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Earthstone Energy, Inc. Reports Third Quarter and Year to Date 2018 Financial Results THE WOODLANDS, Texas
Earthstone Energy, Inc. (NYSE: ESTE) (“Earthstone”, the “Company”, “we”
or “us”), today announced financial and operating results for the three
and nine months ended September 30, 2018.
Third Quarter 2018 Highlights
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Revenues of $46.1 million
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Average daily production of 10,766 Boepd(1)
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Adjusted EBITDAX(2) of $26.4 million(3)
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Net income of $0.6 million(3)
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Net income attributable to Earthstone Energy, Inc. of $0.2 million, or
$0.01 per diluted share
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Capital expenditures of $37.3 million
Year To Date 2018 Highlights
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Revenues of $124.1 million
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Average daily production of 9,762 Boepd(1)
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Adjusted EBITDAX(2) of $72.2 million(3)
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Net income of $14.2 million(3)
-
Net income attributable to Earthstone Energy, Inc. of $6.2 million, or
$0.22 per diluted share
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Capital expenditures of $111.8 million
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(1)
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Represents reported sales volumes.
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(2)
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Adjusted EBITDAX is a non-GAAP financial measure. See
“Reconciliation of Non-GAAP Financial Measure” section below.
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(3)
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Includes a $4.8 million charge to expense representing management’s
estimate of a pending lawsuit settlement, pursuant to an agreement
in principle reached on October 23, 2018 (see below). Adjusted
EBITDAX has not been increased to adjust for this charge in the
period presented.
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Management Comments
Robert J. Anderson, President of Earthstone Energy, Inc., commented,
“The third quarter was a very busy and successful quarter for the
Company. We achieved the highest quarterly production and Adjusted
EBITDAX in our history despite the lowest realized oil prices out of the
three quarters this year. We continue to operate our one-rig drilling
program and complete wells in Reagan County with results that are in
line with or exceed our expectations and type curves. We completed and
announced a trade just after the quarter ended that not only increased
our net production but gave us an increased acreage footprint in central
Reagan County that will allow for greater operating efficiency as we
plan for longer laterals and will greatly enhance surface operations.
Lastly, our team worked tirelessly to sign and announce the proposed
acquisition of nearly 21,000 net acres along with 11,200 Boe/day of net
production in the northern Midland Basin. We expect to close in early
2019 after a shareholder vote.”
Selected Financial Data (unaudited)
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($000s except where noted)
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Three Months Ended
September 30,
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Nine Months Ended
September 30,
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2018
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2017
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2018
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2017
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Total Revenues
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46,076
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31,282
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124,121
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72,402
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Lease operating expense
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4,843
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5,407
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14,509
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14,990
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General and administrative expense (excluding stock-based
compensation)
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3,422
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5,608
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13,274
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14,838
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Stock-based compensation (non-cash)
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1,522
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1,687
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5,535
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4,645
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General and administrative expense
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4,944
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7,295
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18,809
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19,483
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Net income (loss)
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564
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4,008
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14,227
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(50,230
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Less: Net income (loss) attributable to noncontrolling interest
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340
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2,452
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8,032
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(35,392
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)
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Net income (loss) attributable to Earthstone Energy, Inc.
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224
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1,556
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6,195
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(14,838
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Net income (loss) per common share(1)
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Basic
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0.01
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0.07
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0.22
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(0.66
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Diluted
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0.01
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0.07
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0.22
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(0.66
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Adjusted EBITDAX(2)
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26,443
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(5)
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19,109
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72,239
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(5)
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38,538
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Production(3):
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Oil (MBbls)
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645
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563
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1,696
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1,300
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Gas (MMcf)
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947
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967
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2,883
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2,328
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NGL (MBbls)
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188
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166
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489
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350
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Total (MBoe)(4)
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991
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890
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2,665
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2,038
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Average Daily Production (Boepd)
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10,766
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9,671
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9,762
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7,464
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Average Prices:
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Oil ($/Bbl)
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60.12
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45.73
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61.97
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46.02
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Gas ($/Mcf)
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1.89
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2.60
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2.17
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2.72
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NGL ($/Bbl)
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29.31
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18.29
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26.10
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17.86
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Total ($/Boe)
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46.52
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35.16
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46.57
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35.53
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Adj. for Realized Derivatives Settlements:
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Oil ($/Bbl)
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53.30
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46.42
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53.82
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46.26
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Gas ($/Mcf)
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1.92
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2.71
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2.23
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2.68
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NGL ($/Bbl)
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29.31
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18.29
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26.10
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17.86
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Total ($/Boe)
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42.10
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35.72
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41.45
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35.64
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(1)
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Net Income (Loss) Per Common Share attributable to Earthstone
Energy, Inc.
