SRC Energy Inc. (NYSE American: SRCI) (“SRC”, the “Company”, “we”,
“us” or “our”), a U.S. oil and gas exploration and production
company with operations focused on the Wattenberg Field in the
Denver-Julesburg Basin, reports its financial results for the three
and six months ended June 30, 2019.
Second Quarter 2019 Highlights
- Revenues were $162.6 million and $352.1 million for the three
and six months ended June 30, 2019, respectively
- Net income was $54.5 million or $0.22 per diluted share and
$104.2 million or $0.43 per diluted share for the three and six
months ended June 30, 2019, respectively
- Adjusted EBITDA was $127.9 million and $287.5 million for the
three and six months ended June 30, 2019, respectively (see
further discussion regarding the presentation of adjusted EBITDA in
"About Non-GAAP Financial Measures" below)
- Drilling and completion capital expenditures of $91 million and
$201 million for the three and six months ended June 30, 2019,
respectively, were funded from EBITDA
- Reduced the balance outstanding on SRC's revolving credit
facility by $30 million
Second Quarter 2019 Financial ResultsThe
following table presents certain per unit metrics that compare
results of the corresponding reporting periods:
|
|
Three Months Ended |
|
Six Months Ended |
Net Volumes |
|
6/30/2019 |
|
3/31/2019 |
|
% Chg. |
|
6/30/2018 |
|
% Chg. |
|
6/30/2019 |
|
6/30/2018 |
|
% Chg. |
Crude Oil (MBbls) |
|
|
2,441 |
|
|
2,967 |
|
(18 |
)% |
|
|
1,846 |
|
32 |
% |
|
|
5,408 |
|
|
3,887 |
|
39 |
% |
NGL (MBbls) |
|
|
1,111 |
|
|
1,054 |
|
5 |
% |
|
|
992 |
|
12 |
% |
|
|
2,165 |
|
|
1,750 |
|
24 |
% |
Natural Gas (MMcf) |
|
|
11,905 |
|
|
11,391 |
|
5 |
% |
|
|
8,987 |
|
32 |
% |
|
|
23,296 |
|
|
16,706 |
|
39 |
% |
Sales Volumes: (MBOE) |
|
|
5,536 |
|
|
5,919 |
|
(6 |
)% |
|
|
4,336 |
|
28 |
% |
|
|
11,455 |
|
|
8,422 |
|
36 |
% |
Average Daily Volumes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daily Production (BOE) |
|
|
60,833 |
|
|
65,771 |
|
(8 |
)% |
|
|
47,646 |
|
28 |
% |
|
|
63,288 |
|
|
46,528 |
|
36 |
% |
Product Price Received |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil ($/Bbl) (1) |
|
$52.75 |
|
$48.33 |
|
9 |
% |
|
$61.22 |
|
(14 |
)% |
|
$50.32 |
|
$58.48 |
|
(14 |
)% |
Natural Gas Liquids ($/Bbl) |
|
$9.39 |
|
$12.59 |
|
(25 |
)% |
|
$17.65 |
|
(47 |
)% |
|
|
10.95 |
|
|
18.30 |
|
(40 |
)% |
Natural Gas ($/Mcf) (1) |
|
$1.58 |
|
$2.52 |
|
(37 |
)% |
|
$1.64 |
|
(4 |
)% |
|
$2.04 |
|
$1.87 |
|
9 |
% |
Avg. Sales Price ($/BOE) (1) |
|
$28.53 |
|
$31.32 |
|
(9 |
)% |
|
$33.50 |
|
(15 |
)% |
|
$29.97 |
|
$34.50 |
|
(13 |
)% |
Per Unit Cost Information ($/BOE) |
|
|
|
|
|
|
Lease Operating Expense |
|
$2.39 |
|
$2.93 |
|
(18 |
)% |
|
$2.68 |
|
(11 |
)% |
|
$2.67 |
|
$2.31 |
|
16 |
% |
Production Tax |
|
$2.38 |
|
$1.20 |
|
98 |
% |
|
$3.47 |
|
(31 |
)% |
|
$1.77 |
|
$3.38 |
|
(48 |
)% |
DD&A Expense |
|
$10.48 |
|
$10.29 |
|
2 |
% |
|
$9.66 |
|
8 |
% |
|
$10.38 |
|
$9.38 |
|
11 |
% |
Net G&A Expense (2) |
|
$1.67 |
|
$1.60 |
|
4 |
% |
|
$2.17 |
|
(23 |
)% |
|
$1.64 |
|
$2.26 |
|
(27 |
)% |
Gross G&A Expense (3) |
|
$2.30 |
|
$2.22 |
|
4 |
% |
|
$2.93 |
|
(22 |
)% |
|
$2.26 |
|
$3.02 |
|
(25 |
)% |
(1) - Includes transportation and gathering expense (2) - Net
of capitalized portion (3) - Gross of capitalized
portion |
Revenues for the three months ended June 30, 2019 decreased 14%
compared to the three months ended March 31, 2019 and increased 11%
compared to the three months ended June 30, 2018. While sales
volumes decreased 8% quarter-over-quarter, 9% lower average
realized prices compounded the revenue decline in a
quarter-over-quarter comparison. The year-over-year increase
in revenues was driven by growth in sales volumes. Natural
gas liquids pricing during the quarter ended June 30, 2019 was
impacted by generally weaker product pricing for ethane, propane
and other components of the NGL stream in US markets.
