Earthstone Energy, Inc. Reports Third Quarter 2015 Financial Results
Quarterly Production of 4,646 Boepd
/EINPresswire.com/ -- THE WOODLANDS, TX -- (Marketwired) -- 11/12/15 -- Earthstone Energy, Inc. (NYSE MKT: ESTE) ("Earthstone" or the "Company"), today announced financial results for the three month period ended September 30, 2015.
Third Quarter 2015 Highlights
- Average daily production of 4,646 Boepd, a 3% increase compared to the second quarter of 2015 and a 100% increase compared to the third quarter of 2014
- Total revenue of $13.1 million, which excludes any effects from hedges
- Reduced LOE and G&A on a per-unit basis of 6% and 5%, respectively, compared to the second quarter of 2015
- Adjusted EBITDAX(1) of $7.5 million
- Acquired approximately 1,650 gross / 550 net operated acres in southern Gonzales County, Texas, with at least 16 gross identified Eagle Ford drilling locations.
(1) See "Reconciliation of Non-GAAP Financials Measures" section below.
Selected Financial and Operational Data
The below table provides selected financial and operational data for the three months ended September 30, 2015, June 30, 2015, and September 30, 2014.
($000s except where noted) Three Months Ended
-----------------------------------------
September 30, June 30, September 30,
2015 2015 2014
-------------- ----------- --------------
Total Revenue 13,080 16,733 12,055
Realized Hedge Settlements Gain
(Loss) 1,741 943 120
Adjusted Revenue (including
realized hedge settlements) 14,821 17,676 12,175
Net Income (Loss) 1,718 (748) 4,214
Earnings (Loss) Per Share
(Diluted) 0.12 (0.05) 0.46
Adjusted EBITDAX(1) 7,536 8,660 7,420
Production:
Oil (MBbls) 246 230 95
Gas (MMcf) 742 739 521
NGL (MBbls) 58 58 32
Total (MBOE) 428 411 214
Total daily production (BOEPD) 4,646 4,517 2,327
Average prices:
Oil ($/Bbl) 42.20 52.94 93.69
Gas ($/Mcf) 2.66 2.68 4.05
NGL ($/Bbl) 11.73 14.01 28.94
Total ($/Boe) 30.49 36.39 55.85
Adjusted for realized derivatives
settlements:
Oil ($/Bbl) 49.27 57.04 93.44
Gas ($/Mcf) 2.66 2.68 4.33
NGL ($/Bbl) 11.73 14.01 28.94
Total ($/Boe) 34.56 38.69 56.41
(1) See "Reconciliation of Non-GAAP Financials Measures" section below.
Acquisitions
During the third quarter of 2015, the Company acquired a 33% operated interest in approximately 1,650 gross acres, in southern Gonzales County, Texas, which supports 16 gross Eagle Ford locations. This acreage, along with other recent acquisitions in the area, has been de-risked by numerous offsetting Eagle Ford wells operated by EOG Resources, Inc. and Marathon Oil Corporation and is economic in the current commodity price environment.
When combined with acquisitions completed in June 2015, the Company has acquired a total of approximately 3,050 gross / 1,185 net acres in Karnes and southern Gonzales Counties, Texas, with working interests ranging from 33% to 50% in at least 33 identified future gross drilling locations.
Management Comments
Frank A. Lodzinski, President and Chief Executive Officer of Earthstone Energy, Inc., commented, "During the third quarter we continued to deliver production within guidance, while further reducing drilling, completion and operating costs. We drilled and brought online one gross Austin Chalk well and drilled four gross Eagle Ford wells. In the fourth quarter, we intend to drill and initiate completion operations on four gross Eagle Ford wells in our Boggs Unit (approximately 350 gross / 115 net acres, 33% operated working interest). We anticipate having 12 gross wells waiting on completion by the end of year, including our Boggs Unit which should be in the initial stages of completing, which will help support our production and cash flow level into 2016. We currently are running one rig in our operated Eagle Ford project with intermittent Austin Chalk drilling to hold sizeable acreage positions. We believe we can achieve some additional cost savings through efficiencies, but recognize that we must maintain high quality crews and equipment to realize such efficiencies and minimize mechanical problems that lead to cost over-runs."
Mr. Lodzinski further commented, "While we intend to continue to run one rig, we may consider suspending drilling if low commodity prices persist. In that event, we forecast that we can spend within internally generated cash flow in 2016 and keep production relatively flat with our fourth quarter of 2015 exit rate by completing our frac inventory and adding artificial lift where needed. We will provide further guidance in periodic operations updates as the commodity price environment evolves over the ensuing months."
About Earthstone Energy, Inc.
