DALLAS, Nov. 6, 2017
/PRNewswire/ -- RSP Permian, Inc. ("RSP" or the "Company")
(NYSE: RSPP) today reported financial and operating results for the
quarter ended September 30, 2017. In addition, the
Company filed its Quarterly Report on Form 10-Q with the Securities
and Exchange Commission (the "SEC") and posted a presentation that
supplements the information in this release to its website at
www.rsppermian.com.
Third Quarter 2017 Highlights
- Production increased 98% to 58.9 MBoe/d (71% oil, 87% liquids),
compared to 3Q16 and increased 8% compared to 2Q17
- Net income of $21.3 million, or
$0.14 per diluted share. Adjusted net
income, which does not include certain items, was $28.2 million, or $0.18 per diluted share
- Adjusted EBITDAX of $144.7
million, a 120% increase compared to 3Q16 and a 7% increase
compared to 2Q17
- Borrowing base increased to $1.5
billion from $1.1
billion(1) and Company negotiated reduced
interest rate on outstanding borrowings' pricing grid
- Closed bolt-on acquisitions of leasehold acreage and mineral
interests located primarily in the heart of the Company's
Delaware Basin position for an
aggregate purchase price of $234.4
million acquiring approximately 5,800 net leasehold
acres, 5,800 net royalty acres(2) and 500 Boe/d of
production
(1) Borrowing base redetermination closed subsequent
to 3Q17
(2) Net royalty acre defined as one surface acre leased
at a 1/8th royalty
Well Results
Midland Basin
- The Keystone 1007 Wolfcamp A well (9,800') established a peak
30-day average rate of 2,220 Boe/d or 227 Boe/d per 1,000' (90%
oil)
- The Spanish Trail 347 02 Wolfcamp A well (6,500') established a
peak 30-day average rate of 1,850 Boe/d or 285 Boe/d per 1,000'
(82% oil)
Delaware Basin
- The Rudd Draw 29 03 01H Third Bone Spring well (4,440') is
currently producing 1,822 Boe/d while still cleaning up at over
2,500 psi and established a seven day rate of 1,428 Boe/d or 322
Boe/d per 1,000' (79% oil)
- The Ludeman A 603 Wolfcamp B well (4,830') established a peak
30-day average rate of 935 Boe/d or 194 Boe/d per 1,000' (77%
oil)
- The Ludeman D 2105H Delaware
Basin Lower Wolfcamp A well (4,750') has produced 200 MBoe in 170
days (72% oil)
- The Rudd Draw 26-21 01H Delaware Basin Wolfcamp XY well (6,700') has
produced 450 MBoe in 275 days (73% oil)
Steve Gray, Chief Executive
Officer of RSP, commented, "After closing our $2.4 billion acquisition of Silver Hill, 2017 has
been all about execution. I am pleased to report that our
build out of infrastructure in the Delaware Basin has been completed on time and
on budget, and we remain on track to deliver on our 2017
guidance. Our well results in both the Midland and Delaware
Basins are outperforming our expectations. As a result, we've
slowed down our completion pace in order to minimize our outspend
while at the same time reaffirmed our production guidance for the
year."
Mr. Gray continued, "RSP is well positioned to accelerate our
production and cash flow growth next year and to further enhance
our capital efficiency as we work off our backlog of uncompleted
wells. Our inventory of high-return, horizontal prospects
located in multiple stacked zones in the core of the Midland and
Delaware Basins, coupled with our low cost operations, provide us
with decades of strong, profitable growth and will enable us to
fund our drilling program out of operating cash flow before the end
of next year at today's oil prices."
