Lilis Energy, Inc. (NYSE American: LLEX), an exploration and
development company operating in the Permian Basin of West Texas
and southeastern New Mexico, today reported financial and operating
results for the first quarter of 2019.
First Quarter 2019
Highlights
- Increased net sales production volumes by 75% to 6,058 BOE/d,
including a 52% increase in crude oil production to 3,530 BOE/d,
for the quarter ended March 31, 2019, as compared to the same
period in 2018
- Sales volumes were 72% Liquids, including 58% crude oil
- Significant technical advancements in the third Bone Spring
formation and choke management protocol, resulting in improved
production rates on previous and recent wells
- Reduced crude transportation costs from approximately $5.15 per
Bbl as of December 31, 2018, to approximately $0.75 per Bbl in
March 2019, through continued focus on improvements in
infrastructure and sales agreements
- Realized pricing for March was 93% of WTI, with an approximate
$16.50 per barrel increase in realized oil price, as compared to
January
- Realized pricing for the full quarter was 84% of WTI, with
projected realized pricing between 90% - 95% in the second
quarter
- Reduced salt-water disposal costs from $4.43 per BOE, for the
three months ended March 31, 2018, to $2.98 per BOE as of March
2019, through continued improvements in infrastructure and sales
agreements
- Increased proved reserves by 298% to approximately 44 MMBOE,
68% of which are Liquids (51% oil and 17% NGLs), as of March 31,
2019, as compared to March 31, 2018
- Recapitalization completed in the first quarter improved
leverage ratios and resulted in a 16% increase in borrowing base
from $108 million to $125 million
- Accelerated capital expenditures to bring new wells to sales in
the second and third quarter, with the expectation of realizing the
benefits of increased realized pricing, the Company reaffirms cash
flow neutrality expected in the second half of 2019
First Quarter 2019 Summary
Production for first quarter 2019 was 545,217
barrels of oil equivalent (Boe), or an average of 6,058 Boe per day
(Boep/d), an increase of 75% from first quarter 2018. Average daily
oil production for first quarter 2019 totaled 3,530 barrels per day
(MBop/d), an increase of 52% from first quarter 2018. Natural gas
liquids (NGL) and natural gas production for first quarter 2019
totaled 74,446 barrels (Bbls) and 918 million cubic feet (MMcf),
representing respective 116% and 122% increases from first quarter
2018.
Lilis’ average realized price for oil, NGLs, and
natural gas for first quarter 2019, excluding the effect of
commodity derivatives, was $46.28 per Bbl, $19.75 per Bbl, and
$1.66 per Mcf, respectively, compared to $60.40 per Bbl, $26.60 per
Bbl, and $2.15 per Mcf, respectively, for first quarter 2018.
Net loss attributable to common stockholders was
$27.5 million, or $0.35 per basic and diluted share, for the three
months ended March 31, 2019, compared to a net gain of $10.6
million, or $0.14 per basic and $0.17 per diluted share, for the
three months ended March 31, 2018. Total revenue was $17.7 million
for the three months ended March 31, 2019, an increase of 23% over
the comparable quarter in 2018. The Company generated an adjusted
EBITDAX (non-GAAP) of $6.5 million for the quarter, a 45% increase,
compared to $4.5 million in the first quarter of 2018.
Capital Expenditure
Overview
The Company continues the strategy of
delineating and de-risking its acreage position, further validating
the strength of its Delaware Basin position. As a result of the
decline in commodity prices in late 2018, the Company reduced
drilling and completion activity resulting in a backlog of six
drilled but uncompleted (DUC) wells.
As a result, the Company decided to front-load a
portion of its 2019 capital expenditure budget in the first and
second quarter to accelerate the completion of 2018 DUCs, in
addition to the 2019 drilling program. In doing so, the Company
believes it will maximize production revenues associated with
existing DUC wells in the second and third quarters of
2019.
The Company believes these completions will
coincide with significant uplifts in realized pricing and margin
enhancements that will also be recognized during the second and
third quarters.