Earthstone Energy, Inc. is a growth-oriented independent oil and gas exploration and production company engaged in the development and acquisition of oil and gas reserves through an active and diversified program that includes the acquisition, drilling and development of undeveloped leases, purchases of reserves, and exploration activities, with its current primary assets located in the Eagle Ford trend of south Texas and in the Williston Basin of North Dakota and Montana. Earthstone is traded on NYSE MKT under the symbol "ESTE." Our corporate headquarters is located in The Woodlands, Texas. Additional information on Earthstone can be found 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, and Section 21E of the Securities Exchange Act of 1934, as amended. 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," "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 future operations, expansion of production and development acreage, increased cash flow, earnings and assets and access to capital. 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 risks of the oil and gas industry (for example, the recent rapid, significant decline in oil prices and operational risks in exploring for, developing and producing crude oil and natural gas; risks and uncertainties involving geology of oil and gas deposits); the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to future oil and gas prices, production, costs and expenses; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; health, safety and environmental risks and risks related to weather; inability of management to execute its plans to meet its goals; unavailability of gathering systems, pipelines and processing facilities; and the possibility that government policies may change. Earthstone's annual report on Form 10-K for the year ended December 31, 2014, quarterly reports on Form 10-Q, recent current reports on Form 8-K, and other Securities and Exchange Commission 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.
EARTHSTONE ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
------------- -------------
ASSETS 2015 2014
------------- -------------
(In thousands, except share
Current assets: amounts)
Cash and cash equivalents $ 41,327 $ 100,447
Accounts receivable:
Oil, natural gas, and natural gas
liquids revenues 15,828 14,016
Joint interest billings and other 6,370 9,417
Prepaid expenses and other current assets 1,058 1,578
Current derivative assets 3,626 3,569
------------- -------------
Total current assets 68,209 129,027
------------- -------------
Oil and gas properties, successful efforts
method:
Proved properties 365,584 317,006
Unproved properties 85,971 76,791
------------- -------------
Total oil and gas properties 451,555 393,797
------------- -------------
Accumulated depreciation, depletion, and
amortization (111,530) (97,920)
------------- -------------
Net oil and gas properties 340,025 295,877
Other noncurrent assets:
Goodwill 22,992 22,992
Office and other equipment, less accumulated
depreciation of $879 and $474 at September
30, 2015 and December 31, 2014 2,032 2,109
Land 101 101
Noncurrent derivative assets 287 -
Other noncurrent assets 1,184 1,282
------------- -------------
TOTAL ASSETS $ 434,830 $ 451,388
============= =============
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 23,662 $ 28,753
Accrued expenses 16,454 20,529
Revenues and royalties payable 9,947 17,364
Advances 21,600 21,398
Asset retirement obligations 341 408
------------- -------------
Total current liabilities 72,004 88,452
Noncurrent liabilities:
Long-term debt 11,191 11,191
Asset retirement obligations 5,822 5,670
Deferred tax liability 29,188 29,258
Other noncurrent liabilities 241 289
------------- -------------
Total noncurrent liabilities 46,442 46,408
------------- -------------
Total liabilities 118,446 134,860
------------- -------------
Commitments and Contingencies (Note 10)
Equity:
Preferred stock, $0.001 par value,
20,000,000 shares authorized; none issued
or outstanding -- --
Common stock, $0.001 par value, 100,000,000
shares authorized; 13,835,128 shares issued
and outstanding at September 30, 2015 and
December 31, 2014 14 14
Additional paid-in capital 358,086 358,086
Accumulated deficit (41,256) (41,112)
Treasury stock, 15,414 shares at September
30, 2015 and December 31, 2014 (460) (460)
------------- -------------
Total equity 316,384 316,528
------------- -------------
TOTAL LIABILITIES AND EQUITY $ 434,830 $ 451,388
============= =============
EARTHSTONE ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Threemonths ended Nine months ended
September 30, September 30,
------------------------ ------------------------
2015 2014 2015 2014
----------- ----------- ----------- -----------
REVENUES (In thousands, except share and per share amounts)
Oil, natural gas, and
natural gas liquids
revenues:
Oil $ 10,385 $ 8,916 $ 31,586 $ 25,292
Natural gas 1,971 2,113 5,483 7,459
Natural gas liquids 677 928 2,164 2,842
----------- ----------- ----------- -----------
Total oil, natural
gas, and natural
gas liquids
revenues 13,033 11,957 39,233 35,593
Gathering income 60 98 233 293
(Loss) gain on sales of
oil and gas
properties, net (13) -- 1,667 --
----------- ----------- ----------- -----------
Total revenues 13,080 12,055 41,133 35,886
----------- ----------- ----------- -----------
OPERATING COSTS AND
EXPENSES
Production costs:
Lease operating
expense 4,138 2,536 12,751 7,210
Severance taxes 746 481 2,122 1,479
Re-engineering and
