Triangle Petroleum Provides Financial Results And Operational Update For Third Quarter Fiscal Year 2016

Q3 FY 2016

Revenue

y/y % Change

Adj.-EBITDA

y/y % Change

E&P

$42.9

-47%

$49.1

-14%

RockPile

$25.8

-82%

($4.0)

-112%

Total

$68.7

-69%

$45.1

-51%

*Dollars in U.S. millions

*E&P revenue does not include realized hedge settlements

*Exploration and production operating segment ("E&P") Adjusted-EBITDA includes all exploration and production related business lines, and does not include TPC (parent company) other revenues and expenses

Q3 Fiscal 2016 Summary Consolidated Statement of Operations (in thousands)

Quarter Ended October 31,

2014

2015

Revenues

Oil, natural gas and natural gas liquids sales

$    80,139

$        42,871

Oilfield services(a)

94,057

22,273

Total revenues

174,196

65,144

Expenses

Lease operating expenses

7,317

10,135

Gathering, transportation and processing

4,380

6,537

Production taxes

8,637

4,052

Depreciation and amortization(a)

32,471

28,396

Impairment of oil and natural gas properties

-

261,000

Accretion of asset retirement obligations

259

75

Oilfield services(a)

70,805

21,700

Corporate and other stock-based compensation

1,587

7,259

E&P stock-based compensation

94

390

RockPile stock-based compensation

146

117

Corporate and other cash G&A expenses

3,693

4,477

E&P cash G&A expenses

2,896

855

RockPile cash G&A expenses

7,043

5,336

   Other

1,334

-

Total operating expenses

140,662

350,329

Operating Income (Loss)

33,534

(285,185)

Interest expense, net

(8,984)

(9,877)

Amortization of deferred loan costs

(479)

(852)

Gain on extinguishment of debt

-

4,175

Realized commodity derivative gains (losses)

688

27,857

Unrealized commodity derivative gains (losses)

19,134

(21,044)

Equity investment income (loss)

393

450

Gain (loss) on equity investment derivatives

742

(1,118)

Other income(a)

(330)

(1,405)

Total other income (expense)

11,164

(1,814)

Income (Loss) Before Income Taxes

44,698

(286,999)

Income tax provision (benefit)(b)

19,300

-

Net Income (Loss) Attributable to Common Stockholders

$    25,398

$    (286,999)

Net Income (Loss) per Common Share

Basic

$        0.30

$          (3.80)

Diluted(c)

$        0.26

$          (3.80)

Adjusted Net Income (Loss) per Common Share(d)

Basic

$        0.17

$          (0.11)

Diluted(c)

$        0.15

$          (0.11)

Weighted Average Common Shares

Basic

85,242

75,588

Diluted

102,954

75,588

 (a) Includes intercompany eliminations; reference Note 3 – Segment Reporting in our Q3 fiscal year 2016 Form 10-Q for additional details

 (b) The effective tax rate for the quarter ended October 31, 2014 was approximately 43.2%. Income tax provision is a non-cash expense

 (c) Includes interest expense add-back of $0.9 million net of income taxes and amounts capitalized in Q3 fiscal 2015 related to outstanding convertible note

 (d) Reference accompanying Reconciliation Tables and Use of Segment Information and Non-GAAP Measures at end of press release for additional detail

Q3 Fiscal 2016 Summary Consolidated Balance Sheet (in thousands)

January 31, 2015

October 31, 2015

Assets

Cash and equivalents

$                 67,871

$                  36,250

Other current assets

241,638

80,490

Net property and equipment

1,261,006

641,483

Other noncurrent assets

84,355

92,235

Total assets

$            1,654,870

$                850,458

Liabilities and Stockholders' Equity

 Current liabilities

$               271,842

$                139,034

 TUSA credit facility

119,272

189,272

 RockPile credit facility

104,887

54,130

 TUSA 6.75% notes due July 2022

429,500

415,889

 5% convertible note

135,877

141,037

Other notes and mortgages payable

10,102

12,566

Other noncurrent liabilities

38,372

5,055

Total stockholders' equity

545,018

(106,525)

Total liabilities and stockholders' equity

$            1,654,870

$                850,458

Q3 Fiscal 2016 Production Volumes and Average Pre-Hedging Realized Prices

Quarter Ended October 31, 

2014

2015

Production volumes

Crude oil (Mbbls)

947

987

Natural gas (MMcf)

654

814

Natural gas liquids (Mbbls)

69

136

Total barrels of oil equivalent (Mboe)

1,125

1,259

Average daily production volumes (Boe/d)

12,228

13,685

Average realized prices:

Crude oil ($ per Bbl)

$    79.11

$    40.74

Natural gas ($ per Mcf)

$      4.59

$      2.51

Natural gas liquids ($ per Bbl)

$    32.24

$      4.52

Total average realized price ($ per Boe)

$    71.22

$    34.05

Use of Segment Information and Non-GAAP Measures

(1)

The Company often provides financial metrics for Triangle's segments of operation. Revenues for each segment are disclosed in notes to the financial statements contained in the Company's Form 10-K and Form 10-Q filings, but the sum of those stand-alone revenues differ from Triangle's consolidated revenues for the corresponding reporting period. Triangle's consolidated revenues would reflect segment revenues reduced for intercompany sales (i.e. for RockPile services to Triangle's E&P segment).

