Rosehill Resources Inc. (“Rosehill” or the “Company”) (NASDAQ:
ROSE, ROSEW, ROSEU) today reported financial and operational
results for the first quarter ended March 31, 2019.
First Quarter 2019 Highlights and Recent
Items:
- Strong average net production of
21,478 barrels of oil equivalent per day (“BOEPD”) (70% oil and 85%
total liquids), an increase of 75% compared to the first quarter of
2018, without the benefit of any new wells turned online until late
March
- Early Southern Delaware success
with six wells placed onto production with electric submersible
pumps (“ESPs”) in April with average peak rates achieved over a 24
hour period (“IP24”) of 1,152 BOEPD, or 252 BOEPD per 1,000 feet,
and 91% oil providing strong support for broad commerciality of our
acreage position
- Improved efficiencies in Southern
Delaware from reducing drilling times to 14.7 days per well in the
first quarter, down 31% from full-year 2018; also reduced most
recent one-mile Southern Delaware well cost to approximately $6.9
million per well compared to $8.0 million per well for initial
wells drilled in 2018
- Enhanced liquidity position to $120
million at March 31, 2019 pro-forma for the sale of our New Mexico
assets that closed in early April
- Reported net loss attributable to
Rosehill of $38.0 million, or $2.75 per share, for the first
quarter of 2019, which included a $103.5 million non-cash, pre-tax
loss on commodity derivative instruments
- Delivered Adjusted EBITDAX (a
non-GAAP measure defined and reconciled below) of $46.5 million, an
increase of 33% over the first quarter of 2018
Management Comments
David French, Rosehill’s President and Chief
Executive Officer, commented, “It has been a smooth transition into
the seat following Gary Hanna’s leadership as interim CEO.
The technical and operational teams are excited about the potential
of our Delaware acreage, and our 2019 year to date results support
that optimism. Even though we did not place any new wells
online until late March, we nearly maintained overall production
levels from the prior quarter. Our development activity in
2019 will be weighted toward the first half of the year, and we
expect our production levels to begin increasing late in the second
quarter as volumes ramp up from wells brought online.”
“We are excited to announce early results from
our latest wells in the Southern Delaware area that are improved
over our initial delineation wells in late 2018. With IP24 rates
from 938 to 1,428 barrels of oil equivalent per day, liquids
content around 90 percent, and well costs averaging below $7
million, we are set up for an ongoing development program. We
recently drilled our first two-mile lateral in just 14 days which
is a strong validation of the capabilities of the team.”
“Our Northern Delaware area remained active in
the first quarter drilling five wells and beginning completion
operations. These wells will be placed on production throughout the
second quarter and we look forward to sharing results once
available. In summary, we had a solid quarter operationally and
expect the results of our activity to bear fruit over the course of
the year. As we move through 2019, we will remain focused on
improving in all areas of our business and delivering on our
commitments. It is great to have joined the team.”
Operational Results
For the first quarter of 2019, the Company’s net
production averaged 21,478 BOEPD, a 75% increase compared to the
average for the first quarter of 2018, comprised of 14,956 barrels
of oil per day, 3,300 barrels of natural gas liquids (“NGLs”) per
day and 19.3 million cubic feet of gas (“MMCF”) per day. Rosehill
operated two rigs, drilled eleven horizontal wells, completed six
wells and had 13 drilled uncompleted wells at the end of the first
quarter of 2019.
Southern Delaware - In the Southern Delaware,
the Company recently placed six wells onto production. As
previously indicated, the Company installed ESPs on each of these
wells shortly after initial flowback in order to enhance economics
and optimize each well’s production profile. These wells are
currently averaging rates over a 14 day period of 871 BOEPD, or 191
BOEPD per 1,000 feet. The Company plans to provide average
rates over a 30 day period once this data is available. The
IP24 results from ESP installation for these six wells averaged
1,152 BOEPD, or 252 BOEPD per 1,000 feet, and are presented in the
table below.