During the three months ended March 31,
2019, total capital expenditure cost incurred was $33 million,
including $24.5 million related to drilling and completions. Total
capital expenditure is comprised of the following:
- approximately $19 million related to six 2018 DUCs
- approximately $5.5 million related to the 2019 drilling
program
- approximately $8.9 million related to non-recurring additional
capital expenses
Non-recurring expenses are expected to provide
significant future benefits to the Company, and include notably the
Panther pilot well in the eastern acreage, fresh water wells, and
new and upgraded facilities with advanced supervisory control and
data acquisition (SCADA) systems’ production monitoring.
While production and revenue are expected to
improve as DUCs are turned to sales, management continues to
evaluate and closely monitor the 2019 capital program with the goal
of continuing to improve capital expenditure returns. Several wells
that accounted for significant capital spending during the first
quarter have begun flowing to production. Capital spending in the
second quarter will focus on completing the remaining DUCs,
including the two Kudu wells, which are currently being drilled and
completed. The Company remains on track towards cash flow
neutrality in the second half of 2019 with its one rig program.
However, we are evaluating adding a second rig in the back half of
the year as our fundamentals and technology continue to
improve.
Current Operational
Overview
Four of the remaining five DUC wells, the Haley
1H, Haley 2H, NW Axis 1H and NE Axis 2H, will be converted to
production during the second quarter of 2019. The Haley 1H and
Haley 2H began flowing to sales in April 2019, and the NE Axis 2H
has finished completion with expected sales in June. Additionally,
the two Kudu wells are currently drilling and completing and are
expected to be flowing to sales in June.
A detailed overview of Lilis’ current drilling
operations and recent well activity can be found in the earnings
presentation posted on the Company website.
Recent Well Results:
- Haley #1H – Wolfcamp A (1
mile lateral): ○ IP24-hour rate of 1,422 Boepd,
1,124 Bopd (90% liquids, 79% oil), or 317 Boepd per 1,000 lateral
ft.
- Haley #2H – Wolfcamp A (1
mile lateral):○ IP24-hour rate of 1,048 Boepd, 639
Bopd (81% liquids, 61% oil), or 234 Boepd per 1,000 lateral
ft.
- Oso #1H – Upper Wolfcamp A
(1 ½ mile lateral):○ The well remains in the clean-up
phase and has not reached its peak rate○ Current 24-hour rate
of 910 Boepd, 500 Bopd (65% liquids, 55% oil), with peak rate
expected in June
Second Quarter 2019
Guidance
The strategic decision to front-load a portion
of the Company’s 2019 capital expenditure budget in the first
quarter was made to maximize production revenues, by coinciding the
completion of 2018 DUCS and the 2019 new drills with anticipated
significant uplifts in realized pricing and margin enhancements. As
a result, the Company is increasing its full-year CAPEX guidance to
$60 - $70 million. In addition to providing second quarter
guidance, the Company is reaffirming full-year guidance metrics and
increasing the top end oil production from 4.6 MBbls/d to 4.8
MBbls/d.
|
Second Quarter and Year-end 2019 Guidance |
|
|
1Q'19A |
2Q'19E |
2019E |
Oil Production (MBbls/d) |
3.5 |
3.6 - 3.8 |
4.2 ─ 4.8 |
NGL Production (MBbls/d) |
0.8 |
0.8 ─ 1.0 |
1.0 ─ 1.2 |
Liquids Production (MBbls/d) |
4.3 |
4.4 ─
4.8 |
5.2 ─
5.8 |
|
|
|
|
Total Capital Expenditure ($MM) (1) |
$33 |
$15 ─ $20 |
$60 ─ $70 |
|
(1) Includes non-recurring expenditures of $8.9 million |
|
Conference Call
Management will host a conference call on
Friday, May 10, 2019 at 11:00 a.m. EDT to review financial results
and provide an update on corporate developments. Following
management’s formal remarks, there will be a question and answer
session.
Participants are asked to preregister for the
call through the following link: http://dpregister.com/10131051.
