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| 8-K - FORM 8-K EARNINGS RELEASE Q1 2017 - ROAN RESOURCES, INC. | form8-kq12017earningsrelea.htm |
Exhibit 99.1
LINN ENERGY REPORTS FIRST-QUARTER 2017 RESULTS
HOUSTON, May 11, 2017 – LINN Energy, Inc. (OTCQB: LNGG) (“LINN” or the “Company”) announced today financial and operating results for the first quarter of 2017 and provided updated guidance for the second quarter and full-year 2017.
The Company highlights the following:
• | Successfully emerged from restructuring and reduced total debt to $834 million as of March 31, 2017 |
• | Entered into a definitive agreement to sell the Jonah and Pinedale assets in Wyoming for $581.5 million |
• | Commenced trading on OTCQB market under ticker symbol LNGG |
• | Average daily production of 779 MMcfe/d, exceeding midpoint of production guidance |
• | Merge horizontal net production increased to 8,000 BOE/d at the end of first quarter and added a second rig |
• | LINN’s midstream business in the Merge is now processing ~40 MMcf/d from the Chisholm Trail refrigeration facility |
• | Approved the construction of the Chisholm Trail cryogenic plant with a designed capacity of 250 MMcf/d |
• | G&A expenses were lower than guidance and the Company continues to improve its cost structure |
“We continue to work hand-in-hand with the new board to identify and execute on strategic opportunities to maximize value,” said Mark E. Ellis, President and Chief Executive Officer. “As previously announced, we entered into an agreement to divest of our Jonah and Pinedale assets for $581.5 million. This represents the first step in our transition to a growth-oriented E&P company. We are aggressively pursuing higher return opportunities in the SCOOP / STACK / Merge play where we are increasing rig activity and building out our midstream business. In addition, we are pursuing other emerging horizontal plays in the Mid-Continent, Rockies, North Louisiana and East Texas. In 2017, we plan to test horizontal potential in each of these areas. Our employees are the key driver to unlocking value from these opportunities and I would like to thank them for their commitment to the Company’s success.”
Key Financial Results
First Quarter | ||||||||
$ in millions, except per unit amounts | 2017 (1) | 2016 (2) | ||||||
Average daily production (MMcfe/d) | 779 | 858 | ||||||
Total revenues | $ | 393 | $ | 347 | ||||
Total assets | $ | 3,645 | $ | 9,439 | (4) | |||
Net income (loss) | $ | 2,390 | $ | (1,348 | ) | |||
Adjusted EBITDAX (a non-GAAP financial measure) | $ | 128 | $ | 335 | ||||
Total debt | $ | 834 | $ | 8,170 | ||||
Total debt / Adjusted EBITDAX (3) | 1.63x | 6.10x | ||||||
Net cash provided by (used in) operating activities | $ | (3 | ) | (5) | $ | 270 | ||
Oil and natural gas capital | $ | 57 | $ | 24 | ||||
Total capital | $ | 65 | $ | 28 | ||||
(1) | All amounts reflect the combined results of the one month ended March 31, 2017 (successor) and the two months ended February 28, 2017 (predecessor) |
(2) | All amounts reflect continuing operations with the exception of total assets and net loss for 2016 |
(3) | Annualized |
(4) | Includes Berry assets of $2,772 million |
(5) | Includes funding of professional fees escrow account and general unsecured claims cash distribution pool of approximately $80 million recorded to restricted cash |
Signed Agreement to Sell Jonah and Pinedale Assets for $581.5 Million
As previously announced, the Company signed a definitive agreement to sell its interests in the Jonah and Pinedale Anticline fields located in western Wyoming to Jonah Energy LLC for a contract price of $581.5 million. The transaction is expected to close in the second quarter of 2017 and is subject to satisfactory completion of title and environmental due diligence, as well as the satisfaction of closing conditions. Net proceeds from the sale are expected to be used to reduce outstanding borrowings under the Company’s revolving credit facility and/or term loan. The Company continues to market the previously announced non-core asset sales and there is significant interest in each of the packages.
Balance Sheet and Liquidity
At the end of the first quarter, total assets were approximately $3.6 billion and total liabilities were approximately $1.6 billion, including approximately $834 million of total debt. As of March 31, 2017, the Company had $540 million drawn on a $1.4 billion credit facility and a $294 million term loan outstanding, resulting in approximately $853 million of liquidity including $7 million of outstanding letters of credit. The planned asset sales are expected to further reduce leverage, improve liquidity and increase financial flexibility.
