UNITED STATES |
SECURITIES AND EXCHANGE COMMISSION |
WASHINGTON, D.C. 20549 |
FORM 8‑K |
CURRENT REPORT |
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Date of Report (Date of earliest event reported): March 2, 2017 |
CLAYTON WILLIAMS ENERGY, INC. |
(Exact name of Registrant as specified in its charter) |
Delaware | 001-10924 | 75-2396863 | ||
(State or other jurisdiction of | (Commission File | (I.R.S. Employer | ||
incorporation or organization) | Number) | Identification Number) |
6 Desta Drive, Suite 6500, Midland, Texas | 79705-5510 | |
(Address of principal executive offices) | (Zip code) |
Registrant's Telephone Number, including area code: (432) 682-6324 |
Not applicable |
(Former name, former address and former fiscal year, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2 (b)) |
o Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4 (c)) |
Exhibit Number | Description | |
99.1 | News release dated March 2, 2017 by Clayton Williams Energy, Inc. announcing financial results for the quarter and year ended December 31, 2016 and proved reserves as of December 31, 2016. |
SIGNATURES |
CLAYTON WILLIAMS ENERGY, INC. |
Date: | March 2, 2017 | By: | /s/ Mel G. Riggs |
Mel G. Riggs | |||
President | |||
Date: | March 2, 2017 | By: | /s/ Jaime R. Casas |
Jaime R. Casas | |||
Senior Vice President and Chief Financial | |||
Officer |
• | Oil and Gas Production of 13.7 MBOE/d |
• | Cash flow from operating activities of $10.7 million |
• | Liquidity of $671.1 million |
• | Total Proved Reserves of 34.8 MMBOE |
• | 84% Oil and NGL and 63% Proved Developed |
• | Announced Proposed Merger with Noble Energy, Inc. |
• | Purchase of Net Mineral Acres in Southern Reeves County, Texas |
• | Sale of Giddings Area assets for $400 million |
• | Oil and gas sales, excluding amortized deferred revenues, decreased $54.1 million to $158.8 million in 2016 from $212.9 million in 2015. Production variances accounted for $30.7 million of the decrease and price variances accounted for $23.4 million of the decrease. Average realized oil prices were $38.58 per barrel in 2016 versus $44.76 per barrel in 2015, average realized gas prices were $2.31 per Mcf in 2016 versus $2.52 per Mcf in 2015, and average realized natural gas liquids (“NGL”) prices were $13.26 per barrel in 2016 versus $13.07 per barrel in 2015. Amortized deferred revenue in 2016 totaled $1.5 million as compared to $4.5 million in 2015. |
• | Oil, gas and NGL production per barrel of oil equivalent per day (“BOE/d”) decreased 14% in 2016, to 13,652 BOE/d, as compared to 15,818 BOE/d in 2015, with oil production |
• | Production costs in 2016 were $70.9 million versus $87.6 million in 2015 due to lower oilfield service costs and decreased activity. After giving effect to a 14% decrease in total production, production costs on a BOE basis, excluding production taxes, decreased 4% to $12.68 per BOE in 2016 versus $13.23 per BOE in 2015. |
• | Interest expense for 2016 was $93.7 million versus $54.4 million for 2015. The increase was due primarily to $44.3 million of incremental interest expense on funded indebtedness incurred under a second lien term loan credit facility issued in connection with a refinancing in March 2016 (the “Refinancing”). For the second and third quarters of 2016, the Company elected to pay interest on the term loan facility in-kind and resulted in an increase in the principal amount of the term loan to $377.2 million. |
• | The Company accounts for the warrants issued in connection with the Refinancing as derivative instruments and carries the warrants as a non-current liability at their fair value. The Company recorded a $230 million loss on change in fair value in 2016 due primarily to the impact on the valuation model of a 730% increase in the market price of the Company’s common stock from $14.37 at March 15, 2016 to $119.26 at December 31, 2016. |
• | Loss on commodity derivatives for 2016 was $20.3 million (including a $7.4 million loss on settled contracts) versus a gain on commodity derivatives in 2015 of $12.5 million (including a $12.5 million gain on settled contracts). See accompanying tables for additional information about the Company’s accounting for commodity derivatives. |
