California Resources Corporation (NYSE:CRC), an independent
California-based oil and gas exploration and production company, today
reported a net loss attributable to common stock (CRC net loss) of $82
million, or $1.70 per diluted share, for the second quarter of 2018.
Adjusted net loss1 for the second quarter of 2018 was $14
million, or $0.29 per diluted share.
Quarterly Highlights Include:
-
Generated core adjusted EBITDAX1 of $337 million excluding
the impact of $68 million of cash hedging losses and $24 million of
stock-based compensation expenses
-
Reported adjusted EBITDAX1 of $245 million including these
items, and an adjusted EBITDAX margin1 of 38%
-
Produced 134,000 BOE per day, above the midpoint of the guidance range
-
Internally funded capital investments of $170 million
-
Drilled 48 wells with internally funded capital and 35 wells with
joint venture (JV) capital
-
Implemented $15 million of annualized synergies from the acquired Elk
Hills interests, well ahead of anticipated pace
2018 Outlook:
-
Increased 2018 capital budget to a range of $650 million to $700
million (including approximately $100 million or more of JV funding),
subject to further adjustments based on commodity prices in the second
half of the year and other developments
-
Incremental capital directed to drilling, workover and facilities
projects in the San Joaquin, Los Angeles and Ventura basins
-
Third quarter 2018 production guidance of 134,000 to 138,000 BOE per
day
-
Third quarter 2018 production forecast reflects CRC's return to a
growth profile
Todd A. Stevens, CRC's President and Chief Executive Officer, said, "CRC
is building sustained momentum as our experienced and pressure-tested
teams continue to drive strong operational execution and as we take
advantage of the breadth and diversity of our California portfolio. Our
teams are driving improved efficiencies in the field and we expect to
deliver value-oriented production growth through the second half of
2018. This is showcased by our ability to capture near-term synergies
from the consolidation of CRC's flagship Elk Hills interests quicker
than expected, in addition to solid production results we are witnessing
from our drilling activity. Looking ahead, we are keenly monitoring
crude oil fundamentals and commodity markets to flex our capital plans
and enhance our 2019 cash flow performance. We expect our mid-cycle
capital investment plan should maximize value creation through
value-oriented production increases along with stronger EBITDAX growth
into 2019, particularly with the modified hedging strategy."
Second Quarter 2018 Results
For the second quarter of 2018, the CRC net loss was $82 million, or
$1.70 per diluted share, while adjusted net loss1 was $14
million, or $0.29 per diluted share. Adjusted net loss1
excluded $92 million of non-cash derivative losses and a net gain of $24
million on debt repurchases. These results compared to a net loss of $48
million, or $1.13 per diluted share, and an adjusted net loss of $78
million, or $1.83 per diluted share, in the prior year period. The 2018
results represented higher production and significantly higher realized
oil and NGL prices offset by hedge results and higher production costs
resulting from increased activity levels and equity compensation.
Total daily production volumes averaged 134,000 barrels of oil
equivalent (BOE) per day for the second quarter of 2018, compared to
129,000 BOE per day for the same period in 2017, an increase of nearly 4
percent driven by the Elk Hills acquisition. This net increase included
a 1,600 BOE per day negative effect on production volumes from our PSCs.
For the second quarter of 2018, oil volumes averaged 83,000 barrels per
day, NGL volumes averaged 16,000 barrels per day and gas volumes
averaged 210,000 thousand cubic feet (MCF) per day.
Realized crude oil prices, including the effect of settled hedges,
increased by $16.13 per barrel in the second quarter of 2018 to $64.11
per barrel from the prior year comparable period. Settled hedges
decreased realized crude oil prices by $9.08 per barrel. Average
realized NGL prices continued to be strong and registered $42.13 per
barrel, reflecting a realized price that was 56% of Brent prices.
Realized natural gas prices were $2.25 per MCF.
Production costs for the second quarter of 2018 were $231 million,
compared to $216 million in the second quarter of 2017, an increase of
$15 million primarily due to higher production from the Elk Hills
acquisition of $12 million, and increased equity compensation expense of
$5 million resulting from the stock price increase. On a per unit basis,
second quarter production costs were $18.93 per BOE, compared to $18.34
per BOE in the prior year comparable period. Second quarter unit
production costs were within the previously disclosed guidance levels,
and would have been $18.52 excluding higher equity compensation expense
or $0.56 per BOE lower on a sequential basis from first quarter 2018
unit production costs of $19.08. In line with industry practice for
companies operating under PSCs, CRC reports gross field operating costs
and only the Company's share of production volumes, which can result in
higher production costs per barrel. Excluding this PSC effect, per unit
production costs1 for the second quarter of 2018 would have
been $17.41. General and administrative (G&A) expenses were $90 million
for the second quarter of 2018, compared to $63 million in the first
quarter of 2018 and $31 million higher than the prior year comparable
period primarily related to higher equity compensation expense as a
result of CRC's increased stock price. CRC's increased stock price added
$19 million to the current year expense compared to the prior year
period. The Elk Hills acquisition added another $3 million to second
quarter 2018 G&A expense. The rest of the increase was mostly related to
the timing of certain expenses.
CRC reported taxes other than on income of $37 million, $6 million
higher than the prior year period largely due to higher property taxes
as a result of commodity price increases. Exploration expense of $6
million for the second quarter of 2018 remained flat to the prior year
comparable period.
Capital investment in the second quarter of 2018 totaled $170 million,
excluding JV capital. Approximately $115 million was directed to
drilling and capital workovers.
Cash provided by operating activities was $34 million, which included
interest payments of $154 million. CRC's working capital use is larger
in the second and fourth quarters of the year due to the timing of
interest and property tax payments. CRC's free cash flow1 was
$(136) million in the second quarter of 2018 after taking into account
capital that was funded by BSP.
Six-Month Results
For the first six months of 2018, CRC net loss was $84 million, or $1.81
per diluted share, compared to net income of $5 million, or $0.12 per
diluted share, for the same period of 2017. The 2018 results reflected
significantly higher realized oil and NGL prices offset by hedge results
and higher production costs resulting from higher activity levels,
energy costs and equity compensation. The adjusted net loss1
for the first six months of 2018 was $6 million, or $0.13 per diluted
share, compared with an adjusted net loss of $121 million, or $2.85 per
diluted share, for the same period of 2017. The 2018 adjusted net loss
excluded $99 million of non-cash derivative losses, a gain of $24
million on debt repurchases and a net $3 million charge related to other
unusual and infrequent items. The 2017 adjusted net loss excluded $110
million of non-cash derivative gains, $21 million of gains from asset
divestitures, a $4 million gain on debt repurchases and a $9 million
charge from other unusual and infrequent items.
