Delaware | 001- 37907 | 46-1473923 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
370 17th Street, Suite 5300 Denver, Colorado 80202 | ||||
(Address of principal executive offices) (Zip Code) |
Exhibit No. | Description | ||
EXTRACTION OIL & GAS, INC. | ||
By: | /s/ RUSSELL T. KELLEY, JR. | |
Russell T. Kelley, Jr. | ||
Chief Financial Officer |
• | Second quarter average net sales volumes of 73,563 barrels of oil equivalent per day (BOE/d) including 38,804 barrels per day (Bbl/d) of crude oil; |
• | For the second quarter, Extraction reported net income of $8.8 million, or $0.03 per basic and diluted share1, compared to net income of $7.2 million, or $0.02 per basic and diluted share1, for the same period in 2017. Adjusted EBITDAX, Unhedged2 was $189.5 million for the second quarter, up 154% year-over-year and up 14% sequentially. Adjusted EBITDAX was $153.1 million for the second quarter, up 105% year-over-year and up 9% sequentially; and |
• | Drilling and completion (D&C) capital expenditures for the second quarter 2018 were $247 million. |
For the Three Months Ended | For the Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Sales (MBoe)(1): | 6,694 | 4,020 | 12,893 | 7,024 | |||||||||||
Oil sales (MBbl) | 3,531 | 2,101 | 6,776 | 3,312 | |||||||||||
Natural gas sales (MMcf) | 11,370 | 6,402 | 21,774 | 12,761 | |||||||||||
NGL sales (MBbl) | 1,268 | 852 | 2,488 | 1,585 | |||||||||||
Sales (BOE/d)(1): | 73,563 | 44,172 | 71,231 | 38,807 | |||||||||||
Oil sales (Bbl/d) | 38,804 | 23,088 | 37,436 | 18,298 | |||||||||||
Natural gas sales (Mcf/d) | 124,941 | 70,353 | 120,297 | 70,501 | |||||||||||
NGL sales (Bbl/d) | 13,935 | 9,358 | 13,746 | 8,759 | |||||||||||
Average sales prices(2): | |||||||||||||||
Oil sales (per Bbl) | $ | 60.46 | $ | 40.64 | $ | 58.11 | $ | 41.52 | |||||||
Oil sales with derivative settlements (per Bbl) | 48.89 | 40.70 | 47.28 | 39.14 | |||||||||||
Differential ($/Bbl) to Average NYMEX WTI | (7.45 | ) | (7.51 | ) | (7.35 | ) | (8.43 | ) | |||||||
Natural gas sales (per Mcf) | 1.74 | 2.89 | 2.02 | 3.01 | |||||||||||
Natural gas sales with derivative settlements (per Mcf) | 2.19 | 2.90 | 2.53 | 2.94 | |||||||||||
Differential ($/Mcf) to Average NYMEX Henry Hub(3) | (1.37 | ) | (0.56 | ) | (1.10 | ) | (0.40 | ) | |||||||
NGL sales (per Bbl)(3) | 21.22 | 18.61 | 21.21 | 21.10 | |||||||||||
Average price per BOE | 38.87 | 29.80 | 38.04 | 29.81 | |||||||||||
Average price per BOE with derivative settlements | 33.53 | 29.84 | 33.22 | 28.55 | |||||||||||
Expense per BOE: | |||||||||||||||
Lease operating expenses | $ | 3.10 | $ | 3.51 | $ | 3.22 | $ | 3.72 | |||||||
Transportation and gathering | 1.49 | 2.50 | 1.36 | 2.90 | |||||||||||
General and administrative expenses | 5.11 | 5.84 | 5.06 | 7.00 | |||||||||||
Cash general and administrative expenses | 2.46 | 2.64 | 2.46 | 2.93 | |||||||||||
Stock-based compensation | 2.65 | 3.20 | 2.60 | 4.07 | |||||||||||
Production taxes as a % of Revenue | 9.4 | % | 8.8 | % | 9.1 | % | 8.1 | % |
(1) | One BOE is equal to six thousand cubic feet (“Mcf”) of natural gas or one barrel (“Bbl”) of oil or NGL based on an approximate energy equivalency. This is an energy content correlation and does not reflect a value or price relationship between the commodities. |
(2) | Average prices shown in the table reflect prices both before and after the effects of our settlements of our commodity derivative contracts. Our calculation of such effects includes both gains and losses on settlements for commodity derivatives and amortization of premiums paid or received on options that settled during the period. |