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(2)
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See “Reconciliation of Non-GAAP Financial Measure” section below.
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(3)
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Represents reported sales volumes.
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(4)
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Barrels of oil equivalent have been calculated on the basis of six
thousand cubic feet (Mcf) of natural gas equals one barrel of oil
equivalent (BOE).
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(5)
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Includes a $4.8 million charge to expense representing management’s
estimate of a pending lawsuit settlement, pursuant to an agreement
in principle reached on October 23, 2018 (see below). Adjusted
EBITDAX has not been increased to adjust for this charge in the
period presented.
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Liquidity
As of September 30, 2018, we had $13.4 million in cash and $35.0 million
of long-term debt outstanding under our credit facility with a current
borrowing base of $225 million. In early November, 2018, our borrowing
base was increased from $225 million to $275 million, increasing
liquidity by $50 million.
Capital Expenditures
During the three months ended September 30, 2018, we incurred capital
expenditures of approximately $37.3 million, on an accrual basis,
primarily consisting of drilling and completion costs.
Litigation Settlement
On October 23, 2018, we entered into a Rule 11 Agreement and agreed in
principle to settle pending litigation applicable to certain operations
conducted by Bold Energy III LLC (“Bold”) preceding our acquisition of
Bold in 2017. Based on management’s current estimate, a $4.8 million
expense has been accrued as litigation settlement expense as of
September 30, 2018. While currently finalizing certain related
agreements, we believe the settlement will allow for additional drilling
locations with laterals approximating 10,000 feet, as well as
acceleration of our development activities.
Hedging Update
As of September 30, 2018, we had hedged a total of 414 MBbls of
remaining 2018 oil production at an average price of $54.05/Bbl and 610
MMBtu of remaining 2018 natural gas production at average price of
$2.95/MMBbtu. Additionally, we had 243.8 MBbls of WTI Midland Argus
Crude Oil Basis Swaps at -$1.90/Bbl and 92 MBbls of LLS Crude Oil Basis
Swaps at +$6.35/Bbl remaining for 2018 oil production. Related to 2019
production, we had hedged a total of 1,624 MBbls at an average price of
$58.95/Bbl, and we had 1,278 MBbls of WTI Midland Argus Crude Basis
Swaps at -$6.39/Bbl and 365 MBbls of LLS Crude Oil Basis Swaps at
+$4.50/Bbl. For 2020 production, we had hedged a total of 732 MBbls at
an average price of $63.08/Bbl, and we had 732 MBbls of WTI Midland
Argus Crude Oil Swaps at -$5.38/Bbl.
Additionally, in October and early November 2018, we entered into the
following crude oil and natural gas derivative contracts:
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Price Swaps
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Period
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Commodity
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Volume
(Bbls / MMBtu)
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Weighted Average Price
($/Bbl / $/MMBtu)
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Q1 - Q4 2019
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Crude Oil
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730,000
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$
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73.05
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Q1 - Q4 2020
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Crude Oil
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732,000
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$
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68.67
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Q1 - Q4 2019
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Crude Oil Basis Swap(1)
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730,000
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$
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(5.50
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Q1 - Q4 2020
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Crude Oil Basis Swap(1)
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732,000
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$
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(0.10
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Q1 - Q4 2019
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Natural Gas
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1,277,550
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$
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2.87
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Q1 - Q4 2019
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Natural Gas (Basis Swap)(2)
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1,277,550
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$
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(1.28
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(1)
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The basis differential price is between WTI Midland Argus Crude and
the WTI NYMEX.
