Earthstone Energy, Inc. (NYSE: ESTE) (“Earthstone”, the “Company”,
“we”, “our” or “us”), today announced financial and operating
results for the three and six months ended June 30, 2023.
Second Quarter 2023
Highlights
- Announced the Novo
Acquisition for $1 billion on June 15, 2023, which is expected to
close on August 15, 2023
- Achieved record
average daily production of 105,493 Boepd(1) (42% oil), which
exceeded the mid-point of full-year 2023 production guidance by
5.5%
- Net income(2) of
$82.4 million, and Adjusted Net Income(3) of $75.6 million
- Adjusted EBITDAX(3)
of $238.8 million
- Net cash provided
by operating activities of $218.4 million
-
Free Cash Flow(3) of $41.9 million
-
Capital expenditures of $174.4 million, which comprised 23% of the
mid-point of full-year 2023 capital expenditures guidance
-
Issued $500 million of senior unsecured notes due 2031
Year to Date 2023
Highlights
- Average daily
production of 104,974 Boepd(1) (43% oil), which exceeded the
mid-point of full-year 2023 production guidance by 5.0%
- Net income(2) of
$168.7 million, and Adjusted Net Income(3) of $184.7 million
- Adjusted EBITDAX(3)
of $505.7 million
- Net cash provided
by operating activities of $476.8 million
-
Free Cash Flow(3) of $83.7 million
-
Capital expenditures of $376.7 million, which comprised 50% of the
mid-point of full-year 2023 capital expenditures guidance
(1) Represents reported sales volumes.(2) Net
income (GAAP) represents the sum of Net Income attributable to
Earthstone Energy, Inc., plus the Net income attributable to
noncontrolling interest. The related consolidated weighted average
shares outstanding of Class A Common Stock and Class B Common Stock
were 141.6 million shares and 141.7 million shares,
respectively, on an as-converted basis, for the three and six
months ended June 30, 2023 (“Adjusted Diluted Shares”, as
reconciled in the “Non-GAAP Financial Measures” section below). All
shares of our Class B Common Stock issued and outstanding are held
by the noncontrolling interest group.(3) See “Non-GAAP Financial
Measures” section below.Management Comments
Robert J. Anderson, President and Chief
Executive Officer of Earthstone, stated, “Earthstone’s operational
excellence continued during the second quarter, with production
setting record levels and surpassing our internal forecast and the
top end of our full-year guidance. We reported second-quarter
production of 105,493 boepd, with the oil component over 44,000
barrels per day. Our low decline, stable production base, and
strong new well results drove our production outperformance for the
quarter. The execution of our disciplined operating plan and the
strength of our operational performance translated directly into
strong financial performance for the quarter. Company record daily
production led to Adjusted EBITDAX of approximately $239 million
and Free Cash Flow of approximately $42 million for the quarter.
Year-to-date average daily production of approximately 105,000
Boepd exceeds the midpoint of our pre-Novo full-year guidance by
5,000 Boepd, showcasing the quality and productivity of our
inventory and strong operational execution.”
Mr. Anderson continued, “Also during the
quarter, we continued to further our consolidation strategy with
the announcement of the pending Novo acquisition, which will
significantly increase the scale of our northern Delaware Basin
footprint. The Novo acquisition, combined with last year's Chisholm
and Titus acquisitions, will fundamentally transform Earthstone
into a major operator in the northern Delaware Basin, with four of
our five rigs expected to be drilling in this oil-rich and highly
economic area. We look forward to closing the Novo transaction
later this month and incorporating its high-quality inventory into
our development plans. We expect Novo will increase our production
base to more than 130,000 Boepd in the fourth quarter. We believe
the Novo transaction will add significant Free Cash Flow as well as
increased value for Earthstone shareholders.”
Operational Overview
We operated a five-rig drilling program during
the second quarter of 2023 with three rigs in the Delaware Basin
and two in the Midland Basin.
Delaware Basin Highlights
In the Delaware Basin, during the second quarter
of 2023, we commenced drilling 12 gross (9.7 net) wells and brought
13 gross (9.5 net) wells online.
We completed the Lonesome Dove Com pad on
acreage acquired in the Titus acquisition in the Stateline area in
Lea County, New Mexico. The wells targeted the First and Second
Bone Spring intervals. The four wells had an average peak IP-30
rate of 1,762 Boepd from laterals averaging approximately 7,700
feet with an average oil percentage of 72%. We hold a 90% working
interest in the Lonesome Dove Com pad.
Also, in the Stateline area, we completed the
Cattlemen Fed Com Pad, where we hold a 99% working interest. The
2-well pad had an average peak IP-30 of 1,934 Boepd and was
approximately 67% oil. The average lateral length of the two wells
was about 7,700 feet, and the wells targeted the First and Second
Bone Spring. The Cattlemen Fed Com pad is located on acreage also
acquired in the Titus acquisition.
Midland Basin Highlights
During the second quarter of 2023 in the Midland
Basin, we began drilling nine gross (7.2 net) wells and brought
four gross (3.0 net) wells online.
In Irion County, Texas, at the Barnhart pad, we
put four wells online in July producing from the Wolfcamp Upper and
Lower B zones. These wells were drilled with an average lateral
length of approximately 13,340 feet. Although these wells have not
been online for a full 30 days, their performance is in line with a
prior pad completed by the Company in 2022 and they have average
peak IP-20 over 1,030 Boepd with approximately 86% oil. We hold a
100% working interest in the Barnhart pad.
We recently put two wells online at the
Mid-States East Unit 37-5 pad, and the wells are producing from the
Wolfcamp D zone. This is our initial development of the Wolfcamp D
interval in Midland County. The wells had an average lateral length
of 9,950 feet with a 67% working interest. The wells are flowing
naturally with no artificial lift and results are encouraging, with
recent average daily production per well over 800 Boepd and 89%
oil.