(3) | As a result of the adoption of ASC 606 - Revenue from Contracts with Customers ("ASC 606") on January 1, 2018, certain costs previously classified as transportation and gathering expenses are presented on a net basis for proceeds expected to be received. For further information, see Note 2 - Adoption of ASC 606 of our Quarterly Report on Form 10-Q for the three and six months ended June 30, 2018. |
Date: | Wednesday, August 8, 2018 |
Time: | 8:00 AM MDT / 10:00 AM EDT |
Dial - In Numbers: | 1-844-229-9561 (Domestic toll-free) |
Conference ID: | 8778023 |
June 30, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 68,249 | $ | 6,768 | |||
Accounts receivable | 135,485 | 139,348 | |||||
Inventory and prepaid expenses | 24,308 | 13,017 | |||||
Commodity derivative asset | 15,313 | 4,132 | |||||
Total Current Assets | 243,355 | 163,265 | |||||
Property and Equipment (successful efforts method), at cost: | |||||||
Oil and gas properties | 4,361,943 | 3,825,912 | |||||
Less: accumulated depletion, depreciation and amortization | (908,169 | ) | (709,662 | ) | |||
Net oil and gas properties | 3,453,774 | 3,116,250 | |||||
Elevation gathering systems and facilities | 26,417 | 4,889 | |||||
Other property and equipment, net of accumulated depreciation | 30,186 | 32,429 | |||||
Net Property and Equipment | 3,510,377 | 3,153,568 | |||||
Non-Current Assets: | |||||||
Commodity derivative asset | 266 | — | |||||
Goodwill and other intangible assets, net of accumulated amortization | 55,757 | 55,453 | |||||
Other non-current assets | 14,305 | 12,383 | |||||
Total Non-Current Assets | 70,328 | 67,836 | |||||
Total Assets | $ | 3,824,060 | $ | 3,384,669 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current Liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 252,051 | $ | 211,581 | |||
Revenue and production taxes payable | 151,179 | 90,249 | |||||
Commodity derivative liability | 153,567 | 67,428 | |||||
Accrued interest payable | 22,411 | 23,807 | |||||
Asset retirement obligations | 12,792 | 6,873 | |||||
Total Current Liabilities | 592,000 | 399,938 | |||||
Non-Current Liabilities: | |||||||
Credit facility | 190,000 | 90,000 | |||||
Senior Notes, net of unamortized debt issuance costs | 1,131,579 | 933,361 | |||||
Deferred tax liability | 32,426 | 42,326 | |||||
Commodity derivative liability | 6,245 | 17,274 | |||||
Other non-current liabilities | 116,627 | 126,622 | |||||
Total Non-Current Liabilities | 1,476,877 | 1,209,583 | |||||
Total Liabilities | 2,068,877 | 1,609,521 | |||||
Commitments and Contingencies | |||||||
Series A Convertible Preferred Stock, $0.01 par value; 50,000,000 shares authorized; 185,280 issued and outstanding | 161,298 | 158,383 | |||||
Total Stockholders' Equity | 1,593,885 | 1,616,765 | |||||
Total Liabilities and Stockholders' Equity | $ | 3,824,060 | $ | 3,384,669 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues: | |||||||||||||||
Oil sales | $ | 213,481 | $ | 85,394 | $ | 393,744 | $ | 137,522 | |||||||
Natural gas sales | 19,807 | 18,526 | 43,888 | 38,423 | |||||||||||
NGL sales | 26,908 | 15,846 | 52,779 | 33,460 | |||||||||||
Total Revenues | 260,196 | 119,766 | 490,411 | 209,405 | |||||||||||
Operating Expenses: | |||||||||||||||
Lease operating expenses | 20,774 | 14,125 | 41,477 | 26,161 | |||||||||||
Transportation and gathering | 9,959 | 10,040 | 17,498 | 20,327 | |||||||||||
Production taxes | 24,389 | 10,511 | 44,712 | 16,964 | |||||||||||
Exploration expenses | 3,021 | 6,438 | 10,288 | 17,250 | |||||||||||
Depletion, depreciation, amortization and accretion | 106,774 | 68,610 | 202,981 | 119,263 | |||||||||||
Impairment of long lived assets | 128 | — | 128 | 675 | |||||||||||
(Gain) loss on sale of property and equipment | (59,902 | ) | — | (59,902 | ) | 451 | |||||||||
Acquisition transaction expenses | — | — | — | 68 | |||||||||||