1
Positive Results Continue in the Merge
In the first quarter, the Company drilled 3 gross (1.86 net) and completed 4 gross (2.14 net) operated horizontal wells targeting the Mississippi and Woodford. To date, the Company has drilled and completed 9 gross (6.66 net) operated horizontal wells with an average normalized peak IP-30 rate of more than 1,450 BOE/d. Over the past two quarters, LINN has improved cycle times by more than 40% to ~30 days (spud to spud) on two-mile laterals and expects to see additional efficiency gains in 2017.
The Company also participated in 5 gross (0.35 net) non-operated horizontal completions in the first quarter. Operated and non-operated horizontal net production in the Merge increased to 8,000 BOE/d by the end of the first quarter. With the addition of a second rig to the program in April and a target to drill 25 gross operated wells in 2017, the Company forecasts to exit 2017 with a horizontal net production rate of approximately 16,700 BOE/d. Recent well results are highlighted below and reflect all LINN operated horizontal wells completed in the Merge to date.
LINN Operated Well | Working Interest | First Production | Zone | Lateral Length (ft) | Peak IP-30 (BOE/d)(1) | Normalized Peak IP-30(1&2) (BOE/d) | % Oil(1) | Total % Liquids | ||
1 | Barbour 12-10-7 1H | 90% | Mar-16 | Woodford | 4,209 | 668 | 1,587 | 29% | 50% | |
2 | Hinparr 31-6-10-5 1XH | 90% | Nov-16 | Mississippi | 9,898 | 2,268 | 2,291 | 70% | 76% | |
3 | McNeff 22-10-5 1H | 99% | Dec-16 | Mississippi | 4,391 | 961 | 2,189 | 44% | 54% | |
4 | Braum 28-21-10-6 1XH | 95% | Dec-16 | Woodford | 10,206 | 1,445 | 1,416 | 13% | 30% | |
5 | Braum 33-4-10-6 1XH | 77% | Dec-16 | Woodford | 10,179 | 769 | 755 | 35% | 56% | |
6 | Langston 13-24-9-6 1XH | 34% | Jan-17 | Woodford | 10,135 | 842 | 831 | 19% | 42% | |
7 | Jackson 25-24-10-6 1XH | 62% | Jan-17 | Mississippi | 9,769 | 1,612 | 1,650 | 47% | 63% | |
8 | Doris 12-13-10-6 1XH | 58% | Mar-17 | Woodford | 10,042 | 1,455 | 1,449 | 47% | 62% | |
9 | Dream Cooler 13-12-10-6 2XH | 59% | Mar-17 | Mississippi | 9,637 | 1,242 | 1,289 | 23% | 53% | |
(1) | Calculated from gross 2-stream volumes |
(2) | The average Peak IP-30 rate shown has been normalized to a 10,000 ft. lateral |
LINN’s Chisholm Trail Midstream Business in the Merge is Enhancing Value
The positive production results in the Merge continue to increase demand for our Chisholm Trail midstream business. The refrigeration facility is currently processing approximately 40 MMcf/d and construction has been approved on a cryogenic plant with designed capacity of 250 MMcf/d. The Company has signed agreements dedicating its Merge acreage to Chisholm Trail for gathering and processing. The Company estimates that a midstream business of this type at full capacity could generate annual EBITDAX (a non-GAAP financial measure) between $100 million and $125 million.
Activity Increases in the NW STACK
The Company holds a significant acreage position in the NW STACK that is 99%+ held by production. The primary horizontal drilling targets are the Osage and Meramec formations. Industry activity has significantly increased in the area, with 43 horizontal well permits in the first quarter of 2017 compared to 18 in the first quarter of 2016. There are 17 rigs currently running and recently several companies have announced acreage acquisitions in the area. In the first quarter of 2017, the Company participated in 2 gross (0.24 net) non-operated horizontal completions in the NW STACK.
