Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - BATTALION OIL CORP | d390481d8k.htm |
Exhibit 99.1
|
NEWS RELEASE |
Halcón Resources Announces Second Quarter 2012 Financial and Operational Results
Company Reports Two Multi-Zone Wildcat Discoveries
HOUSTON, TEXAS – August 2, 2012 – Halcón Resources Corporation (NYSE:HK) (“Halcón” or the “Company”) today announced its second quarter 2012 financial and operational results.
Halcón reported net income for the quarter of $2.8 million, or $0.02 per diluted share, after adjusting for selected items (primarily related to the non-cash impact of derivatives, acquisition and merger transaction costs and the amortization of the non-cash preferred dividend as a result of the beneficial conversion feature of the convertible preferred stock) compared to net income of $2.3 million, or $0.09 per diluted share in the comparable quarter of 2011 (see Selected Item Review and Reconciliation table for additional information). Before adjusting for selected items, the Company reported a net loss available to common stockholders of $79.7 million, or $0.59 per diluted share for the quarter.
The Company produced an average of 3,912 barrels of oil equivalent per day (Boe/d) during the quarter, 73% of which was oil and natural gas liquids (NGLs). Revenues for the three months ended June 30, 2012 decreased to $23.3 million, compared to $28.2 million for the three months ended June 30, 2011, as a result of lower realized average prices and production volumes. Before the effect of derivatives, Halcón realized an average price of $92.23 per barrel (Bbl) of oil, $42.71 per Bbl of NGLs and $2.12 per million cubic feet (Mcf) of natural gas during the second quarter of 2012. Taking into account the effect of derivatives, the Company realized an average price of $93.36 per Bbl of oil and $3.46 per Mcf of natural gas. Halcón did not hedge NGLs during the quarter.
Cash operating costs per unit (including lease operating expense, workover expense, taxes other than income and general and administrative expense), after adjusting for selected items, were $54.73 per barrel of oil equivalent (Boe) for the three months ended June 30, 2012, compared to $35.76 per Boe for the same period of 2011. Lease operating expense was $24.33 per Boe versus $20.56 per Boe in the second quarter of 2011, mainly due to higher service costs and repairs in the Company’s Electra/Burkburnett field in North Texas and increased employee
costs. Workover expense was $1.52 per Boe compared to $0.95 per Boe for the three months ended June 30, 2011. Taxes other than income decreased to $3.80 per Boe during the quarter, compared to $3.89 per Boe in the same period of 2011. The Company’s efforts to expand its platform for future growth resulted in an increase of general and administrative expense to $25.08 per Boe, excluding selected items, compared to $10.36 per Boe for the same period of 2011 (see Selected Operating Data table for additional information).
Floyd C. Wilson, Chairman and Chief Executive Officer stated, “The second quarter marks the last of our “RAM Energy only” quarters. We have made significant strides towards our goal of building a liquids-rich asset base with substantial drilling inventory. The transition from the leasehold acquisition phase to the drilling phase has begun. We will be in a position to discuss additional well results from all of our activities in the coming months.”
Liquidity and Capitalization
As of June 30, 2012, the Company had liquidity of $444.2 million, which consisted of $219.2 million in cash and $225.0 million of borrowing capacity available on its $500.0 million senior revolving credit facility.
Halcón closed $750 million aggregate principal amount of senior unsecured notes due 2020 into escrow on July 16, 2012, the net proceeds of approximately $725 million have since been released and used to fund the cash portion of the GeoResources, Inc. (“GeoResources”) acquisition and to partially fund the cash consideration of the acquisition of assets in East Texas (“East Texas Assets”).
Concurrent with the closings of the GeoResources and East Texas Assets acquisitions, the borrowing base on the Company’s senior revolving credit facility has been increased to $525 million.
Midway/Navarro
Halcón today identifies the Midway/Navarro formations in Austin and Colorado Counties, Texas as one of its previously undisclosed liquids-rich exploratory plays. This play will initially be drilled vertically and completed using modern completion techniques.
