Form 8-K WildHorse Resource Devel For: May 09
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 9, 2018
WildHorse Resource Development Corporation
(Exact name of registrant as specified in its charter)
| Delaware | 001-37964 | 81-3470246 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
9805 Katy Freeway, Suite 400
Houston, TX 77024
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (713) 568-4910
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:
☐ 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))
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.
A press release issued by WildHorse Resource Development Corporation (the “Company”) on May 9, 2018 regarding the Company’s financial and operational results for the quarter ended March 31, 2018 is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
The information under Item 2.02 of this Current Report on Form 8-K, including the attached Exhibit 99.1, is being “furnished” pursuant to General Instruction B.2 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any Company filing, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number |
Description | |
| 99.1 |
Press release dated May 9, 2018 |
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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.
| WILDHORSE RESOURCE DEVELOPMENT CORPORATION | ||
| By: | /s/ Kyle N. Roane | |
| Name: | Kyle N. Roane | |
| Title: | Executive Vice President, General Counsel and | |
| Corporate Secretary | ||
Dated: May 9, 2018
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Exhibit 99.1
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WildHorse Resource Development Corporation Announces First Quarter Results
HOUSTON, May 9, 2018 – WildHorse Resource Development Corporation (NYSE: WRD) announced today its operating and financial results for the three months ended March 31, 2018. Operational highlights from first quarter 2018 include:
| • | Increased average daily production by 198% to 52.4 Mboe/d for the first quarter 2018 compared to 17.6 Mboe/d for the first quarter 2017 |
| • | Increased average daily Eagle Ford production by 251% to 40.4 Mboe/d for the first quarter 2018 compared to 11.5 Mboe/d for the first quarter 2017 |
| • | Brought online 19 gross (18.4 net) Eagle Ford wells and 4 gross (3.6 net) Austin Chalk wells in the first quarter of 2018 |
| • | Crude oil realizations in the first quarter of 2018 were 103% of WTI as a result of low differentials and Louisiana Light Sweet (“LLS”) pricing |
| • | Brought online a two-well Austin Chalk pad, the Morgan #1H/Brodnax #1H, at an average peak 24-hr rate(1) of 2,711 Boe/d and an average IP-30(1) of 2,483 Boe/d or 14.9 MMcfe/d (67% natural gas, 32% NGLs and 1% oil) on a 5,311’ lateral |
| • | The Brollier AC #1H, a previously announced first quarter 2018 Austin Chalk well, reached its final peak 24-hr rate(1) of 3,416 Boe/d and an IP-30(1) of 3,030 Boe/d or 18.2 MMcfe/d (62% natural gas, 30% NGLs and 8% oil) on a 5,684’ lateral |
| • | Brought online three Eagle Ford wells in Brazos County with an average peak 24-hr IP rate of 941 Boe/d (90% oil) and an IP-30(1) rate of 778 Boe/d (90% oil)(3) on a 6,404’ lateral |
Financial highlights from first quarter 2018 and other recent highlights include:
| • | Reported a Net Loss of $115.8 million for the first quarter 2018 |
| • | Reported a Net Loss available to common stockholders of $123.2 million or $1.24 per share for the first quarter 2018 |
| o | Reported Adjusted Net Income available to common stockholders(2) of $44.5 million or $0.45 per share for the first quarter 2018 |
| o | Reported Adjusted EBITDAX(2) of $158.6 million for the first quarter 2018 |
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| • | Closed the North Louisiana divestiture for approximately $206.4 million after customary preliminary purchase price adjustments of $9.7 million related to cash flows after the effective date, January 1, 2018 |
| ○ | WRD recorded an impairment charge of $214.3 million in the first quarter of 2018 to adjust the carrying amount of the divestiture to the net divestiture proceeds |
| • | Increased the borrowing base on WRD’s revolving credit facility to $1.05 billion from $875 million including the impact of the North Louisiana divestiture |
| • | Issued an additional $200 million of 6.875% Senior Notes due 2025 in April 2018 |
“In the first quarter of 2018, we delivered consistent results while increasing production, pushing the boundaries of our position, and further developing the Austin Chalk. We have managed to accomplish this while also continuing to test enhancements on our completion design,” said Jay Graham, Chairman and Chief Executive Officer of WRD. “In 2017, the majority of our program focused on delineation and successfully proving the quality of our acreage. In 2018, we are further optimizing our completion design in preparation for full field development and are building economies of scale with our in-field sand mine. In addition, we are further investing in technology with upcoming diverter and stage spacing tests, permanent fiber optics installation, and microseismic analysis. As an engineering-driven company, this part of the development process is one of our key strengths, and we look forward to the results from these projects later in the year.”
First Quarter 2018 Results
Net production was 52.4 Mboe/d for the first quarter 2018 compared to 17.6 Mboe/d for the first quarter 2017. First quarter 2018 net production consisted of approximately 60% oil, 31% natural gas, and 9% NGLs. The Eagle Ford and Austin Chalk represented 40.4 Mboe/d of total production (77% oil), and North Louisiana represented 72.2 MMcfe/d of total production (97% natural gas).