Pursuing Emerging Growth Opportunities
The Company continues to pursue emerging horizontal opportunities in the Mid-Continent, Rockies, North Louisiana and East Texas. We plan to test horizontal potential in each of these areas and remain committed to the capital investment necessary to maximize the value of these assets. In the first quarter, LINN added one rig in North Louisiana and is currently drilling a Lower Red horizontal well on our Ruston acreage.
Updated 2017 Guidance
2017 Capital has been increased $18 million to $413 million due to a 25% design capacity increase for the Chisholm Trail cryogenic plant. The tables below exclude the impact of asset sales and the Company will provide updated guidance in future quarters as the transactions close. In addition, the Company estimates reorganization costs of approximately $20 million for the remaining three quarters of the year.
$ in millions | Merge | Rest of LINN | 2017 Capital | ||||||
Horizontal development | $ | 100 | $ | 65 | $ | 165 | |||
Vertical development and optimization | — | $ | 95 | $ | 95 | ||||
Land, seismic and water infrastructure | $ | 34 | $ | 6 | $ | 40 | |||
Oil and natural gas capital | $ | 134 | $ | 166 | $ | 300 | |||
Plant and pipeline / Midstream | $ | 100 | $ | 2 | $ | 102 | |||
Administrative | — | $ | 11 | $ | 11 | ||||
Total Capital | $ | 234 | $ | 179 | $ | 413 | |||
2
First Quarter Actuals and Guidance | |||||||||||
2017 Actuals (4)(5) | Q1 2017E (4) | ||||||||||
Net Production | |||||||||||
Natural gas (MMcf/d) | 496 | 475 | - | 495 | |||||||
Oil (Bbls/d) | 25,300 | 25,000 | - | 27,000 | |||||||
NGL (Bbls/d) | 22,000 | 21,000 | - | 24,000 | |||||||
Total (MMcfe/d) | 779 | 750 | - | 800 | |||||||
Other revenues, net (in thousands) (1) | $ | 21,508 | $ | 13,500 | - | $ | 15,500 | ||||
Costs (in thousands) | |||||||||||
Lease operating expenses | $ | 80,390 | $ | 76,000 | - | $ | 84,000 | ||||
Transportation expenses | $ | 39,695 | $ | 38,000 | - | $ | 42,000 | ||||
Taxes, other than income taxes | $ | 23,249 | $ | 22,000 | - | $ | 26,000 | ||||
Total operating expenses | $ | 143,334 | $ | 136,000 | - | $ | 152,000 | ||||
General and administrative expenses (2)(3) | $ | 27,724 | $ | 30,000 | - | $ | 36,000 | ||||
Costs per Mcfe (Mid-Point) | ||||||||
Lease operating expenses | $ | 1.15 | $ | 1.14 | ||||
Transportation expenses | $ | 0.57 | $ | 0.57 | ||||
Taxes, other than income taxes | $ | 0.33 | $ | 0.35 | ||||
Total operating expenses | $ | 2.05 | $ | 2.06 | ||||
General and administrative expenses (2)(3) | $ | 0.40 | $ | 0.47 | ||||
Targets (Mid-Point) (in thousands) | ||||||||
Adjusted EBITDAX | $ | 128,134 | $ | 122,000 | ||||
Interest expense | $ | 23,323 | $ | 25,000 | ||||
Oil and natural gas capital | $ | 56,806 | $ | 56,000 | ||||
Total capital | $ | 65,488 | $ | 84,000 | ||||
Weighted Average NYMEX Differentials | |||||||||||
Natural gas (MMBtu) | $ | (0.23 | ) | $ | (0.32 | ) | - | $ | (0.22 | ) | |
Oil (Bbl) | $ | (3.26 | ) | $ | (4.50 | ) | - | $ | (3.50 | ) | |
NGL price as a % of crude oil price | 45% | 40%-45% | |||||
_________________________________________________________
(1) | First two months includes other revenues, margin on marketing activities and ~$6 million of Berry management fee reimbursements |
(2) | First two months includes G&A expenses related to operating Berry’s assets. See footnote (1) for ~$6 million of Berry management fee reimbursements in “other revenues, net” |
(3) | As included in operating cash flow and excludes share-based compensation expenses of approximately $54 million |
(4) | Does not include any post-emergence restructuring costs |
(5) | Does not include effect of asset sales or related severance costs |
3
Second Quarter and Full Year 2017 Guidance Update | |||||||||||||||
Q2 2017E (4)(5) | FY 2017E (1)(2)(4)(5) | ||||||||||||||