• | Lower commodity prices negatively impacted our results of operations due to asset impairments. The Company recorded impairments of property and equipment of $7.6 million in 2016, of which $5.2 million related primarily to impairments of proved non-core properties located in North Dakota, Oklahoma, California and the Cotton Valley area of Texas and $2.4 million related to the impairment of certain drilling rigs and related equipment to reduce the carrying value to their estimated fair values. By comparison, the Company recorded impairments of property and equipment of $41.9 million in 2015, of which $37.9 million related primarily to impairments of proved non-core properties in the Permian Basin and Oklahoma and $4 million related to the impairment of certain drilling rigs and related equipment to reduce the carrying value to their estimated fair values. |
• | The Company recorded a net gain of $118.8 million on sales of assets and impairment of inventory in 2016 compared to a net loss of $3 million in 2015. The 2016 gain related primarily to the sale of substantially all of the Company’s assets in the Giddings Area in East Central Texas in December 2016 and the sale of interests in certain wells in Glasscock County, Texas in July 2016. The 2015 loss related primarily to the write-down of inventory to reduce |
• | The Company recorded an $8.4 million charge to fully impair the carrying value of the Company’s investment in Dalea Investment Group, LLC in 2016, as compared to a partial impairment of this investment of $2.6 million in 2015. |
• | General and administrative (“G&A”) expenses for 2016 were $23 million versus $22.8 million for 2015. G&A expense increased due primarily to increases in salary and personnel expense. Changes in compensation expense related to the Company’s APO Reward Plans accounted for a $7.9 million decrease ($7.9 million credit in 2016 versus a negligible credit in 2015) which was due primarily to reductions in previously accrued compensation associated with the APO Reward Plans affected by the Giddings sale. Compensation expense related to issuances of restricted stock and stock options under the Company’s long-term incentive plan (“LTIP”) accounted for a $5.7 million increase. |
• | The Company redeemed $100 million of 7.75% Senior Notes due 2019 (“2019 Senior Notes”) in a tender offer in August 2016 and recorded a gain on early extinguishment of long-term debt during 2016 of $4 million. |
• | Oil and gas sales for 4Q16, excluding amortized deferred revenues, increased $7.9 million to $46.6 million in 4Q16 from $38.7 million in 4Q15. Price variances accounted for $8.5 million of the increase and production variances accounted for $0.6 million of the decrease. Average realized oil prices were $44.87 per barrel in 4Q16 versus $36.91 per barrel in 4Q15, average realized gas prices were $2.70 per Mcf in 4Q16 versus $2.09 per Mcf in 4Q15, and average realized NGL prices were $16.72 per barrel in 4Q16 versus $13.00 per barrel in 4Q15. Amortized deferred revenue in 4Q16 totaled $0.4 million as compared to $0.3 million in 4Q15. |
• | Oil, gas and NGL production per BOE/d decreased 4% in 4Q16 to 13,441 BOE/d as compared to 13,939 BOE/d in 4Q15, with oil production decreasing 1% to 9,957 barrels per day, gas production decreasing 15% to 12,359 Mcf per day, and NGL production decreasing 1% to 1,424 barrels per day. Oil and NGL production accounted for approximately 85% of the Company’s total BOE production in 4Q16 versus 83% in 4Q15. After giving effect to the |
• | Production costs in 4Q16 were $16.8 million versus $20.4 million in 4Q15 due to lower oilfield service costs and decreased activity. Production costs on a BOE basis, excluding production taxes, decreased 17% to $11.71 per BOE in 4Q16 versus $14.07 per BOE in 4Q15. |
• | Interest expense for 4Q16 was $23.5 million versus $14 million for 4Q15. The increase was due primarily to $13.1 million of incremental interest expense on funded indebtedness incurred under a second lien term loan credit facility issued in connection with the Refinancing. |
