Berry Corporation (bry) (NASDAQ: BRY) (“bry” or the “Company”)
today reported net loss of $21 million or $0.27 per diluted share
and Adjusted Net Income(1) of $6 million or $0.07 per diluted share
for the first quarter of 2021. The Board of Directors also declared
a quarterly dividend of $0.04 per share for the second quarter of
2021.
Quarterly Highlights
- Generated Adjusted EBITDA(1) of $52
million
- Reduced non-energy OpEx an
additional 11% sequentially
- Increased sequential oil production
3% and total production 2% to 27,100 boe/d
- Improving sustainable capital
efficiency on development program
- Generated $16 million of Levered
Free Cash Flow(1)
- Ended the quarter with $99 million
in cash
_______(1) Please see “Non-GAAP Financial
Measures and Reconciliations” later in this press release for a
reconciliation and more information on these
Non-GAAP measures.
“We had a strong quarter. By managing the things
within our control, we realized growth in our production on
improving capital efficiency and record low non-energy operating
expenses by enhancing our cost structure,” said Trem Smith, Berry
board chair and chief executive officer. “Furthermore, our results
underscore the strength of and success of our natural gas hedging
program. As unprecedented cold weather covered much of the central
and southern parts of the U.S. in February, our natural gas hedges
allowed us to sustain our steam operations despite natural gas
prices in California exceeding $100 per mmbtu for a few days. Our
2020 and first quarter results demonstrate that we are well on
track to deliver on the commitments we made at the start of the
historic downturn early last year.
“More recently, on April 23, Governor Newsom
directed CalGEM to initiate regulatory action to end the issuance
of new permits for hydraulic fracturing by January 2024. This
directive does not materially impact bry’s operations and, as
defined, does not affect our current or future thermal diatomite
production. However, this proposal is not in the best interest of
Californians and does not support the state’s 2045 net carbon
neutrality goal. Studies, including those sponsored by the
Governor, show that Californians will still demand transportation
fuels well past 2045. Therefore, this ban just shifts the state’s
supply source from local producers, who provide significant
economic value to our communities and operate using rigorous
environmental and safety standards, to foreign oil producers that
do not contribute to our economy nor share our social or
environmental standards. This year bry will pay $40 million in
greenhouse gas (“GHG”) credits, and the industry as a whole pays
more than $1 billion annually to help fund California’s GHG
programs. We support the state’s goal of carbon neutrality by 2045,
but to achieve this we need to work together and find solutions
that are equitable and affordable for everyone,” added Smith.
First Quarter 2021 Results
Adjusted EBITDA(1), on a hedged basis, was $52
million in the first quarter 2021, compared to $54 million in the
fourth quarter 2020. The impact of lower hedged oil prices was
partially offset by higher natural gas sales in the Rockies, as a
result of acutely higher prices from the shortage of natural gas
caused by Winter Storm Uri that affected much of the nation. The
Company also benefited from improved production and lower operating
expenses and general and administrative expenses.
The Company increased average daily production
2% to 27,100 boe/d for the first quarter of 2021 compared to the
fourth quarter of 2020, as a result of its 2021 development
program. The Company increased oil production for the quarter by 3%
to 23,900 bbl/d over fourth quarter 2020. The Company's California
production of 21,900 boe/d for the first quarter of 2021 also
increased 3% from the fourth quarter 2020.
The Company-wide hedged realized oil price for
the first quarter 2021 was $44.81 per bbl, a 21% decrease from the
fourth quarter. The financial hedges for oil sales in the first
quarter 2021 had an unfavorable impact of $12.08 per bbl on the
realized price. The California average oil price before hedges for
the first quarter was $57.34 per bbl, or 94% of Brent, which was
37% higher than the $41.74 per bbl in the fourth quarter 2020,
which was 92% of Brent.
OpEx consists of lease operating expenses
(“LOE”), third-party revenues and expenses from electricity
generation, transportation and marketing activities, as well as the
effect of derivative settlements (received or paid) for gas
purchases, and excludes taxes other than income taxes.
On a hedged basis, operating expenses decreased
by 24% or $4.66 per boe to $14.40 for the first quarter 2021,
compared to $19.06 for the fourth quarter 2020. During the first
quarter the Company continued its cost savings efforts with
non-energy operating expenses down an additional $1.61 per boe, or
11%, compared to the fourth quarter of 2020. The decreased
operating expenses was also partially due to increased electricity
revenues resulting from the higher gas prices. The Company's gas
purchase hedges were effective at protecting operating expenses
against the higher gas prices. Additionally, improved steam
management had a positive effect on overall costs without
negatively impacting production.
General and administrative expenses decreased by
$3 million, or 16%, to approximately $17 million for the first
quarter 2021, compared to the fourth quarter 2020. Adjusted General
and Administrative Expenses(1), which exclude non-cash stock
compensation costs and nonrecurring costs, decreased 10% to $13
million for the first quarter 2021. The decline in Adjusted General
and Administrative Expenses(1) was primarily the result of lower
short-term incentive expense and reductions in numerous third-party
costs.
Taxes, other than income taxes were $3.93 per
boe for the first quarter compared to $4.43 per boe in the fourth
quarter 2020. GHG costs were lower in the first quarter of 2021 as
the prices remained relatively flat while the emission volumes
declined. Severance taxes increased due to higher revenue in Utah,
while property taxes in Colorado and California were lower.