Net Production | |||||||||||||||
Natural gas (MMcf/d) | 460 | - | 510 | 470 | - | 520 | |||||||||
Oil (Bbls/d) | 24,000 | - | 27,000 | 25,000 | - | 28,000 | |||||||||
NGL (Bbls/d) | 21,000 | - | 23,000 | 21,000 | - | 23,000 | |||||||||
Total (MMcfe/d) | 730 | - | 810 | 745 | - | 825 | |||||||||
Other revenues, net (in thousands) | $ | 9,000 | - | $ | 10,000 | $ | 44,000 | - | $ | 48,000 | |||||
Costs (in thousands) | |||||||||||||||
Lease operating expenses (3) | $ | 75,000 | - | $ | 83,000 | $ | 302,000 | - | $ | 336,000 | |||||
Transportation expenses | 37,000 | - | 42,000 | 151,000 | - | 168,000 | |||||||||
Taxes, other than income taxes | 22,000 | - | 26,000 | 91,000 | - | 101,000 | |||||||||
Total operating expenses | $ | 134,000 | - | $ | 151,000 | $ | 544,000 | - | $ | 605,000 | |||||
General and administrative expenses (2)(3) | $ | 27,000 | - | $ | 30,000 | $ | 115,000 | - | $ | 125,000 | |||||
Costs per Mcfe (Mid-Point) | |||||||
Lease operating expenses (3) | $ | 1.13 | $ | 1.11 | |||
Transportation expenses | $ | 0.56 | $ | 0.56 | |||
Taxes, other than income taxes | $ | 0.34 | $ | 0.33 | |||
Total operating expenses | $ | 2.03 | $ | 2.00 | |||
General and administrative expenses (2)(3) | $ | 0.41 | $ | 0.42 | |||
Targets (Mid-Point) (in thousands) | |||||||
Adjusted EBITDAX | $ | 116,000 | $ | 496,000 | |||
Interest expense | $ | 13,000 | $ | 60,000 | |||
Oil and natural gas capital | $ | 52,000 | $ | 300,000 | |||
Total capital | $ | 88,000 | $ | 413,000 | |||
Weighted Average NYMEX Differentials | |||||||||||||||
Natural gas (MMBtu) | $ | (0.15 | ) | - | $ | (0.35 | ) | $ | (0.35 | ) | - | $ | (0.15 | ) | |
Oil (Bbl) | $ | (5.00 | ) | - | $ | (3.00 | ) | $ | (5.00 | ) | - | $ | (3.00 | ) | |
NGL price as a % of crude oil price | 34%-38% | 34%-42% | |||||
Unhedged Commodity Price Assumptions | Apr | May | Jun | FY 2017E | |||||||||||
Natural gas (MMBtu) | $ | 3.18 | $ | 3.14 | $ | 3.28 | $ | 3.33 | |||||||
Oil (Bbl) | $ | 51.12 | $ | 49.33 | $ | 49.33 | $ | 50.51 | |||||||
NGL (Bbl) | $ | 18.41 | $ | 17.80 | $ | 17.84 | $ | 19.06 | |||||||
__________________________________________________________________
(1) | Includes other revenues, margin on marketing activities and ~$6 million of Berry management fee reimbursements for the first quarter |
(2) | First quarter includes two months of G&A expenses related to operating Berry’s assets. See footnote (1) for ~$6 million of Berry management fee reimbursements in “other revenues, net” |
(3) | As included in operating cash flow and excludes share-based compensation expenses |
(4) | Does not include any post-emergence restructuring costs |
(5) | Does not include the effect of asset sales or related severance costs |
4
Hedging Update as of April 30, 2017
Natural Gas
2017 | 2018 | 2019 | ||||||||||
Volume (MMMBtu/d) | Average Price (per MMBtu) | Volume (MMMBtu/d) | Average Price (per MMBtu) | Volume (MMMBtu/d) | Average Price (per MMBtu) | |||||||
Swaps | 370 | $ | 3.17 | 131 | $ | 3.01 | 31 | $ | 2.97 | |||
Oil
2017 | 2018 | 2019 | ||||||||
Volume (Bbls/d) | Average Price (per Bbl) | Volume (Bbls/d) | Average Price (per Bbl) | Volume (Bbls/d) | Average Price (per Bbl) | |||||
Swaps | 12,000 | $ | 52.13 | 1,500 | $ | 54.07 | - | - | ||
Collars | - | - | 5,000 | $50.00 - $55.00 | 5,000 | $50.00 - $55.00 | ||||
Update on Public Common Stock Listing
LINN Energy, Inc. (OTCQB: LNGG) announced April 10, 2017 that its common stock was approved for trading on the OTCQB market under the symbol LNGG. Investors can find real-time quotes and market information for the Company on www.otcmarkets.com. The Company currently has approximately 89.2 million shares issued and outstanding, with a total of 9.9 million shares reserved for issuance under the Company’s Omnibus Incentive Pan (of which 3.7 million have been issued to date as restricted stock units).