Selected Financial Data
(unaudited)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
($000s except where noted) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Total revenues |
$ |
370,008 |
|
|
$ |
472,551 |
|
|
$ |
783,144 |
|
|
$ |
668,701 |
|
|
|
|
|
|
|
|
|
Lease operating expense |
|
87,602 |
|
|
|
50,514 |
|
|
|
175,580 |
|
|
|
72,145 |
|
|
|
|
|
|
|
|
|
General and administrative expense (excluding stock-based
compensation) |
|
12,157 |
|
|
|
8,117 |
|
|
|
25,118 |
|
|
|
14,593 |
|
Stock-based compensation |
|
7,835 |
|
|
|
5,960 |
|
|
|
12,453 |
|
|
|
11,790 |
|
General and administrative
expense |
$ |
19,992 |
|
|
$ |
14,077 |
|
|
$ |
37,571 |
|
|
$ |
26,383 |
|
|
|
|
|
|
|
|
|
Net income |
$ |
82,448 |
|
|
$ |
218,025 |
|
|
$ |
168,659 |
|
|
$ |
166,148 |
|
Less: Net income attributable
to noncontrolling interest |
|
24,406 |
|
|
|
73,140 |
|
|
|
50,069 |
|
|
|
54,741 |
|
Net income attributable to
Earthstone Energy, Inc. |
|
58,042 |
|
|
|
144,885 |
|
|
|
118,590 |
|
|
|
111,407 |
|
Adjusted EBITDAX(1) |
$ |
238,845 |
|
|
$ |
300,875 |
|
|
$ |
505,748 |
|
|
$ |
423,964 |
|
|
|
|
|
|
|
|
|
Production(2): |
|
|
|
|
|
|
|
Oil (MBbls) |
|
4,014 |
|
|
|
2,587 |
|
|
|
8,167 |
|
|
|
4,004 |
|
Gas (MMcf) |
|
18,308 |
|
|
|
14,414 |
|
|
|
35,118 |
|
|
|
20,053 |
|
NGL (MBbls) |
|
2,535 |
|
|
|
2,029 |
|
|
|
4,980 |
|
|
|
2,869 |
|
Total (MBoe)(3) |
|
9,600 |
|
|
|
7,018 |
|
|
|
19,000 |
|
|
|
10,214 |
|
Average Daily Production
(Boepd) |
|
105,493 |
|
|
|
77,125 |
|
|
|
104,974 |
|
|
|
56,432 |
|
Average Prices: |
|
|
|
|
|
|
|
Oil ($/Bbl) |
|
73.49 |
|
|
|
110.80 |
|
|
|
74.98 |
|
|
|
106.00 |
|
Gas ($/Mcf) |
|
1.13 |
|
|
|
6.67 |
|
|
|
1.44 |
|
|
|
5.94 |
|
NGL ($/Bbl) |
|
21.45 |
|
|
|
44.25 |
|
|
|
24.12 |
|
|
|
43.66 |
|
Total ($/Boe) |
|
38.54 |
|
|
|
67.33 |
|
|
|
41.22 |
|
|
|
65.47 |
|
Adj. for Realized Derivatives
Settlements: |
|
|
|
|
|
|
|
Oil ($/Bbl) |
|
73.07 |
|
|
|
87.30 |
|
|
|
74.22 |
|
|
|
83.16 |
|
Gas ($/Mcf) |
|
1.20 |
|
|
|
5.40 |
|
|
|
1.41 |
|
|
|
4.97 |
|
NGL ($/Bbl) |
|
21.45 |
|
|
|
44.25 |
|
|
|
24.12 |
|
|
|
43.66 |
|
Total ($/Boe) |
|
38.50 |
|
|
|
56.06 |
|
|
|
40.83 |
|
|
|
54.62 |
|
Operating Margin per Boe |
|
|
|
|
|
|
|
Average realized price |
$ |
38.54 |
|
|
$ |
67.33 |
|
|
$ |
41.22 |
|
|
$ |
65.47 |
|
Lease operating expense |
|
9.13 |
|
|
|
7.20 |
|
|
|
9.24 |
|
|
|
7.06 |
|
Production and ad valorem taxes |
|
3.31 |
|
|
|
4.87 |
|
|
|
3.42 |
|
|
|
4.65 |
|
Operating margin per
Boe(1) |
|
26.10 |
|
|
|
55.26 |
|
|
|
28.56 |
|
|
|
53.76 |
|
Realized hedge settlements |
|
(0.04 |
) |
|
|
(11.27 |
) |
|
|
(0.39 |
) |
|
|
(10.85 |
) |
Operating margin per Boe
(including Realized Hedge Settlements)(1) |
$ |
26.06 |
|
|
$ |
43.99 |
|
|
$ |
28.17 |
|
|
$ |
42.91 |
|
|
|
|
|
|
|
|
|
(1) See the “Non-GAAP Financial Measures”
section below.(2) Represents reported sales volumes.(3) 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).Updated 2023 Guidance
Earthstone is providing updated guidance for
2023, which assumes the closing of the Novo Acquisition on August
15, 2023. The Company anticipates third quarter production to be
115-120 MBoepd and fourth quarter production to average 130-135
MBoepd. From a capital activity standpoint, the Company plans to
maintain its five-rig drilling program for the remainder of the
year. Additionally, the Company expects to complete 11 gross
Novo-drilled wells which are currently uncompleted. The Company now
expects to drill and complete an incremental 3-4 net wells compared
to its original capital plan. Despite the incremental activity, the
Company is maintaining its full year capital expenditure guidance
at $725-775 million.