For the first quarter 2021, capital expenditures
were approximately $24 million on an accrual basis excluding
acquisitions and asset retirement obligation spending.
Approximately 90% of this capital was directed to California oil
operations. Berry also spent approximately $3 million for
plugging and abandonment activities in the first quarter 2021.
At March 31, 2021, the Company had liquidity of
$292 million consisting of $99 million cash in the bank
and $193 million available for borrowings under its RBL
Facility which had no borrowings and $7 million of letters of
credit outstanding. The RBL Facility has a $200 million borrowing
base with an elected commitment of $200 million.
“All in all, we delivered a strong quarter,
capitalizing on the impact of the unseasonably high gas prices on
our revenues, while leveraging our effective gas purchase hedging
program, stated Cary Baetz, chief financial officer, EVP and
director. “Additionally, our non-energy OpEx per boe was down 11%
and Adjusted General and Administrative Expenses(1) was down 10%,
both compared to the fourth quarter 2020. We demonstrated that the
way we manage our costs and natural gas hedging strategy positions
us to be a low-cost producer of oil in California. On natural gas,
we understand we can’t count on the gas and electricity sales
impact from these unseasonably high prices every quarter, but we
can rely on having stable gas purchase costs with our hedging
strategy, which in turn provides stability and visibility to our
overall cost structure.”
Quarterly Dividend
The Company’s Board of Directors declared a
regular dividend for the second quarter of 2021 at a rate of $0.04
per share on the Company’s outstanding common stock, payable on
July 15, 2021 to shareholders of record at the close of business on
June 15, 2021.
Subject to approval by the Board and depending
on a variety of factors, including the Company’s financial
condition and results of operations, the Company intends to pay a
similar dividend in future quarters.
_______(1) Please see “Non-GAAP Financial
Measures and Reconciliations” later in this press release for a
reconciliation and more information on these
Non-GAAP measures.
Earnings Conference Call
The Company will host a conference call May 5,
2021 to discuss these results:
Live Call Date: |
|
Wednesday, May 5, 2021 |
Live Call Time: |
|
9:00 a.m. Eastern Time (6 a.m. Pacific Time) |
Live Call Dial-in: |
|
877-491-5169 from the U.S.720-405-2254 from international
locations |
Live Call Passcode: |
|
8438708 |
A live audio webcast will be available at
bry.com/category/events.
An audio replay will be available shortly after the
broadcast:
Replay Dates: |
|
Through Wednesday, May 19, 2021 |
Replay Dial-in: |
|
855-859-2056 from the U.S.404-537-3406 from international
locations |
Replay Passcode: |
|
8438708 |
A replay of the audio webcast will also be
archived at ir.bry.com/reports-resources.
About Berry Corporation
(bry)
Bry is a publicly traded (NASDAQ: BRY) western
United States independent upstream energy company with a focus on
the conventional, long-lived oil reserves in the San Joaquin basin
of California. More information can be found at the Company’s
website at bry.com.
Forward-Looking Statements
The information in this press release includes
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. All statements, other than statements of historical
facts, included in this press release that address plans,
activities, events, objectives, goals, strategies, or developments
that the Company expects, believes or anticipates will or may occur
in the future, such as those regarding financial position;
liquidity; cash flows; anticipated financial and operating,
results; capital program and development and production plans;
operations and business strategy; potential acquisition
opportunities; reserves; hedging activities; capital expenditures,
return of capital; payment, payment of or improvement of future
dividends; future repurchases of stock or debt; capital
investments, recovery factors and other guidance are
forward-looking statements. The forward-looking statements in this
press release are based upon various assumptions, many of which are
based, in turn, upon further assumptions. Although we believe that
these assumptions were reasonable when made, these assumptions are
inherently subject to significant uncertainties and contingencies
which are difficult or impossible to predict and are beyond our
control. Therefore, such forward-looking statements involve
significant risks and uncertainties that could materially affect
our expected results of operations, liquidity, cash flows and
business prospects.
Bry cautions you that these forward-looking
statements are subject to all of the risks and uncertainties,
incident to the exploration for and development, production,
gathering and sale of natural gas, NGLs and oil most of which are
difficult to predict and many of which are beyond bry’s control.
These risks include, but are not limited to, commodity price
volatility; legislative and regulatory processes and actions that
may prevent, delay or otherwise restrict our ability to drill and
develop our assets, including regulatory approval and permitting
requirements; legislative and regulatory initiatives in California
or our other areas of operation addressing climate change or other
environmental concerns; drilling, production and other operating
risks; investment in and development of competing or alternative
energy sources; uncertainties inherent in estimating natural gas
and oil reserves and in projecting future rates of production; cash
flow and access to capital; the timing and funding of development
expenditures; environmental, health and safety risks; effects of
hedging arrangements; potential shut-ins of production due to lack
of downstream demand or storage capacity; the impact and duration
of the ongoing COVID-19 pandemic on demand and pricing levels; and
the other risks described under the heading “Item 1A. Risk Factors”
in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2020.
You can typically identify forward-looking
statements by words such as aim, anticipate, achievable, believe,
budget, continue, could, effort, estimate, expect, forecast, goal,
guidance, intend, likely, may, might, objective, outlook, plan,
potential, predict, project, seek, should, target, will or would
and other similar words that reflect the prospective nature of
events or outcomes.