|
|
|
|
IP24 |
IP24 |
|
|
|
Well |
Formation |
BOEPD |
BOEPD per 1,000’ LL |
Oil % |
|
|
State Blanco 58 G003 |
Wolfcamp A |
938 |
230 |
88 |
% |
|
|
State
Blanco 58 H001 |
Wolfcamp
B |
1,055 |
230 |
88 |
% |
|
|
State
Blanco 58 G001 |
Wolfcamp
B |
1,088 |
247 |
91 |
% |
|
|
Trees
Estate 77 A001 |
Wolfcamp
B |
1,115 |
238 |
92 |
% |
|
|
Trees
Estate 77 H001 |
Wolfcamp
A |
1,428 |
300 |
89 |
% |
|
|
Trees Estate 77 H003 |
Wolfcamp B |
1,290 |
269 |
93 |
% |
Northern Delaware - In the Northern Delaware,
the Company placed on production the Z&T 20 E006 in late April
targeting the 2nd Bone Spring Sand formation. The well reached an
IP 7 of 1,457 BOEPD, 73% oil, or 331 BOEPD per 1,000 feet.
Based on success with the first ESP installation
on a mature well in the Northern Delaware area, the Company
installed an ESP in April on the Weber 26 G001 well (Lower Wolfcamp
A formation) which was first placed on production in January 2017.
Shortly after installation of the ESP, the well reached production
of 501 BOEPD, which is more than double the rate just prior to
installation, representing a significant uplift to the well’s
forecasted production profile.
Financial Results
For the first quarter of 2019, the Company
reported a net loss attributable to Rosehill of $38.0 million, or
$2.75 per share, as compared to a net loss of $1.3 million, or
$0.22 per share, in the first quarter of 2018. The first quarter of
2019 included a $103.5 million non-cash, pre-tax loss on commodity
derivative instruments compared to a $18.2 million non-cash,
pre-tax gain on commodity derivative instruments in the first
quarter of 2018.
Adjusted EBITDAX totaled $46.5 million for the
first quarter of 2019, as compared to $34.9 million in the first
quarter of 2018. This increase of 33% was driven primarily by
higher production and lower per unit operating expenses, more than
offsetting the impact of lower commodity prices.
For the first quarter of 2019, average realized
prices (all prices excluding the effects of derivatives) were
$48.92 per barrel of oil, $0.85 per Mcf of natural gas and $15.26
per barrel of NGLs, resulting in a total equivalent price of $37.18
per barrel of oil equivalent (“BOE”), down 26% from the first
quarter of 2018.
The Company’s cash operating costs for the first
quarter of 2019 were $12.55 per BOE, which includes lease operating
expense (“LOE”), gathering and transportation costs, production
taxes and general and administrative expenses, and excludes costs
associated with stock-based compensation. First quarter cash
operating costs per BOE decreased 23% as compared to first quarter
of 2018, primarily attributable to increased volumes. First quarter
LOE costs were adversely impacted by operational issues with a
third party operated salt water disposal (“SWD”) well in the
Southern Delaware area resulting in increased water handling
costs. The Company expects that these increased costs will
not be incurred for the remainder of the year as it now has two
additional SWD wells with capacity in excess of 40,000 barrels per
day for its use as well as approved permits for additional SWD
wells.
Capital Expenditures and
Liquidity
During the first quarter of 2019, Rosehill
incurred capital costs, excluding asset retirement costs, of $72.4
million. The portion of capital costs related to facilities and
other items during the first quarter of 2019 was $13.3 million and
$1.3 million, respectively.
As previously announced, the Company’s drilling
and completions activity will be heavily weighted towards the first
half of the year due to increases in drilling efficiencies and
timing associated with its recently announced farm-in
agreement. The Company currently forecasts over two-thirds
its drilling and completion capital to occur in the first half of
the year and for its total capital expenditures to be approximately
equal to Adjusted EBITDAX for 2019.
As of March 31, 2019, Rosehill had $5.7 million
in cash on hand and $301.6 million in long-term debt. As of March
31, 2019, total liquidity was $98.7 million which included cash on
hand and availability under the revolving credit facility and
increases to $120 million when including the proceeds from the sale
of its assets in Lea County, New Mexico that closed in early
April.