WRD reported a Net Loss of $115.8 million for the first quarter 2018. The Net Loss available to common stockholders was $123.2 million or $1.24 per share for the first quarter 2018.
Adjusted Net Income available to common stockholders(2) for the first quarter 2018 was $44.5 million or $0.45 per share. WRD reported Adjusted EBITDAX(2) for the first quarter 2018 of $158.6 million compared to Adjusted EBITDAX(2) for the first quarter 2017 of $34.6 million.
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Total revenues and other income for the first quarter 2018, excluding the impact of realized hedges, were $218.8 million compared to $54.3 million for the first quarter 2017. Total revenues were primarily higher as a result of increased production and higher commodity prices.
Average realized prices for the quarter ending March 31, 2018 and 2017, before the effect of commodity derivatives, are presented below:
| Percent | ||||||||||||
| Q1’18 | Q1’17 | Change | ||||||||||
| Oil (per Bbl) |
$64.75 | $49.90 | 30% | |||||||||
| Natural Gas (per Mcf) |
$3.14 | $3.16 | 0% | |||||||||
| NGL (per BbL) |
$17.22 | $16.65 | 3% | |||||||||
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| Total (per Boe) |
$46.12 | $34.01 | 36% | |||||||||
Average realized prices for the quarter ending March 31, 2018 and 2017, after the effect of commodity derivatives, are presented below:
| Percent | ||||||||||||
| Q1’18 | Q1’17 | Change | ||||||||||
| Oil (per Bbl) |
$56.55 | $50.74 | 11% | |||||||||
| Natural Gas (per Mcf) |
$3.17 | $3.02 | 5% | |||||||||
| NGL (per BbL) |
$17.22 | $16.65 | 3% | |||||||||
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| Total (per Boe) |
$41.27 | $34.08 | 21% | |||||||||
Lease operating expense (“LOE”) for the first quarter 2018 was $16.4 million, or $3.48 per Boe, compared to $6.9 million, or $4.37 per Boe, for the first quarter 2017. The year over year difference is attributable to the efficiencies gained since several acquisitions in 2017 and greater produced volumes with lower cost LOE.
Gathering, processing and transportation expense (“GP&T”) for the first quarter 2018 was $1.4 million, or $0.29 per Boe, compared to $1.7 million, or $1.07 per Boe, in the first quarter 2017. GP&T was significantly lower on a Boe basis due to the implementation of the new FASB revenue recognition standard (ASC 606, Revenue from Contracts with Customers), effective as of January 1, 2018. As a result of the new standard, the majority of our GP&T expense will now be recognized as a deduction from natural gas and NGL revenues rather than as an expense item. In the first quarter, $2.8 million of GP&T was deducted from natural gas and NGL revenues. This accounting change will have no impact on WRD’s actual costs for GP&T and only reflects a change of the presentation on the income statement.
Absent the impact of the accounting change, total GP&T for the first quarter would have been $4.1 million or $0.87 per boe. In addition, if GP&T were not recognized as a revenue deduction,
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natural gas realizations would have been 108% of Henry Hub and NGL realizations would have been 35% of WTI for the first quarter 2018 excluding hedges. The high natural gas price realization during the first quarter was the result of strong pricing in North Louisiana. For additional information, please see the appendix of this press release and the Management’s Discussion & Analysis section of WRD’s first quarter 2018 10-Q for a reconciliation of GP&T to the previous accounting convention.
Taxes other than income were $11.8 million for the first quarter 2018, or $2.50 per Boe, compared to $3.9 million, or $2.46 per Boe, for the first quarter 2017. Taxes other than income in the first quarter 2018 increased primarily due to higher price realizations and changes in the commodity mix.
General and administrative (“G&A”) expense for the first quarter 2018 was $12.7 million, or $2.70 per Boe, compared to $7.5 million, or $4.72 per Boe, for the first quarter 2017. During the first quarter 2018, G&A expense included $3.2 million, or $0.67 per Boe, of stock-based compensation expense and $0.4 million, or $0.08 per Boe, of acquisition related costs. Excluding acquisition related costs, cash G&A expense(2), which also does not include stock-based compensation, was $9.2 million or $1.95 per Boe for the first quarter 2018.
Exploration expense was $1.7 million for the first quarter 2018 compared to $1.6 million for the first quarter 2017.
Net interest expense during the first quarter 2018 was $13.3 million, including amortization of deferred financing fees of approximately $0.7 million. This compares to net interest expense during the first quarter 2017 of $5.6 million, including amortization of deferred financing fees of approximately $0.8 million. The increase in net interest expense is primarily the result of higher levels of indebtedness due to the issuance of senior notes in 2017.