Total daily production volumes averaged 129,000 BOE per day in the first
six months of 2018, compared with 131,000 BOE per day for the same
period in 2017, a decrease of 2 percent. This decrease included a
negative effect on production volumes from our PSCs of 2,000 BOE per
day. Excluding production from the Elk Hills acquisition and the effect
of PSC contracts, the decline from the first half of 2017 to the first
half of 2018 was 4%, which is below CRC's previously reported base
production decline range.
In the first six months of 2018, realized crude oil prices, including
the effect of settled hedges, increased $14.35 per barrel to $63.47 per
barrel from $49.12 per barrel for the same period in 2017. Settled
hedges reduced 2018 realized crude oil prices by $6.88 per barrel,
compared with an increase of $0.42 per barrel for the same period in
2017. Realized NGL prices increased 32 percent to $42.63 from $32.20 per
barrel in the first six months of 2017. Realized natural gas prices
decreased 6 percent to $2.51 per Mcf, compared with $2.68 per Mcf for
the same period in 2017.
Production costs for the first six months of 2018 were $443 million, or
$19.01 per BOE, compared to $427 million, or $18.02 per BOE, for the
same period in 2017. The Elk Hills transaction added $12 million to the
first six months' production costs, and the increase in equity
compensation expense added $6 million, or $0.25 per BOE. Excluding these
items, production costs were slightly lower in the current year period
compared to the prior year due to efficiencies delivered. Per unit
production costs, excluding the effect of PSC contracts, were $17.44 and
$16.92 per BOE for the first six months of 2018 and 2017, respectively.
G&A expenses for the first six months of 2018 were $153 million and for
the first six months of 2017 were $122 million, with the difference
almost entirely related to the increased equity compensation expense
resulting from the stock price increase.
Taxes other than on income of $75 million for the first six months of
2018 were $11 million higher than the same period of 2017 primarily due
to higher property taxes as a result of commodity price increases.
Exploration expense of $14 million for the first six months of 2018 was
$2 million higher than the same period of 2017.
Capital investment in the first six months of 2018 totaled $309 million
excluding JV capital, of which $209 million was directed to drilling and
capital workovers.
Cash provided by operating activities for the first six months of 2018
was $234 million and free cash flow was $(75) million after taking into
account capital that was funded by BSP.
Operational Update
CRC operated an average of ten rigs during the second quarter of 2018
and drilled 83 development wells with CRC and JV capital (51 steamflood,
18 waterflood, three primary and 11 unconventional). Steamfloods and
waterfloods have different production profiles and longer response times
than typical conventional wells and, as a result, the full production
contribution may not be experienced in the same year that the well is
drilled. In the San Joaquin basin, CRC operated seven rigs and produced
approximately 98,000 BOE per day for the second quarter of 2018. The Los
Angeles basin had three rigs directed toward waterflood projects, and
contributed 25,000 BOE per day of production in the second quarter.
Production for the Ventura basin was 6,000 BOE per day and the
Sacramento basin produced 5,000 BOE per day. Neither of these areas had
active drilling programs in the period.
2018 Capital Budget
With stronger expected cash flows from commodity price improvements and
increased production from the Elk Hills transaction, combined with
synergies resulting from the transaction, CRC increased its 2018 capital
program to a range from $650 million to $700 million, which includes
approximately $100 million or more of JV capital, subject to further
adjustments based on commodity prices in the second half of the year and
other developments. This is an increase from its previously stated range
of $550 million to $600 million. The incremental investment builds on
the momentum created to increase second half 2018 production with a more
substantial effect in 2019. The additional capital will primarily be
deployed to drilling, workovers and facilities in the San Joaquin, Los
Angeles and Ventura basins. As expected, CRC received funding of a third
tranche of the BSP capital in the second quarter of 2018.
Debt Reduction Update
CRC continued to validate its commitment to strengthening the balance
sheet. In the second quarter of 2018, CRC repurchased a total of $143
million in aggregate principal amount of the Company's outstanding debt
for $118 million in cash.
Borrowing Base Redetermination
As previously disclosed, effective May 1, 2018, CRC's borrowing base
under its 2014 Credit Agreement was reaffirmed at $2.3 billion.
Hedging Update
CRC continues to opportunistically seek hedging transactions to protect
its cash flow, operating margins and capital program while maintaining
adequate liquidity. For the first and second quarters of 2019, CRC has
hedged approximately 42,000 and 37,000 barrels per day, at approximately
$64 Brent and $67 Brent, respectively. In the third and fourth quarters
of 2019, the Company hedged approximately 32,000 and 22,000 barrels per
day, at approximately $71 and $73 Brent, respectively. A significant
majority of the 2019 hedges do not contain caps, thereby providing
upside to oil price movements. See Attachment 8 for more details.
CRC also purchased LIBOR interest rate caps in the second quarter of
2018 which cap the interest rate on a notional $1.3 billion at one-month
LIBOR of 2.75% through May 2021.
1 See Attachment 3 for explanations of how CRC calculates and
uses the non-GAAP measures of adjusted EBITDAX, core adjusted EBITDAX,
adjusted EBITDAX margin, free cash flow, production costs (excluding the
effects of PSC type contracts) and adjusted net income (loss), and for
reconciliations of the foregoing to their nearest GAAP measure as
applicable.
Conference Call Details
To participate in today’s conference call scheduled for 5:00 P.M.
Eastern Daylight Time, either dial (877) 328-5505 (International calls
please dial +1 (412) 317-5421) or access via webcast at www.crc.com,
fifteen minutes prior to the scheduled start time to register.
Participants may also pre-register for the conference call at http://dpregister.com/10120726.
A digital replay of the conference call will be archived for
approximately 30 days and supplemental slides for the conference call
will be available online in the Investor Relations section of www.crc.com.
About California Resources Corporation
California Resources Corporation is the largest oil and natural gas
exploration and production company in California on a gross-operated
basis. The Company operates its world-class resource base exclusively
within the State of California, applying complementary and integrated
infrastructure to gather, process and market its production. Using
advanced technology, California Resources Corporation focuses on safely
and responsibly supplying affordable energy for California by
Californians.
