DALLAS--(BUSINESS WIRE)--HollyFrontier Corporation (NYSE:HFC) (“HollyFrontier” or the “Company”) today reported third quarter net loss attributable to HollyFrontier stockholders of $(2.4) million, or $(0.01) per diluted share, for the quarter ended September 30, 2020, compared to net income of $261.8 million, or $1.58 per diluted share, for the quarter ended September 30, 2019.
The third quarter results reflect special items that collectively increased net income by a total of $64.5 million. On a pre-tax basis, these items include HollyFrontier's pro-rata share of a gain recognized upon the settlement of the Company's business interruption claim with its insurance carrier related to a loss at the Woods Cross Refinery totaling $77.1 million and a lower of cost or market inventory valuation adjustment of $62.8 million, partially offset by charges related to the Cheyenne Refinery conversion to renewable diesel production, including last-in, first-out (“LIFO”) inventory liquidation costs of $33.8 million, decommissioning charges of $12.3 million and severance charges totaling $2.4 million. Excluding these items, net loss for the current quarter was $(66.9) million ($(0.41) per diluted share) compared to net income of $278.0 million ($1.68 per diluted share) for the third quarter of 2019, which excludes certain items that collectively decreased net income by $16.2 million.
HollyFrontier’s President & CEO, Michael Jennings, commented, “Despite the difficult operating environment, HollyFrontier delivered solid results in the third quarter, led by resilient financial performances from our lubricants and midstream businesses. In August, we ran the last barrel of crude oil at Cheyenne and began the conversion to renewable diesel production. I would like to thank all of the employees at Cheyenne for safely achieving this milestone. In September, we reinforced our strong liquidity position through the successful $750.0 million bond offering, providing us the necessary capital to fully fund the previously announced renewable diesel projects at our Artesia, New Mexico and Cheyenne, Wyoming facilities.”
The COVID-19 pandemic caused a decline in U.S. and global economic activity starting in the first quarter of 2020. This decrease reduced both volumes and unit margins across the Company's businesses, resulting in lower gross margins and earnings. During the third quarter of 2020, demand for transportation fuels remained challenged while lubricants and specialties saw meaningful improvement in industrial and transportation-related markets and increased global demand for base oils.
The Refining segment reported adjusted EBITDA of $(53.6) million for the third quarter of 2020 compared to $424.6 million for the third quarter of 2019. This decrease was primarily due to continued weak demand for gasoline and diesel coupled with compressed crude differentials. Refinery gross margin for the third quarter of 2020 was $4.93 per produced barrel, a 71% decrease compared to $17.23 for the third quarter of 2019. Crude oil charge averaged 390,580 barrels per day (“BPD”) for the current quarter compared to 476,030 BPD for the third quarter of 2019.
The Lubricants and Specialty Products segment reported EBITDA of $60.6 million for the third quarter of 2020 compared to $38.0 million in the third quarter of 2019. This increase was driven by the strong recovery in global demand for finished lubricants and base oils, resulting in higher sales volumes and margins during the quarter.
Holly Energy Partners, L.P. (“HEP”) reported EBITDA of $55.3 million for the third quarter of 2020 compared to $123.1 million in the third quarter of 2019. Reported EBITDA for the third quarter of 2020 included a $35.7 million goodwill impairment charge, and reported EBITDA for the third quarter of 2019 included a $35.2 million gain on sales-type leases, both of which eliminated on the Company's consolidation.
For the third quarter of 2020, net cash provided by operations totaled $81.7 million. During the period, HollyFrontier declared and paid a dividend of $0.35 per share to shareholders totaling $57.2 million. At September 30, 2020, the Company's cash and cash equivalents totaled $1,524.9 million, a $622.4 million increase over cash and cash equivalents of $902.5 million at June 30, 2020. Additionally, the Company's consolidated debt was $3,176.3 million. The Company’s debt, exclusive of HEP debt, which is nonrecourse to HollyFrontier, was $1,736.5 million at September 30, 2020.
The Company has scheduled a webcast conference call for today, November 5, 2020, at 8:30 AM Eastern Time to discuss third quarter financial results. This webcast may be accessed at: https://event.on24.com/wcc/r/2628168/9BE4DA1E13C98135F6352CD76762D475. An audio archive of this webcast will be available using the above noted link through November 19, 2020.
HollyFrontier Corporation, headquartered in Dallas, Texas, is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel, jet fuel and other specialty products. HollyFrontier owns and operates refineries located in Kansas, Oklahoma, New Mexico and Utah and markets its refined products principally in the Southwest U.S., the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states. In addition, HollyFrontier produces base oils and other specialized lubricants in the U.S., Canada and the Netherlands, and exports products to more than 80 countries. HollyFrontier also owns a 57% limited partner interest and a non-economic general partner interest in Holly Energy Partners, L.P., a master limited partnership that provides petroleum product and crude oil transportation, terminalling, storage and throughput services to the petroleum industry, including HollyFrontier Corporation subsidiaries.