• | The Company accounts for the warrants issued in connection with the Refinancing as derivative instruments and carries the warrants as a non-current liability at their fair value. The Company recorded a $75 million loss on change in fair value in 4Q16 due primarily to the impact on the valuation model of a 40% increase in the market price of the Company’s common stock from $85.44 at September 30, 2016 to $119.26 at December 31, 2016. |
• | Loss on commodity derivatives for 4Q16 was $6.3 million (including a $5 million loss on settled contracts) versus a gain on commodity derivatives in 4Q15 of $2.1 million (including a $7.9 million gain on settled contracts). See accompanying tables for additional information about the Company’s accounting for commodity derivatives. |
• | Lower commodity prices negatively impacted our results of operations due to asset impairments. The Company recorded impairments of property and equipment of $4.2 million in 4Q16, of which $1.8 million related primarily to impairments of proved non-core properties in North Dakota and $2.4 million related to the impairment of certain drilling rigs and related equipment to reduce the carrying value to their estimated fair values. By comparison, the Company recorded impairments of property and equipment of $36.3 million in 4Q15, of which $32.3 million related primarily to impairments of proved non-core properties in the Permian Basin and Oklahoma and $4 million related to the impairment of certain drilling rigs and related equipment to reduce the carrying value to their estimated fair values. |
• | The Company recorded a net gain of $110.8 million on sales of assets and impairment of inventory in 4Q16 compared to a net loss of $3.9 million in 4Q15. The 4Q16 gain related primarily to the sale of substantially all of the Company’s assets in the Giddings Area in East Central Texas in December 2016 and the 4Q15 loss related primarily to the write-down of inventory to reduce the carrying value to the estimated fair value. |
• | G&A expenses were negligible for 4Q16 versus a $2.3 million credit for 4Q15. G&A expense increased due primarily to increases in salary and personnel expense. Changes in compensation expense related to the Company’s APO Reward Plans accounted for a decrease of $8.5 million ($15.2 million credit in 4Q16 versus a $6.7 million credit in 4Q15) which was due primarily to reductions in previously accrued compensation associated with the APO Reward Plans affected by the Giddings sale. Compensation expense related to issuances of restricted stock and stock options under the Company’s LTIP accounted for a $4.9 million increase. |
MMBOE | |||
Total proved reserves, December 31, 2015 | 46.6 | ||
Extensions and discoveries | 4.1 | ||
Revisions | (0.2 | ) | |
Sales of reserves | (10.7 | ) | |
Production | (5.0 | ) | |
Total proved reserves, December 31, 2016 | 34.8 |
CLAYTON WILLIAMS ENERGY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share) | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
REVENUES | |||||||||||||||
Oil and gas sales | $ | 46,980 | $ | 38,946 | $ | 160,331 | $ | 217,485 | |||||||
Midstream services | 1,791 | 1,408 | 5,688 | 6,122 | |||||||||||
Drilling rig services | — | — | — | 23 | |||||||||||
Other operating revenues | 112,693 | 64 | 123,392 | 8,742 | |||||||||||
Total revenues | 161,464 | 40,418 | 289,411 | 232,372 | |||||||||||
COSTS AND EXPENSES | |||||||||||||||
Production | 16,760 | 20,369 | 70,920 | 87,557 | |||||||||||
Exploration: | |||||||||||||||
Abandonments and impairments | 29 | 1,504 | 3,536 | 6,509 | |||||||||||
Seismic and other | 504 | 108 | 925 | 1,318 | |||||||||||
Midstream services | 809 | 349 | 2,173 | 1,688 | |||||||||||
Drilling rig services | 347 | 820 | 3,938 | 5,238 | |||||||||||
Depreciation, depletion and amortization | 30,474 | 40,626 | 145,614 | 162,262 | |||||||||||
Impairment of property and equipment | 4,155 | 36,297 | 7,593 | 41,917 | |||||||||||
Accretion of asset retirement obligations | 1,004 | 1,009 | 4,364 | 3,945 | |||||||||||
General and administrative | (39 | ) | (2,314 | ) | 22,988 | 22,788 | |||||||||
Other operating expenses | 1,952 | 4,106 | 5,046 | 12,585 | |||||||||||
Total costs and expenses | 55,995 | 102,874 | 267,097 | 345,807 | |||||||||||