Any forward-looking statement speaks only as of
the date on which such statement is made, and we undertake no
obligation to correct or update any forward-looking statement,
whether as a result of new information, future events or otherwise
except as required by applicable law. Investors are urged to
consider carefully the disclosure in our filings with the
Securities and Exchange Commission, available from us at via our
website or via the Investor Relations contact below, or from the
SEC’s website at www.sec.gov.
Contact
Contact: bryTodd Crabtree - Manager, Investor
Relations (661) 616-3811 ir@bry.com
Tables Following
The financial information and certain other
information presented have been rounded to the nearest whole number
or the nearest decimal. Therefore, the sum of the numbers in a
column may not conform exactly to the total figure given for that
column in certain tables. In addition, certain percentages
presented here reflect calculations based upon the underlying
information prior to rounding and, accordingly, may not conform
exactly to the percentages that would be derived if the relevant
calculations were based upon the rounded numbers, or may not sum
due to rounding.
SUMMARY OF RESULTS
|
Three Months Ended |
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
|
|
|
|
|
|
|
($ and shares in thousands, except per share amounts) |
Statement of Operations Data: |
|
|
|
|
|
Revenues and other: |
|
|
|
|
|
Oil, natural gas and natural gas liquids sales |
$ |
135,265 |
|
|
$ |
93,811 |
|
|
$ |
122,098 |
|
Electricity sales |
10,069 |
|
|
6,724 |
|
|
5,461 |
|
(Losses) gains on oil and gas sales derivatives |
(53,504 |
) |
|
(39,617 |
) |
|
211,229 |
|
Marketing revenues |
2,234 |
|
|
351 |
|
|
453 |
|
Other revenues |
137 |
|
|
97 |
|
|
24 |
|
Total revenues and other |
94,201 |
|
|
61,366 |
|
|
339,265 |
|
|
|
|
|
|
|
Expenses and other: |
|
|
|
|
|
Lease operating expenses |
62,284 |
|
|
49,621 |
|
|
50,752 |
|
Electricity generation expenses |
7,648 |
|
|
5,422 |
|
|
3,946 |
|
Transportation expenses |
1,576 |
|
|
1,559 |
|
|
1,822 |
|
Marketing expenses |
2,227 |
|
|
344 |
|
|
430 |
|
General and administrative expenses |
17,070 |
|
|
20,409 |
|
|
19,337 |
|
Depreciation, depletion and amortization |
33,840 |
|
|
30,434 |
|
|
35,329 |
|
Impairment of oil and gas properties |
— |
|
|
— |
|
|
289,085 |
|
Taxes, other than income taxes |
9,557 |
|
|
10,858 |
|
|
4,352 |
|
(Gains) losses on natural gas purchase derivatives |
(27,730 |
) |
|
3,859 |
|
|
12,035 |
|
Other operating expenses |
799 |
|
|
3,123 |
|
|
2,202 |
|
Total expenses and other |
107,271 |
|
|
125,629 |
|
|
419,290 |
|
|
|
|
|
|
|
Other (expenses) income: |
|
|
|
|
|
Interest expense |
(8,485 |
) |
|
(8,308 |
) |
|
(8,920 |
) |
Other, net |
(143 |
) |
|
(13 |
) |
|
(6 |
) |
Total other (expenses) income |
(8,628 |
) |
|
(8,321 |
) |
|
(8,926 |
) |
Loss before income taxes |
(21,698 |
) |
|
(72,584 |
) |
|
(88,951 |
) |
Income tax (benefit) expense |
(376 |
) |
|
(8,754 |
) |
|
26,349 |
|
Net loss |
$ |
(21,322 |
) |
|
$ |
(63,830 |
) |
|
$ |
(115,300 |
) |
|
|
|
|
|
|
Net loss per share: |
|
|
|
|
|
Basic |
$ |
(0.27 |
) |
|
$ |
(0.80 |
) |
|
$ |
(1.45 |
) |
Diluted |
$ |
(0.27 |
) |
|
$ |
(0.80 |
) |
|
$ |
(1.45 |
) |
|
|
|
|
|
|
Weighted-average shares of common stock outstanding - basic |
80,115 |
|
|
79,922 |
|
|
79,608 |
|
Weighted-average shares of common stock outstanding - diluted |
80,115 |
|
|
79,922 |
|
|
79,608 |
|
|
|
|
|
|
|
Adjusted Net Income(1) |
$ |
5,627 |
|
|
$ |
8,580 |
|
|
$ |
18,175 |
|
Weighted-average shares of common stock outstanding - diluted |
82,276 |
|
|
80,033 |
|
|
79,945 |
|
Diluted earnings per share on Adjusted Net Income |
$ |
0.07 |
|
|
$ |
0.11 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
|
Three Months Ended |
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
|
|
|
|
|
|
|
($ and shares in thousands, except per share amounts) |
Adjusted EBITDA(1) |
$ |
51,829 |
|
|
$ |
53,682 |
|
|
$ |
71,800 |
|
Adjusted EBITDA Unhedged(1) |
$ |
50,979 |
|
|
$ |
18,365 |
|
|
$ |
52,175 |
|
Levered Free Cash Flow(1) |
$ |
16,301 |
|
|
$ |
31,215 |
|
|
$ |
13,613 |
|
Levered Free Cash Flow Unhedged(1) |
$ |
15,451 |
|
|
$ |
(4,102 |
) |
|
$ |
(6,012 |
) |
Adjusted General and Administrative Expenses(1) |
$ |
13,401 |
|
|
$ |
14,881 |
|
|
$ |
14,556 |
|
Effective Tax Rate, including discrete items |
2 |
% |
|
12 |
% |
|
(30 |
)% |
|
|
|
|
|
|
Cash Flow Data: |
|
|
|
|
|
Net cash provided by operating activities |
$ |
38,430 |
|
|
$ |
52,110 |
|
|
$ |
44,483 |
|
Net cash used in investing activities |
$ |
(19,937 |
) |
|
$ |
(19,098 |
) |
|
$ |
(43,038 |
) |
Net cash used in financing activities |
$ |
(1,688 |
) |
|
$ |
(75 |
) |
|
$ |
(1,444 |
) |
__________(1) See further discussion and
reconciliation in “Non-GAAP Financial Measures and
Reconciliations”.