The following is a “safe harbor” statement under the Private Securities Litigation Reform Act of 1995: The statements in this press release relating to matters that are not historical facts are “forward-looking statements” based on management’s beliefs and assumptions using currently available information and expectations as of the date hereof, are not guarantees of future performance and involve certain risks and uncertainties, including those contained in our filings with the Securities and Exchange Commission. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that our expectations will prove correct. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Any differences could be caused by a number of factors, including, but not limited to, the extraordinary market environment and effects of the COVID-19 pandemic, including the continuation of a material decline in demand for refined petroleum products in markets the Company serves; risks and uncertainties with respect to the actions of actual or potential competitive suppliers and transporters of refined petroleum products or lubricant and specialty products in the Company’s markets; the spread between market prices for refined products and market prices for crude oil; the possibility of constraints on the transportation of refined products or lubricant and specialty products; the possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines, whether due to infection in the workforce or in response to reductions in demand; effects of governmental and environmental regulations and policies, including the effects of current restrictions on various commercial and economic activities in response to the COVID-19 pandemic; the availability and cost of financing to the Company; the effectiveness of the Company’s capital investments and marketing strategies; the Company’s efficiency in carrying out and consummating construction projects, including the Company's ability to complete announced capital projects, such as the conversion of the Cheyenne Refinery to a renewable diesel facility and the construction of the Artesia renewable diesel unit and pretreatment unit, on time and within budget; the Company's ability to timely obtain or maintain permits, including those necessary for operations or capital projects; the ability of the Company to acquire refined or lubricant product operations or pipeline and terminal operations on acceptable terms and to integrate any existing or future acquired operations; the possibility of terrorist or cyberattacks and the consequences of any such attacks; general economic conditions, including uncertainty regarding the timing, pace and extent of an economic recovery in the United States; further deterioration in gross margins or a prolonged economic slowdown due to COVID-19 could result in an impairment of goodwill and / or additional long-lived asset impairments; and other financial, operational and legal risks and uncertainties detailed from time to time in the Company’s Securities and Exchange Commission filings. The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
RESULTS OF OPERATIONS |
|||||||||||||||||
Financial Data (all information in this release is unaudited) |
|||||||||||||||||
|
Three Months Ended |
|
Change from 2019 |
||||||||||||||
|
2020 |
|
2019 |
|
Change |
|
Percent |
||||||||||
|
(In thousands, except per share data) |
||||||||||||||||
Sales and other revenues |
$ |
2,819,400 |
|
|
|
$ |
4,424,828 |
|
|
|
$ |
(1,605,428 |
) |
|
|
(36 |
)% |
Operating costs and expenses: |
|
|
|
|
|
|
|
||||||||||
Cost of products sold: |
|
|
|
|
|
|
|
||||||||||
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment) |
2,377,238 |
|
|
|
3,403,767 |
|
|
|
(1,026,529 |
) |
|
|
(30 |
) |
|||
Lower of cost or market inventory valuation adjustment |
(62,849 |
) |
|
|
34,062 |
|
|
|
(96,911 |
) |
|
|
(285 |
) |
|||
|
2,314,389 |
|
|
|
3,437,829 |
|
|
|
(1,123,440 |
) |
|
|
(33 |
) |
|||
Operating expenses |
332,496 |
|
|
|
345,578 |
|
|
|
(13,082 |
) |
|
|
(4 |
) |
|||
Selling, general and administrative expenses |
74,453 |
|
|
|
87,626 |
|
|
|
(13,173 |
) |
|
|
(15 |
) |
|||
Depreciation and amortization |
125,280 |
|
|
|
127,016 |
|
|
|
(1,736 |
) |
|
|
(1 |
) |
|||
Total operating costs and expenses |
2,846,618 |
|
|
|
3,998,049 |
|
|
|
(1,151,431 |
) |
|
|
(29 |
) |
|||
Income (loss) from operations |
(27,218 |
) |
|
|
426,779 |
|
|
|
(453,997 |
) |
|
|
(106 |
) |
|||
|
|
|
|
|
|
|
|
||||||||||
Other income (expense): |
|
|
|
|
|
|
|
||||||||||
Earnings of equity method investments |
1,316 |
|
|
|
1,334 |
|
|
|
(18 |
) |
|
|
(1 |
) |
|||
Interest income |
1,011 |
|
|
|
6,164 |
|
|
|
(5,153 |
) |
|
|
(84 |
) |
|||
Interest expense |
(30,589 |
) |
|
|
(36,027 |
) |
|
|
5,438 |
|
|
|
(15 |
) |
|||
Gain on business interruption insurance settlement |
81,000 |
|
|
|
— |
|
|
|
81,000 |
|
|
|
— |
|
|||
Gain on foreign currency transactions |
1,030 |
|
|
|
395 |
|
|
|
635 |
|
|
|
161 |
|
|||
Other, net |
1,368 |
|
|
|
2,356 |
|
|
|
(988 |
) |
|
|
(42 |
) |
|||
|
55,136 |
|
|
|
(25,778 |
) |
|
|
80,914 |
|
|
|
(314 |
) |
|||
Income before income taxes |
27,918 |
|
|
|
401,001 |
|
|
|
(373,083 |
) |
|
|
(93 |
) |
|||
Income tax expense |
4,573 |
|
|
|
103,021 |
|
|
|
(98,448 |
) |
|
|
(96 |
) |
|||
Net income |
23,345 |
|
|
|
297,980 |
|
|
|
(274,635 |
) |
|
|
(92 |
) |
|||
Less net income attributable to noncontrolling interest |
25,746 |
|
|
|
36,167 |
|
|
|
(10,421 |
) |
|
|
(29 |
) |
|||
Net income (loss) attributable to HollyFrontier stockholders |
$ |
(2,401 |
) |
|
|
$ |
261,813 |
|
|
|
$ |
(264,214 |
) |
|
|
(101 |
)% |
|
|
|
|
|
|
|
|
||||||||||
Earnings (loss) per share attributable to HollyFrontier stockholders: |
|
|
|
|
|
|
|
||||||||||
Basic |