Production Guidance |
|
1H23 |
|
3Q23(1) |
|
4Q23(1) |
|
FY 2023(1) |
Production (Boe/d) |
|
104,974 |
|
115,000 - 120,000 |
|
130,000 - 135,000 |
|
113,809 - 116,330 |
% Oil |
|
43% |
|
41% |
|
41% |
|
42% |
% Liquids |
|
69% |
|
68% |
|
69% |
|
69% |
|
|
|
|
|
|
|
|
|
Expense & Capex Guidance |
|
1H23 |
|
2H23(1) |
|
FY 2023(1) |
|
|
Total Capital Expenditures ($MM) |
|
$377 |
|
$348 - $398 |
|
$725 - $775 |
|
|
Lease Operating Expense ($/Boe) |
|
$9.24 |
|
$8.75 - $9.25 |
|
$9.00 - $9.25 |
|
|
Production & Ad Valorem Taxes (% of Revenue) |
|
8.3% |
|
8.5% - 9.0% |
|
8.4% - 8.7% |
|
|
Cash G&A ($MM)(2) |
|
$25 |
|
$27.5 - $32.5 |
|
$52.5 - $57.5 |
|
|
|
|
|
|
|
|
|
|
|
1) Includes the projected impact of the Novo
Acquisition, expected to close on August 15, 2023.2) Cash G&A
is defined as general and administrative expenses excluding
stock-based compensation.
Note: Guidance is forward-looking information
that is subject to considerable change and numerous risks and
uncertainties, many of which are beyond Earthstone’s control. See
“Forward-Looking Statements” section below.
Liquidity and Equity
Capitalization
As of June 30, 2023, we had $49.5 million of
cash on hand and no borrowings outstanding under our senior secured
credit facility (“Credit Facility”). As of June 30, 2023, elected
commitments under the Credit Facility were $1.4 billion with a
borrowing base of $1.65 billion.
Through June 30, 2023, we had incurred $376.7
million of capital expenditures. Our 2023 capital expenditure
guidance remains at $725-$775 million. We expect to fund our
remaining 2023 capital expenditures and interest expense with cash
flow from operations while any excess cash flow is expected to be
utilized to repay borrowings under our Credit Facility, if any.
As of June 30, 2023, 106,331,055 shares of Class
A Common Stock and 34,257,641 shares of Class B Common Stock were
outstanding, resulting in 140,588,696 combined shares of common
stock outstanding.
Commodity Hedging
Hedging Activities
The following tables set forth our outstanding
derivative contracts as of June 30, 2023. When aggregating multiple
contracts, the weighted average contract price is disclosed.
|
|
Price Swaps |
Period |
|
Commodity |
|
Volume(Bbls / MMBtu) |
|
Weighted Average Price($/Bbl /
$/MMBtu) |
Q3 - Q4 2023 |
|
Crude Oil |
|
1,145,200 |
|
$74.90 |
Q1 - Q4 2024 |
|
Crude Oil |
|
621,600 |
|
$69.28 |
Q3 - Q4 2023 |
|
Crude Oil Basis Swap (1) |
|
4,692,000 |
|
$0.92 |
Q3 - Q4 2023 |
|
Natural Gas |
|
2,300,000 |
|
$3.35 |
Q3 - Q4 2023 |
|
Natural Gas Basis Swap (2) |
|
25,760,000 |
|
$(1.67) |
Q1 - Q4 2024 |
|
Natural Gas Basis Swap (2) |
|
36,600,000 |
|
$(1.05) |
Q1 - Q4 2025 |
|
Natural Gas Basis Swap (2) |
|
14,600,000 |
|
$(0.74) |
(1) The basis differential price is between WTI
Midland Crude and the WTI NYMEX.(2) The basis differential price is
between W. Texas (WAHA) and the Henry Hub NYMEX.
|
|
Costless Collars |
Period |
|
Commodity |
|
Volume(Bbls / MMBtu) |
|
Bought Floor($/Bbl /
$/MMBtu) |
|
Sold Ceiling($/Bbl /
$/MMBtu) |
Q3 - Q4 2023 |
|
Crude Oil Costless Collar |
|
2,120,800 |
|
$62.73 |
|
$85.26 |
Q1 - Q4 2024 |
|
Crude Oil Costless Collar |
|
732,000 |
|
$60.00 |
|
$76.01 |
Q3 - Q4 2023 |
|
Natural Gas Costless Collar |
|
13,298,800 |
|
$3.12 |
|
$5.21 |
Q1 - Q4 2024 |
|
Natural Gas Costless Collar |
|
14,640,000 |
|
$2.56 |
|
$4.51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Premium Puts |
Period |
|
Commodity |
|
Volume(Bbls / MMBtu) |
|
$/Bbl (Put Price) |
|
$/Bbl (Net of Premium) |
Q3 - Q4 2023 |
|
Crude Oil |
|
791,200 |
|
$70.00 |
|
$64.54 |
Q1 - Q4 2024 |
|
Crude Oil |
|
915,000 |
|
$65.00 |
|
$60.04 |
Conference Call Details
Earthstone is hosting a conference call on
Thursday, August 3, 2023 at 2:00 p.m. Eastern (1:00 p.m. Central)
to discuss the Company’s financial results for the second quarter
of 2023 and its outlook for the remainder of 2023. Prepared remarks
by Robert J. Anderson, President and Chief Executive Officer, Mark
Lumpkin, Jr., Executive Vice President and Chief Financial Officer,
and Steven C. Collins, Executive Vice President and Chief Operating
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 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 and webcast will be
available on the Company’s website and by telephone until 2:00 p.m.
Eastern (1:00 p.m. Central), Thursday, August 17, 2023. The number
for the replay is 877-660-6853 for domestic calls or 201-612-7415
for international calls, using Replay ID: 13739946.
About Earthstone Energy,
Inc.