|
March 31, 2021 |
|
December 31, 2020 |
|
|
|
|
|
($ and shares in thousands) |
Balance Sheet Data: |
|
|
|
Total current assets |
$ |
178,041 |
|
|
$ |
154,491 |
|
Total property, plant and equipment, net |
$ |
1,250,656 |
|
|
$ |
1,258,084 |
|
Total current liabilities |
$ |
212,565 |
|
|
$ |
175,306 |
|
Long-term debt |
$ |
393,741 |
|
|
$ |
393,480 |
|
Total stockholders' equity |
$ |
691,794 |
|
|
$ |
714,036 |
|
Outstanding common stock shares as of |
80,471 |
|
|
79,929 |
|
|
|
|
|
|
|
SUMMARY BY AREA
The following table shows a summary by area of
our selected historical financial information and operating data
for the periods indicated.
|
California (San Joaquin and Ventura
basins) |
|
Three Months Ended |
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
($ in thousands, except prices) |
|
|
|
|
|
Oil, natural gas and natural gas liquids sales |
$ |
113,177 |
|
|
$ |
81,588 |
|
|
$ |
109,519 |
|
Operating income
(loss)(1) |
$ |
18,965 |
|
|
$ |
34,651 |
|
|
$ |
(113,203 |
) |
Depreciation, depletion, and
amortization (DD&A) |
$ |
32,896 |
|
|
$ |
29,440 |
|
|
$ |
30,918 |
|
Impairment of oil and gas
properties |
$ |
— |
|
|
$ |
— |
|
|
$ |
163,879 |
|
Average daily production
(mboe/d) |
21.9 |
|
|
21.2 |
|
|
24.9 |
|
Production (oil % of
total) |
100 |
% |
|
100 |
% |
|
100 |
% |
Realized sales prices: |
|
|
|
|
|
Oil (per bbl) |
$ |
57.34 |
|
|
$ |
41.74 |
|
|
$ |
48.38 |
|
NGLs (per bbl) |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Gas (per mcf) |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Capital expenditures(2) |
$ |
22,760 |
|
|
$ |
13,665 |
|
|
$ |
38,627 |
|
|
Utah(Uinta basin) |
|
Colorado(Piceance basin) |
|
Three Months Ended |
|
Three Months Ended |
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
($ in thousands, except prices) |
|
|
|
|
|
|
|
|
|
|
|
Oil, natural gas and natural gas liquids sales |
$ |
15,889 |
|
|
$ |
10,453 |
|
|
$ |
11,278 |
|
|
$ |
6,194 |
|
|
$ |
1,769 |
|
|
$ |
1,299 |
|
Operating income
(loss)(1) |
$ |
7,433 |
|
|
$ |
923 |
|
|
$ |
(127,700 |
) |
|
$ |
5,039 |
|
|
$ |
233 |
|
|
$ |
384 |
|
Depreciation, depletion, and
amortization (DD&A) |
$ |
554 |
|
|
$ |
911 |
|
|
$ |
4,311 |
|
|
$ |
38 |
|
|
$ |
63 |
|
|
$ |
55 |
|
Impairment of oil and gas
properties |
$ |
— |
|
|
$ |
— |
|
|
$ |
125,206 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Average daily production
(mboe/d) |
4.0 |
|
|
4.1 |
|
|
4.5 |
|
|
1.2 |
|
|
1.3 |
|
|
1.4 |
|
Production (oil % of
total) |
49 |
% |
|
50 |
% |
|
53 |
% |
|
2 |
% |
|
2 |
% |
|
1 |
% |
Realized sales prices: |
|
|
|
|
|
|
|
|
|
|
|
Oil (per bbl) |
$ |
52.08 |
|
|
$ |
37.95 |
|
|
$ |
39.64 |
|
|
$ |
25.80 |
|
|
$ |
10.23 |
|
|
$ |
42.54 |
|
NGLs (per bbl) |
$ |
26.81 |
|
|
$ |
16.75 |
|
|
$ |
13.16 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Gas (per mcf) |
$ |
6.65 |
|
|
$ |
3.04 |
|
|
$ |
2.22 |
|
|
$ |
9.83 |
|
|
$ |
2.44 |
|
|
$ |
1.70 |
|
Capital expenditures(2) |
$ |
392 |
|
|
$ |
385 |
|
|
$ |
678 |
|
|
$ |
1 |
|
|
$ |
13 |
|
|
$ |
1 |
|
__________(1) Operating income (loss) includes
oil, natural gas and NGL sales, and scheduled oil derivative
settlements, offset by operating expenses (as defined elsewhere),
general and administrative expenses, DD&A, impairment of oil
and gas properties, and taxes, other than income taxes.(2) Excludes
corporate capital expenditures.