Drilling and completion (“D&C”) capital expenditures totaled $216.7 million in the first quarter 2018. Sand mine capital expenditures in the first quarter 2018 totaled $9.3 million comprised primarily of property acquisition costs.
| (1) | The initial production rates represent the peak average of the initial production rates for the applicable consecutive days of production. |
| (2) | Adjusted EBITDAX, Adjusted Net Income (Loss) available to common stockholders, Cash G&A, and net debt are financial measures not calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Please see the reconciliation to the most comparable measures calculated in accordance with GAAP in the “Use of Non-GAAP Financial Measures” section of this press release. |
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| (3) | These preliminary results are based on the most current information available to management. As a result, WRD’s final results may vary from these preliminary estimates. Such variances may be material; accordingly, you should not place undue reliance on these preliminary estimates. |
Operational Update
WRD reported first quarter 2018 average daily production of 52.4 Mboe/d consisting of 60% oil, 31% natural gas, and 9% NGLs. WRD brought online a total of 23 gross (22.0 net) wells including 19 gross (18.4 net) Eagle Ford wells and 4 gross (3.6 net) Austin Chalk wells along with six Eagle Ford refracs in the first quarter 2018.
In the Austin Chalk, WRD brought online 4 wells in the first quarter 2018 including the previously announced Brollier AC #1H which has reached its final peak 24-hr rate(1) of 3,416 Boe/d and an IP-30(1) of 3,030 Boe/d or 18.2 MMcfe/d (62% natural gas, 30% NGLs and 8% oil) on a 5,684’ lateral. WRD also brought online a two-well Austin Chalk pad, the Morgan #1H/Brodnax #1H, at an average peak 24-hr rate(1) of 2,711 Boe/d and an average IP-30(1) of 2,483 Boe/d or 14.9 MMcfe/d (67% natural gas, 32% NGLs and 1% oil) on a 5,311’ lateral. The fourth Austin Chalk well was brought online in the last days of the quarter and is currently in flowback.
In the Eagle Ford, WRD brought online three strong wells late in the first quarter(3) on the northeastern portion of its acreage in Brazos County, TX. While still increasing production, the Irene, Inez, and Lero wells have averaged a peak 24-hr rate(1) of 941 barrels of oil equivalent per day at 90% oil and an IP-30 rate(1) of 778 Boe/d (90% oil) on a 6,404’ lateral. These wells represent the most northeastern Gen 3 wells drilled to date.
Financial Update
In April 2018, WRD issued an additional $200 million of 6.875% Senior Notes due 2025. In addition, Moody’s recently increased WRD’s Long Term Corporate Family Rating to B2 with a positive outlook from B3 with a stable outlook. Total net debt(2) outstanding as of March 31, 2018 was $802 million, including $309.0 million of debt outstanding under WRD’s revolving credit facility, $500 million of Senior Notes due 2025, and $7.0 million in cash and cash equivalents. On March 23, 2018, in connection with its regularly scheduled redetermination, the borrowing base on WRD’s revolving credit facility was increased to $1.05 billion from $875
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million which includes the impact of the North Louisiana divestiture and the April Senior Notes issuance. The next redetermination of the borrowing base utilizing mid-year 2018 reserves is scheduled for October 2018. As of March 31, 2018, WRD’s liquidity was $748.0 million consisting of $7.0 million of cash and cash equivalents and $741.0 million of availability under its revolving credit facility.
WRD’s net debt(2) to annualized first quarter 2018 Adjusted EBITDAX(2) ratio was 1.3 times. WRD continues to target a net debt(2) to quarterly annualized Adjusted EBITDAX(2) ratio below 2.0 times based on the mid-point of guidance. WRD expects the available borrowings under its revolving credit facility to provide sufficient liquidity to finance anticipated working capital and capital expenditure requirements.
Hedging Update
WRD utilizes its hedging program to mitigate financial risks and the effects of commodity price volatility. Total hedged production in the first quarter of 2018 was approximately 3.4 MMboe, or 71% of first quarter production of 4.7 MMboe. As of May 9, 2018, WRD had hedged approximately 64% of the remaining 2018 production on a barrel of oil equivalent basis (using the mid-point of WRD’s annual guidance range).
WRD novated its natural gas hedges to the buyer of the North Louisiana assets in March 2018. In April, WRD entered into additional natural gas contracts extending to 2020. Specifically, WRD hedged approximately 22.4 billion cubic feet of natural gas distributed across 2018 to 2020 at approximately $2.78 per Mcfe. In addition, during the early second quarter, WRD added additional oil swaps out to 2020 and also added 3.1 MMbls of oil basis hedges on average locking in a LLS premium to WTI of approximately $3.00 per Bbl.
The following table reflects WRD’s hedged volumes and corresponding weighted-average price, as of May 9, 2018.
