SRC Energy Inc. Reports Second Quarter 2018 Financial and Operating Results
Second Quarter 2018 Highlights
- Revenues were
$147.1 million for the three months ended June 30, 2018 - Net income was
$49.6 million or$0.20 per diluted share for the three months ended June 30, 2018 - Adjusted EBITDA was
$107.7 million and$223.4 million for the three and six months ended June 30, 2018 , respectively (see further discussion regarding the presentation of adjusted EBITDA in "About Non-GAAP Financial Measures" below) - Drilling and completion capital expenditures were
$120.2 million and$231.2 million for the three and six months ended June 30, 2018, respectively
Second Quarter 2018 Financial Results
The following tables present certain per unit metrics that compare results of the corresponding reporting periods:
Three Months Ended | Six Months Ended | ||||||||||||||||
Net Volumes | 6/30/2018 | 6/30/2017 | % Chg. | 6/30/2018 | 6/30/2017 | % Chg. | |||||||||||
Crude Oil (MBbls) | 1,846 | 1,262 | 46 | % | 3,887 | 1,942 | 100 | % | |||||||||
Natural Gas Liquids (MBbls) | 992 | 662 | 50 | % | 1,750 | 1,005 | 74 | % | |||||||||
Natural Gas (MMcf) | 8,987 | 6,264 | 43 | % | 16,706 | 9,710 | 72 | % | |||||||||
Sales Volumes: (MBOE) | 4,336 | 2,969 | 46 | % | 8,422 | 4,566 | 84 | % | |||||||||
Average Daily Volumes | |||||||||||||||||
Daily Production (BOE) | 47,646 | 32,624 | 46 | % | 46,528 | 25,224 | 84 | % | |||||||||
Product Price Received | |||||||||||||||||
Crude Oil ($/Bbl) | $ | 61.22 | $ | 41.11 | 49 | % | $ | 58.48 | $ | 41.60 | 41 | % | |||||
Natural Gas Liquids ($/Bbl) | $ | 17.65 | 13.18 | 34 | % | $ | 18.30 | 14.12 | 30 | % | |||||||
Natural Gas ($/Mcf) | $ | 1.64 | $ | 2.29 | (28 | )% | $ | 1.87 | $ | 2.42 | (23 | )% | |||||
Avg. Realized Price ($/BOE) | $ | 33.50 | $ | 25.26 | 33 | % | $ | 34.50 | $ | 25.96 | 33 | % | |||||
Per Unit Cost Information ($/BOE) | |||||||||||||||||
Lease Operating Exp. | $ | 2.68 | $ | 1.67 | 60 | % | $ | 2.31 | $ | 1.91 | 21 | % | |||||
Production Tax | $ | 3.47 | $ | 3.19 | 9 | % | $ | 3.38 | $ | 2.39 | 41 | % | |||||
DD&A Expense | $ | 9.66 | $ | 8.90 | 9 | % | $ | 9.38 | $ | 8.69 | 8 | % | |||||
Total G&A Expense | $ | 2.17 | $ | 2.56 | (15 | )% | $ | 2.26 | $ | 3.46 | (35 | )% | |||||
Revenues for the three months ended
Lease operating expense for the three months ended
The Company's 2018 second quarter net income totaled
During the second quarter of 2018, SRC entered into an agreement to purchase leasehold acreage and associated production for
Management Comment
Concluding, Mr. Peterson added, "I would like to commend our field team for all of their hard work around the constraints associated with the lack of gas processing and our land team for the recent acreage transactions that have further enhanced SRC's acreage position"
Conference Call
The Company will host a conference call on
To participate in this call please dial:
International Dial-in Number: (201) 493-6747
Webcast: https://78449.themediaframe.com/dataconf/productusers/srci/mediaframe/25642/indexl.html
Replay Information:
Conference ID #: 411931
Replay Dial-In (Toll Free US &
Replay Dial-In (International): 201-612-7415
Expiration Date:
About
Important Cautions Regarding Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. The use of words such as "believes", "expects", "anticipates", "intends", "plans", "estimates", "should", "likely", “guidance” or similar expressions indicates a forward-looking statement. Forward-looking statements in the release relate to, among other things, the construction and impact of new midstream facilities in the
Reconciliation of Non-GAAP Financial Measures
We define adjusted EBITDA, a non-GAAP financial measure, as net income adjusted to exclude the impact of the items set forth in the table below. We exclude those items because they can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures, and the method by which the assets were acquired. We believe that adjusted EBITDA is widely used in our industry as a measure of operating performance and may also be used by investors to measure our ability to meet debt covenant requirements. The following table presents a reconciliation of adjusted EBITDA to net income, its nearest GAAP measure:
SRC ENERGY INC. | |||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||||||||||
(unaudited, in thousands) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Adjusted EBITDA: | |||||||||||||||
Net income | $ | 49,624 | $ | 27,936 | $ | 115,420 | $ | 47,816 | |||||||
Depreciation, depletion, and accretion | 41,877 | 26,427 | 78,958 | 39,656 | |||||||||||
Stock-based compensation | 3,146 | 2,685 | 5,942 | 5,360 | |||||||||||
Mark-to-market of commodity derivative contracts: | |||||||||||||||
Total gain on commodity derivatives contracts | 14,294 | (1,328 | ) | 20,075 | (4,707 | ) | |||||||||
Cash settlements on commodity derivative contracts | (4,566 | ) | 153 | (6,121 | ) | 234 | |||||||||
Interest income, net of interest expense | (5 | ) | (20 | ) | (14 | ) | (31 | ) | |||||||