The Kollatschny 1 well was drilled to a total measured depth of 17,320 feet in Austin County, Texas. Based on encouraging drilling results, the Company believes the well to be a two zone discovery in the Midway and Navarro formations. Halcón has commenced completion operations in the lower-most Navarro zone. A second well, the Hillboldt 1, was recently spud. The Company anticipates building a position of 25,000 to 75,000 net acres in the play and expects to utilize one rig to spud four to six wells in 2012. Halcón has initiated a 68 square mile 3D seismic survey in the area.
Woodbine/Eagle Ford
During the quarter, Halcón spud the Covington 1H in Grimes County, Texas. Based on encouraging drilling results, the Company believes the well to be a two zone discovery in the Woodbine and Eagle Ford formations. A lateral is currently being drilled in the Woodbine and completion operations are expected to begin in late August. Halcón intends to drill an Eagle Ford only well near the location of the Covington 1H as soon as possible.
On a pro forma basis, including the recently closed East Texas Assets acquisition, the Company averaged two rigs during the second quarter and spud three wells on its East Texas acreage prospective for the Woodbine, Eagle Ford and other formations.
There are currently 14 wells producing, 1 well waiting on completion and 1 well being drilled. The most recently completed well, the Gilbert Gresham 1H in Leon County, Texas, was drilled to a total measured depth of 14,203 feet and includes a 6,909 foot lateral. The well was completed with 24 fracture stages and was recently put on production. The AM Easterling-Gresham A 1H in Leon County, Texas has been drilled to a total measured depth of 14,274 feet and includes a 6,752 foot lateral in the Woodbine. This well is scheduled to be completed by the end of August. The Company expects to spud its next well, the Keeling 1H, in Leon County, Texas by the end of the week.
Bakken
On a pro forma basis to include the acquisition of GeoResources, the Company averaged two rigs and spud seven wells on its operated acreage in Williams County, North Dakota during the second quarter. A third rig was added in early June to drill two operated wells in Eastern Montana.
Currently there are 22 wells producing, 4 wells flowing back, 3 wells waiting on completion and 3 wells being drilled on Halcón’s operated acreage. The Company plans to continue running three rigs in the Williston Basin for the remainder of 2012. Recent operated wells continue to perform in-line with the company’s 310,000 Boe type curve while costs have remained below $8.0 million per well.
In addition, the Company participated in 14 non-operated wells in Mountrail County, North Dakota and 6 non-operated wells in Williams County, North Dakota during the quarter ended June 30, 2012.
Mississippi Lime
The Company utilized one rig to drill three of five planned wells in Osage County, Oklahoma during the second quarter. Three of four planned salt water disposal wells were also drilled in the quarter. Subsequent to June 30, 2012, the fourth and fifth wells were drilled and a fourth salt water disposal well was also drilled. Halcón has completed two of the five wells and expects to complete the remaining three wells by early September. The Company intends to evaluate results from all five wells for approximately 30-60 days before recommencing drilling operations.
Eagle Ford
Pro forma to include the GeoResources acquisition, the Company averaged two rigs and spud five operated wells in Fayette and Gonzales Counties, Texas during the three months ended June 30, 2012.
There are currently 12 wells producing, 2 wells being completed, 4 wells waiting on completion and 2 wells being drilled in the Eagle Ford project area. Due to improved completion techniques, the most recent wells continue to perform significantly above the Company’s 325,000 Boe per well type curve.
Due to a non-compete agreement, Halcón’s 24,000 net acre Eagle Ford position will be divested. The Company expects to open a data room during the third quarter of 2012 with the intent to complete the sale before the end of 2012.
Outlook
Halcón is reaffirming the following previously disclosed production guidance:
| 3Q12E | 4Q12E | Full Year 2012E |
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| Production (Boe/d) |
||||||||||||
| Low |
11,000 | 17,000 | 9,000 | |||||||||
| High |
13,000 | 20,000 | 11,000 | |||||||||
| % Oil |
60 | % | ||||||||||
| % NGLs |
15 | % | ||||||||||
| % Gas |
25 | % | ||||||||||
Note: Production guidance is provided on an SEC accounting basis and includes the GeoResources and East Texas Assets acquisitions as of August 1, 2012.