The Company's 2019 second quarter net income totaled $54.5
million, or $0.22 per diluted share, compared to net income of
$49.8 million, or $0.20 per diluted share, in the first quarter of
2019 and $49.6 million, or $0.20 per diluted share, in the second
quarter of 2018.
Midstream Operations UpdateGas gathering and
processing constraints have continued to limit activity and have
ultimately impacted well productivity within the DJ Basin.
DCP Midstream’s system-wide producer allocation remains in effect
with an intent of stabilizing line pressures. Despite the
allocation limitation, we encountered significant planned and
unplanned downtime which further reduced system capacity throughout
the 2nd quarter. This resulted in consistently high line
pressures, restricting our ability to maintain consistent
production levels.
As DCP Midstream's O'Connor II plant commissioning phase is
finalized and throughput ramps up over the upcoming weeks, we
expect some improvement in line pressure as the system balances out
over the remainder of the year. DCP’s recent announcement of
its agreement with Western Midstream Partners, including the Latham
II plant, should help further relieve constraints by mid-2020.
Management CommentLynn A. Peterson, Chairman
and CEO of SRC Energy Inc. commented, "While our operations were
mostly in line with guidance as set out earlier, we continue to
face significant ongoing operational challenges stemming from a
lack of gas processing capacity and timing of associated
expansions. The second quarter was hindered by several
midstream interruptions which impacted our production volume and
the composition of our production."
Mr. Peterson continued, "Our 2019 budget was built around
anticipated midstream constraints and in the second quarter we
began to reduce our activity level, in line with our 2019
budget. We released our completion crew in mid-May, which is
reflected in lower capital expenditures for the quarter. In
addition, we will release one of our drilling rigs in the third
quarter. We expect to continue with one drilling rig
throughout the balance of 2019 and into 2020. In an ongoing
effort to reduce gas emissions and be a leader in the communities
where we operate, we will test a new electric hydraulic stimulation
fleet, designed by Halliburton, in the third quarter."
Mr. Peterson concluded, "Despite the operational issues, SRC
generated positive free cash flow for the three and six months
ended June 30, 2019, allowing us to reduce the amount outstanding
under our revolving line of credit.”
Conference CallThe Company will host a
conference call on Thursday, August 1, 2019 at 10:00 a.m. Eastern
time (8:00 a.m. Mountain time) to discuss the results. The
call will be conducted by Chairman and CEO Lynn A. Peterson, CFO
James Henderson, Chief Development Officer Nick Spence, Chief
Operations Officer Mike Eberhard, Vice President of Midstream and
Marketing Jo Ann Stockton and Manager of Investor Relations John
Richardson. A Q&A session will immediately follow the
discussion of the results for the quarter. Please refer to
SRC's website at www.srcenergy.com for the most recent corporate
presentation and other news and information.
To participate in this call please
dial:Domestic Dial-in Number: (877)
407-9122International Dial-in Number: (201) 493-6747
Webcast:
https://78449.themediaframe.com/dataconf/productusers/srci/mediaframe/31583/indexl.html
Replay Information:Conference ID #:
13692888Replay Dial-In (Toll Free US & Canada):
877-660-6853Replay Dial-In (International):
201-612-7415Expiration Date: 8/15/19
Upcoming Investor ConferencesPresentations
provided in conjunction with these events will be available on
SRC's website at www.srcenergy.com the morning of the respective
presentation. Members of SRC senior management will
participate in the following hosted investor events, please refer
to the Company’s website for specific presentation dates:
Barclays CEO Energy-Power
Conference - September 3-5,
2019 - New York, NY
About SRC Energy Inc.
SRC Energy Inc. is a Denver based oil and natural gas
exploration and production company. SRC's core area of operations
is in the Greater Wattenberg Field of the Denver-Julesburg Basin of
Colorado. More company news and information about SRC is available
at www.srcenergy.com.
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, future
development activities, production and midstream matters.