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| Q2 - Q4 ‘18 | 2019 | 2020 | ||||||||||
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| Crude Oil Hedge Contracts: |
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| Total crude oil volumes hedged (Bbl) |
6,895,632 | 8,402,126 | 4,511,681 | |||||||||
| Volumes hedged (Bbl/d) |
25,075 | 23,020 | 12,327 | |||||||||
| Total weighted-average price (4) |
$51.88 | $54.32 | $53.49 | |||||||||
| Expected crude production hedged (5) |
75% | - | - | |||||||||
| Natural Gas Hedge Contracts: |
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| Total natural gas volumes hedged (MMbtu) |
6,730,332 | 6,425,146 | 4,846,020 | |||||||||
| Volumes hedged (MMbtu/d) |
24,474 | 17,603 | 13,240 | |||||||||
| Total weighted-average price (4) |
$2.79 | $2.79 | $2.76 | |||||||||
| Expected gas production hedged (5) |
71% | - | - | |||||||||
| Total Hedge Contracts: |
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| Total hedged production (boe) |
8,017,354 | 9,472,984 | 5,319,351 | |||||||||
| Volumes hedged (Boe/d) |
29,154 | 25,953 | 14,534 | |||||||||
| Total weighted-average price ($/boe) (4) |
$45.02 | $48.49 | $45.79 | |||||||||
| Expected total production hedged (5) |
64% | - | - | |||||||||
| LLS Basis Swaps |
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| Total crude oil volumes hedged (Bbl) |
4,763,026 | - | - | |||||||||
| Volumes hedged (Bbl/d) |
17,320 | - | - | |||||||||
| Total weighted-average price - WTI to LLS (4) |
$3.03 | - | - | |||||||||
| Expected crude production hedged (5) |
52% | - | - | |||||||||
| (4) | Utilizing the mid-point for collars. |
| (5) | Using the mid-point of WRD’s 2018 guidance ranges. |
Upcoming Conferences
Members of WRD’s management team intend to participate in the following upcoming investment conferences:
| • | Tudor Pickering Holt Hotter ‘N Hell Conference on May 15 – 16, 2018 (Houston, TX) |
| • | Bank of America Merrill Lynch Energy Credit Conference on June 6 – 7, 2018 (New York, NY) |
| • | Wells Fargo West Coast Energy Conference on June 12 – 13, 2018 (San Francisco, CA) |
| • | J.P. Morgan 2018 Energy Conference on June 18 – 20, 2018 (New York, NY) |
Presentation materials for all conferences mentioned above will be available on WRD’s website at www.wildhorserd.com on or prior to the day of the respective presentation.
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Quarterly Report on Form 10-Q
WRD’s financial statements and related footnotes will be available in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, which will be filed with the U.S. Securities and Exchange Commission (“SEC”) on or before May 15, 2018.
Conference Call and Webcast
WRD will host an investor conference call tomorrow morning, May 10, 2018 at 8 a.m. Central (9 a.m. Eastern) to discuss the first quarter 2018 operating and financial results. Interested parties are invited to participate on the call by dialing (877) 883-0383 (Conference ID: 7787856), or (412) 902-6506 for international calls, (Conference ID: 7787856) at least 15 minutes prior to the start of the call or via the internet at www.wildhorserd.com. A replay of the call will be available on WRD’s website or by phone at (877) 344-7529 (Conference ID: 10118478) for a seven-day period following the call.
About WildHorse Resource Development Corporation
WildHorse Resource Development Corporation is an independent oil and natural gas company focused on the acquisition, exploration, development and production of oil, natural gas and NGL properties primarily in the Eagle Ford Shale and Austin Chalk in East Texas. For more information, please visit our website at www.wildhorserd.com.
Cautionary Statements and Additional Disclosures
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “will,” “plans,” “seeks,” “believes,” “estimates,” “could,” “expects” and similar references to future periods. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond WRD’s control. All statements, other than historical facts included in this press release, that address activities, events or developments that WRD expects or anticipates will or may occur in the future, including such things as WRD’s future capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, future drilling locations and inventory, competitive strengths, goals, expansion and growth of WRD’s business and operations, plans, successful consummation and integration of acquisitions and other transactions, market conditions,
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references to future success, references to intentions as to future matters and other such matters are forward-looking statements. All forward-looking statements speak only as of the date of this press release. Although WRD believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.
WRD cautions you that these forward-looking statements are subject to risks and uncertainties, most of which are difficult to predict and many of which are beyond WRD’s control, incident to the exploration for and development, production, gathering and sale of natural gas and oil. These risks include, but are not limited to: commodity price volatility; inflation; lack of availability of drilling and production equipment and services; environmental risks; drilling and other operating risks; regulatory changes; the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital; and the timing of development expenditures. Information concerning these and other factors can be found in WRD’s filings with the SEC, including its Forms 10-K, 10-Q and 8-K. Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and there can be no assurances that the actual results or developments anticipated by WRD will be realized, or even if realized, that they will have the expected consequences to or effects on WRD, its business or operations. WRD has no intention, and disclaims any obligation, to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.
Initial production rates are subject to decline over time and should not be regarded as reflective of sustained production levels.
Some of the above results are preliminary. Such preliminary results are based on the most current information available to management. As a result, WRD’s final results may vary from these preliminary estimates. Such variances may be material; accordingly, you should not place undue reliance on these preliminary estimates.
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Cash General and Administrative Expenses per Boe
Our presentation of cash G&A expenses is a non-GAAP measure. We define cash G&A as total G&A determined in accordance with GAAP less non-cash equity compensation expenses, and we may express it on a per Boe basis. We report and provide guidance on cash G&A because we believe this measure is commonly used by management, analysts and investors as an indicator of cost management and operating efficiency on a comparable basis from period to period. In addition, management believes cash G&A is used by analysts and others in valuation, comparison and investment recommendations of companies in the oil and natural gas industry to allow for analysis of G&A spend without regard to stock-based compensation programs which can vary substantially from company to company. Cash G&A should not be considered as an alternative to, or more meaningful than, total G&A as determined in accordance with GAAP and may not be comparable to other similarly titled measures of other companies.