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(2)
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The basis differential price is between W. Texas (WAHA) and the
Henry Hub NYMEX.
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Sabalo Energy Acquisition Financing Update
Subsequent to our entering into a financing commitment with a group of
banks to provide an amended and restated five-year senior secured
reserve-based revolving credit facility with a minimum initial borrowing
base of $475 million, the Company received commitments from a syndicate
of banks, including the banks providing the initial $475 million
borrowing base commitment, for an increased minimum initial borrowing
base of $550 million, conditioned upon the closing of our previously
announced acquisition of Sabalo Energy, LLC (“Sabalo”).
Conference Call Details
Earthstone is hosting a conference call on Thursday, November 8, 2018 at
11:00 a.m. Eastern (10:00 a.m. Central) to discuss the Company’s
operational and financial results for the third quarter of 2018 and its
outlook for the remainder of 2018. Prepared remarks by Frank A.
Lodzinski, Chief Executive Officer, Robert J. Anderson, President, and
Mark Lumpkin, Jr., Executive Vice President and Chief Financial Officer
will be followed by a question and answer session.
Investors and analysts are invited to participate in the call by dialing
877-407-6184 for domestic calls or 201-389-0877 for international calls,
in both cases asking for the Earthstone conference call. A webcast will
also be available through the Company's website (www.earthstoneenergy.com).
Please select "Events & Presentations" under the "Investors" section of
the Company's website and log on at least 10 minutes in advance to
register.
A replay of the call will be available on the Company’s website and by
telephone until 11:00 a.m. Eastern (10:00 a.m. Central), Thursday,
November 22, 2018. The number for the replay is 877-660-6853 for
domestic calls or 201-612-7415 for international calls, using Replay ID:
13684836.
About Earthstone Energy, Inc.
Earthstone Energy, Inc. is a growth-oriented, independent energy company
engaged in the development and operation of oil and natural gas
properties. Its primary assets are located in the Midland Basin of west
Texas and the Eagle Ford Trend of south Texas. Earthstone is listed on
the New York Stock Exchange under the symbol “ESTE.” For more
information, visit the Company’s website at www.earthstoneenergy.com.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the “Securities
Act”), and Section 21E of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). Statements that are not strictly
historical statements constitute forward-looking statements and may
often, but not always, be identified by the use of such words such as
“expects,” “believes,” “intends,” “anticipates,” “plans,” “estimates,”
“forecast,” “guidance,” “potential,” “possible,” or “probable” or
statements that certain actions, events or results “may,” “will,”
“should,” or “could” be taken, occur or be achieved. The forward-looking
statements include statements about the expected benefits of the
acquisition (the “Acquisition”) of Sabalo to Earthstone and its
stockholders, the anticipated completion of the Acquisition or the
timing thereof, the expected future reserves, production, financial
position, business strategy, revenues, earnings, costs, capital
expenditures and debt levels of the combined company, and plans and
objectives of management for future operations. Forward-looking
statements are based on current expectations and assumptions and
analyses made by Earthstone and its management in light of experience
and perception of historical trends, current conditions and expected
future developments, as well as other factors appropriate under the
circumstances. However, whether actual results and developments will
conform to expectations is subject to a number of material risks and
uncertainties, including but not limited to: the ability to obtain
stockholder and regulatory approvals of the Acquisition; the ability to
complete the Acquisition on anticipated terms and timetable;
Earthstone’s ability to integrate its combined operations successfully
after the Acquisition and achieve anticipated benefits from it; the
possibility that various closing conditions for the Acquisition may not
be satisfied or waived; risks relating to any unforeseen liabilities of
Earthstone or Sabalo; declines in oil, natural gas liquids or natural
gas prices; the level of success in exploration, development and
production activities; adverse weather conditions that may negatively
impact development or production activities; the timing of exploration
and development expenditures; inaccuracies of reserve estimates or
assumptions underlying them; revisions to reserve estimates as a result
of changes in commodity prices; impacts to financial statements as a
result of impairment write-downs; risks related to level of indebtedness
and periodic redeterminations of the borrowing base under Earthstone’s
credit agreement; Earthstone’s ability to generate sufficient cash flows
from operations to meet the internally funded portion of its capital
expenditures budget; Earthstone’s ability to obtain external capital to
finance exploration and development operations and acquisitions; the
ability to successfully complete any potential asset dispositions and
the risks related thereto; the impacts of hedging on results of
operations; uninsured or underinsured losses resulting from oil and
natural gas operations; Earthstone’s ability to replace oil and natural
gas reserves; and any loss of senior management or technical personnel.