Commodity Hedging
Included below is a summary of the Company’s
derivative contracts as of March 31, 2019.
|
|
2019 |
|
2020 |
|
2021 |
|
2022 |
|
Oil: |
|
|
|
|
|
|
|
|
Notional volume (Bbls) |
1,998,000 |
|
|
1,960,000 |
|
|
2,160,000 |
|
|
1,100,000 |
|
|
Weighted average fixed price
($/Bbl) |
$ |
53.59 |
|
|
$ |
60.09 |
|
|
$ |
61.21 |
|
|
$ |
58.42 |
|
Natural
gas: |
|
|
|
|
|
|
|
|
Notional volume (MMBtu) |
2,438,364 |
|
|
1,500,000 |
|
|
1,200,000 |
|
|
1,200,000 |
|
|
Weighted average fixed price
($/MMBtu) |
$ |
2.87 |
|
|
$ |
2.84 |
|
|
$ |
2.85 |
|
|
$ |
2.87 |
|
Ethane: |
|
|
|
|
|
|
|
|
Notional volume (Gallons) |
9,960,552 |
|
|
— |
|
|
— |
|
|
— |
|
|
Weighted average fixed price
($/Gallons) |
$ |
0.28 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Propane: |
|
|
|
|
|
|
|
|
Notional volume (Gallons) |
6,640,452 |
|
|
— |
|
|
— |
|
|
— |
|
|
Weighted average fixed price
($/Gallons) |
$ |
0.79 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Pentanes: |
|
|
|
|
|
|
|
|
Notional volume (Gallons) |
2,213,820 |
|
|
— |
|
|
— |
|
|
— |
|
|
Weighted average fixed price
($/Gallons) |
$ |
1.47 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
Oil: |
|
|
|
|
|
|
|
|
Notional volume (Bbls) |
406,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
Weighted average ceiling price
($/Bbl) |
$ |
60.98 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Weighted average floor price
($/Bbl) |
$ |
54.68 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
Oil: |
|
|
|
|
|
|
|
|
Notional volume (Bbls) |
1,332,039 |
|
|
3,294,000 |
|
|
— |
|
|
— |
|
|
Weighted average ceiling price
($/Bbl) |
$ |
68.66 |
|
|
$ |
70.29 |
|
|
$ |
— |
|
|
$ |
— |
|
|
Weighted average floor price
($/Bbl) |
$ |
57.61 |
|
|
$ |
57.50 |
|
|
$ |
— |
|
|
$ |
— |
|
|
Weighted average sold put option
price ($/Bbl) |
$ |
45.69 |
|
|
$ |
47.50 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
Midland /
Cushing: |
|
|
|
|
|
|
|
|
Notional volume (Bbls) |
3,736,039 |
|
|
5,254,000 |
|
|
2,160,000 |
|
|
1,100,000 |
|
|
Weighted average fixed price
($/Bbl) |
$ |
(4.82 |
) |
|
$ |
(0.83 |
) |
|
$ |
0.39 |
|
|
$ |
0.39 |
|
|
|
|
|
|
|
|
|
|
|
EP
Permian: |
|
|
|
|
|
|
|
|
Notional volume (MMBtu) |
2,466,780 |
|
|
2,096,160 |
|
|
— |
|
|
— |
|
|
Weighted average fixed price
($/MMBtu) |
$ |
(1.13 |
) |
|
$ |
(1.03 |
) |
|
$ |
— |
|
|
$ |
— |
|
Conference Call, Webcast and Presentation
The Company will hold a conference call to
discuss its first quarter 2019 financial and operating results on
Wednesday, May 15, 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 3571695. 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.
Equity Awards
On May 9, 2019 the Compensation Committee of
Rosehill’s Board of Directors approved the grant of equity awards
to David French, the Company’s Chief Executive Officer. The
Company approved the issuance to Mr. French of an equity award with
an aggregate value equal to $1,650,000, made up of 210,997
restricted stock units (“RSUs”) and 210,997 performance stock units
granted at target (“PSUs”). The RSUs and PSUs were granted
based on the Company’s stock price on April 15, 2019, the date Mr.
French joined the Company. The RSUs vest 1/3 each year over three
years, beginning on the first anniversary of April 15, 2019 and the
PSUs vest according to the Company’s achievement of certain
performance factors, subject in each case to Mr. French’s continued
employment through the applicable vesting date. The aggregate
value of this equity award was previously disclosed on the
Company’s Form 8-K filed with the Securities Exchange Commission on
March 11, 2019. There are no additional awards being granted at
this time.