On a pro forma basis, average daily production for the second quarter of 2012 was approximately 14,900 Boe/d, which represents 10% growth compared to the first quarter of 2012.
Conference Call and Webcast Information
Halcón Resources Corporation (NYSE:HK) has scheduled a conference call for Thursday, August 2, 2012, at 10:00 a.m. EDT (9:00 a.m. CDT). To participate in the conference call, dial (877) 810-3368 for domestic callers, and (914) 495-8561 for international callers a few minutes before the call begins and reference Halcón Resources conference ID 99829597. The conference call will also be webcast live over the Internet on Halcón Resources’ website at http://www.halconresources.com in the Investor Relations section under Events & Presentations. A telephonic replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until August 9, 2012. To access the replay, dial (855) 859-2056 for domestic callers or (404) 537-3406 for international callers, in both cases referencing conference ID 99829597.
About Halcón Resources
Halcón Resources Corporation is an independent energy company engaged in the acquisition, production, exploration and development of onshore oil and natural gas properties in the United States.
For more information contact Scott Zuehlke, Vice President of Investor Relations, at 832-538-0314 or szuehlke@halconresources.com.
Forward-Looking Statements
This release may contain 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. Statements that are not strictly historical statements constitute forward-looking statements and may often, but not always, be identified by the use of such words such as “expects”, “believes”, “intends”, “anticipates”, “plans”, “estimates”, “potential”, “possible”, or “probable” or statements that certain actions, events or results “may”, “will”, “should”, or “could” be taken, occur or be achieved. Forward-looking statements are based on current beliefs and expectations and involve certain assumptions or estimates that involve various risks and uncertainties that could cause actual results to differ materially from those reflected in the statements. These risks include, but are not limited to, those set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, Form 10-Q for the quarter ended June 30, 2012 and other filings submitted by the Company to the U.S. Securities and Exchange Commission (“SEC”), copies of which may be obtained from the SEC’s website at www.sec.gov or through the Company’s website at www.halconresources.com. Readers should not place undue reliance on any such forward-looking statements, which are made only as of the date hereof. The Company has no duty, and assumes no obligation, to update forward-looking statements as a result of new information, future events or changes in the Company’s expectations.
HALCÓN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Operating revenues: |
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| Oil and natural gas sales |
||||||||||||||||
| Oil |
$ | 20,383 | $ | 22,783 | $ | 43,380 | $ | 43,195 | ||||||||
| Natural gas |
1,240 | 2,812 | 2,908 | 5,704 | ||||||||||||
| NGLs |
1,623 | 2,523 | 3,792 | 4,938 | ||||||||||||
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| Total oil and natural gas sales |
23,246 | 28,118 | 50,080 | 53,837 | ||||||||||||
| Other |
35 | 34 | 71 | 85 | ||||||||||||
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| Total operating revenues |
23,281 | 28,152 | 50,151 | 53,922 | ||||||||||||
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| Operating expenses: |
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| Production: |
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| Lease operating |
8,663 | 7,812 | 16,610 | 15,653 | ||||||||||||
| Workover |
540 | 362 | 1,261 | 896 | ||||||||||||
| Taxes |
1,352 | 1,478 | 2,922 | 2,889 | ||||||||||||
| Restructuring |
903 | — | 1,007 | — | ||||||||||||
| General and administrative |
13,087 | 4,621 | 33,421 | 9,168 | ||||||||||||
| Depletion, depreciation and accretion |
5,956 | 5,608 | 11,935 | 11,283 | ||||||||||||
