Bonanza Creek Energy (BCEI) Announces 2021 Guidance
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Bonanza Creek Energy, Inc. (NYSE: BCEI) (the "Company" or "Bonanza Creek") today announced 2021 guidance, and has posted an updated investor presentation to its website.
- Total 2021 annual capital expenditures are expected to be between $150 and $170 million
- 2Q - 4Q 2021 production guidance of 40.0 to 44.0 thousand barrels of oil equivalent per day (“MBoe/d”)
- Full year pro forma 2021 estimated production of approximately 42.0 MBoe/d(1)
- 2Q - 4Q 2021 oil production guidance of 48% to 52% of BOE volumes
- Leverage ratio at closing of approximately 0.5x (pro forma net debt / pro forma LTM EBITDAX)
- Expect to generate over $150 million of full year 2021 estimated levered free cash flow at current strip pricing(2)
(1) Assumes mid-point of 1Q 2021 BCEI stand-alone production guidance, and mid-point of 9-month combined production guidance, plus estimated HPR 1Q 2021 production(2) Levered Free Cash Flow (LFCF) is defined as EBITDAX (including non-recurring transaction costs and costs of synergies) less interest expense and capex, and includes estimated 1Q 2021 results from HPR and BCEI (assuming 3/31/21 strip)
The Company announced the closing of its merger with HighPoint Resources on April 1, 2021. At closing, Bonanza Creek assumed approximately $154 million of RBL debt from HighPoint, issued $100 million of new 7.50% senior unsecured notes due 2026, and had a combined cash balance of approximately $85 million. Bonanza Creek had no debt prior to the closing. The Company estimates its leverage ratio at the time of closing, based on pro forma net debt and estimated pro forma EBITDAX over the last 12 months, to be approximately 0.5x. The table below outlines the pro forma capitalization of the Company at closing.
|Pro Forma Capitalization|
|Pro Forma Shares Outstanding (Million)||30.6|
|BCEI Share Price as of 4/1/2021||$38.25|
|$ in millions|
|7.50% Senior Unsecured Notes (due 2026)||100|
|Estimated Enterprise Value||$1,339|
Eric Greager, President and Chief Executive Officer of Bonanza Creek, commented, “It’s been nearly five months since we announced our merger with HighPoint on November 9, 2020, and I’m pleased to speak with greater clarity regarding our 2021 guidance for the combined company. In the time since the merger announcement, we have benefited from exposure to higher commodity prices that have lifted our 2021 cash flow expectations, but also made adjustments to the development schedule. This added approximately $35 million in cash at closing, and sets up greater operational flexibility going forward. Certain HighPoint completions were rescheduled from 4Q 2020 and 1Q 2021 to later in 2021 to allow our combined teams the opportunity to design the completions and optimize facility and gathering capital. Those changes to the schedule resulted in lower full year 2021 pro forma production than we estimated in November, but the decision to complete these wells as a combined team creates real value. The guidance we released today also incorporates weather that impacted both Bonanza Creek and HighPoint in the first quarter.”
Greager, added, “We’ve included approximately $30 million of non-recurring merger-related costs into our pro forma estimated 2021 cash flow forecast and, inclusive of these expenses and changes to the development schedule, expect greater 2021 levered free cash flow than previously estimated. We have taken immediate steps to allow us to deliver the estimated $31 million of first-year synergies that we identified in November, and we expect to deliver those synergies in the first 12 months from closing. All things considered, we estimate our 2021 pro forma levered free cash flow at over $150 million at current commodity prices. As a result of the stronger balance sheet at closing we’re already at our target leverage ratio of approximately 0.5x. We’re quickly integrating two new directors into capital allocation discussions, and plan to announce formal plans with our 1Q earnings.”
The Company provided guidance for 1Q 2021 as a stand-alone company with its 4Q 2020 earnings release on February 17, 2021. The table below outlines the Company’s guidance for the full year 2021, which incorporates the closing of the HighPoint merger on April 1, 2021.
|BCEI Only||BCEI + HPR|
|1Q 2021||2Q - 4Q 2021|
|Capital Expenditures ($MM)||$35||--||$40||$115||--||$130|
|Lease Operating Expenses ($MM)||$5.0||--||$5.5|
|Lease Operating Expenses ($/Boe)||$3.00||--||$3.25|
|RMI Operating Expenses ($MM)||$3.5||--||$4.0|
|RMI Operating Expenses ($/Boe)||$0.85||--||$1.15|
|Recurring Cash G&A ($MM)||$6.0||--||$6.5||$23.0||--||$25.0|
|Production Taxes (% of revenue)||5%||--||6%||5%||--||6%|
|Oil Differential ($/Bbl)||$4.00||--||$5.00||$4.00||--||$5.00|
The Company’s 2021 capital plan includes completing 45 gross (39.9 net) drilled, uncompleted (“DUC”) wells, and picking up a drilling rig in 4Q 2021, with completions of those newly drilled wells to begin in 2022. The Company started completion activities in early January on Bonanza Creek DUCs, and we expect to begin completing DUCs from HighPoint’s inventory during the third quarter of 2021. The Company expects to exit the year with 30 gross DUCs from the current inventory.
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