Operational Results
|
Three Months Ended
September 30,
|
|
2017
|
|
2016
|
Production
data:
|
|
|
|
Oil
(MBbls)
|
3,808
|
|
|
1,989
|
|
Natural gas
(MMcf)
|
4,339
|
|
|
1,720
|
|
NGLs
(MBbls)
|
890
|
|
|
462
|
|
Total
(MBoe)
|
5,422
|
|
|
2,738
|
|
Average net daily
production (Boe/d)
|
58,932
|
|
|
29,761
|
|
Average prices
before effects of hedges (1) (2):
|
|
|
|
Oil (per
Bbl)
|
$
|
45.85
|
|
|
$
|
42.60
|
|
Natural gas (per
Mcf)
|
2.23
|
|
|
2.27
|
|
NGLs (per
Bbl)
|
19.52
|
|
|
10.82
|
|
Total (per
Boe)
|
$
|
37.19
|
|
|
$
|
34.19
|
|
Average realized
prices after effects of hedges (1) (2):
|
|
|
|
Oil (per
Bbl)
|
$
|
45.16
|
|
|
$
|
41.46
|
|
Natural gas (per
Mcf)
|
2.24
|
|
|
2.27
|
|
NGLs (per
Bbl)
|
19.52
|
|
|
10.82
|
|
Total (per
Boe)
|
$
|
36.72
|
|
|
$
|
33.37
|
|
Average costs (per
Boe):
|
|
|
|
Lease operating
expenses (excluding gathering and transportation)
|
$
|
5.18
|
|
|
$
|
4.67
|
|
Gathering and
transportation
|
0.98
|
|
|
0.51
|
|
Production and ad
valorem taxes
|
2.45
|
|
|
2.14
|
|
Depreciation,
depletion and amortization
|
13.54
|
|
|
18.27
|
|
General and
administrative - cash component
|
1.43
|
|
|
2.04
|
|
General and
administrative - stock comp (3)
|
0.81
|
|
|
1.20
|
|
|
|
(1)
|
Average prices shown
in the table reflect prices both before and after the effects of
our cash payments/receipts on our commodity derivative
transactions. Our calculation of such effects includes realized
gains or losses on cash settlements for commodity derivative
transactions and an adjustment to reflect premiums incurred
previously or upon settlement that are attributable to instruments
settled in the period, if applicable.
|
(2)
|
Average prices for
oil are net of transportation costs. Average prices for natural gas
do not include transportation costs; instead, transportation costs
related to our natural gas production and sales are included in
gathering and transportation which is included in lease operating
expenses in our consolidated statements of operations. No
transportation costs are associated with NGL production and
sales.
|
(3)
|
Represents
compensation expense related to restricted stock awards and
performance share awards granted as part of the Company's ongoing
compensation and retention programs.
|
Production volumes for the quarter ended September 30, 2017
averaged 58,932 Boe/d, or a total of 5,422 MBoe, an increase of 98%
over prior year's third quarter of 29,761 Boe/d. Production
for the third quarter of 2017 was comprised of 71% crude oil, 13%
natural gas and 16% NGLs. RSP's average realized oil price
for the third quarter of 2017, before the effects of hedges, was
$45.85 per barrel, a negative
$2.35 differential compared to
average NYMEX WTI pricing of $48.20
per barrel for the same period, or 95% of NYMEX WTI pricing. RSP's
average realized natural gas price for the third quarter of 2017,
before the effects of hedges, was $2.23 per Mcf, a negative $0.76 differential compared to average NYMEX
Henry Hub pricing of $2.99 per MMBtu
for the same period, or 75% of NYMEX Henry Hub pricing. RSP's
average realized NGL price for the third quarter of 2017, before
the effects of hedges, was $19.52 per
Bbl, or 40% of NYMEX WTI pricing for the same time period.
RSP's average realized commodity price per barrel of oil
equivalent for the third quarter of 2017, before the effects of
hedges, was $37.19. Per unit
cash operating expenses excluding interest expense but including
lease operating expense, gathering and transportation expense,
production and ad valorem taxes and recurring cash general and
administrative expenses were $10.04
per Boe.
Operational Update
The Company operated four horizontal rigs in the Midland Basin
and three horizontal rigs in the Delaware Basin throughout the third quarter
2017. RSP utilized two full-time completion crews during the
third quarter. RSP drilled 26 operated horizontal wells and
completed 22 operated horizontal wells (Midland: seven Lower
Spraberry, seven Wolfcamp A, three Wolfcamp B, one Middle
Spraberry; Delaware: two Wolfcamp
A, one Wolfcamp B, one Third Bone Spring). The Company began
the quarter with 22 operated horizontal drilled but uncompleted
wells ("DUCs") and exited the quarter with a total of 26 operated
horizontal DUCs.