COMMODITY PRICING
|
Three Months Ended |
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
Weighted-average realized sales prices: |
|
|
|
|
|
Oil without hedges ($/bbl) |
$ |
56.89 |
|
|
$ |
41.38 |
|
|
$ |
47.61 |
|
Effects of scheduled derivative settlements ($/bbl) |
$ |
(12.08 |
) |
|
$ |
15.03 |
|
|
$ |
9.67 |
|
Oil with hedges ($/bbl) |
$ |
44.81 |
|
|
$ |
56.41 |
|
|
$ |
57.28 |
|
Natural gas ($/mcf) |
$ |
7.96 |
|
|
$ |
2.78 |
|
|
$ |
2.00 |
|
NGLs ($/bbl) |
$ |
26.81 |
|
|
$ |
16.78 |
|
|
$ |
13.16 |
|
|
|
|
|
|
|
Average Benchmark prices: |
|
|
|
|
|
Oil (bbl) – Brent |
$ |
61.32 |
|
|
$ |
45.26 |
|
|
$ |
50.82 |
|
Oil (bbl) – WTI |
$ |
57.82 |
|
|
$ |
42.66 |
|
|
$ |
46.35 |
|
Natural gas (mmbtu) – Kern, Delivered(1) |
$ |
7.99 |
|
|
$ |
3.38 |
|
|
$ |
1.97 |
|
Natural gas (mmbtu) – Henry Hub(2) |
$ |
3.50 |
|
|
$ |
2.52 |
|
|
$ |
1.91 |
|
__________(1) Kern, Delivered Index is the
relevant index used for gas purchases in California.(2) Henry Hub
is the relevant index used for gas sales in the Rockies.
CURRENT HEDGING SUMMARY
As of March 31, 2021, we had the following crude
oil production and gas purchases hedges.
|
Q2 2021 |
|
Q3 2021 |
|
Q4 2021 |
|
FY 2022 |
|
|
|
|
|
|
|
|
Fixed Price Oil Swaps (Brent): |
|
|
|
|
|
|
|
Hedged volume (mbbls) |
1,728 |
|
|
1,318 |
|
|
1,318 |
|
|
1,095 |
|
Weighted-average price ($/bbl) |
$ |
45.82 |
|
|
$ |
48.66 |
|
|
$ |
48.66 |
|
|
$ |
60.00 |
|
Fixed Price Gas Purchase Swaps (Kern,
Delivered): |
|
|
|
|
|
|
|
Hedged volume (mmbtu) |
4,777,500 |
|
|
4,830,000 |
|
|
2,085,000 |
|
|
— |
|
Weighted-average price ($/mmbtu) |
$ |
2.83 |
|
|
$ |
2.83 |
|
|
$ |
2.95 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
Three Months Ended |
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
|
|
|
|
|
|
|
($ in thousands except per boe amounts) |
Lease operating expenses |
$ |
62,284 |
|
|
$ |
49,621 |
|
|
$ |
50,752 |
|
Electricity generation expenses |
7,648 |
|
|
5,422 |
|
|
3,946 |
|
Electricity sales(1) |
(10,069 |
) |
|
(6,724 |
) |
|
(5,461 |
) |
Transportation expenses |
1,576 |
|
|
1,559 |
|
|
1,822 |
|
Transportation sales(1) |
(137 |
) |
|
(97 |
) |
|
(24 |
) |
Marketing expenses |
2,227 |
|
|
344 |
|
|
430 |
|
Marketing revenues(1) |
(2,234 |
) |
|
(351 |
) |
|
(453 |
) |
Derivative settlements (received) paid for gas purchases(1) |
(26,239 |
) |
|
(3,090 |
) |
|
4,411 |
|
Total operating expenses(1) |
$ |
35,056 |
|
|
$ |
46,684 |
|
|
$ |
55,423 |
|
|
|
|
|
|
|
Lease operating expenses ($/boe) |
$ |
25.58 |
|
|
$ |
20.25 |
|
|
$ |
18.14 |
|
Electricity generation expenses ($/boe) |
3.14 |
|
|
2.21 |
|
|
1.41 |
|
Electricity sales ($/boe) |
(4.13 |
) |
|
(2.74 |
) |
|
(1.95 |
) |
Transportation expenses ($/boe) |
0.65 |
|
|
0.64 |
|
|
0.65 |
|
Transportation sales ($/boe) |
(0.06 |
) |
|
(0.04 |
) |
|
(0.01 |
) |
Marketing expenses ($/boe) |
0.92 |
|
|
0.14 |
|
|
0.15 |
|
Marketing revenues ($/boe) |
(0.92 |
) |
|
(0.14 |
) |
|
(0.16 |
) |
Derivative settlements (received) paid for gas purchases
($/boe) |
(10.78 |
) |
|
(1.26 |
) |
|
1.58 |
|
Total operating expenses ($/boe) |
$ |
14.40 |
|
|
$ |
19.06 |
|
|
$ |
19.81 |
|
Total unhedged operating expenses ($/boe)(2) |
$ |
25.18 |
|
|
$ |
20.32 |
|
|
$ |
18.23 |
|
|
|
|
|
|
|
Total non-energy operating expenses(3) |
$ |
12.74 |
|
|
$ |
14.35 |
|
|
$ |
14.03 |
|
Total energy operating expenses(4) |
$ |
1.66 |
|
|
$ |
4.70 |
|
|
$ |
5.78 |
|
|
|
|
|
|
|
Total mboe |
2,435 |
|
|
2,450 |
|
|
2,798 |
|
__________(1) We report electricity,
transportation and marketing sales separately in our financial
statements as revenues in accordance with GAAP. However, these
revenues are viewed and used internally in calculating operating
expenses which is used to track and analyze the economics of
development projects and the efficiency of our hydrocarbon
recovery. We purchase third-party gas to generate electricity
through our cogeneration facilities to be used in our field
operations activities and view the added benefit of any excess
electricity sold externally as a cost reduction/benefit to
generating steam for our thermal recovery operations. Marketing
revenues and expenses mainly relate to natural gas purchased from
third parties that moves through our gathering and processing
systems and then is sold to third parties. Transportation sales
relate to water and other liquids that we transport on our systems
on behalf of third parties and have not been significant to date.