Earthstone’s annual report on Form 10-K for the year ended December 31,
2017, quarterly reports on Form 10-Q, recent current reports on Form
8-K, and other Securities and Exchange Commission (“SEC”) filings
discuss some of the important risk factors identified that may affect
Earthstone’s business, results of operations, and financial condition.
Earthstone undertakes no obligation to revise or update publicly any
forward-looking statements except as required by law.
Additional Information and Where to Find It
In connection with the proposed Acquisition, Earthstone filed with the
SEC on November 6, 2018 and subsequently mailed to its security holders
a definitive proxy statement and other relevant documents in connection
with the proposed Acquisition. This release is not a substitute for the
definitive proxy statement or any other document that Earthstone may
file with the SEC or send to its stockholders in connection with the
proposed Acquisition. EARTHSTONE URGES SECURITY HOLDERS TO READ THE
DEFINITIVE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS LATER FILED
WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN
IMPORTANT INFORMATION ABOUT EARTHSTONE AND THE PROPOSED ACQUISITION. Investors
and security holders can obtain these materials and other documents
filed with the SEC free of charge at the SEC’s website, www.sec.gov.
In addition, a copy of the definitive proxy statement may be obtained
free of charge from Earthstone’s website at www.earthstoneenergy.com.
Investors and security holders may also read and copy any reports,
statements and other information filed by Earthstone, with the SEC, at
the SEC public reference room at 100 F Street, N.E., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC’s website
for further information on its public reference room. In addition, the
documents filed with the SEC by Earthstone can be obtained free of
charge from Earthstone’s website at www.earthstoneenergy.com
or by contacting Earthstone by mail at 1400 Woodloch Forest Drive, Suite
300, The Woodlands, Texas, 77380, or by telephone at 281-298-4246.
Participants in the Solicitation
Earthstone and its directors, executive officers and certain other
members of management and employees may be deemed to be participants in
the solicitation of proxies in respect of the Acquisition. Information
regarding Earthstone’s directors and executive officers is available in
its definitive proxy statement filed with the SEC by Earthstone on
November 6, 2018 in connection with the special meeting of stockholders.
Other information regarding the participants in the proxy solicitation
and a description of their direct and indirect interests, by security
holdings or otherwise, are contained in the definitive proxy statement
filed with the SEC on November 6, 2018.