Financial Results
(In thousands,
except per share data)
|
|
|
|
Three Months
Ended
|
|
|
September
30,
|
June
30,
|
|
|
2017
|
2016
|
2017
|
|
|
|
Total
Revenues
|
|
$
|
201,654
|
|
$
|
93,621
|
|
$
|
183,100
|
|
Net Cash from
Derivative Instruments
|
|
(2,567)
|
|
(2,258)
|
|
(716)
|
|
Adjusted Total
Revenues
|
|
199,087
|
|
91,363
|
|
182,384
|
|
|
|
|
|
|
Net Income
|
|
$
|
21,326
|
|
$
|
985
|
|
$
|
31,090
|
|
Net Income per
Common Share - Diluted
|
|
0.14
|
|
0.01
|
|
0.20
|
|
|
|
|
|
|
Adjusted Net Income
(Loss)(1)
|
|
$
|
28,187
|
|
$
|
(764)
|
|
$
|
26,048
|
|
Adjusted Net
Income (Loss) per Common Share - Diluted
|
|
0.18
|
|
(0.01)
|
|
0.17
|
|
|
|
|
|
|
Adjusted
EBITDAX(1)
|
|
$
|
144,662
|
|
$
|
65,732
|
|
$
|
135,450
|
|
|
|
(1)
|
Adjusted EBITDAX and
Adjusted Net Income (loss) are non-GAAP financial measures. For a
definition of Adjusted EBITDAX and Adjusted Net Income (loss) and a
reconciliation of Adjusted EBITDAX and Adjusted Net Income (loss)
to Net Income, see "Use of Non-GAAP financial measures" and our
quarterly statements of operations at the end of this
release.
|
For the quarter ended September 30, 2017, total revenues,
excluding the revenue impact from realized derivative instruments,
were $201.7 million, a 115% increase
over the prior year quarter of $93.6
million. Adjusted total revenues, including the net
cash from derivative instruments, were $199.1 million, a 118% increase from the prior
year quarter of $91.4 million.
Net income for the third quarter of 2017 was $21.3 million, or $0.14 per diluted share, while net income for the
prior year quarter was $1.0 million,
or $0.01 per diluted share.
Adjusted net income for the third quarter of 2017 was $28.2 million, or $0.18 per diluted share, compared to an Adjusted
net loss for the prior year quarter of negative $0.8 million or negative $0.01 per diluted share. Adjusted EBITDAX
was $144.7 million, a 120% increase
from the prior year quarter of $65.7
million.
Capital Expenditures
RSP's development capital expenditures, which includes our
investment in drilling and completing wells, infrastructure,
capitalized workovers, and other, but excludes the cost of
acquisitions, for the quarter ended September 30, 2017 totaled $191.6 million ($168.9
million of drilling and completion and $22.7 million of infrastructure and other).
Of the development capital, approximately $16.5 million, or 9%, was spent on non-operated
properties.
Additionally, during the third quarter of 2017 the Company
acquired $234.4 million of oil and
gas properties.
Liquidity
As of September 30, 2017, the
Company had $46.5 million of cash and
$345 million of borrowings
outstanding on its revolving credit facility, which had a
$1.1 billion borrowing base and a
$900 million Company-elected
commitment. Effective October 19,
2017, the Company increased the borrowing base under its
revolving credit facility to $1.5
billion, from $1.1 billion and
reduced the interest rate on outstanding borrowings' pricing
grid. The Company maintained its elected commitment amount of
$900 million.
Hedging
The summary below includes all hedges in place for the remainder
of 2017 and for 2018, as of November 6,
2017.