$ |
(0.01 |
) |
|
|
$ |
1.60 |
|
|
|
$ |
(1.61 |
) |
|
|
(101 |
)% |
Diluted |
$ |
(0.01 |
) |
|
|
$ |
1.58 |
|
|
|
$ |
(1.59 |
) |
|
|
(101 |
)% |
Cash dividends declared per common share |
$ |
0.35 |
|
|
|
$ |
0.33 |
|
|
|
$ |
0.02 |
|
|
|
6 |
% |
Average number of common shares outstanding: |
|
|
|
|
|
|
|
||||||||||
Basic |
162,015 |
|
|
|
163,676 |
|
|
|
(1,661 |
) |
|
|
(1 |
)% |
|||
Diluted |
162,015 |
|
|
|
165,011 |
|
|
|
(2,996 |
) |
|
|
(2 |
)% |
|||
|
|
|
|
|
|
|
|
||||||||||
EBITDA |
$ |
157,030 |
|
|
|
$ |
521,713 |
|
|
|
$ |
(364,683 |
) |
|
|
(70 |
)% |
Adjusted EBITDA |
$ |
65,638 |
|
|
|
$ |
523,082 |
|
|
|
$ |
(457,444 |
) |
|
|
(87 |
)% |
|
Nine Months Ended |
|
Change from 2019 |
||||||||||||||
|
2020 |
|
2019 |
|
Change |
|
Percent |
||||||||||
|
(In thousands, except per share data) |
||||||||||||||||
Sales and other revenues |
$ |
8,282,875 |
|
|
|
$ |
13,104,690 |
|
|
|
$ |
(4,821,815 |
) |
|
|
(37 |
)% |
Operating costs and expenses: |
|
|
|
|
|
|
|
||||||||||
Cost of products sold: |
|
|
|
|
|
|
|
||||||||||
Cost of products sold (exclusive of lower of cost or market inventory valuation adjustment) |
6,647,960 |
|
|
|
10,307,856 |
|
|
|
(3,659,896 |
) |
|
|
(36 |
) |
|||
Lower of cost or market inventory valuation adjustment |
227,711 |
|
|
|
(150,483 |
) |
|
|
378,194 |
|
|
|
(251 |
) |
|||
|
6,875,671 |
|
|
|
10,157,373 |
|
|
|
(3,281,702 |
) |
|
|
(32 |
) |
|||
Operating expenses |
964,200 |
|
|
|
1,010,422 |
|
|
|
(46,222 |
) |
|
|
(5 |
) |
|||
Selling, general and administrative expenses |
237,559 |
|
|
|
260,977 |
|
|
|
(23,418 |
) |
|
|
(9 |
) |
|||
Depreciation and amortization |
396,033 |
|
|
|
375,345 |
|
|
|
20,688 |
|
|
|
6 |
|
|||
Long-lived asset and goodwill impairments |
436,908 |
|
|
|
152,712 |
|
|
|
284,196 |
|
|
|
186 |
|
|||
Total operating costs and expenses |
8,910,371 |
|
|
|
11,956,829 |
|
|
|
(3,046,458 |
) |
|
|
(25 |
) |
|||
Income (loss) from operations |
(627,496 |
) |
|
|
1,147,861 |
|
|
|
(1,775,357 |
) |
|
|
(155 |
) |
|||
|
|
|
|
|
|
|
|
||||||||||
Other income (expense): |
|
|
|
|
|
|
|
||||||||||
Earnings of equity method investments |
5,186 |
|
|
|
5,217 |
|
|
|
(31 |
) |
|
|
(1 |
) |
|||
Interest income |
6,590 |
|
|
|
17,127 |
|
|
|
(10,537 |
) |
|
|
(62 |
) |
|||
Interest expense |
(85,923 |
) |
|
|
(106,938 |
) |
|
|
21,015 |
|
|
|
(20 |
) |
|||
Gain on business interruption insurance settlement |
81,000 |
|
|
|
— |
|
|
|
81,000 |
|
|
|
— |
|
|||
Gain on sales-type leases |
33,834 |
|
|
|
— |
|
|
|
33,834 |
|
|
|
— |
|
|||
Loss on early extinguishment of debt |
(25,915 |
) |
|
|
— |
|
|
|
(25,915 |
) |
|
|
— |
|
|||
Gain (loss) on foreign currency transactions |
(918 |
) |
|
|
4,873 |
|
|
|
(5,791 |
) |
|
|
(119 |
) |
|||
Other, net |
4,790 |
|
|
|
3,005 |
|
|
|
1,785 |
|
|
|
59 |
|
|||
|
18,644 |
|
|
|
(76,716 |
) |
|
|
95,360 |
|
|
|
(124 |
) |
|||
Income (loss) before income taxes |
(608,852 |
) |
|
|
1,071,145 |
|
|
|
(1,679,997 |
) |
|
|
(157 |
) |
|||
Income tax expense (benefit) |
(188,504 |
) |
|
|
279,862 |
|
|
|
(468,366 |
) |
|
|
(167 |
) |
|||
Net income (loss) |
(420,348 |
) |
|
|
791,283 |
|
|
|
(1,211,631 |
) |
|
|
(153 |
) |
|||
Less net income attributable to noncontrolling interest |
63,353 |
|
|
|
79,500 |
|
|
|
(16,147 |
) |
|
|
(20 |
) |
|||
Net income (loss) attributable to HollyFrontier stockholders |
$ |
(483,701 |
) |
|
|
$ |
711,783 |
|
|
|
$ |
(1,195,484 |
) |
|
|
(168 |
)% |
|
|
|
|
|
|
|
|
||||||||||
Earnings (loss) per share attributable to HollyFrontier stockholders: |
|
|
|
|
|
|
|
||||||||||
Basic |
$ |
(2.99 |
) |
|
|
$ |
4.23 |
|
|
|
$ |
(7.22 |
) |
|
|
(171 |
)% |
Diluted |
$ |
(2.99 |
) |
|
|
$ |
4.20 |
|
|
|
$ |
(7.19 |
) |
|
|
(171 |
)% |
Cash dividends declared per common share |
$ |
1.05 |
|
|
|
$ |
0.99 |
|
|
|
$ |
0.06 |
|
|
|
6 |
% |
Average number of common shares outstanding: |
|
|
|
|
|
|
|
||||||||||
Basic |
161,927 |
|
|
|
167,935 |
|
|
|
(6,008 |
) |
|
|
(4 |
)% |
|||
Diluted |
161,927 |
|
|
|
169,125 |
|
|
|
(7,198 |
) |
|
|
(4 |
)% |
|||
|
|
|
|
|
|
|
|
||||||||||
EBITDA |
$ |
(196,839 |
) |
|
|
$ |
1,456,801 |
|
|
|
$ |
(1,653,640 |
) |
|
|
(114 |
)% |
Adjusted EBITDA |
$ |
434,118 |
|
|
|
$ |
1,451,864 |
|
|
|
$ |
(1,017,746 |
) |
|
|
(70 |
)% |
Balance Sheet Data |
|||||||
|
September 30, |
|
December 31, |
||||
|
2020 |
|
2019 |
||||
|
(In thousands) |
||||||
Cash and cash equivalents |
$ |
1,524,888 |
|
|
$ |
885,162 |
|
Working capital |
$ |
2,081,978 |
|
|
$ |
1,620,261 |
|
Total assets |
$ |
11,579,741 |
|
|
$ |
12,164,841 |
|
Long-term debt |
$ |
3,176,349 |
|
|
$ |
2,455,640 |
|
Total equity |
$ |
5,876,569 |
|
|
$ |
6,509,426 |
|
Segment Information
Our operations are organized into three reportable segments, Refining, Lubricants and Specialty Products and HEP. Our operations that are not included in the Refining, Lubricants and Specialty Products and HEP segments are included in Corporate and Other. Intersegment transactions are eliminated in our consolidated financial statements and are included in Eliminations. Corporate and Other and Eliminations are aggregated and presented under the Corporate, Other and Eliminations column.
The Refining segment includes the operations of our El Dorado, Tulsa, Navajo, Cheyenne and Woods Cross refineries and HollyFrontier Asphalt Company LLC (“HFC Asphalt”) (aggregated as a reportable segment). Refining activities involve the purchase and refining of crude oil and wholesale and branded marketing of refined products, such as gasoline, diesel fuel and jet fuel. These petroleum products are primarily marketed in the Mid-Continent, Southwest and Rocky Mountain regions of the United States. HFC Asphalt operates various terminals in Arizona, New Mexico and Oklahoma.