Earthstone Energy, Inc. is a growth-oriented,
independent energy company engaged in acquisitions and the
development and operation of oil and natural gas properties. Its
primary assets are located in the Permian Basin of New Mexico and
west Texas. Earthstone's Class A Common Stock is listed on the New
York Stock Exchange under the symbol “ESTE.” For more information,
visit Earthstone’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,” “guidance,”
“target,” “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
Novo Acquisition to Earthstone and its stockholders, the
anticipated completion of the Novo Acquisition or the timing
thereof, the expected future reserves, production, financial
position, business strategy, revenues, earnings, free cash flow,
costs, capital expenditures and debt levels of the 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 their 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 complete the Novo Acquisition on
anticipated terms and timetable; Earthstone’s ability to integrate
its combined operations successfully after the Novo Acquisition and
achieve anticipated benefits from it; the possibility that various
closing conditions for the Novo Acquisition may not be satisfied or
waived; and risks relating to any unforeseen liabilities of
Earthstone or Novo. For further discussions of risks and
uncertainties, please refer to those set forth in Earthstone’s
annual report on Form 10-K for the year ended December 31, 2022,
subsequent quarterly reports on Form 10-Q and current reports on
Form 8-K, and other Securities and Exchange Commission filings.
Earthstone undertakes no obligation to revise or update publicly
any forward-looking statements except as required by law.
Contact
Clay JeansonneInvestor RelationsEarthstone
Energy, Inc.1400 Woodloch Forest Drive, Suite 300 The Woodlands, TX
77380713-379-3080 cjeansonne@earthstoneenergy.com
EARTHSTONE ENERGY,
INC.CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)(In thousands, except share and per
share amounts)
|
|
June 30, |
|
December 31, |
ASSETS |
|
|
2023 |
|
|
|
2022 |
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
49,500 |
|
|
$ |
— |
|
Accounts receivable: |
|
|
|
|
Oil, natural gas, and natural gas liquids revenues |
|
|
111,436 |
|
|
|
161,531 |
|
Joint interest billings and other, net of allowance of $19 and $19
at June 30, 2023 and December 31, 2022, respectively |
|
|
24,196 |
|
|
|
34,549 |
|
Derivative asset |
|
|
7,106 |
|
|
|
31,331 |
|
Prepaid expenses and other current assets |
|
|
19,658 |
|
|
|
18,854 |
|
Total current assets |
|
|
211,896 |
|
|
|
246,265 |
|
|
|
|
|
|
Oil and gas
properties, successful efforts method: |
|
|
|
|
Proved properties |
|
|
4,348,453 |
|
|
|
3,987,901 |
|
Unproved properties |
|
|
280,221 |
|
|
|
282,589 |
|
Land |
|
|
5,482 |
|
|
|
5,482 |
|
Total oil and gas properties |
|
|
4,634,156 |
|
|
|
4,275,972 |
|
|
|
|
|
|
Accumulated depreciation, depletion and amortization |
|
|
(832,886 |
) |
|
|
(619,196 |
) |
Net oil and gas properties |
|
|
3,801,270 |
|
|
|
3,656,776 |
|
|
|
|
|
|
Other noncurrent
assets: |
|
|
|
|
Office and other equipment, net of accumulated depreciation and
amortization of $6,090 and $5,273 at June 30, 2023 and December 31,
2022, respectively |
|
|
6,056 |
|
|
|
5,394 |
|
Derivative asset |
|
|
2,284 |
|
|
|
9,117 |
|
Operating lease right-of-use assets |
|
|
6,573 |
|
|
|
4,569 |
|
Other noncurrent assets |
|
|
92,362 |
|
|
|
15,280 |
|
TOTAL
ASSETS |
|
$ |
4,120,441 |
|
|
$ |
3,937,401 |
|
LIABILITIES AND EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable |
|
$ |
53,824 |
|
|
$ |
91,815 |
|
Revenues and royalties payable |
|
|
166,380 |
|
|
|
163,368 |
|
Accrued expenses |
|
|
102,201 |
|
|
|
80,942 |
|
Asset retirement obligation |
|
|
860 |
|
|
|
948 |
|
Derivative liability |
|
|
31,702 |
|
|
|
14,053 |
|
Advances |
|
|
11,449 |
|
|
|
7,312 |
|
Operating lease liabilities |
|
|
906 |
|
|
|
842 |
|
Finance lease liabilities |
|
|
1,083 |
|
|
|
802 |
|
Other current liabilities |
|
|
14,335 |
|
|
|
16,202 |
|
Total current liabilities |
|
|
382,740 |
|
|
|
376,284 |
|
|
|
|
|
|
Noncurrent
liabilities: |
|
|
|
|
Long-term debt, net |
|
|
1,021,555 |
|
|
|
1,053,879 |
|
Deferred tax liability |
|
|
174,565 |
|
|
|
138,336 |
|
Asset retirement obligation |
|
|
29,695 |
|
|
|
29,611 |
|
Derivative liability |
|
|