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EARTHSTONE ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share and per share amounts)
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September 30,
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December 31,
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ASSETS
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2018
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2017
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Current assets:
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Cash
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$
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13,429
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$
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22,955
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Accounts receivable:
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Oil, natural gas, and natural gas liquids revenues
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14,600
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14,978
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Joint interest billings and other, net of allowance of $111 and $138
at September 30, 2018 and December 31, 2017, respectively
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6,047
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7,778
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Derivative asset
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—
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184
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Prepaid expenses and other current assets
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1,440
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|
|
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1,178
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Total current assets
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35,516
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|
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47,073
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Oil and gas properties, successful efforts method:
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Proved properties
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684,862
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605,039
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Unproved properties
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268,426
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275,025
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Land
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5,382
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5,534
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Total oil and gas properties
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|
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958,670
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885,598
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Accumulated depreciation, depletion and amortization
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(115,382
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)
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|
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(118,028
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|
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Net oil and gas properties
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|
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843,288
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767,570
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Other noncurrent assets:
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Goodwill
|
|
|
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17,620
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|
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|
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17,620
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|
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Office and other equipment, net of accumulated depreciation of
$2,378 and $2,093 at September 30, 2018 and December 31, 2017,
respectively
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725
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|
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947
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|
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Other noncurrent assets
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1,252
|
|
|
|
|
1,207
|
|
|
TOTAL ASSETS
|
|
|
|
$
|
898,401
|
|
|
|
|
$
|
834,417
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
$
|
22,234
|
|
|
|
|
$
|
33,472
|
|
|
Revenues and royalties payable
|
|
|
|
32,459
|
|
|
|
|
10,288
|
|
|
Accrued expenses
|
|
|
|
14,274
|
|
|
|
|
8,707
|
|
|
Advances
|
|
|
|
2,771
|
|
|
|
|
4,587
|
|
|
Derivative liability
|
|
|
|
23,391
|
|
|
|
|
11,805
|
|
|
Total current liabilities
|
|
|
|
95,129
|
|
|
|
|
68,859
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent liabilities:
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
35,000
|
|
|
|
|
25,000
|
|
|
Deferred tax liability
|
|
|
|
10,634
|
|
|
|
|
10,515
|
|
|
Asset retirement obligation
|
|
|
|
1,635
|
|
|
|
|
2,354
|
|
|
Derivative liability
|
|
|
|
10,019
|
|
|
|
|
1,826
|
|
|
Other noncurrent liabilities
|
|
|
|
1,891
|
|
|
|
|
131
|
|
|
Total noncurrent liabilities
|
|
|
|
59,179
|
|
|
|
|
39,826
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value, 20,000,000 shares authorized;
none issued or outstanding
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Class A Common Stock, $0.001 par value, 200,000,000 shares
authorized; 28,400,421 issued and outstanding at September 30, 2018
and 27,584,638 issued and outstanding at December 31, 2017
|
|
|
|
28
|
|
|
|
|
28
|
|
|
Class B Common Stock, $0.001 par value, 50,000,000 shares
authorized; 35,663,034 shares issued and outstanding at September
30, 2018; 36,052,169 issued and outstanding at December 31, 2017
|
|
|
|
36
|
|
|
|
|
36
|
|
|
Additional paid-in capital
|
|
|
|
512,960
|
|
|
|
|
503,932
|
|
|
Accumulated deficit
|
|
|
|
(218,627
|
)
|
|
|
|
(224,822
|
)
|
|
Total Earthstone Energy, Inc. equity
|
|
|
|
294,397
|
|
|
|
|
279,174
|
|
|
Noncontrolling interest
|
|
|
|
449,696
|
|
|
|
|
446,558
|
|
|
Total equity
|
|
|
|
744,093
|
|
|
|
|
725,732
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND EQUITY
|
|
|
|
$
|
898,401
|
|
|
|
|
$
|
834,417
|
|
|
|
|
EARTHSTONE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
Oil
|
|
|
|
$
|
38,791
|
|
|
|
|
$
|
25,733
|
|
|
|
|
$
|
105,111
|
|
|
|
|
$
|
59,815
|
|
|
Natural gas
|
|
|
|
1,790
|
|
|
|
|
2,513
|
|
|
|
|
6,257
|
|
|
|
|
6,338
|
|
|
Natural gas liquids
|
|
|
|
5,495
|
|
|
|
|
3,036
|
|
|
|
|
12,753
|
|
|
|
|
6,249
|
|
|
Total revenues
|
|
|
|
46,076
|
|
|
|
|
31,282
|
|
|
|
|
124,121
|
|
|
|
|
72,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating expense
|
|
|
|
4,843
|
|
|
|
|
5,407
|
|
|
|
|
14,509
|
|
|
|
|
14,990
|
|
|
Severance taxes
|
|
|
|
2,254
|
|
|
|
|
1,588
|
|
|
|
|
6,115
|
|
|
|
|
3,705
|
|
|
Impairment expense
|
|
|
|
833
|
|
|
|
|
92
|
|
|
|
|
833
|
|
|
|
|
66,740
|
|
|
Depreciation, depletion and amortization
|
|
|
|
12,842
|
|
|
|
|
10,330
|
|
|
|
|
33,362
|
|
|
|
|
28,258
|
|
|
General and administrative expense
|
|
|
|
4,944
|
|
|
|
|
7,295
|
|
|
|
|
18,809
|
|
|
|
|
19,483
|
|
|
Transaction costs
|
|
|
|
892
|
|
|
|
|
109
|
|
|
|
|
892
|
|
|
|
|
4,676
|
|
|
Accretion of asset retirement obligation
|
|
|
|
44
|
|
|
|
|
72
|
|
|
|
|
128
|
|
|
|
|
378
|
|
|
Total operating costs and expenses
|
|
|
|
26,652
|
|
|
|
|
24,893
|
|
|
|
|
74,648
|
|
|
|
|
138,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of oil and gas properties
|
|
|
|
4,096
|
|
|
|
|
2,157
|
|
|
|
|
4,608
|
|
|
|
|
3,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
|
|
23,520
|
|
|
|
|
8,546
|
|
|
|
|
54,081
|
|
|
|
|
(61,980
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
(565
|
)
|
|
|
|
(903
|
)
|
|
|
|
(1,788
|
)
|
|
|
|
(1,873
|
)
|
|
Write-off of deferred financing costs
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(526
|
)
|
|
(Loss) gain on derivative contracts, net
|
|
|
|
(17,481
|
)
|
|
|
|
(3,663
|
)
|
|
|
|
(33,606
|
)
|
|
|
|
4,137
|
|
|
Litigation settlement
|
|
|
|
(4,775
|
)
|
|
|
|
—
|
|
|
|
|
(4,775
|
)
|
|
|
|
—
|
|
|
Other income, net
|
|
|
|
37
|
|
|
|
|
(66
|
)
|
|
|
|
434
|
|
|
|
|
(34
|
)
|
|
Total other income (expense)
|
|
|
|
(22,784
|
)
|
|
|
|
(4,632
|
)
|
|
|
|
(39,735
|
)
|
|
|
|