Operating income (loss) | 105,469 | (62,456 | ) | 22,314 | (113,435 | ) | |||||||||
OTHER INCOME (EXPENSE) | |||||||||||||||
Interest expense | (23,469 | ) | (13,971 | ) | (93,693 | ) | (54,422 | ) | |||||||
Gain on early extinguishment of long-term debt | — | — | 3,967 | — | |||||||||||
Loss on change in fair value of common stock warrants | (75,024 | ) | — | (229,980 | ) | — | |||||||||
Gain (loss) on commodity derivatives | (6,292 | ) | 2,088 | (20,289 | ) | 12,519 | |||||||||
Impairment of investment and other | 1,035 | (304 | ) | (4,797 | ) | 2,003 | |||||||||
Total other income (expense) | (103,750 | ) | (12,187 | ) | (344,792 | ) | (39,900 | ) | |||||||
Income (loss) before income taxes | 1,719 | (74,643 | ) | (322,478 | ) | (153,335 | ) | ||||||||
Income tax (expense) benefit | (28,896 | ) | 27,434 | 30,327 | 55,139 | ||||||||||
NET LOSS | $ | (27,177 | ) | $ | (47,209 | ) | $ | (292,151 | ) | $ | (98,196 | ) | |||
Net loss per common share: | |||||||||||||||
Basic | $ | (1.54 | ) | $ | (3.88 | ) | $ | (20.87 | ) | $ | (8.07 | ) | |||
Diluted | $ | (1.54 | ) | $ | (3.88 | ) | $ | (20.87 | ) | $ | (8.07 | ) | |||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 17,608 | 12,170 | 14,000 | 12,170 | |||||||||||
Diluted | 17,608 | 12,170 | 14,000 | 12,170 |
CLAYTON WILLIAMS ENERGY, INC. CONSOLIDATED BALANCE SHEETS (In thousands) ASSETS | |||||||
December 31, | December 31, | ||||||
2016 | 2015 | ||||||
CURRENT ASSETS | (Unaudited) | ||||||
Cash and cash equivalents | $ | 573,025 | $ | 7,780 | |||
Accounts receivable: | |||||||
Oil and gas sales | 18,752 | 16,660 | |||||
Joint interest and other, net | 4,148 | 3,661 | |||||
Affiliates | 258 | 260 | |||||
Inventory | 25,781 | 31,455 | |||||
Deferred income taxes | 6,520 | 6,526 | |||||
Prepaids and other | 2,702 | 2,463 | |||||
631,186 | 68,805 | ||||||
PROPERTY AND EQUIPMENT | |||||||
Oil and gas properties, successful efforts method | 1,717,209 | 2,585,502 | |||||
Pipelines and other midstream facilities | 63,228 | 60,120 | |||||
Contract drilling equipment | 118,256 | 123,876 | |||||
Other | 20,822 | 19,371 | |||||
1,919,515 | 2,788,869 | ||||||
Less accumulated depreciation, depletion and amortization | (1,063,379 | ) | (1,587,585 | ) | |||
Property and equipment, net | 856,136 | 1,201,284 | |||||
OTHER ASSETS | |||||||
Investments and other | 7,317 | 17,331 | |||||
$ | 1,494,639 | $ | 1,287,420 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
CURRENT LIABILITIES | |||||||
Accounts payable: | |||||||
Trade | $ | 44,809 | $ | 29,197 | |||
Oil and gas sales | 20,862 | 19,490 | |||||
Affiliates | 252 | 383 | |||||
Fair value of commodity derivatives | 12,895 | — | |||||
Accrued liabilities and other | 27,948 | 16,669 | |||||
106,766 | 65,739 | ||||||
NON-CURRENT LIABILITIES | |||||||
Long-term debt | 847,995 | 742,410 | |||||
Fair value of common stock warrants | 246,743 | — | |||||
Deferred income taxes | 76,590 | 108,996 | |||||
Asset retirement obligations | 47,223 | 48,728 | |||||
Accrued compensation under non-equity award plans | 4,655 | 16,254 | |||||
Deferred revenue from volumetric production payment and other | 4,136 | 5,695 | |||||
1,227,342 | 922,083 | ||||||
SHAREHOLDERS’ EQUITY | |||||||
Preferred stock, par value $.10 per share | — | — | |||||
Common stock, par value $.10 per share | 1,763 | 1,216 | |||||
Additional paid-in capital | 305,223 | 152,686 | |||||
Retained earnings (accumulated deficit) | (146,455 | ) | 145,696 | ||||
Total shareholders' equity | 160,531 | 299,598 | |||||
$ | 1,494,639 | $ | 1,287,420 |
CLAYTON WILLIAMS ENERGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||
Net loss | $ | (27,177 | ) | $ | (47,209 | ) | $ | (292,151 | ) | $ | (98,196 | ) | |||
Adjustments to reconcile net loss to cash provided by (used in) operating activities: | |||||||||||||||
Depreciation, depletion and amortization | 30,474 | 40,626 | 145,614 | 162,262 | |||||||||||
Impairment of property and equipment | 4,155 | 36,297 | 7,593 | 41,917 | |||||||||||
Abandonments and impairments | 29 | 1,504 | 3,536 | 6,509 | |||||||||||
(Gain) loss on sales of assets and impairment of inventory, net | (110,848 | ) | 3,853 | (118,786 | ) | 3,018 | |||||||||
