form 10-K containing the disclosure for the year ended December 31,
2017 available upon request to: Corporate Secretary, Carbon Energy Corporation, 1700 Broadway, Suite 1170, Denver, Colorado 80290;
tel: (720) 407-7043. You can also obtain this Form 10-K from the SEC’s website,
http://www.sec.gov
.
Non-GAAP Measures
The slide presentation
contains certain references to EBITDA and adjusted EBITDA value, which is a non-GAAP financial measure, as defined under Regulation
G of the rules and regulations of the SEC.
Adjusted EBITDA
“EBITDA” and
“Adjusted EBITDA” are non-GAAP financial measures. We define EBITDA as net income (loss) before interest expense, taxes,
depreciation, depletion and amortization.
We define Adjusted EBITDA as EBITDA prior to accretion
of asset retirement obligations, ceiling test write downs of oil and gas properties, non-cash stock-based compensation expense,
non-cash warrant derivative gains and losses and the gain or loss on
sold investments or properties. EBITDA and Adjusted
EBITDA is consolidated including non-controlling interests and as used and defined by us, may not be comparable to similarly titled
measures employed by other companies and are not a measure of performance calculated in accordance with GAAP. EBITDA and Adjusted
EBITDA should not be considered in isolation or as a substitute for operating income, net income or loss, cash flow provided by
or used in operating, investing and financing activities or other income or cash flow statement data prepared in accordance with
GAAP. EBITDA and Adjusted EBITDA provide no information regarding a company’s capital structure, borrowings, interest costs,
capital expenditures, and working capital movement or tax position. EBITDA and Adjusted EBITDA do not represent funds available
for discretionary use because those funds are required for debt service, capital expenditures, working capital, income taxes, franchise
taxes, exploration expenses, and other commitments and obligations. However, our management team believes EBITDA and Adjusted EBITDA
are useful to an investor in evaluating our operating performance because these measures:
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are widely used by investors in the oil and natural gas industry to measure a company’s operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors; and
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help investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our capital structure from our operating structure; and are used by our management team for various purposes, including as a measure of operating performance, in presentations to our board of directors, as a basis for strategic planning and forecasting and by our lenders pursuant to covenants under our credit facilities.
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There are significant limitations
to using EBITDA and Adjusted EBITDA as a measure of performance, including the inability to analyze the effect of certain recurring
and non-recurring items that materially affect our net income or loss, the lack of comparability of results of operations of different
companies and the different methods of calculating Adjusted EBITDA reported by different companies.
In accordance with General
Instructions B.2 and B.6 of Form 8-K, the information included in this Current Report on Form 8-K, shall not be deemed “filed”
for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference into any filing made by the Company under the Exchange Act or the Securities Act except as shall be expressly
set forth by specific reference in such a filing.
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