Operating expenses also include the effect of derivative
settlements (received or paid) for gas purchases.(2) Total unhedged
operating expenses equals total operating expenses, excluding the
derivative settlements paid (received) for gas purchases.(3) Total
non-energy operating expenses equals total operating expenses,
excluding fuel, electricity sales and gas purchase derivative
settlement (gains) losses.(4) Total energy operating expenses
equals fuel and gas purchase derivative settlement (gains) losses
less electricity sales.
PRODUCTION STATISTICS
|
Three Months Ended |
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
Net Oil, Natural Gas and NGLs Production Per
Day(1): |
|
|
|
|
|
|
|
|
Oil (mbbl/d) |
|
|
|
|
|
|
|
|
California |
21.9 |
|
|
21.2 |
|
|
24.9 |
|
Utah |
2.0 |
|
|
2.1 |
|
|
2.4 |
|
Colorado |
— |
|
|
— |
|
|
— |
|
Total oil |
23.9 |
|
|
23.3 |
|
|
27.3 |
|
Natural gas (mmcf/d) |
|
|
|
|
|
|
|
|
California |
— |
|
|
— |
|
|
— |
|
Utah |
10.0 |
|
|
9.8 |
|
|
10.5 |
|
Colorado |
6.9 |
|
|
7.8 |
|
|
8.0 |
|
Total natural gas |
16.9 |
|
|
17.6 |
|
|
18.5 |
|
NGLs (mbbl/d) |
|
|
|
|
|
|
|
|
California |
— |
|
|
— |
|
|
— |
|
Utah |
0.3 |
|
|
0.4 |
|
|
0.4 |
|
Colorado |
— |
|
|
— |
|
|
— |
|
Total NGLs |
0.3 |
|
|
0.4 |
|
|
0.4 |
|
Total Production (mboe/d)(2) |
27.1 |
|
|
26.6 |
|
|
30.8 |
|
__________(1) Production represents volumes sold
during the period.(2) Natural gas volumes have been converted to
boe based on energy content of six Mcf of gas to one bbl of oil.
Barrels of oil equivalence does not necessarily result in price
equivalence. The price of natural gas on a barrel of oil equivalent
basis is currently substantially lower than the corresponding price
for oil and has been similarly lower for a number of years. For
example, in the three months ended March 31, 2021, the average
prices of Brent oil and Henry Hub natural gas were $61.32 per bbl
and $3.50 per mmbtu respectively.
CAPITAL EXPENDITURES (ACCRUAL
BASIS)
|
Three Months Ended |
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
|
|
|
|
|
|
|
(in thousands) |
Capital expenditures (accrual basis)(1) |
$ |
23,569 |
|
|
$ |
14,159 |
|
|
$ |
39,703 |
|
__________(1) Excludes acquisitions and asset
retirement spending.
NON-GAAP FINANCIAL MEASURES AND
RECONCILIATIONS
Adjusted Net Income (Loss) is not a measure of
net income (loss), Levered Free Cash Flow is not a measure of cash
flow, and Adjusted EBITDA is not a measure of either, in all cases,
as determined by GAAP. Adjusted Net Income (Loss), Adjusted
EBITDA, Levered Free Cash Flow and Adjusted General and
Administrative Expenses are supplemental non-GAAP financial
measures used by management and external users of our financial
statements, such as industry analysts, investors, lenders and
rating agencies. We define Adjusted Net Income (Loss) as net income
(loss) adjusted for derivative gains or losses net of cash received
or paid for scheduled derivative settlements, other unusual,
out-of-period and infrequent items, and the income tax expense or
benefit of these adjustments using our effective tax rate. We
define Adjusted EBITDA as earnings before interest expense; income
taxes; depreciation, depletion, and amortization; derivative gains
or losses net of cash received or paid for scheduled derivative
settlements; impairments; stock compensation expense; and other
unusual, out-of-period and infrequent items. We define Levered Free
Cash Flow as Adjusted EBITDA less capital expenditures, interest
expense and dividends. We define Adjusted General and
Administrative Expenses as general and administrative expenses
adjusted for non-cash stock compensation expense and unusual, out
of period and infrequent costs.