Crude Oil
Hedges
|
(Bbl,
$/Bbl)
|
|
Q4
2017
|
|
Q1
2018
|
|
Q2
2018
|
|
Q3
2018
|
|
Q4
2018
|
Three-Way
Collars(1)
|
|
552,000
|
|
|
2,219,000
|
|
|
1,941,000
|
|
|
1,319,000
|
|
|
1,227,000
|
|
Ceiling
|
|
$
|
54.10
|
|
|
$
|
58.81
|
|
|
$
|
59.07
|
|
|
$
|
60.56
|
|
|
$
|
60.96
|
|
Floor
|
|
$
|
45.00
|
|
|
$
|
46.96
|
|
|
$
|
47.11
|
|
|
$
|
47.79
|
|
|
$
|
48.00
|
|
Short Put
|
|
$
|
35.00
|
|
|
$
|
36.96
|
|
|
$
|
37.11
|
|
|
$
|
37.79
|
|
|
$
|
38.00
|
|
|
|
|
|
|
|
|
|
|
|
|
Costless
Collars(1)
|
|
1,150,000
|
|
|
571,000
|
|
|
516,000
|
|
|
890,000
|
|
|
736,000
|
|
Ceiling
|
|
$
|
60.05
|
|
|
$
|
60.19
|
|
|
$
|
60.20
|
|
|
$
|
60.14
|
|
|
$
|
60.16
|
|
Floor
|
|
$
|
45.00
|
|
|
$
|
45.00
|
|
|
$
|
45.00
|
|
|
$
|
45.00
|
|
|
$
|
45.00
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Premium
Puts(1)
|
|
920,000
|
|
|
|
|
|
|
|
|
|
Floor
|
|
$
|
48.50
|
|
|
|
|
|
|
|
|
|
Deferred
Premium(2)
|
|
$
|
(4.00)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Swaps(1)
|
|
552,000
|
|
|
|
|
|
|
|
|
|
Swap
|
|
$
|
48.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Hedge
Volumes
|
|
3,174,000
|
|
|
2,790,000
|
|
|
2,457,000
|
|
|
2,209,000
|
|
|
1,963,000
|
|
Weighted Average
Floor(3)
|
|
$
|
45.54
|
|
|
$
|
46.56
|
|
|
$
|
46.67
|
|
|
$
|
46.67
|
|
|
$
|
46.87
|
|
|
|
|
|
|
|
|
|
|
|
|
Mid-Cush
Differential Swaps(4)
|
|
1,104,000
|
|
|
1,800,000
|
|
|
1,820,000
|
|
|
1,840,000
|
|
|
1,840,000
|
|
Swap
|
|
$
|
(0.63)
|
|
|
$
|
(0.62)
|
|
|
$
|
(0.62)
|
|
|
$
|
(0.62)
|
|
|
$
|
(0.62)
|
|
|
|
(1)
|
The crude oil
derivative contracts are settled based on the arithmetic average of
the closing settlement price for the front month contract NYMEX
price of West Texas Intermediate Light Sweet Crude during the
relevant period.
|
(2)
|
The deferred premium
is not paid until expiration date, aligning cash inflows and
outflows with the settlement of the derivative contract.
|
(3)
|
Weighted average
floor assumes the long put in three-way collars and put spreads and
reflects the impact of premiums paid.
|
(4)
|
The Mid-Cush swap
contracts are settled based on the difference in the arithmetic
average during the calculation period of WTI MIDLAND ARGUS and WTI
ARGUS prices in the Argus Americas Crude publication for the
relevant period.
|
Natural Gas
Hedges
|
(MMBtu,
$/MMBtu)
|
|
Q4
2017
|
Costless
Collars(1)
|
|
2,545,000
|
|
Ceiling
|
|
$
|
3.86
|
|
Floor
|
|
$
|
3.00
|
|
|
|
(1)
|
The natural gas
derivative contracts are settled based on the last trading day's
closing price for the front month contract relevant to each
period.
