Form 8-K VINE ENERGY INC. For: May 17

May 17, 2021 7:07 AM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): May 17, 2021

 

 

VINE ENERGY INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   001-40239   81-4833927
(State or other jurisdiction of   (Commission   (I.R.S. Employer
Incorporation or Organization)   File Number)   Identification No.)

5800 Granite Parkway, Suite 550

Plano, Texas

  75024
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (469) 606-0540

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities Registered Pursuant to Section 12(b):

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Class A common stock, par value $0.01 per share   VEI   The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02.

Results of Operations and Financial Condition.

On May 17, 2021, Vine Energy Inc., a Delaware corporation (the “Company”), issued a press release reporting the Company’s financial and operating results for the first quarter ended March 31, 2021, and providing 2021 guidance. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information contained in this Item 2.02 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.

 

Item 7.01.

Regulation FD Disclosure.

On May 17, 2021, the Company posted to its website an updated investor presentation. The investor presentation may be accessed by going to the Company’s Investor Relations website at https://www.vineenergy.com/investors/events-and-presentations.

The information contained in this Item 7.01 shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.

Cautionary Statement Regarding Forward-Looking Statements

This Current Report on Form 8-K, including the exhibit hereto, includes “forward-looking statements.” These forward-looking statements represent the Company’s expectations or beliefs concerning future events, and it is possible that the results described in this Current Report on Form 8-K will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company’s control, which could cause actual results to differ materially from the results discussed in the forward-looking statements.

Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, the Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for the Company to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in the Company’s Registration Statement filed pursuant to Rule 424(b)(4) on March 19, 2021 with the Securities and Exchange Commission. The risk factors and other factors noted in the Company’s Registration Statement could cause its actual results to differ materially from those contained in any forward-looking statement.

 

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit

  Number  

  

Description

99.1    Press Release of Vine Energy Inc., dated May 17, 2021.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: May 17, 2021     VINE ENERGY INC.
    By:  

/s/ Jonathan C. Curth

      Name:   Jonathan C. Curth
      Title:   Executive Vice President, General Counsel and Corporate Secretary

Exhibit 99.1

 

LOGO

Vine Energy Inc. Announces First-Quarter 2021 Results and Provides 2021 Guidance

Plano, Texas, May 17, 2021—Vine Energy Inc. (NYSE: VEI) (“Vine” or the “Company”) today reported first-quarter 2021 results and provided full-year 2021 guidance and select guidance for the second-quarter 2021.

Highlights

 

   

Completed IPO on March 17, 2021, raising net proceeds of approximately $322 million

 

   

Issued $950 million of 8-year, 6.75% senior unsecured notes to retire predecessor company notes; projected to save nearly $20 million per year in cash interest expense

 

   

Closed on a new reserves-based lending facility (“RBL”) with an initial borrowing base of $350 million

The highlights presented below reflect select financial metrics from the unaudited financial statements for the three months ended March 31, 2021 and 2020 and include the results of the predecessor Vine Oil & Gas LP for the entire period and the results of Brix Oil & Gas Holdings LP and Harvest Royalties Holdings LP from March 17, 2021, the effective date of the combination resulting from the corporate reorganization in connection with the initial public offering.

First-Quarter 2021 Select Financial Highlights

 

     Q1 2021      Q1 2020      Change  
($ millions, except per share metrics)                     

Production (MMcfd)

     724        622        102  

Revenue, w/derivatives

   $ 118      $ 130      $ (12

Operating Income

   $ (23    $ 3      $ (26

Operating Cash Flow

   $ 105      $ 100      $ 5  

Net Income

   $ (58    $ (27    $ (31

Net Income attributable to Vine

   $ (16      

Earnings per share

   $ (3.95      

The unaudited financial statements are presented in their entirety in the appendix of this release.

To facilitate a clearer representation of first-quarter 2021 performance, all results presented hereinafter are pro forma for the combination resulting from the corporate reorganization and initial public offering as if the transactions occurred on January 1, 2020.