Forward-Looking Statements
This presentation contains forward-looking statements that involve risks
and uncertainties that could materially affect CRC's expected results of
operations, liquidity, cash flows and business prospects. Such
statements include those regarding the Company's expectations as to
future:
-
financial position, liquidity, cash flows and results of operations
-
business prospects
-
transactions and projects
-
operating costs
-
operations and operational results including production, hedging,
capital investment and expected value creation index (VCI)
-
capital budgets and maintenance capital requirements
-
reserves
-
type curves
-
expected synergies from acquisitions
Actual results may differ from anticipated results, sometimes
materially, and reported results should not be considered an indication
of future performance. While CRC believes the assumptions or bases
underlying its expectations are reasonable and makes them in good faith,
they almost always vary from actual results, sometimes materially.
Factors (but not necessarily all the factors) that could cause results
to differ include:
-
commodity price changes
-
debt limitations on its financial flexibility
-
insufficient cash flow to fund planned investment or changes to our
capital plan
-
inability to enter desirable transactions including asset sales and
joint ventures
-
legislative or regulatory changes, including those related to
drilling, completion, well stimulation, operation, maintenance or
abandonment of wells or facilities, managing energy, water, land,
greenhouse gases or other emissions, protection of health, safety and
the environment, or transportation, marketing and sale of its products
-
PSC effects on production and unit production costs
-
effect of stock price on costs associated with incentive compensation
-
competition with larger, better funded competitors for and costs of
oilfield equipment, services, qualified personnel and acquisitions
-
incorrect estimates of reserves and related future net cash flows
-
joint venture and acquisition activities and our ability to achieve
expected synergies
-
the recoverability of resources
-
unexpected geologic conditions
-
changes in business strategy
-
inability to replace reserves
-
insufficient capital, including as a result of lender restrictions,
unavailability of capital markets or inability to attract potential
investors
-
effects of hedging transactions and inability to enter efficient hedges
-
equipment, service or labor price inflation or unavailability
-
availability or timing of, or conditions imposed on, permits and
approvals
-
lower-than-expected production, reserves or resources from development
projects or acquisitions or higher-than-expected decline rates
-
disruptions due to accidents, mechanical failures, transportation or
storage constraints, natural disasters, labor difficulties, cyber
attacks or other catastrophic events
-
factors discussed in “Risk Factors” in CRC's Annual Report on Form
10-K available on its website at www.crc.com.
Words such as "anticipate," "believe," "continue," "could," "estimate,"
"expect," "goal," "intend," "likely," "may," "might," "plan,"
"potential," "project," "seek," "should," "target, "will" or "would" and
similar words that reflect the prospective nature of events or outcomes
typically identify forward-looking statements. Any forward-looking
statement speaks only as of the date on which such statement is made and
the Company undertakes 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.
Attachment 1
|
SUMMARY OF RESULTS
|
|
|
Second Quarter
|
|
Six Months
|
($ and shares in millions, except per share amounts)
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
Revenues and Other
|
|
|
|
|
|
|
|
|
Oil and gas sales
|
|
$
|
657
|
|
|
$
|
439
|
|
|
$
|
1,232
|
|
|
$
|
926
|
|
Net derivative (loss) gain from commodity contracts
|
|
|
(167
|
)
|
|
|
43
|
|
|
|
(205
|
)
|
|
|
116
|
|
Other revenue
|
|
|
59
|
|
|
|
34
|
|
|
|
131
|
|
|
|
64
|
|
Total revenues and other (a)
|
|
|
549
|
|
|
|
516
|
|
|
|
1,158
|
|
|
|
1,106
|
|
|
|
|
|
|
|
|
|
|
Costs and Other
|
|
|
|
|
|
|
|
|
Production costs
|
|
|
231
|
|
|
|
216
|
|
|
|
443
|
|
|
|
427
|
|
General and administrative expenses
|
|
|
90
|
|
|
|
59
|
|
|
|
153
|
|
|
|
122
|
|
Depreciation, depletion and amortization
|
|
|
125
|
|
|
|
138
|
|
|
|
244
|
|
|
|
278
|
|
Taxes other than on income
|
|
|
37
|
|
|
|
31
|
|
|
|
75
|
|
|
|
64
|
|
Exploration expense
|
|
|
6
|
|
|
|
6
|
|
|
|
14
|
|
|
|
12
|
|
Other expenses, net (a)
|
|
|
49
|
|
|
|
25
|
|
|
|
110
|
|
|
|
47
|
|
Total costs and other
|
|
|
538
|
|
|
|
475
|
|
|
|
1,039
|
|
|
|
950
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
11
|
|
|
|
41
|
|
|
|
119
|
|
|
|
156
|
|
|
|
|
|
|
|
|
|
|
Non-Operating (Loss) Income
|
|
|
|
|
|
|
|
|
Interest and debt expense, net
|
|
|
(94
|
)
|
|
|
(83
|
)
|
|
|
(186
|
)
|
|
|
(167
|
)
|
Net gain on early extinguishment of debt
|
|
|
24
|
|
|
|
—
|
|
|
|
24
|
|
|
|
4
|
|
Gain on asset divestitures
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
|
21
|
|
Other non-operating expenses
|
|
|
(5
|
)
|
|
|
(5
|
)
|
|
|
(12
|
)
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
(Loss) Income Before Income Taxes
|
|
|
(63
|
)
|
|
|
(47
|
)
|
|
|
(54
|
)
|
|
|
5
|
|
Income tax
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net (Loss) Income
|
|
|
(63
|
)
|
|
|
(47
|
)
|
|
|
(54
|
)
|
|
|
5
|
|
Net income attributable to noncontrolling interests
|
|
|
(19
|
)
|
|
|
(1
|
)
|
|
|
(30
|
)
|
|
|
—
|
|
Net (Loss) Income Attributable to Common Stock
|
|
$
|
(82
|
)
|
|
$
|
(48
|
)
|
|
$
|
(84
|
)
|
|
$
|
5
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to common stock per share - basic
|
|
$
|
(1.70
|
)
|
|
$
|
(1.13
|
)
|
|
$
|
(1.81
|
)
|
|
$
|
0.12
|
|
Net (loss) income attributable to common stock per share - diluted
|
|
$
|
(1.70
|
)
|
|
$
|
(1.13
|
)
|
|
$
|
(1.81
|
)
|
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
|
Adjusted net loss
|
|
$
|
(14
|
)
|
|
$
|
(78
|
)
|
|
$
|
(6
|
)
|
|
$
|
(121
|
)
|
Adjusted net loss per diluted share
|
|
$
|
(0.29
|
)
|
|
$
|
(1.83
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(2.85
|
)
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - basic
|
|
|
48.2
|
|
|
|
42.4
|
|
|
|
46.3
|
|
|
|
42.4
|
|
Weighted-average common shares outstanding - diluted
|
|
|
48.2
|
|
|
|
42.4
|
|
|
|
46.3
|
|
|
|
42.7
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDAX
|
|
$
|
245
|
|
|
$
|
161
|
|
|
$
|
495
|
|
|
$
|
361
|
|
Effective tax rate
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
(a) We adopted the new revenue recognition standard on January 1,
2018 which required certain sales related costs to be reported as
expense as opposed to being netted against revenue. The adoption of
this standard does not affect net income. Results for reporting
periods beginning after January 1, 2018 are presented under the new
accounting standard while prior periods are not adjusted and
continue to be reported under accounting standards in effect for the
prior period. Under prior accounting standards total revenues and
other for the three months and the six months ended June 30, 2018
would have been $513 million and $1,080 million, respectively, and
other expenses, net for the three months and the six months ended
June 30, 2018 would have been $13 million and $32 million,
respectively.