Adjusted Net Income (Loss) excludes the impact
of unusual, out-of-period and infrequent items affecting earnings
that vary widely and unpredictably, including non-cash items such
as derivative gains and losses. This measure is used by management
when comparing results period over period. Our management believes
Adjusted EBITDA provides useful information in assessing our
financial condition, results of operations and cash flows and is
widely used by the industry and the investment community. The
measure also allows our management to more effectively evaluate our
operating performance and compare the results between periods
without regard to our financing methods or capital structure.
Levered Free Cash Flow is used by management as a primary metric to
plan capital allocation to sustain production levels and for
internal growth opportunities, as well as hedging needs. It also
serves as a measure for assessing our financial performance and our
ability to generate excess cash from operations to service debt and
pay dividends. Management believes Adjusted General and
Administrative Expenses is useful because it allows us to more
effectively compare our performance from period to period. We
exclude the items listed above from general and administrative
expenses in arriving at Adjusted General and Administrative
Expenses because these amounts can vary widely and unpredictably in
nature, timing, amount and frequency and stock compensation expense
is non-cash in nature.
While Adjusted Net Income (Loss), Adjusted
EBITDA, Adjusted EBITDA Unhedged, Levered Free Cash Flow, Levered
Free Cash Flow Unhedged and Adjusted General and Administrative
Expenses are non-GAAP measures, the amounts included in the
calculations of Adjusted Net Income (Loss), Adjusted EBITDA,
Adjusted EBITDA Unhedged, Levered Free Cash Flow, Levered Free Cash
Flow Unhedged and Adjusted General and Administrative Expenses were
computed in accordance with GAAP. These measures are provided in
addition to, and not as an alternative for, income and liquidity
measures calculated in accordance with GAAP and should not be
considered as an alternative to, or more meaningful than, income
and liquidity measures calculated in accordance with GAAP. Our
computations of Adjusted Net Income (Loss), Adjusted EBITDA,
Adjusted EBITDA Unhedged, Levered Free Cash Flow, Levered Free Cash
Flow Unhedged and Adjusted General and Administrative Expenses may
not be comparable to other similarly titled measures used by other
companies. Adjusted Net Income (Loss), Adjusted EBITDA, Adjusted
EBITDA Unhedged, Levered Free Cash Flow, Levered Free Cash Flow
Unhedged and Adjusted General and Administrative Expenses should be
read in conjunction with the information contained in our financial
statements prepared in accordance with GAAP.
ADJUSTED NET INCOME (LOSS)
The following table presents a reconciliation of
the GAAP financial measure of net income (loss) to the non-GAAP
financial measure of Adjusted Net Income (Loss).
|
Three Months Ended |
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
|
|
|
|
|
|
|
($ thousands, except per share amounts) |
Net loss |
$ |
(21,322 |
) |
|
$ |
(63,830 |
) |
|
$ |
(115,300 |
) |
Add: discrete income tax items |
— |
|
|
16,724 |
|
|
46,700 |
|
|
|
|
|
|
|
Add (Subtract): |
|
|
|
|
|
Losses (gains) on derivatives |
25,774 |
|
|
43,476 |
|
|
(199,194 |
) |
Net cash received for scheduled derivative settlements |
850 |
|
|
35,317 |
|
|
19,625 |
|
Other operating expenses |
799 |
|
|
3,123 |
|
|
2,202 |
|
Impairment of oil and gas properties |
— |
|
|
— |
|
|
289,085 |
|
Non-recurring costs |
— |
|
|
2,375 |
|
|
1,862 |
|
Total additions, net |
27,423 |
|
|
84,291 |
|
|
113,580 |
|
|
|
|
|
|
|
Income tax expense of adjustments at effective tax rate(1) |
(474 |
) |
|
(28,605 |
) |
|
(26,805 |
) |
Adjusted Net Income |
$ |
5,627 |
|
|
$ |
8,580 |
|
|
$ |
18,175 |
|
|
|
|
|
|
|
Basic EPS on Adjusted Net Income |
$ |
0.07 |
|
|
$ |
0.11 |
|
|
$ |
0.23 |
|
Diluted EPS on Adjusted Net Income |
$ |
0.07 |
|
|
$ |
0.11 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
Weighted average shares of common stock outstanding - basic |
80,115 |
|
|
79,922 |
|
|
79,608 |
|
Weighted average shares of common stock outstanding - diluted |
82,276 |
|
|
80,033 |
|
|
79,945 |
|
__________(1) Excludes discrete income tax items
from the total additions (subtractions), net line item and the tax
effect the discrete income tax items have on the current rate.