|
2017 Annual Guidance
|
|
Nine months
ended 9/30/17
Actual
|
|
2017
Guidance
|
|
Completions
|
|
|
|
|
|
Operated Gross
Horizontal Completions
|
|
54
|
|
70 -
74(1)
|
|
Operated
Average Working Interest
|
|
91%
|
|
92%(1)
|
|
Midland Basin
Average Lateral Length
|
|
~8,300'
|
|
~8,500'
|
|
Delaware Basin
Average Lateral Length
|
|
~5,600'
|
|
~6,250'
|
|
|
|
|
|
|
|
Production
|
|
|
|
|
|
Average Daily
Production (Boe/d)
|
|
52,864
|
|
53,000 -
57,000
|
|
%
Oil
|
|
72%
|
|
71% - 73%
|
|
% Natural
Gas
|
|
12%
|
|
11% - 13%
|
|
%
NGLs
|
|
16%
|
|
15% - 17%
|
|
|
|
|
|
|
|
Development Capital
Expenditures ($ in MM)
|
|
|
|
|
|
Drilling and
Completion (D&C)
|
|
$448.1
|
|
$575 -
$625
|
|
Infrastructure,
Capitalized Workovers & Other
|
|
$38.7
|
|
$50 - $75
|
|
Total Development
Capital Expenditures
|
|
$486.8
|
|
$625 -
$700
|
|
% Midland
Basin
|
|
66%
|
|
60% - 70%
|
|
% Delaware
Basin
|
|
34%
|
|
30% - 40%
|
|
%
Non-Operated
|
|
10%
|
|
8% - 12%
|
|
|
|
|
|
|
|
Income Statement
($/Boe)
|
|
|
|
|
|
Lease operating
expenses (including workovers)
|
|
$5.09
|
|
$4.50 -
$5.50
|
|
Gathering and
transportation
|
|
$0.99
|
|
$1.10 -
$1.40
|
|
Exploration
expenses
|
|
$0.48
|
|
$0.40 -
$0.60
|
|
General and
administrative - cash component
|
|
$1.62
|
|
$1.25 -
$1.75
|
|
General and
administrative - stock comp
|
|
$0.88
|
|
$0.70 -
$0.90
|
|
Depreciation,
depletion, and amortization
|
|
$14.03
|
|
$14.00 -
$16.00
|
|
Production and ad
valorem taxes (% of oil and gas revenues)
|
|
5.9%
|
|
6.0% -
8.0%
|
|
|
|
(1)
|
Represents update to
2017 guidance.
|
Third Quarter 2017 Earnings Release and Conference
Call
RSP will host a conference call for investors at
10:00 AM Central Time on Tuesday, November 7, 2017, to discuss third
quarter 2017 results. Hosting the call will be Steve Gray, Chief Executive Officer,
Scott McNeill, Chief Financial
Officer, Zane Arrott, Chief
Operating Officer and other members of RSP's management team.
The call may be accessed live over the telephone by dialing
(877) 705-6003, or for international callers, (201) 493-6725.
A replay will be available shortly after the call and can be
accessed by dialing (844) 512-2921, or for international callers
(412) 317-6671. The passcode for the replay is 13672586. The
replay will be available until November 21,
2017. Interested parties may also listen to a simultaneous
webcast of the conference call by logging onto RSP's website at
www.rsppermian.com in the Investor Relations section. A replay of
the webcast will also be available for approximately 30 days
following the call.
About RSP Permian, Inc.
RSP is an independent oil and
natural gas company focused on the acquisition, exploration,
development and production of unconventional oil and associated
liquids-rich natural gas reserves in the Permian Basin of
West Texas. The vast majority of
RSP's acreage is located on large, contiguous acreage blocks in the
core of the Midland and Delaware Basins, sub-basins of the Permian
Basin. The Company's common stock is traded on the NYSE under
the ticker symbol "RSPP." For more information, visit
www.rsppermian.com.
Forward-Looking Statements
This news release contains
forward-looking statements within the meaning of the federal
securities laws. All statements, other than historical
facts, that address activities that RSP assumes, plans, expects,
believes, intends or anticipates (and other similar expressions)
will, should or may occur in the future are forward-looking
statements. Forward-looking statements are based on management's
current beliefs, based on currently available information, as to
the outcome and timing of future events. These forward-looking
statements involve certain risks and uncertainties that could cause
the results to differ materially from those expected by the
management of RSP. Information concerning these risks and other
factors can be found in RSP's filings with the SEC, including its
Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q,
which can be obtained free of charge on the SEC's web site located
at http://www.sec.gov. RSP undertakes no obligation to update or
revise any forward-looking statement.