The Lubricants and Specialty Products segment involves Petro-Canada Lubricants Inc.’s (“PCLI”) production operations, located in Mississauga, Ontario, that include lubricant products such as base oils, white oils, specialty products and finished lubricants and the operations of our Petro-Canada Lubricants business that includes the marketing of products to both retail and wholesale outlets through a global sales network with locations in Canada, the United States, Europe and China. Additionally, the Lubricants and Specialty Products segment includes specialty lubricant products produced at our Tulsa refineries that are marketed throughout North America and are distributed in Central and South America, the operations of Red Giant Oil, one of the largest suppliers of locomotive engine oil in North America and the operations of Sonneborn, a producer of specialty hydrocarbon chemicals such as white oils, petrolatums and waxes with manufacturing facilities in the United States and Europe.
The HEP segment involves all of the operations of HEP, a consolidated variable interest entity, which owns and operates logistics assets consisting of petroleum product and crude oil pipelines, terminals, tankage, loading rack facilities and refinery processing units in the Mid-Continent, Southwest and Rocky Mountain regions of the United States. The HEP segment also includes a 75% interest in UNEV Pipeline, LLC (an HEP consolidated subsidiary), and a 50% ownership interest in each of Osage Pipeline Company, LLC, Cheyenne Pipeline LLC and Cushing Connect Pipeline & Terminal LLC. Revenues from the HEP segment are earned through transactions with unaffiliated parties for pipeline transportation, rental and terminalling operations as well as revenues relating to pipeline transportation services provided for our refining operations. Due to certain basis differences, our reported amounts for the HEP segment may not agree to amounts reported in HEP's periodic public filings.
|
|
Refining |
|
Lubricants
|
|
HEP |
|
Corporate,
|
|
Consolidated
|
|||||||||
|
|
(In thousands) |
|||||||||||||||||
Three Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|||||||||||
Sales and other revenues: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenues from external customers |
|
$ |
2,339,782 |
|
|
$ |
452,878 |
|
$ |
26,740 |
|
$ |
— |
|
|
$ |
2,819,400 |
|
|
Intersegment revenues |
|
56,331 |
|
|
2,164 |
|
100,991 |
|
(159,486 |
) |
|
— |
|
||||||
|
|
$ |
2,396,113 |
|
|
$ |
455,042 |
|
$ |
127,731 |
|
$ |
(159,486 |
) |
|
$ |
2,819,400 |
|
|
Cost of products sold (exclusive of lower of cost or market inventory) |
|
$ |
2,211,342 |
|
|
$ |
302,703 |
|
$ |
— |
|
$ |
(136,807 |
) |
|
$ |
2,377,238 |
|
|
Lower of cost or market inventory valuation adjustment |
|
$ |
(62,849 |
) |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
$ |
(62,849 |
) |
|
Operating expenses |
|
$ |
256,079 |
|
|
$ |
54,488 |
|
$ |
40,003 |
|
$ |
(18,074 |
) |
|
$ |
332,496 |
|
|
Selling, general and administrative expenses |
|
$ |
30,866 |
|
|
$ |
36,773 |
|
$ |
2,332 |
|
$ |
4,482 |
|
|
$ |
74,453 |
|
|
Depreciation and amortization |
|
$ |
79,146 |
|
|
$ |
17,432 |
|
$ |
24,109 |
|
$ |
4,593 |
|
|
$ |
125,280 |
|
|
Income (loss) from operations |
|
$ |
(118,471 |
) |
|
$ |
43,646 |
|
$ |
61,287 |
|
$ |
(13,680 |
) |
|
$ |
(27,218 |
) |
|
Income (loss) before interest and income taxes |
|
$ |
(118,471 |
) |
|
$ |
43,120 |
|
$ |
70,067 |
|
$ |
62,780 |
|
|
$ |
57,496 |
|
|
Net income attributable to noncontrolling interest |
|
$ |
— |
|
|
$ |
— |
|
$ |
2,293 |
|
$ |
23,453 |
|
|
$ |
25,746 |
|
|
Earnings of equity method investments |
|
$ |
— |
|
|
$ |
— |
|
$ |
1,316 |
|
$ |
— |
|
|
$ |
1,316 |
|
|
Capital expenditures |
|
$ |
41,740 |
|
|
$ |
6,995 |
|
$ |
7,902 |
|
$ |
26,635 |
|
|
$ |
83,272 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Three Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|||||||||||
Sales and other revenues: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenues from external customers |
|
$ |
3,865,399 |
|
|
$ |
529,561 |
|
$ |
29,868 |
|
$ |
— |
|
|
$ |
4,424,828 |
|
|
Intersegment revenues |
|
81,571 |
|
|
8,157 |
|
106,027 |
|
(195,755 |
) |
|
— |
|
||||||
|
|
$ |
3,946,970 |
|
|
$ |
537,718 |
|
$ |
135,895 |
|
$ |
(195,755 |
) |
|
$ |
4,424,828 |
|
|
Cost of products sold (exclusive of lower of cost or market inventory) |
|
$ |
3,177,167 |
|
|
$ |
397,926 |
|
$ |
— |
|
$ |
(171,326 |
) |
|
$ |
3,403,767 |
|
|
Lower of cost or market inventory valuation adjustment |
|
$ |
34,062 |
|
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
$ |
34,062 |
|
|
Operating expenses |
|
$ |
276,869 |
|
|
$ |
57,974 |
|
$ |
44,924 |
|
$ |
(34,189 |
) |
|
$ |
345,578 |
|
|
Selling, general and administrative expenses |
|
$ |
31,707 |
|
|
$ |
43,875 |
|
$ |
2,714 |
|
$ |
9,330 |
|
|
$ |
87,626 |
|
|
Depreciation and amortization |
|
$ |
76,765 |
|
|
$ |
22,700 |
|
$ |
24,121 |
|
$ |
3,430 |
|
|
$ |
127,016 |
|
|
Income (loss) from operations |
|
$ |
350,400 |
|
|
$ |
15,243 |
|
$ |
64,136 |
|
$ |
(3,000 |
) |
|
$ |
426,779 |
|
|
Income (loss) before interest and income taxes |
|
$ |
350,400 |
|
|
$ |
15,325 |
|
$ |
100,778 |
|
$ |
(35,639 |
) |
|
$ |
430,864 |
|
|
Net income attributable to noncontrolling interest |
|
$ |
— |
|
|
$ |
— |
|
$ |
1,004 |
|
$ |
35,163 |
|
|
$ |
36,167 |
|
|
Earnings of equity method investments |
|
$ |
— |
|
|
$ |
— |
|
$ |
1,334 |
|
$ |
— |
|
|
$ |
1,334 |
|
|
Capital expenditures |
|
$ |
53,506 |
|
|
$ |
8,697 |
|
$ |
6,076 |
|
$ |
6,310 |
|
|
$ |
74,589 |
|
|
|
|
Refining |
|
Lubricants
|
|
HEP |
|
Corporate,
|
|
Consolidated
|
|||||||||
|
|
(In thousands) |
|||||||||||||||||