Management Locations
WRD has disclosed a total of 3,207 net horizontal drilling locations in this press release in the proved, probable, and possible categories as audited by CG&A, WRD’s first party engineers, as well as 446 net locations that have been identified by WRD’s management. WRD identified those additional locations using the same methodology as those locations to which probable and possible reserves are attributed—by using existing geologic and engineering data from vertical production and seismic data. Of WRD’s total 3,207 net horizontal drilling locations, 2,761 lie within the geographic areas to which proved, probable and possible reserves are attributed by CG&A. The remaining 446 management identified net horizontal drilling locations are within geographic areas to which proved, probable or possible reserves are not attributed, but nonetheless are locations that WRD has specifically identified based on its evaluation of applicable geologic and engineering data accrued over our multi-year historical drilling activities in the surrounding area. The management location count includes 110 net locations from the Lee County, TX acquisition which closed on March 1, 2018. The locations have been identified by WRD’s management based on its evaluation of applicable geologic and engineering data from historical drilling activities in the surrounding area. The locations on which WRD actually drills wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results and other factors, and may differ from the locations currently identified.
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| Net Locations | CG&A | Management | Total | |||||||||||||
| Locations | Locations | WRD Locations | ||||||||||||||
| June 30, | Dec. 31, | June 30, | Dec. 31, | June 30, | Dec. 31, | |||||||||||
| 2017 | 2017 | 2017 | 2017 | 2017 | 2017 | |||||||||||
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| Eagle Ford |
1,343 | 2,708 | 1,296 | 445 | 2,639 | 3,154 | ||||||||||
| Austin Chalk |
12 | 53 | 0 | 0 | 12 | 53 | ||||||||||
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| Total Locations |
1,355 | 2,761 | 1,296 | 446 | 2,651 | 3,207 | ||||||||||
Use of Non-GAAP Financial Measures
This press release and accompanying schedules include the non-GAAP financial measures of Adjusted EBITDAX, Adjusted Net Income (Loss) available to common stockholders, Cash G&A, and Net Debt. The accompanying appendix and schedules provide a reconciliation of these non-GAAP financial measures to their most directly comparable financial measure calculated and presented in accordance with GAAP. WRD’s non-GAAP financial measures should not be considered as alternatives to GAAP measures such as Net Income, operating income, net cash flows provided by operating activities or any other measure of financial performance calculated and presented in accordance with GAAP. WRD’s non-GAAP financial measures may not be comparable to similarly-titled measures of other companies because they may not calculate such measures in the same manner as WRD does.
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WildHorse Resource Development Corporation
Statements of Condensed Consolidated Operations
| For the Three Months | ||||||||
| Ended March 31, | ||||||||
| (Amounts in $000s except per share data) | 2018 | 2017 | ||||||
| Revenues and other income: |
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| Oil sales |
$ | 182,379 | $ | 39,077 | ||||
| Natural gas sales |
27,630 | 12,145 | ||||||
| NGL sales |
7,448 | 2,663 | ||||||
| Other income |
1,300 | 407 | ||||||
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| Total operating revenues and other income |
218,757 | 54,292 | ||||||
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| Operating Expenses: |
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| Lease operating expenses |
16,427 | 6,928 | ||||||
| Gathering, processing and transportation |
1,352 | 1,700 | ||||||
| Taxes other than income |
11,781 | 3,899 | ||||||
| Depreciation, depletion and amortization |
59,883 | 26,443 | ||||||
| General and administrative expenses |
12,727 | 7,482 | ||||||
| Impairment of NLA disposal group |
214,274 | - | ||||||
| Exploration expense |
1,708 | 1,615 | ||||||
| Other operating (income) expense |
658 | 19 | ||||||
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| Total expenses |
318,810 | 48,086 | ||||||
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| Income (loss) from operations |
(100,053 | ) | 6,206 | |||||
| Other Income (Expense): |
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| Interest expense |
(13,307 | ) | (5,571 | ) | ||||
| Debt extinguishment costs |
- | 11 | ||||||
| Gain (loss) on derivative instruments |