Triangle also believes that stand-alone segment revenue assists investors in measuring RockPile's performance as a stand-alone company without eliminating, on a consolidated basis, certain revenues attributable to services for Triangle's economic interests in wells operated by Triangle's E&P segment. 

(2)

Adjusted-EBITDA represents income before interest expense, income taxes, depreciation and amortization, other non-cash items, and non-recurring items. Adjusted-EBITDA is not a calculation based upon generally accepted accounting principles in the U.S. ("GAAP"). Triangle has presented Adjusted-EBITDA by segment because it regularly reviews Adjusted-EBITDA by segment as a measure of the segment's operating performance. Triangle also believes Adjusted-EBITDA assists investors in comparing segment performance on a consistent basis without regard to interest expense, income taxes, depreciation and amortization, other non-cash items, and non-recurring items which can vary significantly depending upon many factors. 

The total of Adjusted-EBITDA by segment is not indicative of Triangle's consolidated Adjusted-EBITDA, which reflects other matters such as (i) additional parent company administrative costs, (ii) intercompany eliminations, (iii) paid-in-kind interest expense on the 5% convertible note, and (iv) the use of the equity method, rather than consolidation, for Triangle's investment in Caliber.  The Adjusted-EBITDA measures presented in the "Reconciliation Tables" may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.

Triangle believes that net income before income taxes is the performance measure calculated and presented in accordance with GAAP that is most directly comparable to Adjusted-EBITDA. Net income before income taxes will be significantly affected by consolidated interest expense and full-cost pool amortization. Such amortization varies with changes in proved reserves, well costs during the year, and future plans in developing proved undeveloped reserves.

(3)

Adjusted net income (loss) is defined as net income (loss) applicable to common stockholders adjusted to exclude certain charges or amounts in order to provide users of this financial information with additional meaningful comparisons between current results and the results of prior periods. Triangle presents this measure because (i) it is consistent with the manner in which the Company's performance is measured relative to the performance of its peers, (ii) this measure is more comparable to earnings estimates provided by securities analysts, and (iii) charges or amounts excluded cannot be reasonably estimated and guidance provided by the Company excludes information regarding these types of items. These adjusted amounts are not a measure of financial performance under GAAP. We believe that net income (loss) is the performance measure calculated and presented in accordance with GAAP that is most directly comparable to adjusted net income (loss).

Reconciliation Tables (in thousands)

A.    

Consolidated Adjusted net income per common stockholder (reference disclosure (3) in "Use of Segment Information and Non-GAAP Measures").

Quarter Ended October 31,

2014

2015

Net Income (Loss) Attributable to Common Stockholders

$    25,398

$    (286,999)

Impairment of oil and natural gas properties

-

261,000

Unrealized (gain) loss on commodity derivatives

(19,134)

21,044

(Gain) loss on equity investment derivatives

(742)

1,118

Gain on extinguishment of debt

-

(4,175)

System conversion costs

1,334

-

Tax adjustment(a)

8,007

-

Adjusted Net Income (Loss)

$    14,863

Adjusted Net Income (Loss) Per Common Share

Basic

$        0.17

$          (0.11)

Diluted(b)

$        0.15

$          (0.11)

Weighted Average Common Shares

Basic

85,242

75,588

Diluted

102,954

75,588

 (a) Tax adjustment is calculated  by applying Company's effective tax rate of 43.2% for Q3 fiscal 2015 to pre-tax effected adjusting items

 (b) Includes interest expense add-back of $0.9 million net of income taxes and amounts capitalized for Q3 fiscal 2015 related to outstanding convertible note

B.    

E&P stand-alone Adjusted-EBITDA (reference disclosure (1) and (2) in "Use of Segment Information and Non-GAAP Measures").

Quarter Ended October 31,

2014

2015

Net Income (Loss) Before Income Taxes

$ 37,057

$ (258,576)

Depreciation and amortization

30,291

21,394

Impairment of oil and natural gas properties

-

261,000

Net interest expense

6,846

7,241

Stock-based compensation

94

390

Accretion of asset retirement obligations

259

75

Other

1,813

(3,419)

Unrealized commodity derivative losses (gains)

(19,134)

21,044

Adjusted-EBITDA

$ 57,227

$    49,149

C.    

Oilfield Services stand-alone Adjusted-EBITDA (reference disclosure (1) and (2) in "Use of Segment Information and Non-GAAP Measures").

Quarter Ended October 31,

2014

2015

Net Income (Loss) Before Income Taxes

$ 26,829

$ (13,173)

Depreciation and amortization

6,119

6,797

Stock-based compensation

146

117

Net interest expense

572

793

Other

999

1,456

Adjusted-EBITDA(c)

$ 34,665

$   (4,010)

(C) RockPile Adjusted-EBITDA calculated per RockPile credit facility