The RSUs and PSUs were granted outside the
Company’s Long-Term Incentive Plan and as an inducement to Mr.
French entering into employment with Rosehill, in accordance with
Nasdaq Listing Rule 5635(c)(4). Pursuant to the requirements of
such rule, Rosehill is including the above disclosure in this press
release.
About Rosehill Resources
Inc.
Rosehill Resources Inc. is an independent oil
and gas exploration company with assets uniquely positioned in the
Delaware Basin portion of the Permian Basin. The Company’s strategy
includes the focused development of its multi-bench assets in the
Northern Delaware Basin and the Southern Delaware Basin, as well as
adding economic drilling inventory to support future growth.
Rosehill Resources
Inc.Operational
Highlights(Unaudited)
|
|
Three Months Ended March 31, |
|
|
2019 |
|
2018 |
Revenues: (in thousands) |
|
|
|
|
Oil sales |
|
$ |
65,853 |
|
|
$ |
51,554 |
|
Natural gas sales |
|
1,474 |
|
|
1,745 |
|
NGL sales |
|
4,533 |
|
|
2,487 |
|
Total revenues |
|
$ |
71,860 |
|
|
$ |
55,786 |
|
Average sales price (1): |
|
|
|
|
Oil (per Bbl) |
|
$ |
48.92 |
|
|
$ |
60.72 |
|
Natural gas (per Mcf) |
|
0.85 |
|
|
2.32 |
|
NGLs (per Bbl) |
|
15.26 |
|
|
19.28 |
|
Total (per Boe) |
|
$ |
37.18 |
|
|
$ |
50.58 |
|
Total, including effects of gain (loss) on settled commodity
derivatives, net (per Boe) |
|
$ |
36.65 |
|
|
$ |
47.82 |
|
Net Production: |
|
|
|
|
Oil (MBbls) |
|
1,346 |
|
|
849 |
|
Natural gas (MMcf) |
|
1,739 |
|
|
752 |
|
NGLs (MBbls) |
|
297 |
|
|
129 |
|
Total (MBoe) |
|
1,933 |
|
|
1,103 |
|
Average daily net production volume: |
|
|
|
|
Oil (Bbls/d) |
|
14,956 |
|
|
9,433 |
|
Natural gas (Mcf/d) |
|
19,322 |
|
|
8,356 |
|
NGLs (Bbls/d) |
|
3,300 |
|
|
1,433 |
|
Total (Boe/d) |
|
21,478 |
|
|
12,256 |
|
Average costs (per BOE): |
|
|
|
|
Lease operating expenses |
|
$ |
5.36 |
|
|
$ |
8.06 |
|
Production taxes |
|
1.81 |
|
|
2.39 |
|
Gathering and transportation |
|
1.22 |
|
|
0.65 |
|
Depreciation, depletion, amortization and accretion |
|
18.61 |
|
|
18.87 |
|
Exploration costs |
|
0.65 |
|
|
0.40 |
|
General and administrative, excluding stock-based compensation |
|
4.16 |
|
|
5.11 |
|
Stock-based compensation |
|
0.52 |
|
|
1.33 |
|
Loss on disposition of property and equipment |
|
— |
|
|
0.12 |
|
Total (per Boe) |
|
$ |
32.33 |
|
|
$ |
36.91 |
|
(1) Excluding the effects of realized and
unrealized commodity derivative transactions unless noted
otherwise
ROSEHILL RESOURCES
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)(In thousands,
except per share amounts)
|
|
Three Months Ended March 31, |
|
|
2019 |
|
2018 |
Revenues: |
|
|
|
|
Oil sales |
|
$ |
65,853 |
|
|
$ |
51,554 |
|
Natural gas sales |
|
1,474 |
|
|
1,745 |
|
Natural gas liquids sales |
|
4,533 |
|
|
2,487 |
|
Total revenues |
|
71,860 |
|
|
55,786 |
|
Operating
expenses: |
|
|
|
|
Lease operating expenses |
|
10,370 |
|
|
8,885 |
|
Production taxes |
|
3,503 |
|
|
2,640 |
|
Gathering and transportation |
|
2,361 |
|
|
712 |
|
Depreciation, depletion, amortization and accretion |
|
35,964 |
|
|
20,809 |
|
Exploration costs |
|
1,255 |
|
|
436 |
|
General and administrative |
|
9,055 |
|
|
7,097 |
|
Loss on disposition of property and equipment |