|
|
|
|
|
|
|
|
|
|
Cash Flow Data:
|
|
|
|
|
|
|
|
|
Net cash provided (used) by operating activities
|
|
$
|
34
|
|
|
$
|
(13
|
)
|
|
$
|
234
|
|
|
$
|
120
|
|
Net cash used in investing activities
|
|
$
|
(669
|
)
|
|
$
|
(74
|
)
|
|
$
|
(807
|
)
|
|
$
|
(74
|
)
|
Net cash provided (used) by financing activities
|
|
$
|
183
|
|
|
$
|
46
|
|
|
$
|
595
|
|
|
$
|
(49
|
)
|
|
Balance Sheet Data:
|
|
June 30,
|
|
December 31,
|
|
|
|
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
|
|
Total current assets
|
|
$
|
559
|
|
|
$
|
483
|
|
|
|
|
|
Total property, plant and equipment, net
|
|
$
|
6,334
|
|
|
$
|
5,696
|
|
|
|
|
|
Total current liabilities
|
|
$
|
893
|
|
|
$
|
732
|
|
|
|
|
|
Long-term debt
|
|
$
|
5,075
|
|
|
$
|
5,306
|
|
|
|
|
|
Mezzanine equity
|
|
$
|
735
|
|
|
$
|
—
|
|
|
|
|
|
Equity
|
|
$
|
(645
|
)
|
|
$
|
(720
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding shares as of
|
|
|
48.4
|
|
|
|
42.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCK-BASED COMPENSATION
|
|
|
|
|
|
|
|
|
|
Our stock price increased $36.89 or over 430% from $8.55 as of June
30, 2017 to $45.44 as of June 30, 2018. Due to our stock price
increase, we recognized a significant increase in stock-based
compensation expense that is included in both general and
administrative expenses and production costs as shown in the
following table:
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
|
|
Six Months
|
($ in millions)
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
|
|
|
|
|
|
Cash-settled awards
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
22
|
|
|
$
|
1
|
|
Equity-settled awards
|
|
|
4
|
|
|
|
4
|
|
|
|
7
|
|
|
|
7
|
|
Total stock-based compensation in G&A
|
|
$
|
23
|
|
|
$
|
4
|
|
|
$
|
29
|
|
|
$
|
8
|
|
Total stock-based compensation in G&A per Boe
|
|
$
|
1.89
|
|
|
$
|
0.34
|
|
|
$
|
1.24
|
|
|
$
|
0.34
|
|
|
|
|
|
|
|
|
|
|
Production costs
|
|
|
|
|
|
|
|
|
Cash-settled awards
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
Equity-settled awards
|
|
|
1
|
|
|
|
1
|
|
|
|
2
|
|
|
|
2
|
|
Total stock-based compensation in production costs
|
|
$
|
6
|
|
|
$
|
1
|
|
|
$
|
8
|
|
|
$
|
2
|
|
Total stock-based compensation in production costs per Boe
|
|
$
|
0.49
|
|
|
$
|
0.08
|
|
|
$
|
0.34
|
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
Total company stock-based compensation
|
|
$
|
29
|
|
|
$
|
5
|
|
|
$
|
37
|
|
|
$
|
10
|
|
Total company stock-based compensation per Boe
|
|
$
|
2.38
|
|
|
$
|
0.42
|
|
|
$
|
1.58
|
|
|
$
|
0.42
|
|
Attachment 2
|
PRODUCTION STATISTICS
|
|
|
|
|
|
|
|
Second Quarter
|
|
Six Months
|
Net Oil, NGLs and Natural Gas Production Per Day
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
Oil (MBbl/d)
|
|
|
|
|
|
|
|
|
San Joaquin Basin
|
|
54
|
|
52
|
|
52
|
|
52
|
Los Angeles Basin
|
|
25
|
|
26
|
|
24
|
|
27
|
Ventura Basin
|
|
4
|
|
5
|
|
4
|
|
5
|
Sacramento Basin
|
|
—
|
|
—
|
|
—
|
|
—
|
Total
|
|
83
|
|
83
|
|
80
|
|
84
|
|
|
|
|
|
|
|
|
|
NGLs (MBbl/d)
|
|
|
|
|
|
|
|
|
San Joaquin Basin
|
|
15
|
|
15
|
|
15
|
|
15
|
Los Angeles Basin
|
|
—
|
|
—
|
|
—
|
|
—
|
Ventura Basin
|
|
1
|
|
1
|
|
1
|
|
1
|
Sacramento Basin
|
|
—
|
|
—
|
|
—
|
|
—
|
Total
|
|
16
|
|
16
|
|
16
|
|
16
|
|
|
|
|
|
|
|
|
|
Natural Gas (MMcf/d)
|
|
|
|
|
|
|
|
|
San Joaquin Basin
|
|
172
|
|
141
|
|
157
|
|
141
|
Los Angeles Basin
|
|
1
|
|
—
|
|
1
|
|
1
|
Ventura Basin
|
|
8
|
|
8
|
|
7
|
|
8
|
Sacramento Basin
|
|
29
|
|
33
|
|
31
|
|
33
|
Total
|
|
210
|
|
182
|
|
196
|
|
183
|
|
|
|
|
|
|
|
|
|
Total Production (MBoe/d) (a)
|
|
134
|
|
129
|
|
129
|
|
131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Natural gas volumes have been converted to BOE based on the
equivalence of energy content between six Mcf of natural gas and one
Bbl of oil. Barrels of oil equivalence does not necessarily result
in price equivalence.
|
Attachment 3
|
NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
|
|
Our results of operations can include the effects of unusual,
out-of-period and infrequent transactions and events affecting
earnings that vary widely and unpredictably (in particular certain
non-cash items such as derivative gains and losses) in nature,
timing, amount and frequency. Therefore, management uses a measure
called adjusted net income (loss) which excludes those items. This
measure is not meant to disassociate items from management's
performance, but rather is meant to provide useful information to
investors interested in comparing our performance between periods.