Please note that registered participants will receive their dial in
number upon registration and will dial directly into the call
without delay. Those without internet access or who are unable to
pre-register may dial in by calling: 1-844-695-5520 (domestic),
1-412-902-6761 (international). All callers should dial in
approximately 10 minutes prior to the scheduled start time and ask
to be joined into the Lilis Energy Inc. call. The conference call
will also be available through a live webcast, which can be
accessed via the following link:
https://services.choruscall.com/links/llex190510.html, which is
also available through the Company’s website at:
http://investors.lilisenergy.com/events-presentations. A webcast
replay of the call will be available approximately one hour after
the end of the call through August 10, 2019. The replay can be
accessed through the above links.
About Lilis Energy, Inc.
Lilis Energy, Inc. is a Houston-based
independent oil and gas exploration and production company that
operates in the Permian’s Delaware Basin, considered among the
leading resource plays in North America. Lilis’ current total net
acreage in the Permian Basin is over 20,000 acres. Lilis Energy's
near-term E&P focus is to grow current reserves and production
and pursue strategic acquisitions in its core areas. For more
information, please visit www.lilisenergy.com.
Forward-Looking Statements:
This press release contains forward-looking
statements within the meaning of the federal securities laws. Such
statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of the Company.
These risks include, but are not limited to, our ability to
replicate the results described in this release for future wells;
the ability to finance our continued exploration, drilling
operations and working capital needs; all the other uncertainties,
costs and risks involved in exploration and development activities;
and the other risks identified in the Company’s Annual Report on
Form 10-K and its other filings with the Securities and Exchange
Commission. Investors are cautioned that any such statements are
not guarantees of future performance and that actual results or
developments may differ materially from those projected in the
forward-looking statements. The forward-looking statements in this
press release are made as of the date hereof, and the Company does
not undertake any obligation to update the forward-looking
statements as a result of new information, future events or
otherwise.
Forward-looking statements regarding expected
production levels are based upon our estimates of the successful
completion of drilled wells on schedule. Actual sales production
rates from our wells can vary considerably from tested initial
production (IP) rates and are subject to natural decline rates over
the life of the well.
Contact:
Wobbe PloegsmaV.P. Capital Markets &
Investor Relations210-999-5400, ext. 31
|
Condensed Consolidated Statement of Operations
Information: |
|
|
|
For Three Months EndedMarch
31, |
|
|
2019 |
|
2018 |
($ in thousands, except share and per share data) |
|
|
|
|
|
|
|
|
Oil and gas revenue |
|
$ |
17,697 |
|
|
$ |
14,395 |
|
Operating expenses: |
|
|
|
|
Production costs |
|
4,764 |
|
|
3,263 |
|
Gathering, processing and transportation |
|
1,178 |
|
|
462 |
|
Production taxes |
|
906 |
|
|
850 |
|
General and administrative |
|
9,679 |
|
|
10,464 |
|
Depreciation, depletion, amortization and accretion |
|
8,153 |
|
|
4,641 |
|
Total operating expenses |
|
24,680 |
|
|
19,680 |
|
Operating income (loss) |
|
(6,983 |
) |
|
(5,285 |
) |
Other income (expense): |
|
|
|
|
Other income (expense) |
|
31 |
|
|
1 |
|
Loss from commodity derivative |
|
(10,577 |
) |
|
(1,769 |
) |
Fair value change in derivative instruments |
|
(335 |
) |
|
28,388 |
|
Interest expense |