|
9 |
|
|
133 |
|
Total operating expenses |
|
62,517 |
|
|
40,712 |
|
Operating
income |
|
9,343 |
|
|
15,074 |
|
Other income
(expense): |
|
|
|
|
Interest expense, net |
|
(5,600 |
) |
|
(3,867 |
) |
Loss on commodity derivative instruments, net |
|
(104,571 |
) |
|
(21,285 |
) |
Other income, net |
|
62 |
|
|
132 |
|
Total other expense, net |
|
(110,109 |
) |
|
(25,020 |
) |
Loss before income
taxes |
|
(100,766 |
) |
|
(9,946 |
) |
Income tax expense (benefit) |
|
3,306 |
|
|
(2,190 |
) |
Net loss |
|
(104,072 |
) |
|
(7,756 |
) |
Net loss attributable to
noncontrolling interest |
|
(73,909 |
) |
|
(14,076 |
) |
Net loss attributable to
Rosehill Resources Inc. before preferred stock dividends |
|
(30,163 |
) |
|
6,320 |
|
Series A Preferred Stock
dividends and deemed dividends |
|
2,006 |
|
|
1,928 |
|
Series B Preferred Stock
dividends, deemed dividends, and return |
|
5,808 |
|
|
5,733 |
|
Net loss attributable
to Rosehill Resources Inc. common stockholders |
|
$ |
(37,977 |
) |
|
$ |
(1,341 |
) |
Loss per common
share: |
|
|
|
|
Basic |
|
$ |
(2.75 |
) |
|
$ |
(0.22 |
) |
Diluted |
|
$ |
(2.75 |
) |
|
$ |
(0.22 |
) |
Weighted average
common shares outstanding: |
|
|
|
|
Basic |
|
13,830 |
|
|
6,222 |
|
Diluted |
|
13,830 |
|
|
6,222 |
|
ROSEHILL RESOURCES
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(Unaudited)(In thousands, except
share and per share amounts)
|
|
March 31, 2019 |
|
December 31, 2018 |
ASSETS |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
5,652 |
|
|
$ |
20,157 |
|
Accounts receivable |
|
32,993 |
|
|
32,260 |
|
Accounts receivable, related parties |
|
— |
|
|
78 |
|
Derivative assets |
|
2,293 |
|
|
30,819 |
|
Prepaid and other current assets |
|
1,700 |
|
|
1,371 |
|
Total current assets |
|
42,638 |
|
|
84,685 |
|
Property and
equipment: |
|
|
|
|
Oil and natural gas properties (successful efforts), net |
|
703,474 |
|
|
666,797 |
|
Other property and equipment, net |
|
2,426 |
|
|
2,592 |
|
Total property and equipment, net |
|
705,900 |
|
|
669,389 |
|
Other assets, net |
|
5,355 |
|
|
4,678 |
|
Derivative assets |
|
13,796 |
|
|
58,314 |
|
Total
assets |
|
$ |
767,689 |
|
|
$ |
817,066 |
|
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’
EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable |
|
$ |
20,525 |
|
|
$ |
21,013 |
|
Accounts payable, related parties |
|
12 |
|
|
287 |
|
Derivative liabilities |
|
29,680 |
|
|
— |
|
Accrued liabilities and other |
|
37,007 |
|
|
27,335 |
|
Accrued capital expenditures |
|
35,147 |
|
|
30,529 |
|
Total current liabilities |
|
122,371 |
|
|
79,164 |
|
Long-term
liabilities: |
|
|
|
|
Long-term debt, net |
|
301,590 |
|
|
288,298 |
|
Asset retirement obligations |
|
13,772 |
|
|
13,524 |
|
Deferred tax liabilities |
|
12,272 |
|
|
9,278 |
|
Derivative liabilities |
|
641 |
|
|
696 |
|
Other liabilities |
|
3,654 |
|
|
3,658 |
|
Total long-term liabilities |
|
331,929 |
|
|
315,454 |
|
Total
liabilities |
|
454,300 |
|
|
394,618 |
|
Commitments and
contingencies |
|
|
|
|
Mezzanine
equity |
|
|
|
|
Series B Preferred Stock; $0.0001 par value, 10.0% Redeemable,
$1,000 per share liquidationpreference; of the 1,000,000 shares of