ADJUSTED EBITDA AND ADJUSTED EBITDA
UNHEDGED
The following tables present a reconciliation of
the GAAP financial measures of net income (loss) and net cash
provided by operating activities to the non-GAAP financial measures
of Adjusted EBITDA and Adjusted EBITDA Unhedged.
|
Three Months Ended |
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
|
|
|
|
|
|
|
($ thousands) |
Net loss |
$ |
(21,322 |
) |
|
$ |
(63,830 |
) |
|
$ |
(115,300 |
) |
Add (Subtract): |
|
|
|
|
|
Interest expense |
8,485 |
|
|
8,308 |
|
|
8,920 |
|
Income tax (benefit) expense |
(376 |
) |
|
(8,754 |
) |
|
26,349 |
|
Depreciation, depletion and amortization |
33,840 |
|
|
30,434 |
|
|
35,329 |
|
Impairment of oil and gas properties |
— |
|
|
— |
|
|
289,085 |
|
Losses (gains) on derivatives |
25,774 |
|
|
43,476 |
|
|
(199,194 |
) |
Net cash received for scheduled derivative settlements |
850 |
|
|
35,317 |
|
|
19,625 |
|
Other operating expense |
799 |
|
|
3,123 |
|
|
2,202 |
|
Stock compensation expense |
3,779 |
|
|
3,233 |
|
|
2,922 |
|
Non-recurring costs |
— |
|
|
2,375 |
|
|
1,862 |
|
Adjusted EBITDA |
$ |
51,829 |
|
|
$ |
53,682 |
|
|
$ |
71,800 |
|
Net cash received for scheduled derivative settlements |
(850 |
) |
|
(35,317 |
) |
|
(19,625 |
) |
Adjusted EBITDA Unhedged |
$ |
50,979 |
|
|
$ |
18,365 |
|
|
$ |
52,175 |
|
|
|
|
|
|
|
Net cash provided by operating activities |
$ |
38,430 |
|
|
$ |
52,110 |
|
|
$ |
44,483 |
|
Add (Subtract): |
|
|
|
|
|
Cash interest payments |
14,637 |
|
|
— |
|
|
14,879 |
|
Cash income tax payments |
— |
|
|
— |
|
|
2 |
|
Non-recurring costs |
— |
|
|
2,375 |
|
|
1,862 |
|
Other changes in operating assets and liabilities |
(1,238 |
) |
|
(803 |
) |
|
10,574 |
|
Adjusted EBITDA |
$ |
51,829 |
|
|
$ |
53,682 |
|
|
$ |
71,800 |
|
Net cash received for scheduled derivative settlements |
(850 |
) |
|
(35,317 |
) |
|
(19,625 |
) |
Adjusted EBITDA Unhedged |
$ |
50,979 |
|
|
$ |
18,365 |
|
|
$ |
52,175 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LEVERED FREE CASH FLOW
The following table presents a reconciliation of
Adjusted EBITDA to the non–GAAP measures of Levered Free Cash Flow.
The reconciliation of Adjusted EBITDA is presented above.
|
Three Months Ended |
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
|
|
|
|
|
|
|
($ thousands) |
Adjusted EBITDA |
$ |
51,829 |
|
|
$ |
53,682 |
|
|
$ |
71,800 |
|
Subtract: |
|
|
|
|
|
Capital expenditures - accrual basis(1) |
(23,569 |
) |
|
(14,159 |
) |
|
(39,703 |
) |
Interest expense |
(8,485 |
) |
|
(8,308 |
) |
|
(8,920 |
) |
Cash dividends declared |
(3,474 |
) |
|
— |
|
|
(9,564 |
) |
Levered Free Cash Flow |
$ |
16,301 |
|
|
$ |
31,215 |
|
|
$ |
13,613 |
|
Net cash received for scheduled derivative settlements |
(850 |
) |
|
(35,317 |
) |
|
(19,625 |
) |
Levered Free Cash Flow Unhedged |
$ |
15,451 |
|
|
$ |
(4,102 |
) |
|
$ |
(6,012 |
) |
__________(1) Capital expenditures excludes
acquisitions and asset retirement spending.
ADJUSTED GENERAL AND ADMINISTRATIVE
EXPENSES
The following table presents a reconciliation of
the GAAP financial measure of general and administrative expenses
to the non-GAAP financial measures of Adjusted General and
Administrative Expenses.
|
Three Months Ended |
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
|
|
|
|
|
|
|
($ in thousands except per mboe amounts) |
General and administrative expenses |
$ |
17,070 |
|
|
$ |
20,409 |
|
|
$ |
19,337 |
|
Subtract: |
|
|
|
|
|
Non-cash stock compensation expense (G&A portion) |
(3,669 |
) |
|
(3,153 |
) |
|
(2,919 |
) |
Non-recurring costs |
— |
|
|
(2,375 |
) |
|
(1,862 |
) |
Adjusted General and Administrative Expenses |
$ |
13,401 |
|
|
$ |
14,881 |
|
|
$ |
14,556 |
|
|
|
|
|
|
|
General and administrative expenses ($/mboe) |
$ |
7.01 |
|
|
$ |
8.33 |
|
|
$ |
6.91 |
|
Subtract: |
|
|
|
|
|
Non-cash stock compensation expense ($/mboe) |
(1.51 |
) |
|
(1.29 |
) |
|
(1.04 |
) |
Non-recurring costs ($/mboe) |
— |
|
|
(0.97 |
) |
|
(0.67 |
) |
Adjusted General and Administrative Expenses ($/mboe) |
$ |
5.50 |
|
|
$ |
6.07 |
|
|
$ |
5.20 |
|
|
|
|
|
|
|
Total mboe |
2,435 |
|
|
2,450 |
|
|
2,798 |
|
|
|
|
|
|
|
|
|
|
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