Deferred income tax expense (benefit) | 26,823 | (27,513 | ) | (32,400 | ) | (55,218 | ) | ||||||||
Non-cash employee compensation | (13,264 | ) | (7,079 | ) | (6,019 | ) | (2,674 | ) | |||||||
(Gain) loss on commodity derivatives | 6,292 | (2,088 | ) | 20,289 | (12,519 | ) | |||||||||
Cash settlements of commodity derivatives | (5,023 | ) | 7,934 | (7,394 | ) | 12,519 | |||||||||
Loss on change in fair value of common stock warrants | 75,024 | — | 229,980 | — | |||||||||||
Accretion of asset retirement obligations | 1,004 | 1,009 | 4,364 | 3,945 | |||||||||||
Amortization of debt issue costs and original issue discount | 1,589 | 1,005 | 7,106 | 3,246 | |||||||||||
Gain on early extinguishment of long-term debt | — | — | (3,967 | ) | — | ||||||||||
Paid in-kind interest expense | — | — | 27,196 | — | |||||||||||
Amortization of deferred revenue from volumetric production payment | (413 | ) | (1,641 | ) | (1,479 | ) | (6,822 | ) | |||||||
Impairment of investment and other | 221 | 873 | 8,751 | 1,542 | |||||||||||
Changes in operating working capital: | |||||||||||||||
Accounts receivable | (1,679 | ) | 5,510 | (2,577 | ) | 30,817 | |||||||||
Accounts payable | 12,359 | (3,803 | ) | 10,657 | (35,860 | ) | |||||||||
Other | 3,195 | (12,115 | ) | 10,414 | (2,327 | ) | |||||||||
Net cash provided by (used in) operating activities | 2,761 | (2,837 | ) | 10,727 | 52,159 | ||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||
Additions to property and equipment | (49,210 | ) | (24,147 | ) | (111,541 | ) | (179,827 | ) | |||||||
Termination of volumetric production payment | — | — | — | (13,703 | ) | ||||||||||
Net redemption of short-term investments | 40,041 | — | — | — | |||||||||||
Proceeds from sales of assets | 396,536 | 23,976 | 423,905 | 71,460 | |||||||||||
(Increase) decrease in equipment inventory | (138 | ) | 603 | 1,414 | 1,733 | ||||||||||
Proceeds from volumetric production payment and other | 138 | 1,443 | (551 | ) | 2,942 | ||||||||||
Net cash provided by (used in) investing activities | 387,367 | 1,875 | 313,227 | (117,395 | ) | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||
Proceeds from long-term debt | — | — | 343,237 | 45,000 | |||||||||||
Net repayments of Senior Notes | — | — | (95,001 | ) | — | ||||||||||
Repayments of long-term debt | — | — | (160,000 | ) | — | ||||||||||
Payment of debt issuance costs | (90 | ) | — | (11,048 | ) | — | |||||||||
Proceeds from sale of common stock | (6 | ) | — | 147,340 | — | ||||||||||
Proceeds from issuance of common stock warrants | — | — | 16,763 | — | |||||||||||
Net cash provided by (used in) financing activities | (96 | ) | — | 241,291 | 45,000 | ||||||||||
(Continued) |
CLAYTON WILLIAMS ENERGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED (Unaudited) (In thousands) | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 390,032 | (962 | ) | 565,245 | (20,236 | ) | |||||||||
CASH AND CASH EQUIVALENTS | |||||||||||||||
Beginning of period | 182,993 | 8,742 | 7,780 | 28,016 | |||||||||||
End of period | $ | 573,025 | $ | 7,780 | $ | 573,025 | $ | 7,780 |
Adjusted net loss is presented as a supplemental non-GAAP financial measure because of its wide acceptance by financial analysts, investors, debt holders, banks, rating agencies and other financial statement users as a tool for operating trends analysis and industry comparisons. Adjusted net loss is not an alternative to net loss presented in conformity with GAAP. | |||||||||||||||
The Company defines adjusted net loss as net loss before changes in fair value of commodity derivatives and common stock warrants, abandonments and impairments, impairments of property and equipment, net (gain) loss on sales of assets and impairment of inventory, gain on early extinguishment of long-term debt, amortization of deferred revenue from volumetric production payment, impairment of investments, certain non-cash and unusual items and the impact on taxes of the adjustments for each period presented. | |||||||||||||||
The following table is a reconciliation of net loss (GAAP) to adjusted net loss (non-GAAP): | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net loss | $ | (27,177 | ) | $ | (47,209 | ) | $ | (292,151 | ) | $ | (98,196 | ) | |||