workovers 234 234 520 553
Exploration expense - 83 142 83
Depreciation,
depletion, and
amortization 8,107 5,268 22,705 13,031
General and
administrative expense 2,450 1,602 7,505 4,816
----------- ----------- ----------- -----------
Total operating costs
and expenses 15,675 10,204 45,745 27,172
----------- ----------- ----------- -----------
(Loss) income from
operations (2,595) 1,851 (4,612) 8,714
OTHER INCOME (EXPENSE)
Interest expense, net (169) (149) (507) (446)
Net gain on derivative
contracts 5,166 2,489 4,522 186
Other income, net 127 23 384 30
----------- ----------- ----------- -----------
Total other income
(expense) 5,124 2,363 4,399 (230)
----------- ----------- ----------- -----------
Income (loss) before
income taxes 2,529 4,214 (213) 8,484
Income tax expense
(benefit) 811 -- (69) --
----------- ----------- ----------- -----------
Net income (loss) $ 1,718 $ 4,214 $ (144) $ 8,484
=========== =========== =========== ===========
Net income (loss) per
common share:
Basic $ 0.12 $ 0.46 $ (0.01) $ 0.93
Diluted $ 0.12 $ 0.46 $ (0.01) $ 0.93
Weighted average common
shares outstanding:
Basic 13,835,128 9,124,452 13,835,128 9,124,452
Diluted 13,835,128 9,124,452 13,835,128 9,124,452
EARTHSTONE ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
----------------------------
2015 2014
------------- -------------
Cash flows from operating activities: (In thousands)
Net (loss) income $ (144) $ 8,484
Adjustments to reconcile net (loss) income
to net cash provided by operating
activities:
Depreciation, depletion, and amortization 22,705 13,031
Unrealized gain on derivative contracts (344) (1,155)
Accretion of asset retirement obligations 425 229
Deferred income taxes (69) --
Amortization of deferred financing costs 195 113
Settlement of asset retirement obligations (65) (56)
Gain on sale of assets (1,667) --
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 5,362 (18,457)
Decrease (increase) in prepaid expenses
and other 548 (408)
(Decrease) increase in accounts payable
and accrued expenses (15,547) 38,532
(Decrease) increase in revenue and
royalties payable (7,318) 10,509
Increase in advances 224 11,028
------------- -------------
Net cash provided by operating
activities 4,305 61,850
------------- -------------
Cash flows from investing activities:
Acquisitions of oil and gas property (8,706) --
Additions to oil and gas property and
equipment (57,705) (54,537)
Additions to other property and equipment (328) (576)
Proceeds from sales of oil and gas
properties 3,441 --
------------- -------------
Net cash used in investing activities (63,298) (55,113)
------------- -------------
Cash flows from financing activities:
Deferred financing costs (127) (188)
------------- -------------
Net cash used in financing activities (127) (188)
------------- -------------
Net (decrease) increase in cash and cash
equivalents (59,120) 6,549
Cash and cash equivalents at beginning of
period 100,447 25,423
------------- -------------
Cash and cash equivalents at end of period $ 41,327 $ 31,972
============= =============
Supplemental disclosure of cash flow
information
Cash paid for:
Interest $ 284 $ 331
Non-cash investing and financing activities:
Asset retirement obligations $ 128 $ 50
Acquisitions of oil and gas properties $ 2,130 -
Earthstone Energy, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Adjusted EBITDAX
Adjusted EBITDAX is used as a supplemental financial measure by our management and by external users of our financial statements, such as investors, commercial banks and others, to assess our operating performance compared to that of other companies in our industry, without regard to financing methods, capital structure or historical costs basis. It is also used to assess our ability to incur and service debt and fund capital expenditures. We define "Adjusted EBITDAX" as net income (loss) plus (1) (gain) loss on sale of assets; (2) accretion; (3) depletion, depreciation, and amortization; (4) exploration expense; (5) interest expense; (6) interest income; (7) unrealized (gain) loss on derivatives; and (8) income tax expense (benefit).
Our Adjusted EBITDAX should not be considered an alternative to net income (loss), operating income (loss), cash flow provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with the generally accepted accounting principles ("GAAP"). Our Adjusted EBITDAX may not be comparable to similarly titled measures of another company because all companies may not calculate Adjusted EBITDAX in the same manner.
The following table provides a reconciliation of net income to Adjusted EBITDAX for the periods indicated (in thousands):
Three Months Ended
----------------------------------------
September 30, June 30, September 30,
2015 2015 2014
------------- ---------- -------------
Net income (loss) $ 1,718 $ (748) $ 4,214
(Gain) / loss on sale of assets 13 (1,680) -
Accretion 143 137 78
Depletion, depreciation, and
amortization 8,107 8,674 5,268
Exploration expense - 142 83
Interest expense 180 182 149
Interest income (11) (13) -
Unrealized (gain) loss on
derivative contracts (3,425) 2,261 (2,364)
Income tax expense (benefit) 811 (295) -
------------- ---------- -------------
Adjusted EBITDAX $ 7,536 $ 8,660 $ 7,423
============= ========== =============
Contact:
Neil K. Cohen
Vice President, Finance, and Treasurer
Earthstone Energy, Inc.
1400 Woodloch Forest Drive, Suite 300
The Woodlands, TX 77380
281-298-4246
Legal Disclaimer:
EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.