Financial and Operational Highlights

 

   

Generated $145 million of adjusted EBITDAX and $20 million of Adjusted Free Cash Flow

 

   

Incurred capital of $98 million, or 68% of adjusted EBITDAX

 

   

Announced 2021 capital guidance, which is projected to yield average annual production of approximately 1 Bcf per day (net) while generating substantial Adjusted Free Cash Flow

 

   

Continued to demonstrate progress toward the Company’s objective to reduce methane and greenhouse gas intensity

 

1


Reflecting on the quarter, Eric Marsh, Chairman, President and Chief Executive Officer, commented, “Our initial public offering begins a sequel in Vine’s short but exciting history, and it was undoubtedly the most transformational quarter since 2014 when the company was created by the acquisition of our Haynesville asset. Following the combination of three successful companies, Vine today holds a strategic position in the Haynesville Basin and we have the size, scale and balance sheet to generate significant levered free cash flow and return capital to our shareholders, while concurrently upholding our longstanding commitment to safety and environmental stewardship.”

Mr. Marsh continued, “Though there are many new things about us, our core identity hasn’t changed. Most notably, we have about 25 years of high-quality inventory that supports our ability to create free cash flow longevity, and our operating team is one of the most highly skilled, technical collection of professionals in the industry. We harbor the institutional knowledge and technology which allows us to drill some of the most economic natural gas wells in North America. We believe we can eclipse past milestones as we reach new drilling and completion efficiencies, drive down capital intensity and operating expenses, and deliver on our expectations. Along the way, I believe improving natural gas fundamentals will hasten our bid to substantially increase the value of the company while holding production steady.”

First-Quarter 2021 Select Financial Highlights (Pro Forma)

 

     Q1 2021      Q1 2020      Change  
($ millions, except for per unit metrics)                     

Production (MMcfd)

     945        859        86  

Average Realized Price, w/realized derivatives ($/Mcf)

   $ 2.34      $ 2.39      $ (0.05

Operating Expenses ($/Mcf)

   $ 0.63      $ 0.66      $ (0.03

Adjusted EBITDAX

   $ 145      $ 136      $ 9  

Capital Incurred

   $ 98      $ 99      $ (1

Adjusted Free Cash Flow

   $ 20      $ 12      $ 8  

Production increased 86 MMcfd compared to the prior year quarter due to new wells brought online, improved operational efficiencies and exceptional PDP performance. However, production was negatively impacted by 28 MMcfd averaged over the first quarter due to winter storm Uri in February 2021 that forced temporary well curtailments.

Average realized price, including realized gain/loss on derivatives, was $2.34 per Mcf, $0.05 per Mcf lower compared to the prior year quarter, as follows:

 

     Q1 2021      Q1 2020      Change  

NYMEX settlement price (MMBtu) (1)

   $ 2.69      $ 1.95      $ 0.74  

Basis differential, including firm sales

     (0.13      (0.18      0.05  

Fuel component of gathering

     (0.07      (0.05      (0.02

BTU factor

     (0.09      (0.07      (0.02

Prior-period adjustments and non-operated sales

     (0.04      (0.01      (0.03
  

 

 

    

 

 

    

 

 

 

Average realized price, excluding derivatives (Mcf)

   $ 2.36      $ 1.64      $ 0.72  
  

 

 

    

 

 

    

 

 

 

Realized gain/(loss) on derivatives

     (0.02      0.75        (0.77
  

 

 

    

 

 

    

 

 

 

Average realized price, including derivatives (Mcf)

   $ 2.34      $ 2.39      ($ 0.05
  

 

 

    

 

 

    

 

 

 

 

(1)

Based on posted futures settlement

 

2


Total operating expense, excluding DD&A, strategic and exploration expense, and the non-cash gain on the gathering liability, decreased $0.03 per Mcf compared to the prior year quarter. Lease operating expense was impacted by costs related to winter storm Uri and higher produced water volume, while cash gathering expense benefited from a step down in the contractual rate in September 2020. G&A expense was lower by $0.02 due to the June 2020 reduction in force and operating leverage on higher production volume.

 

per Mcf    Q1 2021      Q1 2020      Change  

Lease operating

   $ 0.22      $ 0.20      $ 0.02  

Gathering & treating, excluding non-cash gain

     0.31        0.32        (0.01

Prod & ad-valorem taxes

     0.06        0.06        0.00  

General & administrative

     0.05        0.07        (0.02
  

 

 

    

 

 

    

 

 

 

Total (may not foot due to rounding)

   $ 0.63      $ 0.66      $ (0.03
  

 

 

    

 

 

    

 

 

 

Adjusted EBITDAX in the first-quarter 2021 was $145 million compared to $136 million in the prior year quarter, or approximately 73% of revenue, excluding unrealized derivative losses, in both periods. The increase was largely due to higher production volume, partially offset by lower average realized prices. With the sum of capital incurred and cash interest essentially flat year-over-year, Adjusted Free Cash Flow was $20 million compared to $12 million in the prior year quarter.