(Gain) loss on commodity derivatives | 6,292 | (2,088 | ) | 20,289 | (12,519 | ) | |||||||||
Cash settlements of commodity derivatives | (5,023 | ) | 7,934 | (7,394 | ) | 12,519 | |||||||||
Loss on change in fair value of common stock warrants | 75,024 | — | 229,980 | — | |||||||||||
Abandonments and impairments | 29 | 1,504 | 3,536 | 6,509 | |||||||||||
Impairment of property and equipment | 4,155 | 36,297 | 7,593 | 41,917 | |||||||||||
Net (gain) loss on sales of assets and impairment of inventory | (110,848 | ) | 3,853 | (118,786 | ) | 3,018 | |||||||||
Gain on early extinguishment of long-term debt | — | — | (3,967 | ) | — | ||||||||||
Amortization of deferred revenue from volumetric production payment | (413 | ) | (1,641 | ) | (1,479 | ) | (6,822 | ) | |||||||
Non-cash employee compensation | (13,264 | ) | (7,079 | ) | (6,019 | ) | (2,674 | ) | |||||||
Impairment of investment and other | 221 | 873 | 8,751 | 1,542 | |||||||||||
Tax impact (a) | 44,807 | (14,592 | ) | 31,972 | (15,656 | ) | |||||||||
Adjusted net loss | $ | (26,197 | ) | $ | (22,148 | ) | $ | (127,675 | ) | $ | (70,362 | ) | |||
Adjusted earnings per share: | |||||||||||||||
Diluted | $ | (1.49 | ) | $ | (1.82 | ) | $ | (9.12 | ) | $ | (5.78 | ) | |||
Weighted average common shares outstanding: | |||||||||||||||
Diluted | 17,608 | 12,170 | 14,000 | 12,170 | |||||||||||
Effective tax rates | 37.7 | % | 36.8 | % | 32.8 | % | 36.0 | % | |||||||
______ |
(a) | The tax impact is computed utilizing the Company’s effective tax rate on the adjustments for each period presented, giving effect to the loss on change in fair value of common stock warrants being non-deductible for income tax purposes. |
CLAYTON WILLIAMS ENERGY, INC. COMPUTATION OF EBITDAX (NON-GAAP) (Unaudited) (In thousands) | |||||||||||||||
EBITDAX is presented as a supplemental non-GAAP financial measure because of its wide acceptance by financial analysts, investors, debt holders, banks, rating agencies and other financial statement users as an indication of an entity's ability to meet its debt service obligations and to internally fund its exploration and development activities. EBITDAX is not an alternative to net loss or cash flow from operating activities, or any other measure of financial performance presented in conformity with GAAP. | |||||||||||||||
The Company defines EBITDAX as net loss before interest expense, income taxes, exploration costs, net (gain) loss on sales of assets and impairment of inventory, gain on early extinguishment of long-term debt and all non-cash items in the Company's statements of operations, including depreciation, depletion and amortization, impairment of property and equipment, accretion of asset retirement obligations, amortization of deferred revenue from volumetric production payment, certain employee compensation, changes in fair value of commodity derivatives and common stock warrants, impairment of investments and certain non-cash and unusual items. | |||||||||||||||
The following table reconciles net loss to EBITDAX: | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net loss | $ | (27,177 | ) | $ | (47,209 | ) | $ | (292,151 | ) | $ | (98,196 | ) | |||
Interest expense | 23,469 | 13,971 | 93,693 | 54,422 | |||||||||||
Income tax expense (benefit) | 28,896 | (27,434 | ) | (30,327 | ) | (55,139 | ) | ||||||||
Exploration: | |||||||||||||||
Abandonments and impairments | 29 | 1,504 | 3,536 | 6,509 | |||||||||||
Seismic and other | 504 | 108 | 925 | 1,318 | |||||||||||
Net (gain) loss on sales of assets and impairment of inventory | (110,848 | ) | 3,853 | (118,786 | ) | 3,018 | |||||||||
Gain on early extinguishment of long-term debt | — | — | (3,967 | ) | — | ||||||||||
Depreciation, depletion and amortization | 30,474 | 40,626 | 145,614 | 162,262 | |||||||||||
Impairment of property and equipment | 4,155 | 36,297 | 7,593 | 41,917 | |||||||||||
Accretion of asset retirement obligations | 1,004 | 1,009 | 4,364 | 3,945 | |||||||||||
Amortization of deferred revenue from volumetric production payment | (413 | ) | (1,641 | ) | (1,479 | ) | (6,822 | ) | |||||||