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| Total operating expenses |
30,501 | 19,881 | 67,156 | 39,889 | ||||||||||||
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| Income (loss) from operations |
(7,220 | ) | 8,271 | (17,005 | ) | 14,033 | ||||||||||
| Other income (expenses): |
||||||||||||||||
| Net gain (loss) on derivative contracts |
13,671 | 8,268 | 8,726 | (5,982 | ) | |||||||||||
| Interest expense and other, net |
(4,179 | ) | (4,361 | ) | (17,176 | ) | (10,863 | ) | ||||||||
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| Total other income (expenses) |
9,492 | 3,907 | (8,450 | ) | (16,845 | ) | ||||||||||
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| Income (loss) before income taxes |
2,272 | 12,178 | (25,455 | ) | (2,812 | ) | ||||||||||
| Income tax provision (benefit) |
(5,387 | ) | 3,242 | 208 | (1,837 | ) | ||||||||||
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| Net income (loss) |
7,659 | 8,936 | (25,663 | ) | (975 | ) | ||||||||||
| Non-cash preferred dividend |
(87,343 | ) | — | (88,445 | ) | — | ||||||||||
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| Net income (loss) available to common stockholders |
$ | (79,684 | ) | $ | 8,936 | $ | (114,108 | ) | $ | (975 | ) | |||||
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| Net income (loss) per common share: |
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| Basic |
$ | (0.59 | ) | $ | 0.34 | $ | (1.11 | ) | $ | (0.04 | ) | |||||
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| Diluted |
$ | (0.59 | ) | $ | 0.34 | $ | (1.11 | ) | $ | (0.04 | ) | |||||
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| Weighted average common shares outstanding: |
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| Basic |
136,066 | 26,278 | 102,441 | 26,199 | ||||||||||||
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| Diluted |
136,066 | 26,278 | 102,441 | 26,199 | ||||||||||||
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HALCÓN RESOURCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share and per share amounts)
| June 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| Current assets: |
||||||||
| Cash |
$ | 219,208 | $ | 49 | ||||
| Accounts receivable |
9,340 | 10,288 | ||||||
| Receivables from derivative contracts |
4,507 | 260 | ||||||
| Deferred income taxes |
2,161 | 2,601 | ||||||
| Inventory |
4,477 | 4,310 | ||||||
| Prepaids and other |
2,513 | 2,729 | ||||||
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| Total current assets |
242,206 | 20,237 | ||||||
| Oil and natural gas properties (full cost method): |
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| Evaluated |
734,551 | 715,666 | ||||||
| Unevaluated |
461,620 | — | ||||||
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| Gross oil and natural gas properties |
1,196,171 | 715,666 | ||||||
| Less—accumulated depletion and impairment |
(512,538 | ) | (501,993 | ) | ||||
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| Net oil and natural gas properties |
683,633 | 213,673 | ||||||
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| Other operating property and equipment: |
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| Other operating assets and equipment |
12,825 | 9,979 | ||||||
| Less—accumulated depreciation |
(6,963 | ) | (7,133 | ) | ||||
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| Net other operating property and equipment |
5,862 | 2,846 | ||||||
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| Other noncurrent assets: |
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| Receivables from derivative contracts |
2,719 | — | ||||||
| Debt issuance costs, net of amortization |
5,525 | 5,966 | ||||||
| Deferred income taxes |
24,405 | 24,102 | ||||||
| Funds in escrow |
29,945 | 560 | ||||||
| Other |
491 | 418 | ||||||
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| Total assets |
$ | 994,786 | $ | 267,802 | ||||
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| Current liabilities: |