Preferred Stock authorized, 210,000 shares designated,
156,746shares issued and outstanding as of March 31, 2019 and
December 31, 2018 |
|
157,053 |
|
|
155,111 |
|
Stockholders’
equity |
|
|
|
|
Series A Preferred Stock; $0.0001 par value, 8.0% Cumulative
Perpetual Convertible, $1,000 per shareliquidation preference; of
the 1,000,000 shares of Preferred Stock authorized, 150,000 shares
designated,101,669 shares issued and outstanding as of March 31,
2019 and December 31, 2018 |
|
84,631 |
|
|
84,631 |
|
Class A Common Stock; $0.0001 par value, 250,000,000 shares
authorized and 14,287,321 and13,760,136 shares issued and
outstanding as of March 31, 2019 and December 31, 2018 |
|
1 |
|
|
1 |
|
Class B Common Stock; $0.0001 par value, 30,000,000 shares
authorized, 29,807,692 shares issued andoutstanding as of March 31,
2019 and December 31, 2018 |
|
3 |
|
|
3 |
|
Additional paid-in capital |
|
35,256 |
|
|
42,271 |
|
Retained earnings (accumulated deficit) |
|
(3,502 |
) |
|
26,661 |
|
Total common stockholders’ equity |
|
31,758 |
|
|
68,936 |
|
Noncontrolling interest |
|
39,947 |
|
|
113,770 |
|
Total stockholders’
equity |
|
156,336 |
|
|
267,337 |
|
Total liabilities,
mezzanine and stockholders’ equity |
|
$ |
767,689 |
|
|
$ |
817,066 |
|
ROSEHILL RESOURCES
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited)(In Thousands)
|
|
Three Months EndedMarch 31, |
|
|
2019 |
|
2018 |
Cash flows from
operating activities: |
|
|
|
|
Net loss |
|
(104,072 |
) |
|
$ |
(7,756 |
) |
Adjustments to reconcile net loss to net cash provided by operating
activities: |
|
|
|
|
Depreciation, depletion, amortization, accretion and impairment of
oil and gas properties |
|
35,964 |
|
|
20,809 |
|
Deferred income taxes |
|
2,994 |
|
|
(2,190 |
) |
Stock-based compensation |
|
974 |
|
|
1,462 |
|
Loss on sale of fixed assets |
|
9 |
|
|
133 |
|
Loss on derivative instruments |
|
104,490 |
|
|
21,185 |
|
Net cash received (paid) in settlement of derivative
instruments |
|
(1,821 |
) |
|
(3,043 |
) |
Amortization of debt issuance costs |
|
427 |
|
|
943 |
|
Settlement of asset retirement obligations |
|
(8 |
) |
|
(8 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
Increase in accounts receivable and accounts
receivable, related parties |
|
(650 |
) |
|
(16,719 |
) |
(Increase) decrease in prepaid and other assets |
|
(329 |
) |
|
105 |
|
Increase in accounts payable and accrued liabilities
and other |
|
13,670 |
|
|
4,162 |
|
Decrease in accounts payable, related parties |
|
(275 |
) |
|
(211 |
) |
Net cash provided by operating activities |
|
51,373 |
|
|
18,872 |
|
Cash flows from
investing activities: |
|
|
|
|
Additions to oil and natural gas properties |
|
(75,825 |
) |
|
(109,310 |
) |
Acquisition of White Wolf |
|
— |
|
|
(4,005 |
) |
Acquisition of land and leasehold, royalty and mineral
interest |
|
— |
|
|
— |
|
Deposit received - Tatanka Asset sale |
|
1,100 |
|
|
— |
|
Additions to other property and equipment |
|
(55 |
) |
|
(799 |
) |
Net cash used in investing activities |
|
(74,780 |
) |
|
(114,114 |
) |
Cash flows from
financing activities: |
|
|
|
|
Proceeds from revolving credit facility |
|
13,000 |
|
|
147,602 |
|
Repayment on revolving credit facility |
|
— |
|