(40,370 | ) | 31,291 | |||||
| Other income (expense) |
(137 | ) | 15 | |||||
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| Total other income (expense) |
(53,814 | ) | 25,746 | |||||
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| Income (loss) before income taxes |
(153,867 | ) | 31,952 | |||||
| Income tax benefit (expense) |
38,093 | (11,700 | ) | |||||
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| |||
| Net Income (loss) |
(115,774 | ) | 20,252 | |||||
|
|
|
|
|
|
| |||
| Preferred stock dividends |
7,389 | - | ||||||
| Undistributed earnings allocated to participating securities |
- | - | ||||||
|
|
|
|
|
|
| |||
| Net income (loss) available to common stockholders |
$ | (123,163 | ) | $ | 20,252 | |||
|
|
|
|
|
|
| |||
| Earnings per share |
||||||||
| Basic |
$ | (1.24 | ) | 0.22 | ||||
| Diluted |
$ | (1.24 | ) | 0.22 | ||||
| Weighted average shares outstanding |
||||||||
| Basic |
99,245 | 93,216 | ||||||
| Diluted |
99,245 | 93,216 | ||||||
12
WildHorse Resource Development Corporation
Statements of Condensed Consolidated Cash Flows
| For the Three Months | ||||||||
| Ended March 31, | ||||||||
|
|
|
| ||||||
| (Amounts in $000s) | 2018 | 2017 | ||||||
|
|
|
|
|
|
| |||
| Cash flows from operating activities: |
||||||||
| Net Income (Loss) |
$ | (115,774 | ) | $ | 20,252 | |||
| Adjustments to reconcile net income (loss) to cash flows provided by operating activities |
||||||||
| Depreciation, depletion and amortization |
59,670 | 26,293 | ||||||
| Accretion of asset retirement obligations |
213 | 150 | ||||||
| Impairment of NLA disposal group |
214,274 | - | ||||||
| Impairments of unproved properties |
1,507 | 683 | ||||||
| Amortization of debt issuance costs |
653 | 838 | ||||||
| Accretion of senior note discount |
140 | 42 | ||||||
| (Gain) loss on derivative instruments |
40,370 | (31,291 | ) | |||||
| Cash settlements on derivative instruments |
(20,546 | ) | (983 | ) | ||||
| Consideration paid to customers, net of amortization |
(424 | ) | - | |||||
| Deferred income tax expense (benefit) |
(38,125 | ) | 11,700 | |||||
| Debt extinguishment expense |
- | (11 | ) | |||||
| Amortization of equity awards |
3,156 | 495 | ||||||
| Changes in operating assets and liabilities |
(27,145 | ) | (349 | ) | ||||
|
|
|
|
|
|
| |||
| Net cash provided by operating activities |
117,969 | 27,819 | ||||||
|
|
|
|
|
|
| |||
| Cash flows from investing activities: |
||||||||
| Net cash used in investing activities |
(132,883 | ) | (65,298 | ) | ||||
|
|
|
|
|
|
| |||
| Cash flows from financing activities: |
||||||||
| Net cash provided by financing activities |
21,705 | 127,572 | ||||||
|
|
|
|
|
|
| |||
| Net change in cash, cash equivalents, and restricted cash |
$ | 6,791 | $ | 90,093 | ||||
| Cash, cash equivalents and restricted cash, beginning of period |
226 | 4,001 | ||||||
|
|
|
|
|
|
| |||
| Cash, cash equivalents and restricted cash, end of period |
$ | 7,017 | $ | 94,094 | ||||
|
|
|
|
|
|
| |||
13
WildHorse Resource Development Corporation
Operating Data
| For the Three Months Ended March 31, |
||||||||
| 2018 | 2017 | |||||||
| Production volumes |
||||||||
| Oil Sales (MBbls) |
2,817 | 783 | ||||||
| Natural Gas Sales (MMcf) |
8,796 | 3,849 | ||||||
| NGL Sales (MBbls) |
432 | 160 | ||||||
|
|
|
|
|
|||||
| Total (Mboe) |
4,715 | 1,584 | ||||||
| Total (Mboe/d) |
52.4 | 17.6 | ||||||
| Average unit costs per boe |
||||||||
| Lease operating expense |
$3.48 | $4.37 | ||||||
| Gathering, processing and transportation |
$0.29 | $1.07 | ||||||
| Taxes other than income |
$2.50 | $2.46 | ||||||
| General and administrative expenses |
$2.70 | $4.72 | ||||||
| Cash General and administrative expenses |
$2.03 | $4.41 | ||||||
| Acquisition-related expenses |
$0.08 | $0.49 | ||||||
14
WildHorse Resource Development Corporation
Condensed Consolidated Balance Sheets
| March 31, | December 31, | |||||||
|
|
|
| ||||||
| (Amounts in $000s) | 2018 | 2017 | ||||||
| ASSETS |
||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 7,017 | $ | 226 | ||||
| Accounts receivable, net |
92,590 | 84,103 | ||||||
| Derivative instruments |
- | 2,336 | ||||||
| Prepaid expenses and other current assets |
5,925 | 3,290 | ||||||
|
|
|
|
|
|
| |||
| Total Current Assets |
105,532 | 89,955 | ||||||
| Property & equipment: |
||||||||
| Oil and natural gas properties |
2,734,096 | 2,999,728 | ||||||
| Other property and equipment |
33,647 | 53,003 | ||||||
| Accumulated depreciation, depletion and impairment |
(280,362 | ) | (368,245 | ) | ||||
|
|
|
|
|
|
| |||
| Total property and equipment, net |
2,487,381 | 2,684,486 | ||||||
| Other noncurrent assets |
||||||||
| Derivative instruments |
- | 86 | ||||||
| Debt issuance costs |
3,875 | 3,573 | ||||||