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| Accounts payable and accrued liabilities |
$ | 36,774 | $ | 25,061 | ||||
| Liabilities from derivative contracts |
— | 265 | ||||||
| Asset retirement obligations |
1,446 | 1,010 | ||||||
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| Total current liabilities |
38,220 | 26,336 | ||||||
| Long-term debt |
242,579 | 202,000 | ||||||
| Other noncurrent liabilities: |
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| Liabilities from derivative contracts |
— | 805 | ||||||
| Asset retirement obligations |
33,088 | 32,703 | ||||||
| Other |
10 | 10 | ||||||
| Commitments and contingencies |
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| Stockholders’ equity: |
||||||||
| Preferred stock: 1,000,000 shares of $0.0001 par value authorized; no shares issued or outstanding |
— | — | ||||||
| Common stock: 336,666,666 and 33,333,333 shares of $0.0001 par value authorized; 145,681,457 and 145,681,457 and 27,694,583 shares issued; 144,031,546 and 26,244,452 outstanding at June 30, 2012 and June 30, 2012 and December 31, 2011, respectively |
15 | 3 | ||||||
| Additional paid-in capital |
932,145 | 229,414 | ||||||
| Treasury stock: 1,649,911 and 1,450,131 shares at June 30, 2012 and December 31, 2011, respectively, at cost |
(9,298 | ) | (7,159 | ) | ||||
| Accumulated deficit |
(241,973 | ) | (216,310 | ) | ||||
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| Total stockholders’ equity |
680,889 | 5,948 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 994,786 | $ | 267,802 | ||||
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HALCÓN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
| Three Months Ended June 30, |
Six Months Ended June 30, |
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Cash flows from operating activities: |
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| Net income (loss) |
$ | 7,659 | $ | 8,936 | $ | (25,663 | ) | $ | (975 | ) | ||||||
| Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: |
||||||||||||||||
| Depletion, depreciation and accretion |
5,956 | 5,608 | 11,935 | 11,283 | ||||||||||||
| Deferred income tax provision (benefit) |
(5,386 | ) | 3,187 | 136 | (1,953 | ) | ||||||||||
| Share-based compensation |
530 | 686 | 2,465 | 1,355 | ||||||||||||
| Unrealized gain (loss) on derivatives contracts |
(12,887 | ) | (10,100 | ) | (8,036 | ) | 5,892 | |||||||||
| Amortization and write-off of deferred loan costs |
212 | 328 | 6,299 | 2,990 | ||||||||||||
| Non-cash interest and amortization of discount |
3,668 | — | 7,733 | 362 | ||||||||||||
| Other income |
(5 | ) | (5 | ) | (17 | ) | (22 | ) | ||||||||
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| Cash flow from operations before changes in working capital |
(253 | ) | 8,640 | (5,148 | ) | 18,932 | ||||||||||
| Changes in working capital |
6,744 | 199 | 2,440 | (5,889 | ) | |||||||||||
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| Net cash provided by (used in) operating activities |
6,491 | 8,839 | (2,708 | ) | 13,043 | |||||||||||
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| Cash flows from investing activities: |
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| Evaluated oil and natural gas capital expenditures |
(7,448 | ) | (7,880 | ) | (14,996 | ) | (13,500 | ) | ||||||||
| Unevaluated oil and natural gas capital expenditures |
(436,763 | ) | — | (453,201 | ) | — | ||||||||||
| Other operating property and equipment capital expenditures |
(2,944 | ) | (250 | ) | (3,573 | ) | (469 | ) | ||||||||
| Proceeds received from sales of property and equipment |
333 | — | 346 | 473 | ||||||||||||
| Funds held in escrow |
(25,609 | ) | — | (29,385 | ) | — | ||||||||||
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| Net cash used in investing activities |
(472,431 | ) | (8,130 | ) | (500,809 | ) | (13,496 | ) | ||||||||
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| Cash flows from financing activities: |
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| Proceeds from borrowings |