|
(68,000 |
) |
Debt issuance costs |
|
(644 |
) |
|
(1,547 |
) |
Dividends paid on preferred stock |
|
(3,362 |
) |
|
(936 |
) |
Restricted stock used for tax withholdings |
|
(89 |
) |
|
— |
|
Payment on capital lease obligation |
|
(3 |
) |
|
(8 |
) |
Net cash provided by financing activities |
|
8,902 |
|
|
77,111 |
|
Net decrease in cash, cash equivalents, and restricted cash |
|
(14,505 |
) |
|
(18,131 |
) |
Cash and cash
equivalents beginning of period |
|
20,157 |
|
|
24,682 |
|
Cash and cash equivalents end of period |
|
$ |
5,652 |
|
|
$ |
6,551 |
|
ROSEHILL RESOURCES
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Continued)(Unaudited)(In
thousands)
Supplemental cash flow information and noncash
activity:
|
|
Three Months EndedMarch 31, |
|
|
2019 |
|
2018 |
Supplemental
disclosures: |
|
|
|
|
Cash paid for interest |
|
$ |
3,424 |
|
|
$ |
2,924 |
|
|
|
|
|
|
Supplemental noncash
activity: |
|
|
|
|
Asset retirement obligations
incurred |
|
$ |
66 |
|
|
$ |
1,307 |
|
Changes in accrued capital
expenditures |
|
(4,618 |
) |
|
18,254 |
|
Changes in accounts payable
for capital expenditures |
|
8,264 |
|
|
(6,526 |
) |
Series A Preferred Stock
dividends paid-in-kind |
|
— |
|
|
964 |
|
Series A Preferred Stock cash
dividends declared and payable |
|
2,006 |
|
|
964 |
|
Series B Preferred Stock
dividends paid-in-kind |
|
— |
|
|
1,486 |
|
Series B Preferred Stock cash
dividends declared and payable |
|
3,866 |
|
|
2,228 |
|
Series B Preferred Stock
return |
|
1,577 |
|
|
1,317 |
|
Series B Preferred Stock
deemed dividend |
|
365 |
|
|
291 |
|
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, amortization, and
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, 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 income (loss), the most directly comparable
GAAP financial measure.
|
Three Months Ended |
|
March 31, |
|
December 31, |
|
March 31, |
|
2019 |
|
2018 |
|
2018 |
|
(In thousands) |
Net income (loss) |
$ |
(104,072 |
) |
|
$ |
201,944 |
|
|
$ |
(7,756 |
) |
Interest expense, net |
5,600 |
|
|
5,597 |
|
|
3,867 |
|
Income tax expense
(benefit) |
3,306 |
|
|
12,639 |
|
|
(2,190 |
) |
Depreciation, depletion,
amortization and accretion |
35,964 |
|
|
37,031 |
|
|
20,809 |
|
Unrealized (gain) loss on
commodity derivatives, net |
103,548 |
|
|
(199,446 |
) |
|
18,242 |
|
Stock settled stock-based
compensation |
974 |
|
|
1,203 |
|
|
1,462 |
|
Exploration costs |
1,255 |
|
|
715 |
|
|
436 |
|
Loss on disposition of
property and equipment |
9 |
|
|
174 |
|
|
133 |
|
Other non-cash (income)
expense, net |
(81 |
) |
|
3,719 |
|
|
(100 |
) |
Adjusted EBITDAX |
$ |
46,503 |
|
|
$ |
63,576 |
|
|
$ |
34,903 |
|
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 realize the anticipated benefits of its drilling and
completion activities, 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 the section
titled “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:
David L. French |
Craig Owen |
President and Chief Executive Officer |
Senior Vice President and Chief Financial Officer |
281-675-3400 |
281-675-3400 |
|
|
John Crain |
|
Director of Investor Relations |
|
281-675-3493 |
|
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