1,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
|
736
|
|
|
|
|
3,914
|
|
|
|
|
14,346
|
|
|
|
|
(60,276
|
)
|
|
Income tax (expense) benefit
|
|
|
|
(172
|
)
|
|
|
|
94
|
|
|
|
|
(119
|
)
|
|
|
|
10,046
|
|
|
Net income (loss)
|
|
|
|
564
|
|
|
|
|
4,008
|
|
|
|
|
14,227
|
|
|
|
|
(50,230
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net income (loss) attributable to noncontrolling interest
|
|
|
|
340
|
|
|
|
|
2,452
|
|
|
|
|
8,032
|
|
|
|
|
(35,392
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Earthstone Energy, Inc.
|
|
|
|
$
|
224
|
|
|
|
|
$
|
1,556
|
|
|
|
|
$
|
6,195
|
|
|
|
|
$
|
(14,838
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share attributable to Earthstone
Energy, Inc.:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
0.01
|
|
|
|
|
$
|
0.07
|
|
|
|
|
$
|
0.22
|
|
|
|
|
$
|
(0.66
|
)
|
|
Diluted
|
|
|
|
$
|
0.01
|
|
|
|
|
$
|
0.07
|
|
|
|
|
$
|
0.22
|
|
|
|
|
$
|
(0.66
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
28,257,376
|
|
|
|
|
22,905,023
|
|
|
|
|
28,011,298
|
|
|
|
|
22,638,977
|
|
|
Diluted
|
|
|
|
28,311,759
|
|
|
|
|
22,905,023
|
|
|
|
|
28,108,365
|
|
|
|
|
22,638,977
|
|
|
|
|
|
|
|
EARTHSTONE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended
September 30,
|
|
|
|
|
2018
|
|
2017
|
|
Cash flows from operating activities:
|
|
|
|
|
Net income (loss)
|
|
|
$
|
14,227
|
|
|
$
|
(50,230
|
)
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
|
Impairment of proved and unproved oil and gas properties
|
|
|
833
|
|
|
66,740
|
|
|
Depreciation, depletion and amortization
|
|
|
33,362
|
|
|
28,258
|
|
|
Accretion of asset retirement obligations
|
|
|
128
|
|
|
378
|
|
|
Settlement of asset retirement obligations
|
|
|
(79
|
)
|
|
—
|
|
|
Gain on sale of oil and gas properties
|
|
|
(4,608
|
)
|
|
(3,848
|
)
|
|
Total loss (gain) on derivative contracts, net
|
|
|
33,606
|
|
|
(4,137
|
)
|
|
Operating portion of net cash paid in settlement of derivative
contracts
|
|
|
(13,643
|
)
|
|
229
|
|
|
Stock-based compensation
|
|
|
5,535
|
|
|
4,645
|
|
|
Deferred income taxes
|
|
|
119
|
|
|
(10,046
|
)
|
|
Write-off of deferred financing costs
|
|
|
—
|
|
|
526
|
|
|
Amortization of deferred financing costs
|
|
|
228
|
|
|
195
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
(Increase) decrease in accounts receivable
|
|
|
(1,476
|
)
|
|
6,964
|
|
|
Increase in prepaid expenses and other current assets
|
|
|
(372
|
)
|
|
(455
|
)
|
|
Increase (decrease) in accounts payable and accrued expenses
|
|
|
3,939
|
|
|
(11,522
|
)
|
|
Increase (decrease) in revenues and royalties payable
|
|
|
26,572
|
|
|
(4,019
|
)
|
|
Increase (decrease) in advances
|
|
|
(1,816
|
)
|
|
506
|
|
|
Net cash provided by operating activities
|
|
|
96,555
|
|
|
24,184
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Bold Contribution Agreement, net of cash acquired
|
|
|
—
|
|
|
(55,609
|
)
|
|
Additions to oil and gas properties
|
|
|
(120,124
|
)
|
|
(29,958
|
)
|
|
Additions to office and other equipment
|
|
|
(121
|
)
|
|
(139
|
)
|
|
Proceeds from sales of oil and gas properties
|
|
|
5,840
|
|
|
5,054
|
|
|
Net cash used in investing activities
|
|
|
(114,405
|
)
|
|
(80,652
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Proceeds from borrowings
|
|
|
70,308
|
|
|
70,000
|
|
|
Repayments of borrowings
|
|
|
(60,308
|
)
|
|
(11,193
|
)
|
|
Cash paid related to the exchange and cancellation of Class A Common
Stock
|
|
|
(1,402
|
)
|
|
(324
|
)
|
|
Deferred financing costs
|
|
|
(274
|
)
|
|
(1,168
|
)
|
|
Net cash provided by financing activities
|
|
|
8,324
|
|
|
57,315
|
|
|
Net (decrease) increase in cash
|
|
|
(9,526
|
)
|
|
847
|
|
|
Cash at beginning of period
|
|
|
22,955
|
|
|
10,200
|
|
|
Cash at end of period
|
|
|
$
|
13,429
|
|
|
$
|
11,047
|
|
|
Supplemental disclosure of cash flow
information
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
Interest
|
|
|
$
|
1,480
|
|
|
$
|
1,555
|
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|
Class B Common stock issued in Bold Contribution Agreement
|
|
|
$
|
—
|
|
|
$
|
489,842
|
|
|
Class A Common stock issued in Bold Contribution Agreement
|
|
|
$
|
—
|
|
|
$
|
2,037
|
|
|
Accrued capital expenditures
|
|
|
$
|
11,314
|
|
|
$
|
19,519
|
|
|
Asset retirement obligations
|
|
|
$
|
(120
|
)
|
|
$
|
83
|
|
|
|
|
|
|
|
|
|
|
|
|
Earthstone Energy, Inc.