Income tax expense | 3,347 | — | 9,158 | — | |||||||||||
Adjusted EBITDA | $ | 107,717 | $ | 55,853 | $ | 223,418 | $ | 88,328 |
Condensed Consolidated Financial Statements
Condensed consolidated financial statements are included below. Additional financial information, including footnotes that are considered an integral part of the condensed consolidated financial statements, can be found in SRC's Quarterly Report on Form 10-Q for the period ended
SRC ENERGY INC. | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(unaudited; in thousands) | |||||||
ASSETS | June 30, 2018 | December 31, 2017 | |||||
Current assets: | |||||||
Cash and cash equivalents | $ | 53,145 | $ | 48,772 | |||
Other current assets | 110,067 | 111,263 | |||||
Total current assets | 163,212 | 160,035 | |||||
Oil and gas properties and other equipment | 2,072,329 | 1,876,576 | |||||
Goodwill | 40,711 | 40,711 | |||||
Other assets | 6,294 | 2,242 | |||||
Total assets | $ | 2,282,546 | $ | 2,079,564 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities | 249,949 | 202,307 | |||||
Revolving credit facility | 25,000 | — | |||||
Notes payable, net of issuance costs | 538,762 | 538,186 | |||||
Asset retirement obligations | 23,154 | 28,376 | |||||
Other liabilities | 11,556 | 2,261 | |||||
Total liabilities | 848,421 | 771,130 | |||||
Shareholders' equity: | |||||||
Common stock and paid-in capital | 1,484,785 | 1,474,514 | |||||
Retained deficit | (50,660 | ) | (166,080 | ) | |||
Total shareholders' equity | 1,434,125 | 1,308,434 | |||||
Total liabilities and shareholders' equity | $ | 2,282,546 | $ | 2,079,564 | |||
SRC ENERGY INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited; in thousands) |
|||||||
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 115,420 | $ | 47,816 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depletion, depreciation, and accretion | 78,958 | 39,656 | |||||
Provision for deferred taxes | 9,158 | — | |||||
Other, non-cash items | 15,807 | (505 | ) | ||||
Changes in operating assets and liabilities | 16,419 | (12,509 | ) | ||||
Net cash provided by operating activities | 235,762 | 74,458 | |||||
Cash flows from investing activities: | |||||||
Acquisitions of oil and gas properties and leaseholds | (16,402 | ) | (29,998 | ) | |||
Capital expenditures for drilling and completion activities | (213,906 | ) | (178,606 | ) | |||
Other capital expenditures | (25,404 | ) | (12,666 | ) | |||
Proceeds from sales of oil and gas properties and other | 766 | 77,155 | |||||
Net cash used in investing activities | (254,946 | ) | (144,115 | ) | |||
Cash flows from financing activities: | |||||||
Equity financing activities | 3,025 | (451 | ) | ||||
Debt financing activities | 22,857 | 89,745 | |||||
Net cash provided by financing activities | 25,882 | 89,294 | |||||
Net increase in cash, cash equivalents, and restricted cash | 6,698 | 19,637 | |||||
Cash, cash equivalents, and restricted cash at beginning of period | 48,772 | 36,834 | |||||
Cash, cash equivalents, and restricted cash at end of period | $ | 55,470 | $ | 56,471 | |||
SRC ENERGY INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited; in thousands, except share and per share data) |
|||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Oil, natural gas, and NGL revenues | $ | 147,087 | $ | 75,036 | $ | 294,320 | $ | 118,826 | |||||||
Expenses: | |||||||||||||||
Lease operating expenses | 11,612 | 4,970 | 19,508 | 8,692 | |||||||||||
Transportation and gathering | 1,880 | 48 | 3,735 | 298 | |||||||||||
Production taxes | 15,058 | 9,464 | 28,501 | 10,930 | |||||||||||
Depreciation, depletion, and accretion | 41,877 | 26,427 | 78,958 | 39,656 | |||||||||||
Unused commitment charge | — | — | — | 669 | |||||||||||
General and administrative | 9,406 | 7,605 | 19,006 | 15,805 | |||||||||||
Total expenses | 79,833 | 48,514 | 149,708 | 76,050 | |||||||||||
Operating income | 67,254 | 26,522 | 144,612 | 42,776 | |||||||||||
Other income (expense): | |||||||||||||||
Commodity derivatives gain (loss) | (14,294 | ) | 1,328 | (20,075 | ) | 4,707 | |||||||||
Interest expense, net of amounts capitalized | — | — | — | — | |||||||||||
Interest income | 5 | 20 | 14 | 31 | |||||||||||
Other income | 6 | 66 | 27 | 302 | |||||||||||
Total other income (expense) | (14,283 | ) | 1,414 | (20,034 | ) | 5,040 | |||||||||
Income before income taxes | 52,971 | 27,936 | 124,578 | 47,816 | |||||||||||
Income tax expense | 3,347 | — | 9,158 | — | |||||||||||
Net income | $ | 49,624 | $ | 27,936 | $ | 115,420 | $ | 47,816 | |||||||
Net income per common share: | |||||||||||||||
Basic | $ | 0.20 | $ | 0.14 | $ | 0.48 | $ | 0.24 | |||||||
Diluted | $ | 0.20 | $ | 0.14 | $ | 0.47 | $ | 0.24 | |||||||
Weighted-average shares outstanding: | |||||||||||||||
Basic | 242,255,724 | 200,831,063 | 242,005,211 | 200,769,817 | |||||||||||
Diluted | 244,464,776 | 201,224,172 | 243,954,673 | 201,266,609 | |||||||||||
Company Contact:John Richardson (Investor Relations Manager)SRC Energy Inc. Tel 720-616-4308 E-mail: jrichardson@srcenergy.com
Source: SRC Energy Inc.