Statements of Operations
(In thousands,
except per share data)
|
|
|
Three Months Ended
September 30,
|
|
Three Months
Ended June 30,
|
|
2017
|
|
2016
|
|
2017
|
Revenues
|
|
|
|
|
|
Oil
sales
|
$
|
174,624
|
|
|
$
|
84,722
|
|
|
$
|
160,395
|
|
Natural gas
sales
|
9,661
|
|
|
3,901
|
|
|
9,859
|
|
NGL
sales
|
17,369
|
|
|
4,998
|
|
|
12,846
|
|
Total revenues
|
201,654
|
|
|
93,621
|
|
|
183,100
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
Lease
operating expenses
|
33,385
|
|
|
14,174
|
|
|
28,892
|
|
Production and
ad valorem taxes
|
13,281
|
|
|
5,872
|
|
|
10,142
|
|
Depreciation,
depletion, and amortization
|
73,408
|
|
|
50,022
|
|
|
68,104
|
|
Asset
retirement obligation accretion
|
151
|
|
|
118
|
|
|
150
|
|
Impairments
|
705
|
|
|
971
|
|
|
5,312
|
|
Exploration
expenses
|
1,497
|
|
|
359
|
|
|
2,869
|
|
General and
administrative expenses
|
12,120
|
|
|
8,857
|
|
|
12,343
|
|
Acquisition
costs
|
30
|
|
|
—
|
|
|
401
|
|
Total operating expenses
|
134,577
|
|
|
80,373
|
|
|
128,213
|
|
Operating
income
|
67,077
|
|
|
13,248
|
|
|
54,887
|
|
Other income
(expense)
|
|
|
|
|
|
Other income,
net
|
1,106
|
|
|
310
|
|
|
589
|
|
Net gain
(loss) on derivative instruments
|
(21,626)
|
|
|
(2,934)
|
|
|
12,194
|
|
Interest
expense
|
(21,553)
|
|
|
(13,146)
|
|
|
(19,508)
|
|
Total other expense
|
(42,073)
|
|
|
(15,770)
|
|
|
(6,725)
|
|
Income (loss)
before income taxes
|
25,004
|
|
|
(2,522)
|
|
|
48,162
|
|
Income tax (expense)
benefit
|
(3,678)
|
|
|
3,507
|
|
|
(17,072)
|
|
Net
income
|
$
|
21,326
|
|
|
$
|
985
|
|
|
$
|
31,090
|
|
|
|
|
|
|
|
Net income
per common share - Basic
|
$
|
0.14
|
|
|
$
|
0.01
|
|
|
$
|
0.20
|
|
Net income
per common share - Diluted
|
$
|
0.14
|
|
|
$
|
0.01
|
|
|
$
|
0.20
|
|
|
|
|
|
|
|
Weighted Average
Common Shares Outstanding
|
|
|
|
|
|
Basic
|
156,864
|
|
|
100,234
|
|
|
156,856
|
|
Diluted
|
157,837
|
|
|
100,234
|
|
|
157,827
|
|
Summary Balance Sheet
(In
thousands)
|
|
|
September 30,
2017
|
|
December 31,
2016
|
|
|
|
|
Cash and cash
equivalents
|
$
|
46,474
|
|
|
$
|
690,776
|
|
Other current
assets
|
122,316
|
|
|
85,486
|
|
Total current
assets
|
168,790
|
|
|
776,262
|
|
Property, plant and
equipment, net
|
6,010,234
|
|
|
4,129,635
|
|
Other long-term
assets
|
57,811
|
|
|
90,530
|
|
Total
assets
|
$
|
6,236,835
|
|
|
$
|
4,996,427
|
|
|
|
|
|
Current
liabilities
|
200,263
|
|
|
108,269
|
|
Long-term
debt
|
1,478,500
|
|
|
1,132,275
|
|
Other long-term
liabilities
|
380,888
|
|
|
338,571
|
|
Total stockholders'
equity
|
4,177,184
|
|
|
3,417,312
|
|
Total liabilities and
stockholders' equity
|
$
|
6,236,835
|
|
|
$
|
4,996,427
|
|
Use of Non-GAAP Financial Measures
We define Adjusted
EBITDAX as oil and gas revenues including net cash receipts
(payments) on settled derivative instruments and premiums paid on
put options that settled during the period, less lease operating
expenses, production and ad valorem taxes, and general and
administrative expenses excluding stock based compensation.