Refer to “Non-GAAP Financial Measures” in the appendix of this release for a definition of Adjusted EBITDAX and Adjusted Free Cash Flow and related disclaimers.

Operating Results

Development and completion capital incurred in the first-quarter 2021 was $92 million to drill 7 gross (6.2 net) wells and complete 11 gross (10.4) net wells, while other field capital was $6 million related to the buildout of the Company’s water gathering and disposal infrastructure, midstream, leasing and other miscellaneous investments.

 

Q1 2021

   Haynesville      Mid-Bossier      Total  
     Gross      Net      Gross      Net      Gross      Net  

Wells Drilled

     3        2.9        4        3.3        7        6.2  

Wells Turned-In-Line (TIL)

     9        8.4        2        2.0        11        10.4  

Completed Lateral (ft)

                 87,993        83,010  

Guidance: Prioritizing Free Cash Flow Generation and Debt Reduction

Vine’s 2021 guidance was developed to prioritize free cash flow generation and debt reduction. Average annual production is expected to be 10 – 12% higher compared to 2020 as the Company targets a one-time step-up to its optimal, long-term production goal of 1 Bcf per day.

Approximately 60% of expenditures associated with the 2021 capital program are expected to be incurred in the first six months of 2021. The program is expected to target 250,000 to 260,000 net feet of completed lateral while drilling and completion costs are expected in the range of $1,180 to $1,210 per lateral foot.

 

     2021 (1)    2nd quarter 2021

Average Production

   985 – 1,005 MMcfd    1,050 – 1,060 MMcfd

Adjusted Free Cash Flow (2)

   $145 – $155 million   

Capital Spending (incurred)

   $340 – $350 million   

Lease operating expense, per Mcf

   $0.19 – $0.20   

Gathering & treating, per Mcf

   $0.29 – $0.30   

Production & ad-valorem taxes, per Mcf

   $0.06 – $0.07   

General & administrative, per Mcf (3)

   $0.06 – $0.07   

Cash interest (4)

   $88 – $90 million    $20 – $22 million

Cash income taxes (5)

   $22 – $24 million    $5.0 – $5.5 million

 

(1) 

Includes 1st quarter 2021 pro forma results for combined entity

(2) 

Based on NYMEX futures on April 30, 2021; refer to the appendix for Vine’s definition of Adjusted Free Cash Flow

(3) 

Excludes non-cash stock compensation

(4) 

Excludes call premiums on retirement of Vine Oil & Gas LP unsecured notes

(5) 

Includes tax distributions to original owners (financing cash flow)

 

3


Financial Position and Liquidity

As of March 31, 2021, total debt outstanding was $1.1 billion, consisting of $28 million outstanding under the 1st lien RBL, $150 million outstanding under the 2nd lien term loan, and $910 million of legacy unsecured notes issued by Vine Oil & Gas LP as the predecessor entity. Settlement of the newly issued $950 million, 6.75% 2029 senior unsecured notes did not occur until April 7, 2021. Liquidity was $389 million, in the form of cash on hand and availability under the Company’s $350 million RBL, less a $26 million letter of credit.

As of April 30, 2021, total debt outstanding was $1.2 billion, consisting of $73 million outstanding under the 1st lien RBL, $150 million outstanding under the 2nd lien term loan, and $950 million of 6.75% senior unsecured notes due 2029. Liquidity was $334 million.

In early May 2021, liquidity was enhanced by $13 million following the partial release (50%) of an outstanding letter of credit.

Hedging Update

Vine routinely utilizes commodity swaps and options to protect its development program and increase the predictability of future cash flows. As of March 31, 2021, approximately 90% of forecasted average production for April to December 2021 is hedged at a weighted average price of $2.53 per MMBtu.