Reported earnings are considered representative of management's
performance over the long term. Adjusted net income (loss) is not
considered to be an alternative to net income (loss) reported in
accordance with U.S. generally accepted accounting principles
(GAAP).
|
|
We define adjusted EBITDAX as earnings before interest expense;
income taxes; depreciation, depletion and amortization;
exploration expense; other unusual, out-of-period and infrequent
items and other non-cash items. We believe adjusted EBITDAX
provides useful information in assessing our financial condition,
results of operations and cash flows and is widely used by the
industry, the investment community and our lenders. While adjusted
EBITDAX is a non-GAAP measure, the amounts included in the
calculation of adjusted EBITDAX were computed in accordance with
GAAP. A version of this measure is a material component of certain
of our financial covenants under our 2014 revolving credit
facility and is provided in addition to, and not as an alternative
for, income and liquidity measures calculated in accordance with
GAAP. Certain items excluded from adjusted EBITDAX are significant
components in understanding and assessing our financial
performance, such as our cost of capital and tax structure, as
well as the historic cost of depreciable and depletable assets.
Adjusted EBITDAX 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) attributable to common stock to the
non-GAAP financial measure of Adjusted net loss and presents the
GAAP financial measure of net (loss) income attributable to common
stock per diluted share and the non-GAAP financial measure of
Adjusted net loss per diluted share:
|
|
|
|
Second Quarter
|
|
Six Months
|
($ millions, except per share amounts)
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
Net (loss) income attributable to common stock
|
|
$
|
(82
|
)
|
|
$
|
(48
|
)
|
|
$
|
(84
|
)
|
|
$
|
5
|
|
Unusual, infrequent and other items:
|
|
|
|
|
|
|
|
|
Non-cash derivative loss (gain), excluding noncontrolling interest
|
|
|
92
|
|
|
|
(35
|
)
|
|
|
99
|
|
|
|
(110
|
)
|
Early retirement and severance costs
|
|
|
2
|
|
|
|
—
|
|
|
|
4
|
|
|
|
3
|
|
Gain on asset divestitures
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
(21
|
)
|
Net gain on early extinguishment of debt
|
|
|
(24
|
)
|
|
|
—
|
|
|
|
(24
|
)
|
|
|
(4
|
)
|
Other, net
|
|
|
(1
|
)
|
|
|
5
|
|
|
|
—
|
|
|
|
6
|
|
Total unusual, infrequent and other items
|
|
|
68
|
|
|
|
(30
|
)
|
|
|
78
|
|
|
|
(126
|
)
|
|
|
|
|
|
|
|
|
|
Adjusted net loss
|
|
$
|
(14
|
)
|
|
$
|
(78
|
)
|
|
$
|
(6
|
)
|
|
$
|
(121
|
)
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to common stock per diluted share
|
|
$
|
(1.70
|
)
|
|
$
|
(1.13
|
)
|
|
$
|
(1.81
|
)
|
|
$
|
0.12
|
|
Adjusted net loss per diluted share
|
|
$
|
(0.29
|
)
|
|
$
|
(1.83
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(2.85
|
)
|
|
|
|
|
|
|
|
|
|
|
DERIVATIVE GAINS AND LOSSES
|
|
|
Second Quarter
|
|
Six Months
|
($ millions)
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
Non-cash derivative (loss) gain, excluding noncontrolling interest
|
|
$
|
(92
|
)
|
|
$
|
35
|
|
|
$
|
(99
|
)
|
|
$
|
110
|
|
Non-cash derivative loss included in noncontrolling interest
|
|
|
(7
|
)
|
|
|
—
|
|
|
|
(7
|
)
|
|
|
(1
|
)
|
Net (payments) proceeds on settled commodity derivatives
|
|
|
(68
|
)
|
|
|
8
|
|
|
|
(99
|
)
|
|
|
7
|
|
Net derivative (loss) gain from commodity contracts
|
|
$
|
(167
|
)
|
|
$
|
43
|
|
|
$
|
(205
|
)
|
|
$
|
116
|
|
|
|
|
|
|
|
|
|
|
|
FREE CASH FLOW
|
|
|
Second Quarter
|
|
Six Months
|
($ millions)
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Net cash provided (used) by operating activities
|
|
$
|
34
|
|
|
$
|
(13
|
)
|
|
$
|
234
|
|
|
$
|
120
|
|
Capital investment
|
|
|
(188
|
)
|
|
|
(82
|
)
|
|
|
(327
|
)
|
|
|
(132
|
)
|
Free cash flow
|
|
|
(154
|
)
|
|
|
(95
|
)
|
|
|
(93
|
)
|
|
|
(12
|
)
|
BSP funded capital investment
|
|
|
18
|
|
|
|
28
|
|
|
|
18
|
|
|
|
43
|
|
Free cash flow excluding BSP funded capital
|
|
$
|
(136
|
)
|
|
$
|
(67
|
)
|
|
$
|
(75
|
)
|
|
$
|
31
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDAX AND CORE ADJUSTED EBITDAX
|
The following tables present a reconciliation of the GAAP financial
measures of net income (loss) and net cash provided (used) by
operating activities to the non-GAAP financial measures of adjusted
and core adjusted EBITDAX.