10,624 |
|
|
|
— |
|
Operating lease liabilities |
|
|
3,524 |
|
|
|
3,889 |
|
Finance lease liabilities |
|
|
1,151 |
|
|
|
876 |
|
Other noncurrent liabilities |
|
|
4,760 |
|
|
|
10,509 |
|
Total noncurrent liabilities |
|
|
1,245,874 |
|
|
|
1,237,100 |
|
|
|
|
|
|
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; 106,331,055 and 105,547,139 issued and outstanding at
June 30, 2023 and December 31, 2022, respectively |
|
|
106 |
|
|
|
106 |
|
Class B Common Stock, $0.001 par value, 50,000,000 shares
authorized; 34,257,641 and 34,259,641 issued and outstanding at
June 30, 2023 and December 31, 2022, respectively |
|
|
34 |
|
|
|
34 |
|
Additional paid-in capital |
|
|
1,345,657 |
|
|
|
1,346,463 |
|
Retained earnings |
|
|
411,301 |
|
|
|
292,711 |
|
Total Earthstone Energy, Inc. equity |
|
|
1,757,098 |
|
|
|
1,639,314 |
|
Noncontrolling interest |
|
|
734,729 |
|
|
|
684,703 |
|
Total equity |
|
|
2,491,827 |
|
|
|
2,324,017 |
|
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY |
|
$ |
4,120,441 |
|
|
$ |
3,937,401 |
|
|
|
|
|
|
EARTHSTONE ENERGY,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)(In thousands, except share
and per share amounts)
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
REVENUES |
|
|
|
|
Oil |
|
$ |
294,997 |
|
|
$ |
286,632 |
|
|
$ |
612,375 |
|
|
$ |
424,384 |
|
Natural gas |
|
|
20,649 |
|
|
|
96,125 |
|
|
|
50,667 |
|
|
|
119,083 |
|
Natural gas liquids |
|
|
54,362 |
|
|
|
89,794 |
|
|
|
120,102 |
|
|
|
125,234 |
|
Total revenues |
|
|
370,008 |
|
|
|
472,551 |
|
|
|
783,144 |
|
|
|
668,701 |
|
|
|
|
|
|
|
|
|
|
OPERATING COSTS AND
EXPENSES |
|
|
|
|
|
|
|
|
Lease operating expense |
|
|
87,602 |
|
|
|
50,514 |
|
|
|
175,580 |
|
|
|
72,145 |
|
Production and ad valorem taxes |
|
|
31,805 |
|
|
|
34,195 |
|
|
|
64,958 |
|
|
|
47,510 |
|
Depreciation, depletion and amortization |
|
|
109,990 |
|
|
|
66,463 |
|
|
|
220,740 |
|
|
|
100,789 |
|
Impairment expense |
|
|
854 |
|
|
|
— |
|
|
|
854 |
|
|
|
— |
|
General and administrative expense |
|
|
19,992 |
|
|
|
14,077 |
|
|
|
37,571 |
|
|
|
26,383 |
|
Transaction costs |
|
|
208 |
|
|
|
(402 |
) |
|
|
401 |
|
|
|
10,340 |
|
Accretion of asset retirement obligation |
|
|
646 |
|
|
|
708 |
|
|
|
1,275 |
|
|
|
1,105 |
|
Exploration expense |
|
|
6,082 |
|
|
|
— |
|
|
|
6,548 |
|
|
|
92 |
|
Total operating costs and expenses |
|
|
257,179 |
|
|
|
165,555 |
|
|
|
507,927 |
|
|
|
258,364 |
|
|
|
|
|
|
|
|
|
|
Gain on sale of oil and gas properties |
|
|
49,254 |
|
|
|
— |
|
|
|
46,114 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
162,083 |
|
|
|
306,996 |
|
|
|
321,331 |
|
|
|
410,337 |
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE) |
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(22,092 |
) |
|
|
(16,625 |
) |
|
|
(44,948 |
) |
|
|
(21,943 |
) |
Write-off of deferred financing costs |
|
|
— |
|
|
|
— |
|
|
|
(5,109 |
) |
|
|
— |
|
Loss on derivative contracts, net |
|
|
(40,309 |
) |
|
|
(49,907 |
) |
|
|
(66,773 |
) |
|
|
(201,387 |
) |
Other income, net |
|
|
819 |
|
|
|
249 |
|
|
|
812 |
|
|
|
296 |
|
Total other income (expense) |
|
|
(61,582 |
) |
|
|
(66,283 |
) |
|
|
(116,018 |
) |
|
|
(223,034 |
) |
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
100,501 |
|
|
|
240,713 |
|
|
|
205,313 |
|
|
|
187,303 |
|
Income tax expense |
|
|
(18,053 |
) |
|
|
(22,688 |
) |
|
|
(36,654 |
) |
|
|
(21,155 |
) |
Net income |
|
|
82,448 |
|
|
|
218,025 |
|
|
|
168,659 |
|
|
|
166,148 |
|
|
|
|
|
|
|
|
|
|
Less: Net income attributable to
noncontrolling interest |
|
|
24,406 |
|
|
|
73,140 |
|
|
|
50,069 |
|
|
|
54,741 |
|
|
|
|
|
|
|
|
|
|
Net income attributable to Earthstone Energy,
Inc. |
|
$ |
58,042 |
|
|
$ |
144,885 |
|
|
$ |
118,590 |
|
|
$ |
111,407 |
|
|
|
|
|
|
|
|
|
|
Net income per common share
attributable to Earthstone Energy, Inc.: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.55 |
|
|
$ |
1.85 |
|
|
$ |
1.12 |
|
|
$ |
1.57 |
|
Diluted |
|
$ |
0.54 |
|
|
$ |
1.46 |
|
|
$ |
1.10 |
|
|
$ |
1.37 |
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
106,209,657 |
|
|
|
78,291,037 |
|
|
|
106,091,850 |
|
|
|
70,909,353 |
|
Diluted |
|
|
107,336,695 |
|
|
|
102,410,036 |
|
|
|
107,438,062 |
|
|
|
84,266,422 |
|
|
|
|
|
|
|
|
|
|
EARTHSTONE ENERGY,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED)(In thousands)
|
|
For the Three Months EndedJune