The Company also engages in firm sales agreements with high-quality counterparties to effectively hedge the price received for natural gas sales at local gathering hubs. Approximately 55% of forecasted average production for April to December 2021 is presold, as follows: 30% at a weighted average price of $0.16 per MMBtu under NYMEX and 25% at $0.01 per MMBtu over Columbia Mainline.

Refer to appendix of this release for a quarterly schedule of the Company’s commodity derivative and firm sales portfolios.

Environmental, Social and Governance

Vine is committed to operating in a manner that protects the welfare of people, the environment, wildlife, and local communities. The Company proudly produces 100% natural gas to meet global demand for cleaner, sustainable, and reliable energy, while concurrently preserving ecosystems for future generations. Since 2017, Vine predecessors have reduced methane intensity by 62% and greenhouse gas intensity by 35%, with plans to realize further reductions. To learn more about Vine’s ESG leadership, visit www.vineenergy.com/commitment.

Conference Call

Date:     May 17, 2021

Time:     9am Central time

Securities analysts may access an open line by dialing (844) 912-3900 (domestic U.S.) or (236) 714-3354 (international) using conference ID 5188044.

All others are encouraged to access the live webcast in listen-only mode by navigating to the following link: https://www.vineenergy.com/investors/events-and-presentations/. Note: registration required. Please access the link at least 5 minutes prior to the start of the call.

A replay of the webcast will be archived for one-year at the web address noted above.

About Vine Energy Inc.

Vine Energy Inc. (NYSE: VEI) is an energy company focused exclusively on the development of natural gas properties in the stacked Haynesville and Mid-Bossier shales in the Haynesville Basin of Northwest Louisiana. The company employs a relentless focus on generating free cash flow and shareholder returns while demonstrating environmental, social and governance leadership. For more information, visit our website at www.VineEnergy.com.

 

4


Investor Contact Information

David Erdman

Director, Investor Relations

Phone: 469-605-2480

Email: david.erdman@VineEnergy.com

Forward-Looking Statements

The information in this Notice includes “forward-looking statements.” All statements, other than statements of historical fact included in this Notice, regarding our strategy, future operations, financial position, estimated revenue and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Notice, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events. We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the exploration for and development, production and sale of natural gas. These risks include, but are not limited to, commodity price volatility, lack of availability of drilling and production equipment and services, costs for drilling and completion and production services, drilling and other operating risks, environmental risks, regulatory changes, the uncertainty inherent in estimating natural gas reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and other risks.

###

 

5


FINANCIAL STATEMENTS OF VINE ENERGY INC.

(U.S. GAAP)

 

6


VINE ENERGY INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share—Unaudited)

 

     For the Three Months
Ended March 31,
 
     2021     2020  

Revenue:

    

Natural gas sales

   $ 153,986     $ 92,543  

Realized (loss) gain on commodity derivatives

     (760     42,044  

Unrealized loss on commodity derivatives

     (35,103     (4,639
  

 

 

   

 

 

 

Total revenue

     118,123       129,948  

Operating Expenses:

    

Lease operating

     14,960       12,995  

Gathering and treating

     20,601       16,382  

Production and ad valorem taxes

     3,982       4,149  

General and administrative

     2,583       3,331  

Monitoring fee

     2,077       1,738  

Depletion, depreciation and accretion

     97,072       82,324  

Exploration

     —         75  

Strategic

     —         562  

Write-off of deferred IPO costs

     —         5,787  
  

 

 

   

 

 

 

Total operating expenses

     141,275       127,343  
  

 

 

   

 

 

 

Operating Income

     (23,152     2,605  

Interest Expense:

    

Interest

     (29,792     (29,351

Loss on extinguishment of debt

     (4,883     —    
  

 

 

   

 

 

 

Total interest expense

     (34,675     (29,351
  

 

 

   

 

 

 

Income before income taxes

     (57,827     (26,746

Income tax provision

     (165     (150
  

 

 

   

 

 

 

Net Income

   $ (57,992   $ (26,896
  

 

 

   

 

 

 

Net income attributable to Predecessor

     (28,939  

Net income attributable to noncontrolling interest

     (13,144  

Net income attributable to Vine Energy Inc.