These statements are subject to risks and uncertainties and are
based on the beliefs and assumptions of management, and information
currently available to management. The actual results could differ
materially from a conclusion, forecast or projection in the
forward-looking information. Certain material factors or
assumptions were applied in drawing a conclusion or making a
forecast or projection as reflected in the forward-looking
information. The identification in this press release of factors
that may affect the Company's future performance and the accuracy
of forward-looking statements is meant to be illustrative and by no
means exhaustive. All forward-looking statements should be
evaluated with the understanding of their inherent uncertainty.
Factors that could cause the Company's actual results to differ
materially from those expressed or implied by forward-looking
statements include, but are not limited to: risks associated with
the construction of new midstream facilities, the impact of those
facilities and other risks associated with the availability of
adequate midstream infrastructure; the success of the Company's
exploration and development efforts; the price of oil and gas;
worldwide economic situation; change in interest rates or
inflation; willingness and ability of third parties to honor their
contractual commitments; the Company's ability to raise additional
capital, as it may be affected by current conditions in the stock
market and competition in the oil and gas industry for risk
capital; the Company's capital costs, which may be affected by
delays or cost overruns; costs of production; environmental and
other regulations, as the same presently exist or may later be
amended; the Company's ability to identify, finance and integrate
any future acquisitions; the volatility of the Company's stock
price; and the other factors described in the “Risk Factors”
sections of the Company’s filings with the Securities and Exchange
Commission, all of which are incorporated by reference in this
release. Please see our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2019 for discussion of the potential
effects on our business of SB19-181, which was passed by the
Colorado General Assembly in April 2019.
Reconciliation of Non-GAAP Financial MeasureWe
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 MEASURE |
(unaudited, in thousands) |
|
|
|
|
|
|
|
|
|
Three
Months Ended June 30, |
|
Six
Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Adjusted
EBITDA: |
|
|
|
|
|
|
|
Net income |
$ |
54,468 |
|
|
$ |
49,624 |
|
|
$ |
104,219 |
|
|
$ |
115,420 |
|
Depreciation, depletion, and accretion |
58,027 |
|
|
41,877 |
|
|
118,945 |
|
|
78,958 |
|
Stock-based compensation expense |
3,142 |
|
|
3,146 |
|
|
6,825 |
|
|
5,942 |
|
Mark-to-market of commodity derivative contracts: |
|
|
|
|
|
|
|
Total (gain) loss on commodity derivatives contracts |
(8,285 |
) |
|
14,294 |
|
|
14,628 |
|
|
20,075 |
|
Cash settlements on commodity derivative contracts |
3,089 |
|
|
(4,566 |
) |
|
7,715 |
|
|
(6,121 |
) |
Cash premiums paid for commodity derivative contracts |
(658 |
) |
|
— |
|
|
(977 |
) |
|
— |
|
Interest income |
(92 |
) |
|
(5 |
) |
|
(161 |
) |
|
(14 |
) |
Income tax expense |
18,237 |
|
|
3,347 |
|
|
36,271 |
|
|
9,158 |
|
Adjusted EBITDA |
$ |
127,928 |
|
|
$ |
107,717 |
|
|
$ |
287,465 |
|
|
$ |
223,418 |
|
Condensed Consolidated Financial
StatementsCondensed 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 June 30, 2019, which
is available at www.sec.gov.
SRC ENERGY INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(unaudited; in thousands) |
|
|
|
|
ASSETS |
June 30, 2019 |
|
December 31, 2018 |
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
27,839 |
|
|
$ |
49,609 |
|
Other current assets |
121,789 |
|
|
182,831 |
|
Total current assets |
149,628 |
|
|
232,440 |
|
|
|
|
|
Oil and gas
properties and other equipment |
2,623,634 |
|
|
2,518,700 |
|
Other
assets |
11,824 |
|
|
3,574 |
|
|
|
|
|
Total assets |
$ |
2,785,086 |
|
|
$ |
2,754,714 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
Current
liabilities |
264,999 |
|
|
353,833 |
|
|
|
|
|
Revolving
credit facility |
165,000 |
|
|
195,000 |
|