|
|
|
|
|
|
|
|
|
|
Second Quarter
|
|
Six Months
|
($ millions)
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
Net (loss) income
|
|
$
|
(63
|
)
|
|
$
|
(47
|
)
|
|
$
|
(54
|
)
|
|
$
|
5
|
|
Interest and debt expense, net
|
|
|
94
|
|
|
|
83
|
|
|
|
186
|
|
|
|
167
|
|
Interest income
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
Depreciation, depletion and amortization
|
|
|
125
|
|
|
|
138
|
|
|
|
244
|
|
|
|
278
|
|
Exploration expense
|
|
|
6
|
|
|
|
6
|
|
|
|
14
|
|
|
|
12
|
|
Unusual, infrequent and other items (a)
|
|
|
68
|
|
|
|
(30
|
)
|
|
|
78
|
|
|
|
(126
|
)
|
Other non-cash items
|
|
|
16
|
|
|
|
11
|
|
|
|
28
|
|
|
|
25
|
|
Adjusted EBITDAX (A)
|
|
$
|
245
|
|
|
$
|
161
|
|
|
$
|
495
|
|
|
$
|
361
|
|
Net payments (proceeds) on settled commodity derivatives
|
|
|
68
|
|
|
|
(8
|
)
|
|
|
99
|
|
|
|
(7
|
)
|
Cash-settled stock-based compensation
|
|
|
24
|
|
|
|
—
|
|
|
|
28
|
|
|
|
1
|
|
Core Adjusted EBITDAX (b)
|
|
$
|
337
|
|
|
$
|
153
|
|
|
$
|
662
|
|
|
$
|
355
|
|
|
|
|
|
|
|
|
|
|
Net cash provided (used) by operating activities
|
|
$
|
34
|
|
|
$
|
(13
|
)
|
|
$
|
234
|
|
|
$
|
120
|
|
Cash interest
|
|
|
154
|
|
|
|
151
|
|
|
|
215
|
|
|
|
195
|
|
Exploration expenditures
|
|
|
4
|
|
|
|
6
|
|
|
|
10
|
|
|
|
11
|
|
Changes in operating assets and liabilities
|
|
|
55
|
|
|
|
12
|
|
|
|
37
|
|
|
|
29
|
|
Other, net
|
|
|
(2
|
)
|
|
|
5
|
|
|
|
(1
|
)
|
|
|
6
|
|
Adjusted EBITDAX (A)
|
|
$
|
245
|
|
|
$
|
161
|
|
|
$
|
495
|
|
|
$
|
361
|
|
Net payments (proceeds) on settled commodity derivatives
|
|
|
68
|
|
|
|
(8
|
)
|
|
|
99
|
|
|
|
(7
|
)
|
Cash-settled stock-based compensation
|
|
|
24
|
|
|
|
—
|
|
|
|
28
|
|
|
|
1
|
|
Core Adjusted EBITDAX (b)
|
|
$
|
337
|
|
|
$
|
153
|
|
|
$
|
662
|
|
|
$
|
355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) See Adjusted Net Income (Loss) reconciliation.
|
|
|
|
|
|
|
|
|
|
(b) Core Adjusted EBITDAX removes the transitory effects of settled
hedges, which in 2018 limited CRC's full price realization. Our
hedging strategy for 2019 has changed and we are not putting caps on
price. Similarly, the significant run-up in our stock price has had
a significant effect on our equity compensation costs due to a
cumulative catch-up effect. The 2018 Core Adjusted EBITDAX
demonstrates our cash generation capacity, taking into account our
new hedging strategy going into 2019.
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDAX MARGIN
|
|
|
Second Quarter
|
|
Six Months
|
($ millions)
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
Total revenues and other
|
|
$
|
549
|
|
|
$
|
516
|
|
|
$
|
1,158
|
|
|
$
|
1,106
|
|
Non-cash derivative loss (gain)
|
|
|
99
|
|
|
|
(35
|
)
|
|
|
106
|
|
|
|
(109
|
)
|
Adjusted revenues (B)
|
|
$
|
648
|
|
|
$
|
481
|
|
|
$
|
1,264
|
|
|
$
|
997
|
|
Adjusted EBITDAX Margin (A)/(B)
|
|
|
38
|
%
|
|
|
33
|
%
|
|
|
39
|
%
|
|
|
36
|
%
|
|
|
|
|
|
|
|
|
|
|
PRODUCTION COSTS PER BOE
|
|
|
|
|
|
|
Second Quarter
|
|
Six Months
|
($ per Boe)
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
Production costs
|
|
$
|
18.93
|
|
|
$
|
18.34
|
|
|
$
|
19.01
|
|
|
$
|
18.02
|
|
Costs attributable to PSC-type contracts
|
|
|
(1.52
|
)
|
|
|
(1.16
|
)
|
|
|
(1.57
|
)
|
|
|
(1.10
|
)
|
Production costs, excluding effects of PSC-type contracts
|
|
$
|
17.41
|
|
|
$
|
17.18
|
|
|
$
|
17.44
|
|
|
$
|
16.92
|
|
Attachment 4
|
ADJUSTED NET LOSS VARIANCE ANALYSIS
|
($ millions)
|
|
|
|
|
|
2017 2nd Quarter Adjusted Net Loss
|
|
$
|
(78
|
)
|
|
|
|
|
|
|
|
Price - Oil
|
|
|
121
|
|
|
(a)
|
Price - NGLs
|
|
|
18
|
|
|
|
Price - Natural Gas
|
|
|
(3
|
)
|
|
|
Volume
|
|
|
3
|
|
|
|
Production cost
|
|
|
(15
|
)
|
|
|
Taxes other than on income
|
|
|
(6
|
)
|
|
|
DD&A rate
|
|
|
15
|
|
|
|
Interest expense
|
|
|
(11
|
)
|
|
|
Adjusted general & administrative expenses
|
|
|
(30
|
)
|
|
|
Net income attributable to noncontrolling interests
|
|
|
(18
|
)
|
|
|
All others
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
2018 2nd Quarter Adjusted Net Loss
|
|
$
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Six-Month Adjusted Net Loss
|
|
$
|
(121
|
)
|
|
|
|
|
|
|
|
Price - Oil
|
|
|
224
|
|
|
(a)
|
Price - NGLs
|
|
|
31
|
|
|
|
Price - Natural Gas
|
|
|
(6
|
)
|
|
|
Volume
|
|
|
(45
|
)
|
|
|
Production cost
|
|
|
(16
|
)
|
|
|
Taxes other than on income
|
|
|
(11
|
)
|
|
|
DD&A rate
|
|
|
29
|
|
|
|
Exploration expense
|
|
|
(2
|
)
|
|
|
Interest expense
|
|
|
(19
|
)
|
|
|
Adjusted general & administrative expenses
|
|
|
(30
|
)
|
|
|
Net income attributable to noncontrolling interests
|
|
|
(30
|