30, |
|
For the Six Months EndedJune
30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Cash flows from
operating activities: |
|
|
|
|
|
|
Net income |
|
$ |
82,448 |
|
|
$ |
218,025 |
|
|
$ |
168,659 |
|
|
$ |
166,148 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
109,990 |
|
|
|
66,463 |
|
|
|
220,740 |
|
|
|
100,789 |
|
Impairment of proved and unproved oil and gas properties |
|
|
854 |
|
|
|
— |
|
|
|
854 |
|
|
|
— |
|
Accretion of asset retirement obligations |
|
|
646 |
|
|
|
708 |
|
|
|
1,275 |
|
|
|
1,105 |
|
Settlement of asset retirement obligations |
|
|
(497 |
) |
|
|
(274 |
) |
|
|
(1,036 |
) |
|
|
(475 |
) |
Gain on sale of oil and gas properties |
|
|
(49,254 |
) |
|
|
— |
|
|
|
(46,114 |
) |
|
|
— |
|
Gain on sale of office and other equipment |
|
|
— |
|
|
|
(24 |
) |
|
|
(33 |
) |
|
|
(46 |
) |
Total loss on derivative contracts, net |
|
|
40,309 |
|
|
|
49,907 |
|
|
|
66,773 |
|
|
|
201,387 |
|
Operating portion of net cash paid in settlement of derivative
contracts |
|
|
(418 |
) |
|
|
(79,099 |
) |
|
|
(7,443 |
) |
|
|
(110,785 |
) |
Stock-based compensation - equity and liability awards |
|
|
7,835 |
|
|
|
5,960 |
|
|
|
12,453 |
|
|
|
11,790 |
|
Deferred income taxes |
|
|
17,628 |
|
|
|
21,873 |
|
|
|
36,229 |
|
|
|
20,546 |
|
Write-off of deferred financing costs |
|
|
— |
|
|
|
— |
|
|
|
5,109 |
|
|
|
— |
|
Amortization of deferred financing costs |
|
|
1,690 |
|
|
|
1,442 |
|
|
|
3,459 |
|
|
|
2,069 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
(Increase) decrease in accounts receivable |
|
|
28,348 |
|
|
|
(135,580 |
) |
|
|
63,303 |
|
|
|
(184,315 |
) |
(Increase) decrease in prepaid expenses and other current
assets |
|
|
4,918 |
|
|
|
(9,207 |
) |
|
|
(834 |
) |
|
|
(11,103 |
) |
Increase (decrease) in accounts payable and accrued expenses |
|
|
(9,003 |
) |
|
|
46,404 |
|
|
|
(62,031 |
) |
|
|
64,658 |
|
Increase (decrease) in revenues and royalties payable |
|
|
(20,265 |
) |
|
|
70,638 |
|
|
|
11,267 |
|
|
|
85,570 |
|
Increase (decrease) in advances |
|
|
3,208 |
|
|
|
(2,561 |
) |
|
|
4,137 |
|
|
|
(9,661 |
) |
Net cash provided by operating
activities |
|
|
218,437 |
|
|
|
254,675 |
|
|
|
476,767 |
|
|
|
337,677 |
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
Acquisition of oil and gas properties, net of cash acquired |
|
|
(75,341 |
) |
|
|
(711,091 |
) |
|
|
(76,078 |
) |
|
|
(1,035,289 |
) |
Additions to oil and gas properties |
|
|
(175,617 |
) |
|
|
(124,456 |
) |
|
|
(357,186 |
) |
|
|
(180,381 |
) |
Additions to office and other equipment |
|
|
(191 |
) |
|
|
(766 |
) |
|
|
(482 |
) |
|
|
(1,356 |
) |
Proceeds from sales of oil and gas properties |
|
|
54,219 |
|
|
|
— |
|
|
|
56,062 |
|
|
|
— |
|
Net cash used in investing
activities |
|
|
(196,930 |
) |
|
|
(836,313 |
) |
|
|
(377,684 |
) |
|
|
(1,217,026 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
Proceeds from borrowings under Credit Agreement |
|
|
932,127 |
|
|
|
889,074 |
|
|
|
1,890,487 |
|
|
|
1,471,572 |
|
Repayments of borrowings under Credit Agreement |
|
|
(1,384,286 |
) |
|
|
(1,118,303 |
) |
|
|
(2,160,624 |
) |
|
|
(1,396,572 |
) |
Proceeds from issuance of 8% Senior Notes due 2027, net |
|
|
— |
|
|
|
537,250 |
|
|
|
— |
|
|
|
537,250 |
|
Proceeds from issuance of 9.875% Senior Notes due 2031, net |
|
|
481,215 |
|
|
|
— |
|
|
|
481,215 |
|
|
|
— |
|
Repayment of term loan |
|
|
— |
|
|
|
— |
|
|
|
(250,000 |
) |
|
|
— |
|
Proceeds from issuance of Series A Convertible Preferred Stock, net
of offering costs of $674 |
|
|
— |
|
|
|
279,326 |
|
|
|
— |
|
|
|
279,326 |
|
Cash paid related to the exchange and cancellation of Class A
Common Stock |
|
|
(799 |
) |
|
|
(719 |
) |
|
|
(7,141 |
) |
|
|
(4,617 |
) |
Cash paid for finance leases |
|
|
(237 |
) |
|
|
— |
|
|
|
(441 |
) |
|
|
— |
|
Deferred financing costs |
|
|
(27 |
) |
|
|
(5,472 |
) |
|
|
(3,079 |
) |
|
|
(11,623 |
) |
Net cash (used in) provided by financing
activities |
|
|
27,993 |
|
|
|
581,156 |
|
|
|
(49,583 |
) |
|
|
875,336 |
|
Net increase (decrease) in
cash and cash equivalents |
|
|
49,500 |
|
|
|
(482 |
) |
|
|
49,500 |
|
|
|
(4,013 |
) |
Cash and cash equivalents at
beginning of period |
|
|
— |
|
|
|
482 |
|
|
|
— |
|
|
|
4,013 |
|
Cash and cash equivalents at
end of period |
|
$ |
49,500 |
|
|
$ |
— |
|
|
$ |
49,500 |
|
|
$ |
— |
|
Earthstone Energy, Inc.