Reconciliation of Non-GAAP
Financial Measure
Unaudited
I. Adjusted EBITDAX
The non-GAAP financial measures of Adjusted EBITDAX (as defined below),
as calculated by us below, is intended to provide readers with
meaningful information that supplements our financial statements
prepared in accordance with accounting principles generally accepted in
the United States (“GAAP”). Further, this non-GAAP measure should only
be considered in conjunction with financial statements and disclosures
prepared in accordance with GAAP and should not be considered in
isolation or as a substitute for GAAP measures, such as net income or
loss, operating income or loss or any other GAAP measure of financial
position or results of operations. Adjusted EBITDAX is presented herein
and reconciled from the GAAP measure of net income (loss) because of its
wide acceptance by the investment community as a financial indicator.
We define “Adjusted EBITDAX” as net income (loss) plus, when applicable,
accretion of asset retirement obligations; impairment expense;
depletion, depreciation and amortization; interest expense, net;
transaction costs; (gain) on sale of oil and gas properties; unrealized
loss (gain) on derivatives; stock-based compensation; and income tax
expense (benefit).
Our Adjusted EBITDAX measure provides additional information that may be
used to better understand our operations. Adjusted EBITDAX is one of
several metrics that we use as a supplemental financial measurement in
the evaluation of our business and should not be considered as an
alternative to, or more meaningful than, net income (loss) as an
indicator of operating performance. Certain items excluded from Adjusted
EBITDAX are significant components in understanding and assessing a
company’s financial performance, such as a company’s cost of capital and
tax structure, as well as the historic cost of depreciable and
depletable assets. Adjusted EBITDAX, as used by us, may not be
comparable to similarly titled measures reported by other companies. We
believe that Adjusted EBITDAX is a widely followed measure of operating
performance and is one of many metrics used by our management team and
by other users of our consolidated financial statements. For example,
Adjusted EBITDAX can be used to assess our operating performance and
return on capital in comparison to other independent exploration and
production companies without regard to financial or capital structure
and to assess the financial performance of our assets and our company
without regard to capital structure or historical cost basis.
The following table provides a reconciliation of Net income (loss) to
Adjusted EBITDAX for the periods indicated:
|
|
|
|
|
|
|
|
|
($000s)
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
Net income (loss) (1)
|
|
|
564
|
|
|
4,008
|
|
|
|
14,227
|
|
|
(50,230
|
)
|
|
Accretion of asset retirement obligations
|
|
|
44
|
|
|
72
|
|
|
|
128
|
|
|
378
|
|
|
Impairment expense
|
|
|
833
|
|
|
92
|
|
|
|
833
|
|
|
66,740
|
|
|
Depletion, depreciation and amortization
|
|
|
12,842
|
|
|
10,330
|
|
|
|
33,362
|
|
|
28,258
|
|
|
Interest expense, net
|
|
|
565
|
|
|
903
|
|
|
|
1,788
|
|
|
1,873
|
|
|
Transaction costs
|
|
|
892
|
|
|
109
|
|
|
|
892
|
|
|
4,676
|
|
|
(Gain) on sale of oil and gas properties
|
|
|
(4,096
|
)
|
|
(2,157
|
)
|
|
|
(4,608
|
)
|
|
(3,848
|
)
|
|
Unrealized loss (gain) on derivative contracts
|
|
|
13,105
|
|
|
4,159
|
|
|
|
19,963
|
|
|
(3,908
|
)
|
|
Stock based compensation (non-cash)(2)
|
|
|
1,522
|
|
|
1,687
|
|
|
|
5,535
|
|
|
4,645
|
|
|
Income tax expense (benefit)
|
|
|
172
|
|
|
(94
|
)
|
|
|
119
|
|
|
(10,046
|
)
|
|
Adjusted EBITDAX
|
|
|
26,443
|
|
|
19,109
|
|
|
|
72,239
|
|
|
38,538
|
|
|
|
|
|
|
|
(1)
|
|
Includes a $4.8 million charge to expense representing management's
estimate of a pending lawsuit settlement, pursuant to an agreement
in principle reached on October 23, 2018.
|
|
|
|
|
|
|
(2)
|
|
Included in General and administrative expense in the Condensed
Consolidated Statements of Operations.
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20181107005915/en/ Copyright Business Wire 2018
Source: Business Wire
(November 7, 2018 - 4:12 PM EST)
News by QuoteMedia
www.quotemedia.com
|