General and administrative expenses | 34,231 | 23,487 | 65,200 | 49,175 | |||||||||||
Total Operating Expenses | 139,374 | 133,211 | 322,382 | 250,334 | |||||||||||
Operating Income (Loss) | 120,822 | (13,445 | ) | 168,029 | (40,929 | ) | |||||||||
Other Income (Expense): | |||||||||||||||
Commodity derivatives gain (loss) | (89,511 | ) | 33,876 | (139,839 | ) | 84,298 | |||||||||
Interest expense | (19,202 | ) | (9,021 | ) | (82,504 | ) | (18,681 | ) | |||||||
Other income | 939 | 250 | 1,267 | 818 | |||||||||||
Total Other Income (Expense) | (107,774 | ) | 25,105 | (221,076 | ) | 66,435 | |||||||||
Income (Loss) Before Income Taxes | 13,048 | 11,660 | (53,047 | ) | 25,506 | ||||||||||
Income tax (expense) benefit | (4,200 | ) | (4,420 | ) | 9,900 | (9,550 | ) | ||||||||
Net Income (Loss) | $ | 8,848 | $ | 7,240 | $ | (43,147 | ) | $ | 15,956 | ||||||
Income (Loss) Per Common Share(1) | |||||||||||||||
Basic and diluted | $ | 0.03 | $ | 0.02 | $ | (0.29 | ) | $ | 0.05 | ||||||
Weighted Average Common Shares Outstanding | |||||||||||||||
Basic and diluted | 175,762 | 171,835 | 174,992 | 171,835 |
(1) | For further information, see the reconciliation of Net Income (Loss) to Net Income (Loss) available to common shareholders in Note 10 of our Quarterly Report on Form 10-Q for the three and six months ended June 30, 2018 and 2017. |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income (loss) | $ | 8,848 | $ | 7,240 | $ | (43,147 | ) | $ | 15,956 | ||||||
Reconciliation of net income (loss) to net cash provided by operating activities: | |||||||||||||||
Depletion, depreciation, amortization and accretion | 106,774 | 68,610 | 202,981 | 119,263 | |||||||||||
Abandonment and impairment of unproved properties | 1,999 | 1,825 | 5,922 | 4,560 | |||||||||||
Impairment of long lived assets | 128 | — | 128 | 675 | |||||||||||
(Gain) loss on sale of property and equipment | (59,902 | ) | — | (59,902 | ) | 451 | |||||||||
Amortization of debt issuance costs | 926 | 867 | 11,368 | 1,712 | |||||||||||
Deferred rent | (505 | ) | (257 | ) | 280 | (156 | ) | ||||||||
(Gain) loss on commodity derivatives, including settlements and premiums paid | 52,371 | (37,987 | ) | 68,289 | (97,538 | ) | |||||||||
Earnings in unconsolidated subsidiaries | (704 | ) | 10 | (1,043 | ) | 10 | |||||||||
Distributions from unconsolidated subsidiaries | 287 | — | 626 | — | |||||||||||
Make-whole premium paid on 2021 Senior Notes | — | — | 35,600 | — | |||||||||||
Deferred income tax expense (benefit) | 4,200 | 4,420 | (9,900 | ) | 9,550 | ||||||||||
Stock-based compensation | 17,743 | 12,852 | 33,464 | 28,597 | |||||||||||
Changes in current assets and liabilities: | |||||||||||||||
Accounts receivable | 18,759 | (15,691 | ) | 5,035 | (11,595 | ) | |||||||||
Inventory and prepaid expenses | (459 | ) | (243 | ) | (812 | ) | (103 | ) | |||||||
Accounts payable and accrued liabilities | 13,798 | 4,727 | (10,248 | ) | (3,186 | ) | |||||||||
Revenue and production taxes payable | 3,374 | (10,358 | ) | 54,879 | (1,773 | ) | |||||||||
Accrued interest payable | 3,306 | 10,829 | (1,396 | ) | 356 | ||||||||||
Asset retirement expenditures | (3,107 | ) | (350 | ) | (5,034 | ) | (952 | ) | |||||||
Net cash provided by operating activities | 167,836 | 46,494 | 287,090 | 65,827 | |||||||||||
Cash flows from investing activities: | |||||||||||||||
Oil and gas property additions | (261,085 | ) | (237,499 | ) | (519,154 | ) | (572,105 | ) | |||||||
Acquired oil and gas properties | — | (13,395 | ) | — | (17,225 | ) | |||||||||
Sale of property and equipment | 72,345 | — | 72,345 | 2,000 | |||||||||||
Elevation gathering systems and facilities additions | (10,219 | ) | — | (16,055 | ) | — | |||||||||
Other property and equipment additions | (1,395 | ) | (2,559 | ) | (2,712 | ) | (5,790 | ) | |||||||