Form 10‑Q / Earnings Call / Upcoming Conferences
LINN plans to file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, with the Securities and Exchange Commission on May 11, 2017 and will host a conference call on Thursday, May 11, 2017 at 10 a.m. (CDT) to discuss the Company’s first quarter 2017 results. A replay of the call and a transcript will be available on the Company’s website until May 25, 2017. Additionally, we plan to attend the upcoming UBS conference in late May and the RBC conference in early June.
Link to the Company’s website: http://www.linnenergy.com
Link to presentations: http://ir.linnenergy.com/presentations.cfm
About LINN Energy
LINN Energy, Inc. was formed in February 2017 as the reorganized successor to Linn Energy, LLC. Headquartered in Houston, Texas, the Company’s core focus is the upstream and midstream development of the SCOOP / STACK / Merge in Oklahoma. Additionally, the Company is pursuing emerging horizontal opportunities in the Mid-Continent, Rockies, North Louisiana and East Texas while continuing to add value by efficiently operating and applying new technology to a diverse set of long-life producing assets.
Forward-Looking Statements
Statements made in this press release that are not historical facts are “forward-looking statements.” These statements are based on certain assumptions and expectations made by the Company which reflect management’s experience, estimates and perception of historical trends, current conditions, and anticipated future developments. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or anticipated in the forward-looking statements. These include risks relating to financial performance and results, ability to improve our financial results and profitability following emergence from bankruptcy, availability of sufficient cash flow to execute our business plan, ability to execute planned asset sales, continued low or further declining commodity prices and demand for oil, natural gas and natural gas liquids, ability to hedge future production, ability to replace reserves and efficiently develop current reserves, the capacity and utilization of midstream facilities, the regulatory environment and other important factors that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. These and other important factors could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. Please read “Risk Factors” in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other public filings. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information or future events.
CONTACTS: LINN Energy, Inc.
Investors:
Thomas Belsha, Vice President — Investor Relations
Brandon Powell, Analyst — Investor Relations
(281) 840-4110
ir@linnenergy.com
5
Consolidated Balance Sheets (Unaudited)
Successor | Predecessor | |||||||
March 31, 2017 | December 31, 2016 | |||||||
(in thousands) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,072 | $ | 694,857 | ||||
Accounts receivable – trade, net | 181,034 | 198,064 | ||||||
Derivative instruments | 2,406 | — | ||||||
Restricted cash | 81,766 | 1,602 | ||||||
Other current assets | 91,005 | 106,011 | ||||||
Total current assets | 357,283 | 1,000,534 | ||||||
Noncurrent assets: | ||||||||
Oil and natural gas properties (successful efforts method) | 2,203,893 | 13,232,959 | ||||||
Less accumulated depletion and amortization | (15,351 | ) | (9,999,560 | ) | ||||
2,188,542 | 3,233,399 | |||||||
Other property and equipment | 445,951 | 636,487 | ||||||
Less accumulated depreciation | (4,197 | ) | (224,547 | ) | ||||
441,754 | 411,940 | |||||||
Derivative instruments | 8,960 | — | ||||||
Deferred income taxes | 624,704 | — | ||||||
Other noncurrent assets | 23,352 | 14,718 | ||||||
657,016 | 14,718 | |||||||
Total noncurrent assets | 3,287,312 | 3,660,057 | ||||||
Total assets | $ | 3,644,595 | $ | 4,660,591 | ||||