     (15,909  

Net income per share attributable to Vine Energy Inc.:

    

Basic

   $ (3.95  

Diluted

   $ (3.95  

Weighted average shares outstanding:

    

Basic

     4,032,450    

Diluted

     4,032,450    

 

7


VINE ENERGY INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands—Unaudited)

 

     March 31,
2021
    December 31,
2020
 

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 92,528     $ 15,517  

Accounts receivable

     91,161       77,129  

Joint interest billing receivables

     17,625       18,280  

Prepaid and other

     1,417       3,626  
  

 

 

   

 

 

 

Total current assets

     202,731       114,552  

Natural gas properties (successful efforts):

    

Proved

     3,162,572       2,722,419  

Unproved

     89,993       —    

Accumulated depletion

     (1,475,582     (1,380,065
  

 

 

   

 

 

 

Total natural gas properties, net

     1,776,983       1,342,354  

Other property and equipment, net

     8,828       7,936  

Other

     12,233       2,921  
  

 

 

   

 

 

 

Total assets

   $ 2,000,775     $ 1,467,763  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity / Partners’ Capital

    

Current liabilities:

    

Accounts payable

   $ 7,908     $ 20,986  

Accrued liabilities

     141,468       90,004  

Revenue payable

     29,121       37,552  

Derivatives

     78,529       19,948  
  

 

 

   

 

 

 

Total current liabilities

     257,026       168,490  

Long-term liabilities:

    

New RBL

     28,000       —    

Prior RBL

     —         183,569  

Second lien credit facility

     143,664       142,947  

Unsecured debt

     899,435       898,225  

Asset retirement obligations

     23,467       21,889  

TRA liability

     6,985       —    

Derivatives

     31,447       38,341  

Other

     —         4,241  
  

 

 

   

 

 

 

Total liabilities

     1,390,024       1,457,702  

Commitments and contingencies

    

Stockholders’ Equity / Partners’ Capital

    

Partners’ capital

     —         10,061  

Class A common stock, $0.01 par value, 350,000,000 shares authorized, 41,040,721 issued and outstanding at March 31, 2021

     410       —    

Class B common stock, $0.01 par value, 150,000,000 shares authorized, 34,218,535 issued and outstanding at March 31, 2021

     342       —    

Additional paid-in capital

     348,406       —    

Retained earnings

     (15,909  
  

 

 

   

 

 

 

Total stockholders’ equity attributable to Vine Energy Inc.

     333,249       10,061  

Noncontrolling interest

     277,502       —    
  

 

 

   

 

 

 

Total stockholders’ equity / partners’ capital

     610,751       10,061  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity / partners’ capital

   $ 2,000,775     $ 1,467,763  
  

 

 

   

 

 

 

 

8


VINE ENERGY INC

CONSOLIDATED STATEMENTS OF CASH FLOW

(Amounts in thousands—Unaudited)

 

     For the Three Months
Ended March 31,
 
     2021     2020  

Operating Activities

    

Net income

   $ (57,992   $ (26,896

Adjustments to reconcile net income to operating cash flow:

    

Depletion, depreciation and accretion

     97,072       82,324  

Amortization of financing costs

     2,909       4,361  

Non-cash loss on extinguishment of debt

     4,883       —    

Non-cash write-off of deferred IPO costs

     —         5,787  

Unrealized loss on commodity derivatives

     35,103       4,639  

Volumetric and production adjustment to gas gathering liability

     —         (2,567

Other

     33       (6

Changes in assets and liabilities:

    

Accounts receivable

     11,294       9,549  

Joint interest billing receivables

     10,084       (5,041

Accounts payable and accrued expenses

     25,182       34,428  

Revenue payable

     (21,815     (6,967

Other

     (1,442     530  
  

 

 

   

 

 

 

Operating cash flow

     105,311       100,141  

Investing Activities

    

Cash received in acquisition of the Brix Companies

     19,858       —    

Capital expenditures

     (78,013     (86,005
  

 

 

   

 

 

 

Investing cash flow

     (58,155     (86,005

Financing Activities

    

Repayment of Brix Credit Facility

     (127,500     —    

Proceeds from New RBL

     28,000       45,000  

Payments on Prior RBL

     (190,000     —    

Proceeds from issuance of Class A common stock, net of fees

     327,422       —    

Deferred financing costs

     (8,067     (3,848
  

 

 

   

 

 

 

Financing cash flow

     29,855       41,152  

Net increase in cash and cash equivalents

     77,011       55,288  

Cash and cash equivalents at beginning of period

     15,517       18,286  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 92,528     $ 73,574  
  

 

 

   

 

 

 

 

9


FINANCIAL STATEMENTS OF VINE ENERGY INC.