)
|
|
|
All others
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
2018 Six-Month Adjusted Net Loss
|
|
$
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes cash settlement payments on commodity derivatives
|
Attachment 5
|
CAPITAL INVESTMENTS
|
|
|
|
|
|
|
Second Quarter
|
|
Six Months
|
($ millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
Internally Funded Capital
|
|
$
|
170
|
|
$
|
45
|
|
$
|
309
|
|
$
|
80
|
|
|
|
|
|
|
|
|
|
BSP Funded Capital
|
|
|
18
|
|
|
37
|
|
|
18
|
|
|
52
|
|
|
|
|
|
|
|
|
|
Consolidated Reported Capital Investments
|
|
$
|
188
|
|
$
|
82
|
|
$
|
327
|
|
$
|
132
|
|
|
|
|
|
|
|
|
|
MIRA Funded Capital
|
|
|
6
|
|
|
8
|
|
|
28
|
|
|
8
|
|
|
|
|
|
|
|
|
|
Total Capital Program
|
|
$
|
194
|
|
$
|
90
|
|
$
|
355
|
|
$
|
140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONCONTROLLING INTEREST DETAIL
|
|
|
|
|
|
|
Second Quarter
|
|
Six Months
|
($ millions)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
Distributions to noncontrolling interest holders
|
|
|
|
|
|
|
|
|
BSP Joint Venture
|
|
$
|
4
|
|
$
|
1
|
|
$
|
17
|
|
$
|
1
|
Ares Joint Venture
|
|
|
19
|
|
|
—
|
|
|
24
|
|
|
—
|
Total
|
|
$
|
23
|
|
$
|
1
|
|
$
|
41
|
|
$
|
1
|
Attachment 6
|
PRICE STATISTICS
|
|
|
|
|
|
|
Second Quarter
|
|
Six Months
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
Realized Prices
|
|
|
|
|
|
|
|
|
Oil with hedge ($/Bbl)
|
|
$
|
64.11
|
|
|
$
|
47.98
|
|
|
$
|
63.47
|
|
|
$
|
49.12
|
|
Oil without hedge ($/Bbl)
|
|
$
|
73.19
|
|
|
$
|
46.95
|
|
|
$
|
70.35
|
|
|
$
|
48.70
|
|
|
|
|
|
|
|
|
|
|
NGLs ($/Bbl)
|
|
$
|
42.13
|
|
|
$
|
30.08
|
|
|
$
|
42.63
|
|
|
$
|
32.20
|
|
|
|
|
|
|
|
|
|
|
Natural gas ($/Mcf) (a)
|
|
$
|
2.25
|
|
|
$
|
2.47
|
|
|
$
|
2.51
|
|
|
$
|
2.68
|
|
|
|
|
|
|
|
|
|
|
Index Prices
|
|
|
|
|
|
|
|
|
Brent oil ($/Bbl)
|
|
$
|
74.90
|
|
|
$
|
50.92
|
|
|
$
|
71.04
|
|
|
$
|
52.79
|
|
WTI oil ($/Bbl)
|
|
$
|
67.88
|
|
|
$
|
48.29
|
|
|
$
|
65.37
|
|
|
$
|
50.10
|
|
NYMEX gas ($/MMBtu)
|
|
$
|
2.75
|
|
|
$
|
3.14
|
|
|
$
|
2.81
|
|
|
$
|
3.20
|
|
|
|
|
|
|
|
|
|
|
Realized Prices as Percentage of Index Prices
|
|
|
|
|
|
|
|
|
Oil with hedge as a percentage of Brent
|
|
|
86
|
%
|
|
|
94
|
%
|
|
|
89
|
%
|
|
|
93
|
%
|
Oil without hedge as a percentage of Brent
|
|
|
98
|
%
|
|
|
92
|
%
|
|
|
99
|
%
|
|
|
92
|
%
|
|
|
|
|
|
|
|
|
|
Oil with hedge as a percentage of WTI
|
|
|
94
|
%
|
|
|
99
|
%
|
|
|
97
|
%
|
|
|
98
|
%
|
Oil without hedge as a percentage of WTI
|
|
|
108
|
%
|
|
|
97
|
%
|
|
|
108
|
%
|
|
|
97
|
%
|
|
|
|
|
|
|
|
|
|
NGLs as a percentage of Brent
|
|
|
56
|
%
|
|
|
59
|
%
|
|
|
60
|
%
|
|
|
61
|
%
|
NGLs as a percentage of WTI
|
|
|
62
|
%
|
|
|
62
|
%
|
|
|
65
|
%
|
|
|
64
|
%
|
|
|
|
|
|
|
|
|
|
Natural gas as a percentage of NYMEX (a)
|
|
|
82
|
%
|
|
|
79
|
%
|
|
|
89
|
%
|
|
|
84
|
%
|
|
|
|
|
|
|
|
|
|
(a) See Note (a) on Attachment 1 related to our adoption of the new
accounting standard related to the reporting of certain sales
related costs. For the three months and six months ended June 30,
2018, the realized gas price would have been $2.06 per Mcf and $2.28
per Mcf, respectively, and the realized gas price as a percentage of
NYMEX would have been 75% and 81%, respectively.
|
Attachment 7
|
SECOND QUARTER DRILLING ACTIVITY
|
|
|
San Joaquin
|
|
Los Angeles
|
|
Ventura
|
|
Sacramento
|
|
|
Wells Drilled (Gross)
|
|
Basin
|
|
Basin
|
|
Basin
|
|
Basin
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Development Wells
|
|
|
|
|
|
|
|
|
|
|
Primary
|
|
3
|
|
—
|
|
—
|
|
—
|
|
3
|
Waterflood
|
|
3
|
|
15
|
|
—
|
|
—
|
|
18
|
Steamflood
|
|
51
|
|
—
|
|
—
|
|
—
|
|
51
|
Unconventional
|
|
11
|
|
—
|
|
—
|
|
—
|
|
11
|
Total
|
|
68
|
|
15
|
|
—
|
|
—
|
|
83
|
|
|
|
|
|
|
|
|
|
|
|
Exploration Wells
|
|
|
|
|
|
|
|
|
|
|
Primary
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Waterflood
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Steamflood
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Unconventional
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Total
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Total Wells (a)
|
|
68
|
|
15
|
|
—
|
|
—
|
|
83
|
|
|
|
|
|
|
|
|
|
|
|
CRC Wells Drilled
|
|
36
|
|
12
|
|
—
|
|
—
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
BSP Wells Drilled
|
|
2
|
|
3
|
|
—
|
|
—
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
MIRA Wells Drilled
|
|
30
|
|
—
|
|
—
|
|
—
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes steam injectors and drilled but uncompleted
wells, which would not be included in the SEC definition of wells
drilled.