| Other |
13,140 | - | ||||||
|
|
|
|
|
|
| |||
| Total Assets |
$ | 2,609,928 | $ | 2,778,100 | ||||
|
|
|
|
|
|
| |||
| LIABILITIES AND EQUITY |
||||||||
| Current Liabilities: |
||||||||
| Accounts payable |
$ | 50,849 | $ | 53,005 | ||||
| Accrued liabilities |
159,476 | 199,952 | ||||||
| Short-term derivative instruments |
67,478 | 58,074 | ||||||
|
|
|
|
|
|
| |||
| Total Current Liabilities |
277,803 | 311,031 | ||||||
| Noncurrent Liabilities: |
||||||||
| Long-term debt |
793,686 | 770,596 | ||||||
| Asset retirement obligations |
7,199 | 14,467 | ||||||
| Deferred tax liabilities |
33,412 | 71,470 | ||||||
| Derivative instruments |
22,999 | 18,676 | ||||||
| Other noncurrent liabilities |
980 | 1,085 | ||||||
|
|
|
|
|
|
| |||
| Total liabilities |
1,136,079 | 1,187,325 | ||||||
| Series A Perpetual Convertible Preferred Stock |
446,522 | 445,483 | ||||||
| Stockholders’ equity: |
||||||||
| Common stock |
1,013 | 1,012 | ||||||
| Additional paid-in capital |
1,123,534 | 1,118,507 | ||||||
| Accumulated earnings (deficit) |
(97,220 | ) | 25,773 | |||||
|
|
|
|
|
|
| |||
| Total stockholders’ equity |
1,027,327 | 1,145,292 | ||||||
|
|
|
|
|
|
| |||
| Total Liabilities & Equity |
$ | 2,609,928 | $ | 2,778,100 | ||||
|
|
|
|
|
|
| |||
15
WildHorse Resource Development Corporation
Commodity Hedge Positions
The following table reflects WRD’s hedged volumes and corresponding weighted-average price, as of May 9, 2018:
| Q2 - Q4 ‘18 | 2019 | 2020 | ||||||||||
| Crude Oil Derivative Contracts: |
||||||||||||
| Swap contracts: |
||||||||||||
| Volume (Bbl) |
4,764,565 | 6,652,369 | 4,511,681 | |||||||||
| Weighted-average fixed price |
$52.39 | $54.45 | $53.49 | |||||||||
| Collar contracts: |
||||||||||||
| Volume (Bbl) |
12,208 | - | - | |||||||||
| Weighted-average floor price |
$50.00 | - | - | |||||||||
| Weighted-average ceiling price |
$62.10 | - | - | |||||||||
| Deferred put options |
||||||||||||
| Volume (Bbl) |
2,118,859 | 1,749,757 | - | |||||||||
| Weighted-average floor price |
$50.72 | $53.83 | - | |||||||||
| Weighted-average put premium |
($3.56) | ($5.43) | - | |||||||||
| LLS basis swaps |
||||||||||||
| Volume (Bbl) |
4,763,026 | - | - | |||||||||
| Weighted-average fixed price - WTI to LLS |
$3.03 | - | - | |||||||||
| Natural Gas Derivative Contracts: |
||||||||||||
| Swap contracts: |
||||||||||||
| Volume (MMBtu) |
6,730,332 | 6,425,146 | 4,846,020 | |||||||||
| Weighted-average fixed price |
$2.79 | $2.79 | $2.76 | |||||||||
Calculation of Adjusted EBITDAX:
We evaluate performance based on Adjusted EBITDAX. Adjusted EBITDAX is defined as Net Income (loss), plus interest expense; debt extinguishment costs; income tax expense; depreciation, depletion and amortization; impairment of goodwill and long-lived properties; accretion of asset retirement obligations; losses on commodity derivative contracts and cash settlements received; losses on sale of properties; stock-based compensation; incentive-based compensation expenses; exploration costs; provision for environmental remediation; transaction related costs; IPO related expenses; the North Louisiana settlement, and other non-routine items, less interest income; income tax benefit; gains on commodity derivative contracts and cash settlements paid; gains on sale of assets and other non-routine items. The following table presents WRD’s information for the periods indicated:
16
Adjusted EBITDAX
| For the Three Months Ended March 31, | ||||||||
| (Amounts in $000s) |
2018 | 2017 | ||||||
|
|
|
|
|
|
| |||
| Net Income (Loss) |
$ | (115,774 | ) | $ | 20,252 | |||
| Add (Deduct): |
||||||||
| Interest expense, net |
13,307 | 5,571 | ||||||
| Income tax (benefit) expense |
(38,093 | ) | 11,700 | |||||
| Depreciation, depletion and amortization |
59,883 | 26,443 | ||||||
| Impairment of NLA disposal group |
214,274 | - | ||||||
| Exploration expense |
1,708 | 1,615 | ||||||
| (Gain) loss on derivative instruments |
40,370 | (31,291 | ) | |||||
| Cash settlements received / (paid) on commodity derivatives |
(20,546 | ) | (983 | ) | ||||
| Stock-based compensation |
3,156 | 495 | ||||||
| Acquisition related costs |
359 | 599 | ||||||
| Debt Extinguishment costs |
- | (11 | ) | |||||
| Initial public offering costs |
- | 182 | ||||||
| Gain (loss) on sale of properties |
- | - | ||||||
|
|
|
|
|
|
| |||
| Adjusted EBITDAX |
$ | 158,644 | $ | 34,572 | ||||
|
|
|
|
|
|
| |||
Calculation of Adjusted Net Income (Loss) Available to Common Stockholders:
Adjusted Net Income (Loss) available to common stockholders is a supplemental non-GAAP financial measure that is used by external users of WRD’s financial statements. We define Adjusted Net Income (Loss) available to common stockholders as Net Income (Loss) available to common stockholders excluding the impact of certain items including gains or losses on commodity derivative instruments not yet settled, gains or losses on sales of properties, debt extinguishment costs, stock-based compensation, incentive-unit compensation expense, impairment-related expenses, the tax benefit related to the Tax Cuts and Jobs Act, the North Louisiana settlement, and the tax effects related to these adjustments. We believe Adjusted Net Income (Loss) available to common stockholders is useful to investors because it provides readers with a more meaningful measure of our profitability before recording certain items for which the timing or amount cannot be reasonably determined. However, this measure is provided in addition to, not as an alternative for, and should be read in conjunction with, the information contained in our financial statements prepared in accordance with GAAP. The following table provides a reconciliation of Net Income (Loss) available to common stockholders as determined in accordance with GAAP to Adjusted Net Income (Loss) available to common stockholders for the periods indicated:
17
Adjusted Net Income (Loss) available to common stockholders
| For the Three Months Ended March 31, 2018 | ||||||||
| (Amounts in $000s) | (Basic / Diluted EPS) | |||||||
| Net Income (Loss) available to common stockholders |
$ | (123,163 | ) | ($1.24 | ) | |||
| Add (Deduct) |
||||||||
| (Gain) loss on derivative instruments |
40,370 | 0.41 | ||||||
| Cash settlements received / (paid) on commodity derivatives |
(20,546 | ) | (0.21 | ) | ||||
| Stock-based compensation |
3,156 | 0.03 | ||||||
| Impairment of oil and gas properties |
- | - | ||||||
| Impairment of NLA disposal group |
214,274 | 2.16 | ||||||
| Debt extinguishment costs |
- | - | ||||||
|
|
|
|
|
|
| |||
| Adjusted income (loss) before tax effect |
114,091 | 1.15 | ||||||
| Tax effect related to adjustments |
(54,249 | ) | (0.55 | ) | ||||
|
|
|
|
|
|
| |||
| Adjusted income (loss) after tax effect |
59,842 | 0.60 | ||||||
|
|
|
|
|
|
| |||
| Preferred stock dividend |
7,389 | 0.08 | ||||||
| Undistributed earnings allocated to participating securities |
- | - | ||||||
|
|
|
|
|
|
| |||
| Adjusted net income (loss) |
67,231 | 0.68 | ||||||
| Preferred stock dividend |
(7,389 | ) | (0.08 | ) | ||||
| Undistributed adjusted earnings allocated to participating securities |
(15,369 | ) | (0.15 | ) | ||||
|
|
|
|
|
|
| |||
| Adjusted net income (loss) available to common shareholders |
$ | 44,473 | $0.45 | |||||
|
|
|
|
|
|
| |||
| Weighted average basic and diluted shares outstanding |
99,245 | |||||||
Calculation of Net Debt:
Net Debt is a supplemental non-GAAP financial measure that is used by external users of WRD’s financial statements. We define Net Debt as total debt minus cash and cash equivalents. We believe Net Debt is useful to investors because it provides readers with a more meaningful measure of our outstanding indebtedness. However, this measure is provided in addition to, not as an alternative for, and should be read in conjunction with, the information contained in our financial statements prepared in accordance with GAAP.
GP&T Revenue Recognition Reconciliation – First Quarter 2018
The table below reconciles gathering, processing and transportation expense to the reporting convention prior to the implementation of the new FASB revenue recognition standard on January 1, 2018 (ASC 606, Revenue from Contracts with Customers). For additional information on the GP&T reconciliation and the new revenue recognition standard, see the Management’s Discussion & Analysis section of WRD’s first quarter 2018 10-Q to be filed on or before May 15, 2018.
18
| Prior Reporting | Variance | New FASB Revenue Recognition Standard |
Guidance (prior reporting) |
|||||||||||||
| Revenues: |
||||||||||||||||
| Gas revenue |
$28,435 | ($805) | $27,630 | |||||||||||||
| NGL revenue |
$9,413 | ($1,965) | $7,448 | |||||||||||||
| Other Income |
$1,166 | $134 | $1,300 | |||||||||||||
| Natural gas price realization (% of Henry Hub) |
108% | -3% | 105% | 90% - 94% | ||||||||||||
| NGL price realization (% of WTI) |
35% | -8% | 27% | 33% - 37% | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Lease operating expenses |
$16,433 | ($6) | $16,427 | |||||||||||||
| GP&T expense |
$4,103 | ($2,751) | $1,352 | |||||||||||||
| Depreciation, depletion, and amortization |
$60,016 | ($133) | $59,883 | |||||||||||||
| Other operating (income) expense |
$518 | $140 | $658 | |||||||||||||
| GP&T per boe |
$0.87 | ($0.58) | $0.29 | $1.10 - $1.40 | ||||||||||||
Contact:
WildHorse Resource Development Corporation
Pearce Hammond, CFA (713) 255-7094
Vice President, Investor Relations
19