Nine Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|||||||||||
Sales and other revenues: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenues from external customers |
|
$ |
6,880,444 |
|
|
$ |
1,330,021 |
|
|
$ |
72,410 |
|
$ |
— |
|
|
$ |
8,282,875 |
|
Intersegment revenues |
|
178,039 |
|
|
8,911 |
|
|
297,982 |
|
(484,932 |
) |
|
— |
|
|||||
|
|
$ |
7,058,483 |
|
|
$ |
1,338,932 |
|
|
$ |
370,392 |
|
$ |
(484,932 |
) |
|
$ |
8,282,875 |
|
Cost of products sold (exclusive of lower of cost or market inventory) |
|
$ |
6,113,530 |
|
|
$ |
952,430 |
|
|
$ |
— |
|
$ |
(418,000 |
) |
|
$ |
6,647,960 |
|
Lower of cost or market inventory valuation adjustment |
|
$ |
227,711 |
|
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
227,711 |
|
Operating expenses |
|
$ |
754,612 |
|
|
$ |
156,459 |
|
|
$ |
109,721 |
|
$ |
(56,592 |
) |
|
$ |
964,200 |
|
Selling, general and administrative expenses |
|
$ |
94,677 |
|
|
$ |
121,654 |
|
|
$ |
7,569 |
|
$ |
13,659 |
|
|
$ |
237,559 |
|
Depreciation and amortization |
|
$ |
251,019 |
|
|
$ |
59,260 |
|
|
$ |
72,095 |
|
$ |
13,659 |
|
|
$ |
396,033 |
|
Long-lived asset impairment |
|
$ |
215,242 |
|
|
$ |
204,708 |
|
|
$ |
16,958 |
|
$ |
— |
|
|
$ |
436,908 |
|
Income (loss) from operations |
|
$ |
(598,308 |
) |
|
$ |
(155,579 |
) |
|
$ |
164,049 |
|
$ |
(37,658 |
) |
|
$ |
(627,496 |
) |
Income (loss) before interest and income taxes |
|
$ |
(598,308 |
) |
|
$ |
(155,847 |
) |
|
$ |
185,593 |
|
$ |
39,043 |
|
|
$ |
(529,519 |
) |
Net income attributable to noncontrolling interest |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
4,158 |
|
$ |
59,195 |
|
|
$ |
63,353 |
|
Earnings of equity method investments |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5,186 |
|
$ |
— |
|
|
$ |
5,186 |
|
Capital expenditures |
|
$ |
106,856 |
|
|
$ |
20,387 |
|
|
$ |
38,642 |
|
$ |
47,123 |
|
|
$ |
213,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Nine Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|||||||||||
Sales and other revenues: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenues from external customers |
|
$ |
11,446,841 |
|
|
$ |
1,568,241 |
|
|
$ |
89,388 |
|
$ |
220 |
|
|
$ |
13,104,690 |
|
Intersegment revenues |
|
244,799 |
|
|
8,157 |
|
|
311,755 |
|
(564,711 |
) |
|
— |
|
|||||
|
|
$ |
11,691,640 |
|
|
$ |
1,576,398 |
|
|
$ |
401,143 |
|
$ |
(564,491 |
) |
|
$ |
13,104,690 |
|
Cost of products sold (exclusive of lower of cost or market inventory) |
|
$ |
9,598,539 |
|
|
$ |
1,202,296 |
|
|
$ |
— |
|
$ |
(492,979 |
) |
|
$ |
10,307,856 |
|
Lower of cost or market inventory valuation adjustment |
|
$ |
(150,483 |
) |
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
(150,483 |
) |
Operating expenses |
|
$ |
794,081 |
|
|
$ |
170,655 |
|
|
$ |
123,045 |
|
$ |
(77,359 |
) |
|
$ |
1,010,422 |
|
Selling, general and administrative expenses |
|
$ |
88,322 |
|
|
$ |
125,681 |
|
|
$ |
7,322 |
|
$ |
39,652 |
|
|
$ |
260,977 |
|
Depreciation and amortization |
|
$ |
227,405 |
|
|
$ |
65,891 |
|
|
$ |
72,192 |
|
$ |
9,857 |
|
|
$ |
375,345 |
|
Goodwill impairment |
|
$ |
— |
|
|
$ |
152,712 |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
152,712 |
|
Income (loss) from operations |
|
$ |
1,133,776 |
|
|
$ |
(140,837 |
) |
|
$ |
198,584 |
|
$ |
(43,662 |
) |
|
$ |
1,147,861 |
|
Income (loss) before interest and income taxes |
|
$ |
1,133,776 |
|
|
$ |
(140,518 |
) |
|
$ |
238,910 |
|
$ |
(71,212 |
) |
|
$ |
1,160,956 |
|
Net income attributable to noncontrolling interest |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
3,524 |
|
$ |
75,976 |
|
|
$ |
79,500 |
|
Earnings of equity method investments |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5,217 |
|
$ |
— |
|
|
$ |
5,217 |
|
Capital expenditures |
|
$ |
129,167 |
|
|
$ |
25,887 |
|
|
$ |
23,828 |
|
$ |
16,175 |
|
|
$ |
195,057 |
|
|
|
Refining |
|
Lubricants
|
|
HEP |
|
Corporate,
|
|
Consolidated
|
||||||||||
|
|
(In thousands) |
||||||||||||||||||
September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents |
|
$ |
6,085 |
|
|
$ |
211,646 |
|
|
$ |
18,091 |
|
|
$ |
1,289,066 |
|
|
$ |
1,524,888 |
|
Total assets |
|
$ |
6,197,301 |
|
|
$ |
1,933,482 |
|
|
$ |
2,193,770 |
|
|
$ |
1,255,188 |
|
|
$ |
11,579,741 |
|
Long-term debt |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,439,874 |
|
|
$ |
1,736,475 |
|
|
$ |
3,176,349 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents |
|
$ |
9,755 |
|
|
$ |
169,277 |
|
|
$ |
13,287 |
|
|
$ |
692,843 |
|
|
$ |
885,162 |
|
Total assets |
|
$ |
7,189,094 |
|
|
$ |
2,223,418 |
|
|
$ |
2,205,437 |
|
|
$ |
546,892 |
|
|
$ |
12,164,841 |
|
Long-term debt |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,462,031 |
|
|
$ |
993,609 |
|
|
$ |
2,455,640 |
|
Richard L. Voliva III, Executive Vice President and Chief Financial Officer
Craig Biery, Vice President, Investor Relations
HollyFrontier Corporation
214-954-6510
Value creation and cost-cutting measures in a hard-oil and gas market create demand for document digitization
HOUSTON--(BUSINESS WIRE)--Quorum Software (Quorum), the leader in digital transformation for the oil and gas industry, today announced recent product enhancements and adoption data for myQuorum DynamicDocs, the company's cloud-based document management system purpose-built for oil and gas. In the 12 months since Quorum first announced its introduction, DynamicDocs has experienced strong industry adoption, now classifying and managing more than 10 million documents, spanning more than 200,000 assets, and 1,500 software users. Value creation and cost-cutting are the primary drivers behind document digitization initiatives during a historically tumultuous year for the industry.