Non-cash employee compensation | (13,264 | ) | (7,079 | ) | (6,019 | ) | (2,674 | ) | |||||||
(Gain) loss on commodity derivatives | 6,292 | (2,088 | ) | 20,289 | (12,519 | ) | |||||||||
Cash settlements of commodity derivatives | (5,023 | ) | 7,934 | (7,394 | ) | 12,519 | |||||||||
Loss on change in fair value of common stock warrants | 75,024 | — | 229,980 | — | |||||||||||
Impairment of investment and other | 221 | 873 | 8,751 | 1,542 | |||||||||||
EBITDAX (a) | $ | 13,343 | $ | 20,724 | $ | 54,622 | $ | 112,102 | |||||||
The following table reconciles net cash provided by (used in) operating activities to EBITDAX: | |||||||||||||||
Net cash provided by (used in) operating activities | $ | 2,761 | $ | (2,837 | ) | $ | 10,727 | $ | 52,159 | ||||||
Changes in operating working capital | (13,875 | ) | 10,408 | (18,494 | ) | 7,370 | |||||||||
Seismic and other | 504 | 108 | 925 | 1,318 | |||||||||||
Current income tax provision | 2,073 | 79 | 2,073 | 79 | |||||||||||
Cash interest expense | 21,880 | 12,966 | 59,391 | 51,176 | |||||||||||
EBITDAX (a) | $ | 13,343 | $ | 20,724 | $ | 54,622 | $ | 112,102 | |||||||
______ |
(a) | In December 2016, the Company sold substantially all of its assets in the Giddings Area in East Central Texas. Revenue, net of direct expenses, associated with the sold properties was $8.1 million during the three months ended December 31, 2016, $8.7 million during the three months ended December 31 2015, $30.3 million for the year ended December 31, 2016 and $66.2 million for the year ended December 31, 2015. |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Oil and Gas Production Data: | |||||||||||||||
Oil (MBbls) | 916 | 927 | 3,623 | 4,257 | |||||||||||
Gas (MMcf) | 1,137 | 1,340 | 4,893 | 5,798 | |||||||||||
Natural gas liquids (MBbls) | 131 | 132 | 558 | 550 | |||||||||||
Total (MBOE)(a) | 1,237 | 1,282 | 4,997 | 5,773 | |||||||||||
Total (BOE/d) | 13,441 | 13,939 | 13,652 | 15,818 | |||||||||||
Average Realized Prices (b) (c): | |||||||||||||||
Oil ($/Bbl) | $ | 44.87 | $ | 36.91 | $ | 38.58 | $ | 44.76 | |||||||
Gas ($/Mcf) | $ | 2.70 | $ | 2.09 | $ | 2.31 | $ | 2.52 | |||||||
Natural gas liquids ($/Bbl) | $ | 16.72 | $ | 13.00 | $ | 13.26 | $ | 13.07 | |||||||
Gain (Loss) on Settled Commodity Derivative Contracts (c): | |||||||||||||||
($ in thousands, except per unit) | |||||||||||||||
Oil: | |||||||||||||||
Cash settlements received (paid) | $ | (5,023 | ) | $ | 7,934 | $ | (7,394 | ) | $ | 12,519 | |||||
Per unit produced ($/Bbl) | $ | (5.48 | ) | $ | 8.56 | $ | (2.04 | ) | $ | 2.94 | |||||
Average Daily Production (d): | |||||||||||||||
Oil (Bbls): | |||||||||||||||
Permian Basin Area: | |||||||||||||||
Delaware Basin | 4,091 | 3,026 | 3,395 | 3,426 | |||||||||||
Other | 2,651 | 2,762 | 2,808 | 2,882 | |||||||||||
Austin Chalk | 1,594 | 1,663 | 1,677 | 1,828 | |||||||||||
Eagle Ford Shale | 1,365 | 2,347 | 1,632 | 3,037 | |||||||||||
Other | 256 | 278 | 387 | 490 | |||||||||||
Total | 9,957 | 10,076 | 9,899 | 11,663 | |||||||||||
Natural Gas (Mcf): | |||||||||||||||
Permian Basin Area: | |||||||||||||||
Delaware Basin | 2,482 | 3,206 | 2,629 | 3,078 | |||||||||||
Other | 5,551 | 5,648 | 5,689 | 5,873 | |||||||||||
Austin Chalk | 1,724 | 1,687 | 1,706 | 1,725 | |||||||||||
Eagle Ford Shale | 273 | 444 | 322 | 516 | |||||||||||
Other | 2,329 | 3,580 | 3,023 | 4,693 | |||||||||||
Total | 12,359 | 14,565 | 13,369 | 15,885 | |||||||||||
Natural Gas Liquids (Bbls): | |||||||||||||||
Permian Basin Area: | |||||||||||||||
Delaware Basin | 367 | 386 | 435 | 409 | |||||||||||
Other | 715 | 742 | 750 | 770 | |||||||||||
Austin Chalk | 175 | 162 | 182 | 168 | |||||||||||
Eagle Ford Shale | 66 | 113 | 80 | 123 | |||||||||||
Other | 101 | 32 | 78 | 37 | |||||||||||
Total | 1,424 | 1,435 | 1,525 | 1,507 | |||||||||||
(Continued) | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
BOE/d: | |||||||||||||||
Permian Basin Area: | |||||||||||||||
Delaware Basin | 4,872 | 3,946 | 4,268 | 4,348 | |||||||||||
Other (e) | 4,291 | 4,446 | 4,506 | 4,631 | |||||||||||
Austin Chalk (f) | 2,056 | 2,106 | 2,143 | 2,284 | |||||||||||
Eagle Ford Shale(f) | 1,477 | 2,534 | 1,766 | 3,246 | |||||||||||