|
Attachment 8
|
HEDGES - CURRENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q
|
|
4Q
|
|
1Q
|
|
2Q
|
|
3Q
|
|
4Q
|
|
FY
|
|
FY
|
|
|
2018
|
|
2018
|
|
2019
|
|
2019
|
|
2019
|
|
2019
|
|
2020
|
|
2021
|
Crude Oil
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sold Calls:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barrels per day
|
|
6,127
|
|
16,086
|
|
16,057
|
|
6,023
|
|
991
|
|
961
|
|
503
|
|
—
|
Weighted-average Brent price per barrel
|
|
$60.24
|
|
$58.91
|
|
$65.75
|
|
$67.01
|
|
$60.00
|
|
$60.00
|
|
$60.00
|
|
$—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased Calls:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barrels per day
|
|
—
|
|
—
|
|
2,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Weighted-average Brent price per barrel
|
|
$—
|
|
$—
|
|
$71.00
|
|
$—
|
|
$—
|
|
$—
|
|
$—
|
|
$—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased Puts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barrels per day
|
|
6,922
|
|
1,851
|
|
34,793
|
|
36,733
|
|
31,676
|
|
21,623
|
|
1,506
|
|
574
|
Weighted-average Brent price per barrel
|
|
$61.31
|
|
$51.70
|
|
$62.77
|
|
$67.40
|
|
$70.50
|
|
$73.09
|
|
$47.97
|
|
$45.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sold Puts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barrels per day
|
|
24,000
|
|
19,000
|
|
35,000
|
|
30,000
|
|
30,000
|
|
20,000
|
|
—
|
|
—
|
Weighted-average Brent price per barrel
|
|
$46.04
|
|
$45.00
|
|
$50.71
|
|
$55.00
|
|
$56.67
|
|
$60.00
|
|
$—
|
|
$—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Swaps:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barrels per day
|
|
48,000
|
|
29,000
|
|
7,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Weighted-average Brent price per barrel
|
|
$60.35
|
|
$60.50
|
|
$67.71
|
|
$—
|
|
$—
|
|
$—
|
|
$—
|
|
$—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A small portion of the crude oil derivatives in the table above were
entered into by the BSP JV, including all of the 2020 and 2021
hedges. This joint venture also entered into natural gas swaps for
insignificant volumes for periods through May 2021.
|
|
|
Certain of our counterparties have options to increase swap volumes
by up to:
|
- 19,000 barrels per day at a weighted-average Brent price of $60.13
for the fourth quarter of 2018 and
|
- 5,000 barrels per day at a weighted-average Brent price of $70.00
for the first quarter of 2019.
|
|
|
In May 2018 we entered into derivative contracts that limit our
interest rate exposure with respect to $1.3 billion of our
variable-rate indebtedness. The interest rate contracts reset
monthly and require the counterparties to pay any excess interest
owed on such amount in the event the one-month LIBOR exceeds 2.75%
for any monthly period prior to May 4, 2021.
|
Attachment 9
|
2018 THIRD QUARTER GUIDANCE
|
|
|
|
Anticipated Realizations Against the Prevailing Index Prices for
Q3 2018 (a)
|
Oil
|
|
95% to 100% of Brent
|
NGLs
|
|
55% to 60% of Brent
|
Natural Gas
|
|
100% to 110% of NYMEX
|
|
|
|
2018 Third Quarter Production, Capital and Income Statement
Guidance
|
Production (b)
|
|
134 to 138 MBOE per day
|
Capital
|
|
$180 million to $200 million
|
Production costs (b)
|
|
$18.60 to $20.10 per BOE
|
Adjusted general and administrative expenses (b) & (c)
|
|
$6.60 to $6.90 per BOE
|
Depreciation, depletion and amortization (b)
|
|
$10.05 to $10.35 per BOE
|
Taxes other than on income
|
|
$42 million to $46 million
|
Exploration expense
|
|
$6 million to $10 million
|
Interest expense (d)
|
|
$94 million to $98 million
|
Cash interest (d)
|
|
$66 million to $70 million
|
Income tax expense rate
|
|
0%
|
Cash tax rate
|
|
0%
|
|
|
|
|
|
|
Pre-tax 2018 Third Quarter Price Sensitivities (e)
|
|
|
$1 change in Brent index - Oil (f)
|
|
$1.6 million
|
$1 change in Brent index - NGLs
|
|
$0.9 million
|
$0.50 change in NYMEX - Gas
|
|
$4.9 million
|
|
|
|
|
|
|
(a) Realizations exclude hedge effects.
|
|
(b) Based on average Q2 2018 Brent of $75.
|
|
(c) Our long-term incentive compensation programs for
non-executive employees are stock-based but payable in cash.
Accounting rules require that we adjust the cumulative liability
for all vested but yet unpaid awards under these programs to the
amount that would be paid using our stock price as of the end of
each quarter. Therefore, in addition to the normal pro-rata
vesting expense associated with these programs, our quarterly G&A
expense could include this cumulative adjustment depending on
movement in our stock price. Our stock price at June 30, 2018 was
$45.44 per share, which was used for third quarter guidance. Only
about 1/3 of such cumulative adjustment would result in a cash
liability in the same year as the adjustment because of the
pro-rata three-year vesting of our incentive compensation programs.
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(d) Interest expense includes cash interest, original issue
discount and amortization of deferred financing costs as well as
the deferred gain that resulted from the December 2015 debt
exchange. Cash interest for the quarter is lower than interest
expense due to the timing of interest payments.
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(e) Due to our tax position there is no difference between the
impact on our income and cash flows.
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(f) Amount reflects the sensitivity with respect to unhedged
barrels at a Brent index price exceeding $60.00 per barrel and
includes the effect of production sharing type contracts at our
Wilmington field operations in Long Beach.
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