LIABILITIES AND EQUITY (DEFICIT) | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 334,160 | $ | 295,077 | ||||
Derivative instruments | 18,701 | 82,508 | ||||||
Current portion of long-term debt, net | 28,125 | 1,937,729 | ||||||
Other accrued liabilities | 48,829 | 26,304 | ||||||
Total current liabilities | 429,815 | 2,341,618 | ||||||
Derivative instruments | — | 11,349 | ||||||
Long-term debt | 805,625 | — | ||||||
Other noncurrent liabilities | 350,981 | 399,607 | ||||||
Liabilities subject to compromise | — | 4,305,005 | ||||||
Temporary Equity | ||||||||
Redeemable noncontrolling interests | 29,350 | — | ||||||
Stockholders’/unitholders’ equity (deficit): | ||||||||
Predecessor units issued and outstanding | — | 5,386,885 | ||||||
Predecessor accumulated deficit | — | (7,783,873 | ) | |||||
Successor Class A common stock | 89 | — | ||||||
Successor additional paid-in capital | 2,035,991 | — | ||||||
Successor accumulated deficit | (7,256 | ) | — | |||||
Total stockholders’/unitholders’ equity (deficit) | 2,028,824 | (2,396,988 | ) | |||||
Total liabilities and equity (deficit) | $ | 3,644,595 | $ | 4,660,591 | ||||
6
Consolidated Statements of Operations (Unaudited)
Successor | Predecessor | |||||||||||
One Month Ended March 31, 2017 | Two Months Ended February 28, 2017 | Three Months Ended March 31, 2016 | ||||||||||
(in thousands, except per share and per unit amounts) | ||||||||||||
Revenues and other: | ||||||||||||
Oil, natural gas and natural gas liquids sales | $ | 87,445 | $ | 203,766 | $ | 199,849 | ||||||
Gains (losses) on oil and natural gas derivatives | (11,959 | ) | 92,691 | 109,453 | ||||||||
Marketing revenues | 2,914 | 6,636 | 9,061 | |||||||||
Other revenues | 2,033 | 9,925 | 28,336 | |||||||||
80,433 | 313,018 | 346,699 | ||||||||||
Expenses: | ||||||||||||
Lease operating expenses | 27,166 | 53,224 | 88,387 | |||||||||
Transportation expenses | 13,723 | 25,972 | 41,994 | |||||||||
Marketing expenses | 2,539 | 4,820 | 7,833 | |||||||||
General and administrative expenses | 10,411 | 71,745 | 83,720 | |||||||||
Exploration costs | 55 | 93 | 2,693 | |||||||||
Depreciation, depletion and amortization | 21,362 | 56,484 | 105,215 | |||||||||
Impairment of long-lived assets | — | — | 123,316 | |||||||||
Taxes, other than income taxes | 7,502 | 15,747 | 19,754 | |||||||||
Losses on sale of assets and other, net | 445 | 672 | 1,269 | |||||||||
83,203 | 228,757 | 474,181 | ||||||||||
Other income and (expenses): | ||||||||||||
Interest expense, net of amounts capitalized | (4,917 | ) | (18,406 | ) | (85,267 | ) | ||||||
Other, net | (388 | ) | (149 | ) | 68 | |||||||
(5,305 | ) | (18,555 | ) | (85,199 | ) | |||||||
Reorganization items, net | (2,565 | ) | 2,331,189 | — | ||||||||
Income (loss) from continuing operations before income taxes | (10,640 | ) | 2,396,895 | (212,681 | ) | |||||||
Income tax expense (benefit) | (3,384 | ) | (166 | ) | 10,246 | |||||||
Income (loss) from continuing operations | (7,256 | ) | 2,397,061 | (222,927 | ) | |||||||
Loss from discontinued operations, net of income taxes | — | — | (1,124,819 | ) | ||||||||
Net income (loss) | $ | (7,256 | ) | $ | 2,397,061 | $ | (1,347,746 | ) | ||||
Basic and diluted income (loss) per share/unit – continuing operations | $ | (0.08 | ) | $ | 6.79 | $ | (0.64 | ) | ||||
Basic and diluted loss per share/unit – discontinued operations | $ | — | $ | — | $ | (3.19 | ) | |||||
Basic and diluted net income (loss) per share/unit | $ | (0.08 | ) | $ | 6.79 | $ | (3.83 | ) | ||||
Basic and diluted weighted average shares/units outstanding | 89,848 | 352,792 | 352,234 | |||||||||
7
Consolidated Statements of Cash Flows (Unaudited)
Successor | Predecessor | |||||||||||
One Month Ended March 31, 2017 | Two Months Ended February 28, 2017 | Three Months Ended March 31, 2016 | ||||||||||
(in thousands) | ||||||||||||