Other (g) | 745 | 907 | 969 | 1,309 | |||||||||||
Total | 13,441 | 13,939 | 13,652 | 15,818 | |||||||||||
Oil and Gas Costs ($/BOE Produced): | |||||||||||||||
Production costs | $ | 13.55 | $ | 15.89 | $ | 14.19 | $ | 15.17 | |||||||
Production costs (excluding production taxes) | $ | 11.71 | $ | 14.07 | $ | 12.68 | $ | 13.23 | |||||||
Oil and gas depletion | $ | 21.89 | $ | 28.83 | $ | 26.21 | $ | 25.54 | |||||||
______ |
(a) | Natural gas reserves have been converted to oil equivalents at the ratio of six Mcf of gas to one Bbl of oil. |
(b) | Oil and gas sales includes $0.4 million for three months ended December 31, 2016, $0.3 million for the three months ended December 31, 2015, $1.5 million for the year ended December 31, 2016 and $4.5 million for the year ended December 31, 2015 of amortized deferred revenue attributable to a volumetric production payment (“VPP”) transaction effective March 1, 2012. In August 2015, we terminated the VPP covering 277 MBOE of oil and gas production from August 2015 through December 2019 for $13.7 million. The calculation of average realized sales prices excludes production of 53,026 barrels of oil and 35,735 Mcf of gas for the year ended December 31, 2015 associated with the VPP. |
(c) | No commodity derivatives were designated as cash flow hedges in the table above. All gains or losses on settled commodity derivatives were included in other income (expense) - gain (loss) on commodity derivatives. |
(d) | Historical average daily production volumes have been reclassified to conform with current period presentation. |
(e) | The average daily production related to interests in certain wells in Glasscock County, Texas sold in July 2016 was none for the three months ended December 31, 2016, 57 total BOE/d for the three months ended December 31, 2015, 49 total BOE/d for the year ended December 31, 2016 and 104 total BOE/d for the year ended December 31, 2015. |
(f) | The average daily production related to assets in the Giddings Area in East Central Texas sold in December 2016 was 3,681 total BOE/d for the three months ended December 31, 2016, 5,104 total BOE/d for the three months ended December 31, 2015, 4,145 total BOE/d for the year ended December 31, 2016 and 5,977 total BOE/d for the year ended December 31, 2015. |
(g) | The average daily production related to selected leases and wells in South Louisiana sold in September 2015 was 390 total BOE/d for the year ended December 31, 2015. |
Oil | ||||||
MBbls | Price | |||||
Production Period: | ||||||
1st Quarter 2017 | 178 | $ | 44.85 | |||
2nd Quarter 2017 | 165 | $ | 44.65 | |||
3rd Quarter 2017 | 37 | $ | 50.00 | |||
4th Quarter 2017 | 27 | $ | 50.00 | |||
407 |
Oil | ||||||||||
Weighted | Weighted | |||||||||
Average | Average | |||||||||
MBbls | Floor Price | Ceiling Price | ||||||||
Production Period: | ||||||||||
1st Quarter 2017 | 355 | $ | 42.26 | $ | 51.67 | |||||
2nd Quarter 2017 | 354 | $ | 42.27 | $ | 51.67 | |||||
3rd Quarter 2017 | 356 | $ | 42.27 | $ | 51.65 | |||||
4th Quarter 2017 | 350 | $ | 42.27 | $ | 51.66 | |||||
1,415 |
Proved Reserves | ||||||||||||
Reserve Category | Oil (MBbls) | Natural Gas Liquids (MBbls) | Natural Gas (MMcf) | Total Oil Equivalents (a) (MBOE) | ||||||||
December 31, 2016 | ||||||||||||
Developed | 14,540 | 3,335 | 24,620 | 21,978 | ||||||||
Undeveloped | 9,807 | 1,476 | 8,957 | 12,776 | ||||||||
Total Proved | 24,347 | 4,811 | 33,577 | 34,754 | ||||||||
December 31, 2015 | ||||||||||||
Developed | 25,349 | 4,266 | 39,987 | 36,280 | ||||||||
Undeveloped | 7,727 | 1,202 | 8,160 | 10,289 | ||||||||
Total Proved | 33,076 | 5,468 | 48,147 | 46,569 |
(a) | Natural gas reserves have been converted to oil equivalents at the rate of six Mcf to one barrel of oil. |
As of December 31, | |||||||
2016 | 2015 | ||||||
(In thousands) | |||||||
PV-10, a non-GAAP financial measure | $ | 204,385 | $ | 442,775 | |||
Less present value, discounted at 10% of: | |||||||
Estimated asset retirement obligations | (37,764 | ) | (35,406 | ) | |||
Estimated future income taxes | (7,658 | ) | (16,726 | ) | |||
Standardized measure of discounted future net cash flows, a GAAP financial measure | $ | 158,963 | $ | 390,643 |