DynamicDocs is now natively integrated into the myQuorum platform, providing robust, industry-specific document management alongside the most comprehensive suite of transactional, operational and accounting solutions. The integration bridges the Upstream paper-to-digital divide seamlessly and continues to build out unique workflows made possible only with the breadth of Quorum’s full suite of offerings. Within context of their standard business processes and applications, users have access to source documents, easy-to-use search options and a host of other capabilities.
"Security, agility, and compliance are the main reasons why an energy CIO or chief data officer would take on digital transformations under normal circumstances," said Tyson Greer, chief product officer of Quorum Software. "In an exceedingly volatile year, the bar is higher for projects to get greenlit. Digitizing document-based workflows is in demand because it increases business agility and operational efficiency; when paired with native integrations to other Quorum apps, it accelerates time to value for Quorum customers looking to advance their digitization significantly."
Across any industry, companies look to digitization for lower real estate costs related to the storage and retention of physical files, greater access to documents from anywhere, anytime, in a secure environment and greater efficiency in document-related workflows that save time and resources. Reasons unique to oil and gas include lower administration costs from time saved scanning, classifying, searching, and maintaining complex industry characteristics. Moreover, current market conditions have increased acquisition and divestiture activity; therefore, digital documents underpin virtual data rooms where assets are being analyzed and valued.
DynamicDocs provides a single source for storing documents, eliminating the proliferation of files across physical and digital storage. Because DynamicDocs is designed for oil and gas, it classifies industry-specific documents with a level of precision unmatched by other document management systems. Easy-to-use features allow upstream companies to set up document-level security, onboarding or divesting assets quickly and reducing risk while saving time and money.
Because DynamicDocs is a cloud-based SaaS solution, oil and gas companies benefit from an accelerated release schedule for faster access to new capabilities. Recent enhancements include:
Customer Testimonials:
Throughout November, Quorum is hosting a three-part webinar series on document management for the oil and gas industry, "Cloud Rescue: Digital Strategies to Eliminate Document Chaos." Speakers include industry leaders from Merit Energy and Camino Natural Resources and digitization experts from DataBank and Quorum.
About Quorum Software
Quorum Software offers an industry-leading portfolio of finance, operations and accounting solutions that empower our customers to streamline operations that drive growth and profitability across the energy value chain. From supermajors to startups, from the wellhead to the city gate, energy businesses rely on Quorum. Designed for digital transformation, the myQuorum software platform delivers open standards, mobile-first design and cloud technologies to drive innovation. We're helping visionary leaders transform their companies into modern energy workplaces. For more information, visit https://www.quorumsoftware.com/.
Media Contact:
Jenna Billings
This email address is being protected from spambots. You need JavaScript enabled to view it.
978-618-8424
HOUSTON--(BUSINESS WIRE)--Nine Energy Service, Inc. ("Nine" or the "Company") (NYSE: NINE) reported third quarter 2020 revenues of $49.5 million, net loss of $(18.5) million and adjusted EBITDA of $(11.1) million. For the third quarter 2020, adjusted net lossB was $(33.8) million, or $(1.13) adjusted basic loss per shareC.
“The US market remained very challenged in Q3 with total US completions and new wells drilled down again quarter over quarter,” said Ann Fox, President and Chief Executive Officer, Nine Energy Service. “That said, we believe that we have passed through the trough during the May-June timeframe and we saw sequential activity and revenue increases month over month throughout the course of Q3, but did not reach April revenue or activity levels. Although the percentage basis increases appear very robust, the absolute activity levels remain bleak with increases coming off a very low base. We do expect Q4 to be better sequentially than Q3 from an activity and revenue perspective. As activity returns, however many competitors are trying to buy market share, driving down prices and offsetting much of the revenue increases.”
“This quarter, our team capitalized on opportunities that better position the company from a financial and operational perspective. Once again, we saw an opportunity to purchase additional bonds on the open market at a significant discount, lowering our annual cash interest expense, while reducing our overall debt outstanding. During and subsequent to Q3, the Company repurchased $23.6 million par value of bonds for $7.2 million of cash. To date, Nine has repurchased approximately $53.3 million of bonds for $14.6 million leaving $346.7 million of bonds outstanding and an undrawn ABL. We have been very purposeful in balancing near and medium-term liquidity needs with the refinancing of our debt and our top priority continues to be the preservation of cash. On the operational side, we organically expanded cementing into the Haynesville, adding size and scale to the cementing service line without increasing our 2020 capex guidance of $10-$15 million.”
“On the technology side, I remain extremely happy with the performance of our dissolvable plugs and the customers’ appetite for a dissolvable option. We are currently running trials with some of the largest acreage holders with over 80% of the tools deployed run by public operators across multiple basins. We also continue to penetrate the cold temperature markets, running approximately 35% of the low-temp Stinger products in the Permian and approximately 46% in the Northeast. We are confident once we see a real recovery in activity, the dissolvable tools will begin generating growth.”
“Our operational team once again demonstrated their ability to gain market share, growing our percentage of stages completed from approximately 16% in Q3 of 2019 to approximately 22% in Q3 of 2020. I am confident we can continue to differentiate through our service execution and technology and be well positioned as activity increases.”
Operating Results
During the third quarter of 2020, the Company reported revenues of $49.5 million with adjusted gross lossD of $(3.0) million. During the third quarter, the Company generated ROICE of (29)%.