Non-GAAP Financial
MeasuresUnaudited
The non-GAAP financial measures of Adjusted
Diluted Shares, Adjusted EBITDAX, Adjusted Net Income, Free Cash
Flow and Operating Margin per Boe, as defined and presented below,
are 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, these non-GAAP measures 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 and
Adjusted Net Income are presented herein and reconciled from the
GAAP measure of net income (loss) because of their wide acceptance
by the investment community as financial indicators.
I. Adjusted Diluted Shares
We define “Adjusted Diluted Shares” as the
weighted average shares of Class A Common Stock - Diluted
outstanding plus the weighted average shares of Class B Common
Stock outstanding.
Our Adjusted Diluted Shares is a non-GAAP
financial measure that provides a comparable per share measurement
when presenting results such as Adjusted EBITDAX and Adjusted Net
Income that include the interests of both Earthstone and the
noncontrolling interest. Adjusted Diluted Shares is used in
calculating several metrics that we use as supplemental financial
measurements in the evaluation of our business, none of which
should be considered as an alternative to, or more meaningful than,
net income as an indicator of operating performance.
Adjusted Diluted Shares for the periods
indicated:
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Class A Common Stock -
Diluted |
107,336,695 |
|
102,410,036 |
|
107,438,062 |
|
84,266,422 |
Class B Common Stock |
34,259,575 |
|
34,268,723 |
|
34,259,608 |
|
34,295,444 |
Adjusted Diluted
Shares |
141,596,270 |
|
136,678,759 |
|
141,697,670 |
|
118,561,866 |
|
|
|
|
|
|
|
|
II. Adjusted EBITDAX
The non-GAAP financial measure 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 GAAP. Further,
this non-GAAP financial 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 because
of its wide acceptance by the investment community as a financial
indicator.
We define “Adjusted EBITDAX” as net income plus,
when applicable, accretion of asset retirement obligations;
depreciation, depletion and amortization; impairment expense;
interest expense, net; transaction costs; gain on sale of oil and
gas properties; exploration expense; unrealized loss (gain) on
derivative contracts; stock-based compensation (non-cash and
expected to settle in cash); and income tax expense.
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 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 to Adjusted EBITDAX for the periods indicated:
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
($000s) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
Net income |
$ |
82,448 |
|
|
$ |
218,025 |
|
|
$ |
168,659 |
|
|
$ |
166,148 |
Accretion of asset retirement
obligations |
|
646 |
|
|
|
708 |
|
|
|
1,275 |
|
|
|
1,105 |
Depreciation, depletion and
amortization |
|
109,990 |
|
|
|
66,463 |
|
|
|
220,740 |
|
|
|
100,789 |
Impairment expense |
|
854 |
|
|
|
— |
|
|
|
854 |
|
|
|
— |
Interest expense, net |
|
22,092 |
|
|
|
16,625 |
|
|
|
44,948 |
|
|
|
21,943 |
Transaction costs |
|
208 |
|
|
|
(402 |
) |
|
|
401 |
|
|
|
10,340 |
Gain on sale of oil and gas
properties |
|
(49,254 |
) |
|
|
— |
|
|
|
(46,114 |
) |
|
|
— |
Exploration expense |
|
6,082 |
|
|
|
— |
|
|
|
6,548 |
|
|
|
92 |
Unrealized loss (gain) on
derivative contracts |
|
39,891 |
|
|
|
(29,192 |
) |
|
|
59,330 |
|
|
|
90,602 |
Stock based
compensation(1) |
|
7,835 |
|
|
|
5,960 |
|
|
|
12,453 |
|
|
|
11,790 |
Income tax expense |
|
18,053 |
|
|
|
22,688 |
|
|
|
36,654 |
|
|
|
21,155 |
Adjusted
EBITDAX |
$ |
238,845 |
|
|
$ |
300,875 |
|
|
$ |
505,748 |
|
|
$ |
423,964 |
|
|
|
|
|
|
|
|
(1) Consists of expense for non-cash equity
awards and cash-based liability awards that are expected to be
settled in cash. On February 8, 2023, cash-based liability awards
were settled in the amount of $14.5 million. On February 9, 2022,
cash-based liability awards were settled in the amount of $8.1
million. Stock-based compensation is included in General and
administrative expense in the Condensed Consolidated Statements of
Operations.III. Adjusted Net Income
We define “Adjusted Net Income” as net income
plus, when applicable, unrealized loss (gain) on derivative
contracts; impairment expense; gain on sale of oil and gas
properties; write-off of deferred financing costs; transaction
costs; and the associated changes in estimated income tax.