Notes payable,
net of issuance costs |
539,977 |
|
|
539,360 |
|
Asset
retirement obligations |
38,609 |
|
|
40,052 |
|
Other
liabilities |
78,884 |
|
|
40,177 |
|
Total liabilities |
1,087,469 |
|
|
1,168,422 |
|
|
|
|
|
Shareholders'
equity: |
|
|
|
Common stock and paid-in capital |
1,499,456 |
|
|
1,492,350 |
|
Retained earnings |
198,161 |
|
|
93,942 |
|
Total
shareholders' equity |
1,697,617 |
|
|
1,586,292 |
|
|
|
|
|
Total
liabilities and shareholders' equity |
$ |
2,785,086 |
|
|
$ |
2,754,714 |
|
SRC ENERGY INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(unaudited; in thousands) |
|
|
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
Cash flows from
operating activities: |
|
|
|
Net income |
$ |
104,219 |
|
|
$ |
115,420 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depletion, depreciation, and accretion |
118,945 |
|
|
78,958 |
|
Provision for deferred taxes |
36,271 |
|
|
9,158 |
|
Other, non-cash items |
23,715 |
|
|
15,807 |
|
Changes in operating assets and liabilities |
18,433 |
|
|
16,419 |
|
Net cash provided by operating activities |
301,583 |
|
|
235,762 |
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Acquisitions of oil and gas properties and leaseholds |
116 |
|
|
(16,402 |
) |
Capital expenditures for drilling and completion activities |
(276,095 |
) |
|
(213,906 |
) |
Other capital expenditures |
(28,566 |
) |
|
(25,404 |
) |
Proceeds from sales of oil and gas properties and other |
12,802 |
|
|
766 |
|
Net cash used in investing activities |
(291,743 |
) |
|
(254,946 |
) |
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Equity financing activities |
(1,126 |
) |
|
3,025 |
|
Debt financing activities |
(30,484 |
) |
|
22,857 |
|
Net cash provided by (used in) financing activities |
(31,610 |
) |
|
25,882 |
|
|
|
|
|
Net increase in
cash and cash equivalents |
(21,770 |
) |
|
6,698 |
|
Cash and cash
equivalents at beginning of period |
49,609 |
|
|
48,772 |
|
Cash and cash
equivalents at end of period |
$ |
27,839 |
|
|
$ |
55,470 |
|
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, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Oil, natural gas,
and NGL revenues |
$ |
162,602 |
|
|
$ |
147,087 |
|
|
$ |
352,057 |
|
|
$ |
294,320 |
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
Lease operating expenses |
13,230 |
|
|
11,612 |
|
|
30,590 |
|
|
19,508 |
|
Transportation and gathering |
4,664 |
|
|
1,880 |
|
|
8,718 |
|
|
3,735 |
|
Production taxes |
13,185 |
|
|
15,058 |
|
|
20,271 |
|
|
28,501 |
|
Depreciation, depletion, and accretion |
58,027 |
|
|
41,877 |
|
|
118,945 |
|
|
78,958 |
|
General and administrative |
9,243 |
|
|
9,406 |
|
|
18,712 |
|
|
19,006 |
|
Total expenses |
98,349 |
|
|
79,833 |
|
|
197,236 |
|
|
149,708 |
|
|
|
|
|
|
|
|
|
Operating
income |
64,253 |
|
|
67,254 |
|
|
154,821 |
|
|
144,612 |
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
|
Commodity derivatives gain (loss) |
8,285 |
|
|
(14,294 |
) |
|
(14,628 |
) |
|
(20,075 |
) |
Interest expense, net of amounts capitalized |
— |
|
|
— |
|
|
— |
|
|
— |
|
Interest income |
92 |
|
|
5 |
|
|
161 |
|
|
14 |
|
Other income |
75 |
|
|
6 |
|
|
136 |
|
|
27 |
|
Total other income (expense) |
8,452 |
|
|
(14,283 |
) |
|
(14,331 |
) |
|
(20,034 |
) |
|
|
|
|
|
|
|
|
Income before
income taxes |
72,705 |
|
|
52,971 |
|
|
140,490 |
|
|
124,578 |
|
|
|
|
|
|
|
|
|
Income tax
expense |
18,237 |
|
|
3,347 |
|
|
36,271 |
|
|
9,158 |
|
Net income |
$ |
54,468 |
|
|
$ |
49,624 |
|
|
$ |
104,219 |
|
|
$ |
115,420 |
|
|
|
|
|
|
|
|
|
Net income per
common share: |
|
|
|
|
|
|
|
Basic |
$ |
0.22 |
|
|
$ |
0.20 |
|
|
$ |
0.43 |
|
|
$ |
0.48 |
|
Diluted |
$ |
0.22 |
|
|
$ |
0.20 |
|
|
$ |
0.43 |
|
|
$ |
0.47 |
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding: |
|
|
|
|
|
|
|
Basic |
243,404,917 |
|
|
242,255,724 |
|
|
243,348,141 |
|
|
242,005,211 |
|
Diluted |
244,130,245 |
|
|
244,464,776 |
|
|
243,709,915 |
|
|
243,954,673 |
|
Company Contact:
John Richardson (Investor Relations Manager)
SRC Energy Inc.
Tel 720-616-4308
E-mail: jrichardson@srcenergy.com
SRC Energy (AMEX:SRCI)
Gráfico Histórico do Ativo
De Mai 2024 até Jun 2024
SRC Energy (AMEX:SRCI)
Gráfico Histórico do Ativo
De Jun 2023 até Jun 2024