During the third quarter of 2020, the Company reported selling, general and administrative (“SG&A”) expense of $10.7 million, compared to $11.3 million for the second quarter of 2020. Depreciation and amortization expense ("D&A") in the third quarter of 2020 was $11.9 million, compared to $12.6 million for the second quarter of 2020.
The Company’s tax benefit for the three and nine months ended September 30, 2020 was less than $0.1 million and $2.3 million, respectively. The Company’s year-to-date tax benefit was primarily a result of the discrete tax benefit recorded in the first quarter of 2020 related to the Coronavirus Aid, Relief, and Economic Security Act as well as the release of valuation allowance due to the goodwill impairment which was also recorded in the first quarter of 2020.
Liquidity and Capital Expenditures
During the third quarter of 2020, the Company reported net cash provided by operating activities of $2.3 million, compared to $1.6 million for the second quarter of 2020. Capital expenditures totaled $2.2 million during the third quarter of 2020.
As of September 30, 2020, Nine’s cash and cash equivalents were $80.3 million, and the Company had $39.5 million of availability under the revolving credit facility, which remains undrawn, resulting in a total liquidity position of $119.8 million as of September 30, 2020. Availability under the revolving credit facility decreased as compared to June 30, 2020 due to a reduction in accounts receivable and inventory balances.
During the third quarter, the Company repurchased approximately $23.1 million of the senior notes for a repurchase price of approximately $7.0 million in cash. As a result, the Company recorded a $15.8 million gain on extinguishment of debt with no cash tax obligation. Subsequent to September 30, 2020, the Company repurchased an additional $0.5 million of the senior notes for a repurchase price of approximately $0.2 million in cash. To date, the Company has repurchased approximately $53.3 million of the senior notes for a repurchase price of approximately $14.6 million in cash, leaving $346.7 million of bonds outstanding.
ABCDESee end of press release for definitions
Conference Call Information
The call is scheduled for Thursday, November 5, 2020 at 9:00 am Central Time. Participants may join the live conference call by dialing U.S. (Toll Free): (877) 524-8416 or International: (412) 902-1028 and asking for the “Nine Energy Service Earnings Call”. Participants are encouraged to dial into the conference call ten to fifteen minutes before the scheduled start time to avoid any delays entering the earnings call.
For those who cannot listen to the live call, a telephonic replay of the call will be available through November 19, 2020 and may be accessed by dialing U.S. (Toll Free): (877) 660-6853 or International: (201) 612-7415 and entering the passcode of 13707026.
About Nine Energy Service
Nine Energy Service is an oilfield services company that offers completion solutions within North America and abroad. The Company brings years of experience with a deep commitment to serving clients with smarter, customized solutions and world-class resources that drive efficiencies. Serving the global oil and gas industry, Nine continues to differentiate itself through superior service quality, wellsite execution and cutting-edge technology. Nine is headquartered in Houston, Texas with operating facilities in the Permian, Eagle Ford, SCOOP/STACK, Niobrara, Barnett, Bakken, Marcellus, Utica and Canada.
For more information on the Company, please visit Nine’s website at nineenergyservice.com.
Forward Looking Statements
The foregoing contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risks and uncertainties. Forward-looking statements also include statements that refer to or are based on projections, uncertain events or assumptions. The forward-looking statements included herein are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Such risks and uncertainties include, among other things, the severity and duration of the COVID-19 pandemic, related economic repercussions and the resulting negative impact on demand for oil and gas; the current significant surplus in the supply of oil and the ability of the OPEC+ countries to agree on and comply with supply limitations; the duration and magnitude of the unprecedented disruption in the oil and gas industry currently resulting from the impact of the foregoing factors, which is negatively impacting our business; operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions; pricing pressures, reduced sales, or reduced market share as a result of intense competition in the markets for the Company’s dissolvable plug products; the Company’s ability to implement and commercialize new technologies, services and tools; the Company’s ability to grow its completion tool business; the Company’s ability to reduce capital expenditures; the Company’s ability to accurately predict customer demand; the loss of, or interruption or delay in operations by, one or more significant customers; the loss of or interruption in operations of one or more key suppliers; the adequacy of the Company’s capital resources and liquidity; the incurrence of significant costs and liabilities resulting from litigation; the loss of, or inability to attract, key personnel; the Company’s ability to successfully integrate recently acquired assets and operations and realize anticipated revenues, cost savings or other benefits thereof; and other factors described in the “Risk Factors” and “Business” sections of the Company’s most recently filed Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof, and, except as required by law, the Company undertakes no obligation to update those statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments.