Cash flow from operating activities: | ||||||||||||
Net income (loss) | $ | (7,256 | ) | $ | 2,397,061 | $ | (1,347,746 | ) | ||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||
Loss from discontinued operations | — | — | 1,124,819 | |||||||||
Depreciation, depletion and amortization | 21,362 | 56,484 | 105,215 | |||||||||
Impairment of long-lived assets | — | — | 123,316 | |||||||||
Deferred income taxes | (3,384 | ) | (166 | ) | 9,422 | |||||||
Noncash (gains) losses on oil and natural gas derivatives | 17,741 | (104,263 | ) | 225,258 | ||||||||
Share-based compensation expenses | 4,177 | 50,255 | 12,425 | |||||||||
Amortization and write-off of deferred financing fees | 3 | 1,338 | 4,676 | |||||||||
Losses on sale of assets and other, net | 345 | 1,069 | 2,226 | |||||||||
Reorganization items, net | — | (2,359,364 | ) | — | ||||||||
Changes in assets and liabilities: | ||||||||||||
(Increase) decrease in accounts receivable – trade, net | 26,614 | (7,216 | ) | (16,082 | ) | |||||||
(Increase) decrease in other assets | (2,620 | ) | 402 | (8,225 | ) | |||||||
Increase in restricted cash | — | (80,164 | ) | — | ||||||||
Increase (decrease) in accounts payable and accrued expenses | (43,476 | ) | 20,949 | (630 | ) | |||||||
Increase in other liabilities | 4,187 | 2,801 | 35,713 | |||||||||
Net cash provided by (used in) operating activities – continuing operations | 17,693 | (20,814 | ) | 270,387 | ||||||||
Net cash provided by operating activities – discontinued operations | — | — | 20,641 | |||||||||
Net cash provided by (used in) operating activities | 17,693 | (20,814 | ) | 291,028 | ||||||||
Cash flow from investing activities: | ||||||||||||
Development of oil and natural gas properties | (20,244 | ) | (50,739 | ) | (70,407 | ) | ||||||
Purchases of other property and equipment | (2,466 | ) | (7,851 | ) | (6,404 | ) | ||||||
Proceeds from sale of properties and equipment and other | 326 | (166 | ) | (280 | ) | |||||||
Net cash used in investing activities – continuing operations | (22,384 | ) | (58,756 | ) | (77,091 | ) | ||||||
Net cash used in investing activities – discontinued operations | — | — | (14,330 | ) | ||||||||
Net cash used in investing activities | (22,384 | ) | (58,756 | ) | (91,421 | ) | ||||||
Cash flow from financing activities: | ||||||||||||
Proceeds from rights offering, net | — | 514,069 | — | |||||||||
Proceeds from borrowings | 30,000 | — | 978,500 | |||||||||
Repayments of debt | (96,250 | ) | (1,038,986 | ) | (100,000 | ) | ||||||
Payment to holders of claims under the second lien notes | — | (30,000 | ) | — | ||||||||
Other | 17,658 | (6,015 | ) | (20,719 | ) | |||||||
Net cash provided by (used in) financing activities – continuing operations | (48,592 | ) | (560,932 | ) | 857,781 | |||||||
Net cash from financing activities – discontinued operations | — | — | — | |||||||||
Net cash provided by (used in) financing activities | (48,592 | ) | (560,932 | ) | 857,781 | |||||||
Net increase (decrease) in cash and cash equivalents | (53,283 | ) | (640,502 | ) | 1,057,388 | |||||||
Cash and cash equivalents: | ||||||||||||
Beginning | 54,355 | 694,857 | 2,168 | |||||||||
Ending | 1,072 | 54,355 | 1,059,556 | |||||||||
Less cash and cash equivalents of discontinued operations at end of period | — | — | (7,334 | ) | ||||||||
Ending – continuing operations | $ | 1,072 | $ | 54,355 | $ | 1,052,222 | ||||||
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Adjusted EBITDAX (Non-GAAP Measure)
The non-GAAP financial measure of adjusted EBITDAX, as defined by the Company, may not be comparable to similarly titled measures used by other companies. Therefore, this non-GAAP measure should be considered in conjunction with net income (loss) and other performance measures prepared in accordance with GAAP. Adjusted EBITDAX should not be considered in isolation or as a substitute for GAAP.
