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
May 21, 2019, 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 oil and 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, 2018 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, gains or losses on sold investments or properties and unrealized commodity gains or losses. 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.