— | 7,102 | 237,410 | 231,166 | ||||||||||||
| Repayments of borrowings |
— | (7,043 | ) | (208,000 | ) | (223,185 | ) | |||||||||
| Debt issuance costs |
(558 | ) | (291 | ) | (5,053 | ) | (7,003 | ) | ||||||||
| Offering costs |
(77 | ) | — | (18,133 | ) | — | ||||||||||
| Common stock repurchased |
— | (65 | ) | (2,139 | ) | (108 | ) | |||||||||
| Preferred stock issued |
— | — | 311,556 | — | ||||||||||||
| Preferred beneficial conversion feature |
— | — | 88,445 | — | ||||||||||||
| Common stock issued |
— | — | 275,000 | — | ||||||||||||
| Warrants issued |
— | — | 43,590 | — | ||||||||||||
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| Net cash provided by (used in) financing activities |
(635 | ) | (297 | ) | 722,676 | 870 | ||||||||||
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| Net increase (decrease) in cash |
(466,575 | ) | 412 | 219,159 | 417 | |||||||||||
| Cash at beginning of period |
685,783 | 42 | 49 | 37 | ||||||||||||
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| Cash at end of period |
$ | 219,208 | $ | 454 | $ | 219,208 | $ | 454 | ||||||||
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| Supplemental cash flow information: |
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| Cash paid for income taxes |
$ | 199 | $ | 504 | $ | 199 | $ | 481 | ||||||||
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| Cash paid for interest |
$ | 129 | $ | 3,351 | $ | 3,445 | $ | 8,706 | ||||||||
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| Disclosure of non-cash investing and financing activities: |
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| Asset retirement obligations |
$ | (1 | ) | $ | (134 | ) | $ | 46 | $ | (129 | ) | |||||
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| Preferred dividend |
$ | 87,343 | $ | — | $ | 88,445 | $ | — | ||||||||
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| Payment-in-kind interest |
$ | 5,626 | $ | — | $ | 8,865 | $ | 362 | ||||||||
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HALCÓN RESOURCES CORPORATION
SELECTED OPERATING DATA
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Production volumes: |
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| Oil (MBbls) |
221 | 226 | 447 | 448 | ||||||||||||
| NGLs (MBbls) |
38 | 44 | 78 | 91 | ||||||||||||
| Natural gas (MMcf) |
584 | 660 | 1,199 | 1,370 | ||||||||||||
| Total (Mboe) |
356 | 380 | 725 | 767 | ||||||||||||
| Average daily production (Boe) |
3,912 | 4,176 | 3,984 | 4,238 | ||||||||||||
| Average prices: |
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| Oil (per Bbl) |
$ | 92.23 | $ | 100.81 | $ | 97.05 | $ | 96.42 | ||||||||
| NGLs (per Bbl) |
42.71 | 57.34 | 48.62 | 54.26 | ||||||||||||
| Natural gas (per Mcf) |
2.12 | 4.26 | 2.43 | 4.16 | ||||||||||||
| Total per Boe |
65.30 | 73.99 | 69.08 | 70.19 | ||||||||||||
| Cash effect of derivative contracts: |
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| Oil (per Bbl) |
$ | 1.13 | ($ | 8.65 | ) | $ | 0.25 | ($ | 6.63 | ) | ||||||
| NGLs (per Bbl) |
— | — | — | — | ||||||||||||
| Natural gas (per Mcf) |
1.34 | (0.22 | ) | 1.25 | 1.25 | |||||||||||
| Total per Boe |
2.90 | (5.52 | ) | 2.22 | (1.65 | ) | ||||||||||
| Average prices computed after cash effect of settlement of derivative contracts: |
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| Oil (per Bbl) |
$ | 93.36 | $ | 92.16 | $ | 97.30 | $ | 89.79 | ||||||||
| NGLs (per Bbl) |
42.71 | 57.34 | 48.62 | 54.26 | ||||||||||||
| Natural gas (per Mcf) |
3.46 | 4.04 | 3.68 | 5.41 | ||||||||||||
| Total per Boe |
68.20 | 68.47 | 71.30 | 68.54 | ||||||||||||
| Average cost per Boe: |
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| Production: |
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| Lease operating |
$ | 24.33 | $ | 20.56 | $ | 22.91 | $ | 20.41 | ||||||||
| Workover |
1.52 | 0.95 | 1.74 | 1.17 | ||||||||||||
| Taxes |
3.80 | 3.89 | 4.03 | 3.77 | ||||||||||||
| General and administrative: |
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| General and administrative |