Adjusted Net Income deducts from Adjusted EBITDAX depreciation,
depletion, and amortization, accretion on asset retirement
obligations, exploration expenses, interest expense, stock-based
compensation, acquisition costs and adjusted income tax
expense.
Management believes Adjusted EBITDAX and Adjusted Net Income are
useful because they allow us to more effectively evaluate our
operating performance and compare the results of our operations
from period to period without regard to our financing methods or
capital structure. We exclude the items listed above in arriving at
Adjusted EBITDAX and Adjusted Net Income because these amounts 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. Adjusted EBITDAX and Adjusted Net Income should not be
considered as an alternative to, or more meaningful than, net
income as determined in accordance with GAAP or as an indicator of
our operating performance or liquidity. Certain items excluded from
Adjusted EBITDAX and Adjusted Net Income 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 costs of depreciable assets, none of which are
components of Adjusted EBITDAX. Our computations of Adjusted
EBITDAX and Adjusted Net Income may not be comparable to other
similarly titled measures of other companies.
The following tables include a reconciliation of the non-GAAP
financial measures of Adjusted EBITDAX and Adjusted Net Income to
the GAAP financial measure of net income.
Reconciliation of Net Income to Adjusted EBITDAX
(In
thousands)
|
|
|
Three Months Ended
September 30,
|
|
Three Months
Ended June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
|
|
|
|
|
Net income
|
$
|
21,326
|
|
|
$
|
985
|
|
|
$
|
31,090
|
|
Interest
expense
|
21,553
|
|
|
13,146
|
|
|
19,508
|
|
Income tax expense
(benefit)
|
3,678
|
|
|
(3,507)
|
|
|
17,072
|
|
Depreciation,
depletion, and amortization
|
73,408
|
|
|
50,022
|
|
|
68,104
|
|
Asset retirement
obligation accretion
|
151
|
|
|
118
|
|
|
150
|
|
Exploration
expenses
|
1,497
|
|
|
359
|
|
|
2,869
|
|
Acquisition
costs
|
30
|
|
|
—
|
|
|
401
|
|
Impairment of
unproved properties
|
705
|
|
|
971
|
|
|
5,312
|
|
(Gain) loss on
derivative instruments
|
21,626
|
|
|
2,934
|
|
|
(12,194)
|
|
Net settled
derivative instruments
|
(2,567)
|
|
|
(2,258)
|
|
|
(716)
|
|
Stock-based
compensation
|
4,361
|
|
|
3,272
|
|
|
4,443
|
|
Other income,
net
|
(1,106)
|
|
|
(310)
|
|
|
(589)
|
|
Adjusted
EBITDAX
|
$
|
144,662
|
|
|
$
|
65,732
|
|
|
$
|
135,450
|
|
Reconciliation of Net Income to Adjusted Net Income
(Loss)
(In
thousands)
|
|
|
Three Months Ended
September 30,
|
|
Three Months
Ended June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
|
|
|
|
|
Net income
|
$
|
21,326
|
|
|
$
|
985
|
|
|
$
|
31,090
|
|
Acquisition
costs
|
30
|
|
|
—
|
|
|
401
|
|
Impairment of
unproved properties
|
705
|
|
|
971
|
|
|
5,312
|
|
(Gain) loss on
derivative instruments
|
21,626
|
|
|
2,934
|
|
|
(12,194)
|
|
Net settled
derivative instruments
|
(2,567)
|
|
|
(2,258)
|
|
|
(716)
|
|
Other income,
net
|
(1,106)
|
|
|
(310)
|
|
|
(589)
|
|
Income tax expense
(benefit) for above items
|
(11,827)
|
|
|
(3,086)
|
|
|
2,744
|
|
Adjusted Net
Income (Loss)
|
$
|
28,187
|
|
|
$
|
(764)
|
|
|
$
|
26,048
|
|
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SOURCE RSP Permian, Inc.