Adjusted EBITDAX is a measure used by Company management to evaluate the Company's operational performance and for comparisons to the Company's industry peers. Management also believes this information may be useful to investors and analysts to gain a better understanding of the Company's financial results.
The following presents a reconciliation of net income (loss) to adjusted EBITDAX:
Three Months Ended March 31, | |||||||
2017(1) | 2016 | ||||||
(in thousands) | |||||||
Net income (loss) | $ | 2,389,805 | $ | (1,347,746 | ) | ||
Plus (less): | |||||||
Loss from discontinued operations | ― | 1,124,819 | |||||
Interest expense | 23,323 | 85,267 | |||||
Income tax expense (benefit) | (3,550 | ) | 10,246 | ||||
Depreciation, depletion and amortization | 77,846 | 105,215 | |||||
Exploration costs | 148 | 2,693 | |||||
EBITDAX | 2,487,572 | (19,506 | ) | ||||
Plus (less): | |||||||
Impairment of long-lived assets | ― | 123,316 | |||||
Noncash (gains) losses on oil and natural gas derivatives | (86,522 | ) | 225,258 | ||||
Accrued settlements on oil derivative contracts related to current production period (2) | 1,302 | (7,862 | ) | ||||
Share-based compensation expenses | 54,432 | 12,425 | |||||
Write-off of deferred financing fees | ― | 16 | |||||
(Gains) losses on sale of assets and other, net (3) | (26 | ) | 1,358 | ||||
Reorganization items, net (4) | (2,328,624 | ) | ― | ||||
Adjusted EBITDAX | $ | 128,134 | $ | 335,005 | |||
In addition, the Company reported the following other items:
Three Months Ended March 31, | |||||||
2017(1) | 2016 | ||||||
(in thousands) | |||||||
Prepetition restructuring costs included in general and administrative expenses (5) | $ | — | $ | 17,164 | |||
Premiums paid for put options that settled during the period (6) | — | (37,485 | ) | ||||
(1) | All amounts reflect the combined results of the one month ended March 31, 2017 (successor) and the two months ended February 28, 2017 (predecessor). |
(2) | Represent amounts related to oil derivative contracts that settled during the respective period (contract terms had expired) but cash had not been received as of the end of the period. |
(3) | Primarily represent gains or losses on the sale of assets, gains or losses on inventory valuation and amortization of basis difference for equity method investments. |
(4) | Represent costs and income directly associated with the Company’s filing for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code since the petition date, and also include adjustments to reflect the carrying value of certain liabilities subject to compromise at their estimated allowed claim amounts, as such adjustments are determined. |
(5) | Represent restructuring costs incurred by the Company prior to its filing for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code, which are included in general and administrative expenses. |
(6) | Represent premiums paid at inception for put options that settled during the respective period. The Company has not purchased any put options since 2012. |
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The following presents the Company’s calculation of total debt to adjusted EBITDAX:
Three Months Ended March 31, | |||||||
2017(1) | 2016(2) | ||||||
(in thousands, except ratios) | |||||||
Total debt (3) | $ | 833,750 | $ | 8,170,040 | |||
Adjusted EBITDAX | $ | 128,134 | $ | 335,005 | |||
Adjusted EBITDAX (Annualized twelve months) | $ | 512,536 | $ | 1,340,020 | |||
Total debt / Adjusted EBITDAX (4) | 1.63x | 6.10x | |||||
(1) | Adjusted EBITDAX reflects the combined results of the one month ended March 31, 2017 (successor) and the two months ended February 28, 2017 (predecessor). |
(2) | Information presented for 2016 relates only to LINN Energy’s continuing operations. |
(3) | Total debt as of March 31, 2017, and March 31, 2016, respectively. |
(4) | Calculated as total debt divided by adjusted EBITDAX (annualized twelve months). |
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