25.08 | 10.36 | 22.48 | 10.19 | ||||||||||||
| Share-based compensation |
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| Cash |
— | — | 0.50 | — | ||||||||||||
| Non-cash |
1.49 | 1.81 | (0.03 | ) | 1.77 | |||||||||||
| Recapitalization and change in control |
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| Cash |
(0.02 | ) | — | 14.70 | — | |||||||||||
| Non-cash |
— | — | 3.43 | — | ||||||||||||
| Acquisition and merger transaction costs |
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| Cash |
10.22 | — | 5.02 | — | ||||||||||||
| Restructuring costs |
2.54 | — | 1.39 | — | ||||||||||||
| Depletion |
14.56 | 13.01 | 14.54 | 13.00 | ||||||||||||
HALCÓN RESOURCES CORPORATION
SELECTED ITEM REVIEW AND RECONCILIATION (Unaudited)
(In thousands, except per share amounts)
| Three Months Ended June 30, |
Six Months Ended June 30, |
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Unrealized loss (gain) on derivatives:(1) |
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| Crude oil |
$ | (13,620 | ) | $ | (10,508 | ) | $ | (8,046 | ) | $ | 2,727 | |||||
| Natural gas |
982 | (220 | ) | 870 | 1,498 | |||||||||||
| Interest rate |
— | 296 | (518 | ) | 418 | |||||||||||
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| Total mark-to-market non-cash charge |
(12,638 | ) | (10,432 | ) | (7,694 | ) | 4,643 | |||||||||
| Recapitalization expenditures(2) |
513 | — | 21,980 | 2,718 | ||||||||||||
| Restructuring(3) |
903 | — | 1,007 | — | ||||||||||||
| Acquisition and merger transaction costs(4) |
3,639 | — | 3,639 | — | ||||||||||||
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| Selected items, before income taxes and preferred dividend |
(7,583 | ) | (10,432 | ) | 18,932 | 7,361 | ||||||||||
| Income tax effect of selected items(5) |
2,753 | 3,787 | (6,872 | ) | (2,672 | ) | ||||||||||
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| Selected items, net of tax and before preferred dividend |
(4,830 | ) | (6,645 | ) | 12,060 | 4,689 | ||||||||||
| Non-cash preferred dividend(6) |
87,343 | — | 88,445 | — | ||||||||||||
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| Total selected items |
82,513 | (6,645 | ) | 100,505 | 4,689 | |||||||||||
| Net income (loss) available to common, as reported |
(79,684 | ) | 8,936 | (114,108 | ) | (975 | ) | |||||||||
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| Net income (loss) available to common, excluding selected items |
$ | 2,829 | $ | 2,291 | $ | (13,603 | ) | $ | 3,714 | |||||||
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| Basic net income (loss) per common share, as reported |
$ | (0.59 | ) | $ | 0.34 | $ | (1.11 | ) | $ | (0.04 | ) | |||||
| Impact of selected items |
0.61 | (0.25 | ) | 0.98 | 0.18 | |||||||||||
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| Basic net income (loss) per common share, excluding selected items |
$ | 0.02 | $ | 0.09 | $ | (0.13 | ) | $ | 0.14 | |||||||
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| Diluted net income (loss) per common share, as reported |
$ | (0.59 | ) | $ | 0.34 | $ | (1.11 | ) | $ | (0.04 | ) | |||||
| Impact of selected items |
0.61 | (0.25 | ) | 0.98 | 0.18 | |||||||||||
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| Diluted net income (loss) per common share, excluding selected items |
$ | 0.02 | $ | 0.09 | $ | (0.13 | ) | $ | 0.14 | |||||||
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| (1) | Represents the non-cash unrealized loss (gain) associated with the mark-to-market valuation of outstanding derivative contracts. |
| (2) | Represents costs related to the recapitalization, change in control and credit facility refinancing. |
| (3) | Represents costs related to relocating key administrative functions to corporate headquarters. |
| (4) | Represents costs related to acquisitions of producing properties and mergers. |
| (5) | Represents tax impact using a normalized tax rate of 36.3%. |
| (6) | Represents amortization of the non-cash preferred dividend as a result of the beneficial conversion feature of convertible preferred stock. |