Our Adjusted Net Income is a non-GAAP financial
measure that provides additional information that may be used to
further understand our operations. Adjusted Net Income 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 as an
indicator of operating performance. Certain items excluded from
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 cost of
depreciable and depletable assets. Adjusted Net Income, as used by
us, may not be comparable to similarly titled measures reported by
other companies. We believe that Adjusted Net Income 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 Net Income
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 to Adjusted Net Income for the periods indicated:
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
($000s, except share and per share data) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income |
$ |
82,448 |
|
|
$ |
218,025 |
|
|
$ |
168,659 |
|
|
$ |
166,148 |
|
Unrealized loss (gain) on
derivative contracts |
|
39,891 |
|
|
|
(29,192 |
) |
|
|
59,330 |
|
|
|
90,602 |
|
Impairment expense |
|
854 |
|
|
|
— |
|
|
|
854 |
|
|
|
— |
|
Gain on sale of oil and gas
properties |
|
(49,254 |
) |
|
|
— |
|
|
|
(46,114 |
) |
|
|
— |
|
Write-off of deferred
financing costs |
|
— |
|
|
|
— |
|
|
|
5,109 |
|
|
|
— |
|
Transaction costs |
|
208 |
|
|
|
(402 |
) |
|
|
401 |
|
|
|
10,340 |
|
Income tax effect of the
above |
|
1,473 |
|
|
|
(12,705 |
) |
|
|
(3,497 |
) |
|
|
(15,190 |
) |
Adjusted Net
Income |
$ |
75,620 |
|
|
$ |
175,726 |
|
|
$ |
184,742 |
|
|
$ |
251,900 |
|
Adjusted Diluted Shares |
|
141,596,270 |
|
|
|
136,678,759 |
|
|
|
141,697,670 |
|
|
|
118,561,866 |
|
Adjusted Net Income
per Adjusted Diluted Share |
$ |
0.53 |
|
|
$ |
1.29 |
|
|
$ |
1.30 |
|
|
$ |
2.12 |
|
|
|
|
|
|
|
|
|
IV. Free Cash Flow
Free Cash Flow is a non-GAAP financial measure
that we use as an indicator of our ability to fund our development
activities and reduce our leverage. We define Free Cash Flow as Net
cash provided by operating activities; less (1) Settlement of asset
retirement obligations, Gain on sale of office and other equipment,
Write-off of deferred financing costs, Amortization of deferred
financing costs and Change in assets and liabilities from the
Condensed Consolidated Statements of Cash Flows; plus (2)
Transaction costs and Exploration expense from the Condensed
Consolidated Statements of Operations; less (3) Capital
expenditures (accrual basis). Alternatively, Free Cash Flow could
be defined as Adjusted EBITDAX (defined above), less interest
expense, less current portion of Income tax (expense) benefit, less
accrual-based capital expenditures.
Management believes that Free Cash Flow, which
measures our ability to generate cash in addition to cash from our
business operations, is an important financial measure for use in
evaluating the Company's financial performance. Free Cash Flow
should be considered in addition to, rather than as a substitute
for, consolidated net income as a measure of our performance and
net cash provided by operating activities as a measure of our
liquidity.
Free Cash Flow for the periods indicated:
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
($000s) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net cash provided by operating
activities |
$ |
218,437 |
|
|
$ |
254,675 |
|
|
$ |
476,767 |
|
|
$ |
337,677 |
|
Adjustments - Condensed
Consolidated Statements of Cash Flows |
|
|
|
|
|
|
|
Settlement of asset retirement obligations |
|
497 |
|
|
|
274 |
|
|
|
1,036 |
|
|
|
475 |
|
Gain on sale of office and other equipment |
|
— |
|
|
|
24 |
|
|
|
33 |
|
|
|
46 |
|
Write-off of deferred financing costs |
|
— |
|
|
|
— |
|
|
|
(5,109 |
) |
|
|
— |
|
Amortization of deferred financing costs |
|
(1,690 |
) |
|
|
(1,442 |
) |
|
|
(3,459 |
) |
|
|
(2,069 |
) |
Change in assets and liabilities |
|
(7,206 |
) |
|
|
30,306 |
|
|
|
(15,842 |
) |
|
|
54,851 |
|
Adjustments - Condensed
Consolidated Statements of Operations |
|
|
|
|
|
|
|
Transaction costs |
|
208 |
|
|
|
(402 |
) |
|
|
401 |
|
|
|
10,340 |
|
Exploration expense |
|
6,082 |
|
|
|
— |
|
|
|
6,548 |
|
|
|
92 |
|
Capital expenditures (accrual
basis) |
|
(174,440 |
) |
|
|
(119,451 |
) |
|
|
(376,712 |
) |
|
|
(201,560 |
) |
Free Cash
Flow |
$ |
41,888 |
|
|
$ |
163,984 |
|
|
$ |
83,663 |
|
|
$ |
199,852 |
|
|
|
|
|
|
|
|
|
Alternate calculation of Free Cash Flow for the
periods indicated:
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
($000s) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Adjusted EBITDAX |
$ |
238,845 |
|
|
$ |
300,875 |
|
|
$ |
505,748 |
|
|
$ |
423,964 |
|
Interest expense, net |
|
(22,092 |
) |
|
|
(16,625 |
) |
|
|
(44,948 |
) |
|
|
(21,943 |
) |
Current portion of income tax
expense |
|
(425 |
) |
|
|
(815 |
) |
|
|
(425 |
) |
|
|
(609 |
) |
Capital expenditures (accrual
basis) |
|
(174,440 |
) |
|
|
(119,451 |
) |
|
|
(376,712 |
) |
|
|
(201,560 |
) |
Free Cash
Flow |
$ |
41,888 |
|
|
$ |
163,984 |
|
|
$ |
83,663 |
|
|
$ |
199,852 |
|
|
|
|
|
|
|
|
|
V. Operating Margin per Boe and
Operating Margin per Boe (Including Realized Hedge
Settlements)
Operating Margin per Boe is a non-GAAP financial
measure that we use to evaluate our operating performance on a per
Boe basis. We define Operating Margin per Boe as average realized
price per Boe minus lease operating expense per BOE and production
and ad valorem taxes per Boe. Operating Margin per Boe (including
Realized Hedge Settlements) is calculated as the sum of Operating
Margin per Boe and Realized hedge settlements per Boe.
Our Operating Margin per Boe measure provides
additional information that may be used to further understand our
operating margins. We use Operating Margin per Boe as a
supplemental financial measurement in the evaluation of our
operational performance. We believe that investors benefit from
having access to the same financial measures that our management
uses in evaluating our results. Operating Margin per Boe should not
be considered as an alternative to, or more meaningful than, net
income as an indicator of operating performance. Operating Margin
per Boe, as used by us, may not be comparable to similarly titled
measures reported by other companies.
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