Distributions from unconsolidated subsidiaries, return of capital | (137 | ) | — | — | — | ||||||||||
Investment in unconsolidated subsidiaries | (293 | ) | — | (293 | ) | — | |||||||||
Net cash used in investing activities | (200,784 | ) | (253,453 | ) | (465,869 | ) | (593,120 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Borrowings under credit facility | 185,000 | — | 430,000 | — | |||||||||||
Repayments under credit facility | (95,000 | ) | — | (330,000 | ) | — | |||||||||
Proceeds from the issuance of 2026 Senior Notes | — | — | 739,664 | — | |||||||||||
Repayments of 2021 Senior Notes | — | — | (550,000 | ) | — | ||||||||||
Make-whole premium paid on 2021 Senior Notes | — | — | (35,600 | ) | — | ||||||||||
Repurchase of shares | — | — | (2,309 | ) | — | ||||||||||
Payment of employee payroll withholding taxes | (226 | ) | — | (2,531 | ) | — | |||||||||
Dividends on Series A Preferred Stock | (2,722 | ) | (2,721 | ) | (5,443 | ) | (4,958 | ) | |||||||
Debt issuance costs | (950 | ) | (95 | ) | (3,055 | ) | (109 | ) | |||||||
Equity issuance costs | (268 | ) | (5 | ) | (466 | ) | (1,487 | ) | |||||||
Net cash provided by (used in) financing activities | 85,834 | (2,821 | ) | 240,260 | (6,554 | ) | |||||||||
Increase (decrease) in cash, cash equivalents and restricted cash | 52,886 | (209,780 | ) | 61,481 | (533,847 | ) | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | 15,363 | 306,869 | 6,768 | 630,936 | |||||||||||
Cash, cash equivalents and restricted cash at end of the period | $ | 68,249 | $ | 97,089 | $ | 68,249 | $ | 97,089 | |||||||
Supplemental cash flow information: | |||||||||||||||
Property and equipment included in accounts payable and accrued liabilities | $ | 197,577 | $ | 134,483 | $ | 197,577 | $ | 134,483 | |||||||
Cash paid for interest | $ | 17,073 | $ | 507 | $ | 41,607 | $ | 22,256 | |||||||
Accretion of beneficial conversion feature of Series A Preferred Stock | $ | 1,476 | $ | 1,331 | $ | 2,914 | $ | 2,627 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Reconciliation of Net Income (Loss) to Adjusted EBITDAX: | |||||||||||||||
Net income (loss) | $ | 8,848 | $ | 7,240 | $ | (43,147 | ) | $ | 15,956 | ||||||
Add back: | |||||||||||||||
Depletion, depreciation, amortization and accretion | 106,774 | 68,610 | 202,981 | 119,263 | |||||||||||
Impairment of long lived assets | 128 | — | 128 | 675 | |||||||||||
Exploration expenses | 3,021 | 6,438 | 10,288 | 17,250 | |||||||||||
(Gain) loss on sale of property and equipment | (59,902 | ) | — | (59,902 | ) | 451 | |||||||||
Acquisition transaction expenses | — | — | — | 68 | |||||||||||
(Gain) loss on commodity derivatives | 89,511 | (33,876 | ) | 139,839 | (84,298 | ) | |||||||||
Settlements on commodity derivative instruments | (35,652 | ) | (143 | ) | (58,905 | ) | (9,184 | ) | |||||||
Premiums paid for derivatives that settled during the period | (730 | ) | 313 | (3,235 | ) | 313 | |||||||||
Stock-based compensation expense | 17,743 | 12,852 | 33,464 | 28,597 | |||||||||||
Amortization of debt issuance costs | 926 | 867 | 11,368 | 1,712 | |||||||||||
Make-whole premium on 2021 Senior Notes | — | — | 35,600 | — | |||||||||||
Interest expense | 18,276 | 8,154 | 35,536 | 16,969 | |||||||||||
Income tax expense (benefit) | 4,200 | 4,420 | (9,900 | ) | 9,550 | ||||||||||
Adjusted EBITDAX | $ | 153,143 | $ | 74,875 | $ | 294,115 | $ | 117,322 | |||||||
Deduct: | |||||||||||||||
Settlements on commodity derivative instruments | (35,652 | ) | (143 | ) | (58,905 | ) | (9,184 | ) | |||||||
Premiums paid for derivatives that settled during the period | (730 | ) | 313 | (3,235 | ) | 313 | |||||||||
Adjusted EBITDAX, Unhedged | $ | 189,525 | $ | 74,705 | $ | 356,255 | $ | 126,193 |