|
(4,828 |
) |
|
(9,089 |
) |
Total other income
(expense) |
|
(15,709 |
) |
|
17,531 |
|
Net loss before income
tax |
|
(22,692 |
) |
|
12,246 |
|
Paid-in-kind dividends on
preferred stock |
|
(4,825 |
) |
|
(1,652 |
) |
Net income (loss) |
|
$ |
(27,517 |
) |
|
$ |
10,594 |
|
|
|
|
|
|
Net loss per common
share: |
|
|
|
|
Basic |
|
$ |
(0.35 |
) |
|
$ |
0.14 |
|
Diluted |
|
$ |
(0.35 |
) |
|
$ |
(0.17 |
) |
|
|
|
|
|
|
|
Weighted average
common shares outstanding: |
|
|
|
|
Basic |
|
77,916,448 |
|
|
54,702,617 |
|
Diluted |
|
77,916,448 |
|
|
78,502,197 |
|
Condensed Consolidated Balance Sheet
Information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019 |
|
December 31, 2018 |
|
|
|
|
|
|
|
($ in thousands, except share and per share data) |
Cash and cash equivalents |
|
$ |
11,228 |
|
|
$ |
21,137 |
|
Accounts receivables, net of
allowance of $25 and $39, respectively |
|
|
19,288 |
|
|
|
20,546 |
|
Derivative instruments |
|
|
— |
|
|
|
2,551 |
|
Prepaid expenses and other
current assets |
|
|
2,419 |
|
|
|
1,851 |
|
Total current
assets |
|
|
32,935 |
|
|
|
46,085 |
|
Total oil and natural gas
properties, net |
|
|
445,119 |
|
|
|
430,903 |
|
Total
assets |
|
$ |
485,666 |
|
|
$ |
480,773 |
|
Total current liabilities |
|
$ |
78,461 |
|
|
$ |
76,967 |
|
Total long-term
liabilities |
|
|
153,040 |
|
|
|
217,449 |
|
Total
liabilities |
|
|
231,501 |
|
|
|
294,416 |
|
Series C-1 Participating
Preferred stock10,000,000 shares authorized, 100,000
shares issued and outstanding with a stated value of $1,007,
per share, as of March 31, 2019. |
|
|
72,021 |
|
|
|
106,774 |
|
Series C-2 Participating
Preferred stock10,000,000 shares authorized, 25,000
shares issued and outstanding with a stated value of $1,007,
per share, as of March 31, 2019. |
|
|
16,894 |
|
|
|
25,522 |
|
Series D Participating
Preferred stock10,000,000 shares authorized, 39,254
issued and outstanding with a stated value of $1,006, per
share, as of March 31, 2019. |
|
|
26,503 |
|
|
|
40,729 |
|
Series E Convertible Preferred
stock 10,000,000 shares authorized, 60,000
issued and outstanding with a stated value of $1,006, per
share, as of March 31, 2019 |
|
|
62,486 |
|
|
|
— |
|
Series F Participating
Preferred stock 10,000,000 shares authorized, 55,000
issued and outstanding with a stated value of $1,007, per
share, as of March 31, 2019 |
|
|
47,053 |
|
|
|
— |
|
Total stockholders’ equity
(91,037,902 and 71,182,016 shares issued and
outstanding as of March 31, 2019 and December 31, 2018,
respectively) |
|
|
29,208 |
|
|
|
13,332 |
|
Total liabilities and
stockholders’ equity |
|
$ |
485,666 |
|
|
$ |
480,773 |
|
Condensed Consolidated Statement of Cash Flows
Information: |
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
2019 |
|
2018 |
|
|
|
|
|
|
|
($ in thousands) |
Net cash provided by
(used in): |
|
|
|
|
|
Operating activities |
|
$ |
(10,498 |
) |
|
$ |
(4,058 |
) |
Investing activities |
|
(28,709 |
) |
|
(90,289 |
) |
Financing activities |
|
29,298 |
|
|
112,519 |
|
Non-GAAP Adjusted EBITDAX |
|
|
|
For the Three Months Ended |
|
|
March 31, |
|
|
|
|
|
|
|
2019 |
|
2018 |
|
|
|
|
|
Reconciliation of
Adjusted EBITDAX: |
|
|
Net income (loss) |
|
$ |
(22,692 |
) |
|
$ |
12,246 |
|
Non-cash equity-based
compensation |
|
3,645 |
|
|
3,031 |
|
Interest expense, net |
|
4,828 |
|
|
9,089 |
|
Depreciation, depletion,
amortization and accretion |
|
8,153 |
|
|
4,641 |
|
Loss (gain) from fair value
changes of debt conversion and warrant derivatives |
|
335 |
|
|
(28,388 |
) |
Unrealized loss from commodity
derivatives, net |
|
8,976 |
|
|
1,131 |
|
Other expense (income),
net |
|
(31 |
) |
|
(1 |
) |
Non-recurring expenses |
|
3,251 |
|
|
2,721 |
|
Adjusted EBITDAX |
|
$ |
6,466 |
|
|
$ |
4,470 |
|
|
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