(Pro Forma)

 

10


To facilitate a clearer representation of first-quarter 2021 performance, all schedules presented hereinafter are pro forma for the combination resulting from the corporate reorganization and initial public offering as if the transactions occurred on January 1, 2020.

VINE ENERGY INC.

UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS

 

     For the Three Months
Ended March 31,
 
     2021      2020  

Revenue:

     

Natural gas sales

   $ 200,927      $ 128,296  

Realized gain (loss) on derivatives

     (2,348      58,305  

Unrealized loss on derivatives

     (37,949      (5,437
  

 

 

    

 

 

 

Total revenue

     160,630        181,164  

Operating Expenses:

     

Lease operating

     18,693        15,725  

Gathering and treating

     26,296        22,654  

Production and ad valorem taxes

     4,757        4,951  

General and administrative

     3,954        5,453  

Depletion, depreciation and accretion

     106,505        93,457  

Exploration

     1        75  

Strategic costs

     —          717  

Write-off of deferred IPO expenses

     —          5,787  
  

 

 

    

 

 

 

Total operating expenses

     160,206        148,819  
  

 

 

    

 

 

 

Operating Income

     424        32,345  
  

 

 

    

 

 

 

Interest expense

     (34,249      (27,284

Income Before Income Taxes

     (33,825      5,061  
  

 

 

    

 

 

 

Income tax provision

     (165    $ (150
  

 

 

    

 

 

 

Net Income

   $ (33,990    $ 4,911  
  

 

 

    

 

 

 

Net income attributable to non-controlling interests

     (15,390      2,303  
  

 

 

    

 

 

 

Net Income Attributable to Vine Energy Inc.

     (18,600      2,608  
  

 

 

    

 

 

 

Net Income per Share:

     

Basic

   $ (0.45    $ 0.06  
  

 

 

    

 

 

 

Diluted

   $ (0.45    $ 0.06  
  

 

 

    

 

 

 

Weighted Average Shares Outstanding:

     

Basic

     41,040,721        41,040,721  
  

 

 

    

 

 

 

Diluted

     41,040,721        41,040,721  
  

 

 

    

 

 

 

 

11


VINE ENERGY INC

SELECT PRO FORMA PRODUCTION AND UNIT COSTS STATISTICS

 

     For the Three Months
Ended Mar 31,
 
     2021      2020  

Production data:

     

Natural gas (MMcf)

     85,035        78,207  

Average daily production (MMcfd)

     945        859  

Average sales prices per Mcf:

     

Before effects of derivatives

   $ 2.36      $ 1.64  

After effects of derivatives

     2.34        2.39  

Costs per Mcf:

     

Lease operating

   $ 0.22      $ 0.20  

Cash gathering and treating

     0.31        0.32  

Production and ad valorem taxes

     0.06        0.06  

General and administrative

     0.05        0.07  
  

 

 

    

 

 

 

Total cash operating expenses

   $ 0.63      $ 0.66  
  

 

 

    

 

 

 

Exploration

     0.00        0.00  

Depreciation, depletion and accretion

     1.25        1.19  

Strategic

     —          0.01  

Non-cash gain on gathering liability

     —          (0.03

Non-cash writeoff of deferred IPO costs

     —          0.07  
  

 

 

    

 

 

 

Total (may not foot due to rounding)

   $ 1.88      $ 1.90  
  

 

 

    

 

 

 

 

12


VINE ENERGY INC.

NATURAL GAS SWAPS

 

     Natural Gas
Swaps
     Weighted Avg
Swap Price
 

Period

   (MMBtud)      ($ / MMBtu)  

2021

     

Second Quarter

     832,871      $ 2.52  

Third Quarter

     845,333      $ 2.53  

Fourth Quarter

     848,887      $ 2.55  

2022

     

First Quarter

     866,797      $ 2.56  

Second Quarter

     348,859      $ 2.54  

Third Quarter

     409,853      $ 2.54  

Fourth Quarter

     604,935      $ 2.53  

2023

     

First Quarter

     528,652      $ 2.48  

Second Quarter

     65,470      $ 2.45  

Third Quarter

     45,954      $ 2.44  

Fourth Quarter

     125,092      $ 2.50  

2024

     

First Quarter

     313,512      $ 2.53  

Second Quarter

     11,957      $ 2.31  

Third Quarter

     7,366      $ 2.31  

Fourth Quarter

     70,761      $ 2.58  

2025

     

First Quarter

     137,667      $ 2.58  

VINE ENERGY INC.

FIRM SALES

 

Period

   Firm Sales:
NYMEX Index
(MMBtud)
     Weighted Avg Price
(NYMEX less)
($ / MMBtu)
     Firm Sales:
ML Index
(MMBtud)
     Weighted Avg Price
(ML plus)
($ / MMBtu)
 

2021

           

Second Quarter

     405,067      $ (0.163      467,171      $ 0.012  

Third Quarter

     310,000      $ (0.163      355,202      $ 0.013  

Fourth Quarter

     310,000      $ (0.163      138,401      $ 0.014  

2022

           

First Quarter

     310,000      $ (0.163      30,000      $ 0.015  

Second Quarter

     100,000      $ (0.150      30,000      $ 0.015  

Third Quarter

     100,000      $ (0.150      30,000      $ 0.015  

Fourth Quarter

     33,333      $ (0.150      30,000      $ 0.015  

2023

           

First Quarter

           30,000      $ 0.015  

 

13


FINANCIAL STATEMENTS OF VINE ENERGY INC.

(Reconciliation)

 

14


NON-GAAP FINANCIAL MEASURES

We define Adjusted EBITDAX as our net income before interest expense, income taxes, depreciation, depletion and accretion, unrealized gains and losses on commodity derivatives, exploration expense, strategic expense, and other non-cash operating items. We believe Adjusted EBITDAX is a useful performance measure because it allows for an effective valuation of our operating performance when compared against our peers, without regard to our financing methods, corporate form, or capital structure. We exclude the items listed above in arriving at Adjusted EBITDAX to reflect the substantial variance in practice 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 should not be considered as an alternative to, or more meaningful than, net income determined in accordance with GAAP. 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 burden, as well as the historic costs of depreciable assets, none of which are reflected in Adjusted EBITDAX. Our presentation of Adjusted EBITDAX should not be construed as an inference that our results will be unaffected by unusual or non-recurring items. Our computations of Adjusted EBITDAX may not be identical to other similarly titled measures of other companies.

We define Adjusted Free Cash Flow as Adjusted EBITDAX less the sum of cash interest, capital incurred and tax payments and distributions. We believe Adjusted Free Cash Flow is a useful performance measure as it’s an indicator of the company’s ability to generate cash flow once capital is invested to either maintain or expand production. Adjusted Free Cash Flow should not be considered as an alternative to, or more meaningful than, operating cash flow or investing cash flow determined in accordance with GAAP. Our computation of adjusted free cash flow may not be identical to other similarly titled measures of other companies.

VINE ENERGY INC.

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDAX AND ADJUSTED FREE CASH FLOW

 

     Pro Forma Presentation      GAAP Presentation  
     For the Three Months
Ended Mar 31,
     For the Three Months
Ended Mar 31,
 
     2021      2020      2021      2020  
     (in thousands)      (in thousands)  

Net income/(loss)

   $ (33,990    $ 4,911      $ (57,992    $ (26,896

Interest expense

     34,249        27,284        34,675        29,351  

Income tax provision

     165        150        165        150  

Depletion, depreciation and accretion

     106,505        93,457        97,072        82,324  

Unrealized (gain)/loss on commodity derivatives

     37,949        5,437        35,103        4,639  

Exploration

     1        75        —          75  

Non-cash G&A

     —          344        (1      (6

Strategic

     —          717        —          562  

Non-cash writeoff of deferred IPO costs

     —          5,787        —          5,787  

Non-cash volumetric and production adjustment to gas gathering liability

     —          (2,567      —          (2,567
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDAX

   $ 144,879      $ 135,595      $ 109,022      $ 93,419  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash interest

     (26,588      (24,242      (26,770      (24,990

Capital incurred

     (97,828      (99,021      (81,168      (82,290
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted Free Cash Flow

   $ 20,463      $ 12,332      $ 1,084      $ (13,861
  

 

 

    

 

 

    

 

 

    

 

 

 

 

15



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