NINE ENERGY SERVICE, INC. |
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) |
||||||||
(In Thousands, Except Per Share Amounts) |
||||||||
(Unaudited) |
||||||||
Three Months Ended |
||||||||
September 30,
|
June 30,
|
|||||||
Revenues |
$ |
49,521 |
|
$ |
52,735 |
|
||
Cost and expenses |
||||||||
Cost of revenues (exclusive of depreciation and |
||||||||
| amortization shown separately below) |
|
52,483 |
|
|
56,703 |
|
||
General and administrative expenses |
|
10,701 |
|
|
11,284 |
|
||
Depreciation |
|
7,763 |
|
|
8,449 |
|
||
Amortization of intangibles |
|
4,091 |
|
|
4,116 |
|
||
Loss on revaluation of contingent liabilities |
|
297 |
|
|
910 |
|
||
Gain on sale of property and equipment |
|
(535 |
) |
|
(1,790 |
) |
||
| Loss from operations |
|
(25,279 |
) |
|
(26,937 |
) |
||
Interest expense |
|
9,130 |
|
|
9,186 |
|
||
Interest income |
|
(43 |
) |
|
(179 |
) |
||
Gain on extinguishment of debt |
|
(15,798 |
) |
|
(11,587 |
) |
||
Other income |
|
(29 |
) |
|
- |
|
||
| Loss before income taxes |
|
(18,539 |
) |
|
(24,357 |
) |
||
Benefit for income taxes |
|
(37 |
) |
|
(186 |
) |
||
| Net loss | $ |
(18,502 |
) |
$ |
(24,171 |
) |
||
Loss per share |
||||||||
| Basic | $ |
(0.62 |
) |
$ |
(0.81 |
) |
||
| Diluted | $ |
(0.62 |
) |
$ |
(0.81 |
) |
||
Weighted average shares outstanding |
||||||||
| Basic |
|
29,849,753 |
|
|
29,844,240 |
|
||
| Diluted |
|
29,849,753 |
|
|
29,844,240 |
|
||
Other comprehensive income (loss), net of tax |
||||||||
Foreign currency translation adjustments, net of tax of $0 and $0 |
$ |
132 |
|
$ |
207 |
|
||
| Total other comprehensive income, net of tax |
|
132 |
|
|
207 |
|
||
| Total comprehensive loss | $ |
(18,370 |
) |
$ |
(23,964 |
) |
||
NINE ENERGY SERVICE, INC. |
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(In Thousands) |
||||||||
(Unaudited) |
||||||||
September 30,
|
June 30,
|
|||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ |
80,338 |
|
$ |
88,678 |
|
||
Accounts receivable, net |
|
34,805 |
|
|
39,376 |
|
||
Income taxes receivable |
|
1,246 |
|
|
630 |
|
||
Inventories, net |
|
52,683 |
|
|
59,333 |
|
||
Prepaid expenses and other current assets |
|
19,526 |
|
|
19,291 |
|
||
Total current assets |
|
188,598 |
|
|
207,308 |
|
||
Property and equipment, net |
|
108,986 |
|
|
115,258 |
|
||
Intangible assets, net |
|
136,615 |
|
|
140,706 |
|
||
Other long-term assets |
|
4,260 |
|
|
5,587 |
|
||
Total assets |
$ |
438,459 |
|
$ |
468,859 |
|
||
Liabilities and Stockholders’ Equity |
||||||||
Current liabilities |
||||||||
Accounts payable |
$ |
10,022 |
|
$ |
11,114 |
|
||
Accrued expenses |
|
23,236 |
|
|
16,056 |
|
||
Current portion of long-term debt |
|
844 |
|
|
563 |
|
||
Current portion of capital lease obligations |
|
1,067 |
|
|
1,043 |
|
||
Total current liabilities |
|
35,169 |
|
|
28,776 |
|
||
Long-term liabilities |
||||||||
Long-term debt |
|
343,036 |
|
|
365,632 |
|
||
Long-term capital lease obligations |
|
1,391 |
|
|
1,667 |
|
||
Other long-term liabilities |
|
5,264 |
|
|
2,834 |
|
||
Total liabilities |
|
384,860 |
|
|
398,909 |
|
||
Stockholders’ equity |
||||||||
Common stock (120,000,000 shares authorized at $.01 par value; 31,570,926 and 31,652,635 shares issued and outstanding at September 30, 2020 and June 30, 2020, respectively) |
|
316 |
|
|
317 |
|
||
Additional paid-in capital |
|
766,402 |
|
|
764,382 |
|
||
Accumulated other comprehensive loss |
|
(4,731 |
) |
|
(4,863 |
) |
||
Accumulated deficit |
|
(708,388 |
) |
|
(689,886 |
) |
||
Total stockholders’ equity |
|
53,599 |
|
|
69,950 |
|
||
Total liabilities and stockholders’ equity |
$ |
438,459 |
|
$ |
468,859 |
|
||
NINE ENERGY SERVICE, INC. |
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(In Thousands) |
||||||||
(Unaudited) |
||||||||
Three Months Ended |
||||||||
September 30,
|
June 30,
|
|||||||
Cash flows from operating activities |
||||||||
Net loss |
$ |
(18,502 |
) |
$ |
(24,171 |
) |
||
Adjustments to reconcile net loss to net cash provided by operating activities |
||||||||
Depreciation |
|
7,763 |
|
|
8,449 |
|
||
Amortization of intangibles |
|
4,091 |
|
|
4,116 |
|
||
Amortization of deferred financing costs |
|
705 |
|
|
710 |
|
||
Provision for doubtful accounts |
|
668 |
|
|
1,741 |
|
||
Provision for inventory obsolescence |
|
1,407 |
|
|
241 |
|
||
Stock-based compensation expense |
|
2,020 |
|
|
2,105 |
|
||
Gain on extinguishment of debt |
|
(15,798 |
) |
|
(11,587 |
) |
||
Gain on sale of property and equipment |
|
(535 |
) |
|
(1,790 |
) |
||
Loss on revaluation of contingent liabilities |
|
297 |
|
|
910 |
|
||
Changes in operating assets and liabilities, net of effects from acquisitions |
||||||||
Accounts receivable, net |
|
3,921 |
|
|
51,585 |
|
||
Inventories, net |
|
5,285 |
|
|
3,610 |
|
||
Prepaid expenses and other current assets |
|
201 |
|
|
(4,067 |
) |
||
Accounts payable and accrued expenses |
|
9,083 |
|
|
(32,943 |
) |
||
Income taxes receivable/payable |
|
(616 |
) |
|
180 |
|
||
Other assets and liabilities |
|
2,291 |
|
|
2,525 |
|
||
Net cash provided by operating activities |
|
2,281 |
|
|
1,614 |
|
||
Cash flows from investing activities |
||||||||
Proceeds from sales of property and equipment |
|
1,843 |
|
|
3,213 |
|
||
Proceeds from property and equipment casualty losses |
|
- |
|
|
127 |
|
||
Purchases of property and equipment |
|
(4,161 |
) |
|
(2,107 |
) |
||
Net cash provided by (used in) investing activities |
|
(2,318 |
) |
|
1,233 |
|
||
Cash flows from financing activities |
||||||||
Purchases of senior notes |
|
(6,996 |
) |
|
(3,959 |
) |
||
Payments on capital leases |
|
(252 |
) |
|
(246 |
) |
||
Payments of contingent liability |
|
(1,125 |
) |
|
(108 |
) |
||
Vesting of restricted stock |
|
(1 |
) |
|
(42 |
) |
||
Net cash used in financing activities |
|
(8,374 |
) |
|
(4,355 |
) |
||
Impact of foreign currency exchange on cash |
|
71 |
|
|
70 |
|
||
Net decrease in cash and cash equivalents |
|
(8,340 |
) |
|
(1,438 |
) |
||
Cash and cash equivalents |
||||||||
Beginning of period |
|
88,678 |
|
|
90,116 |
|
||
End of period |
$ |
80,338 |
|
$ |
88,678 |
|
||
NINE ENERGY SERVICE, INC. |
||||||||
RECONCILIATION OF ADJUSTED GROSS PROFIT (LOSS) |
||||||||
(In Thousands) |
||||||||
(Unaudited) |
||||||||
Three Months Ended |
||||||||
September 30,
|
June 30,
|
|||||||
Calculation of gross loss |
||||||||
Revenues |
$ |
49,521 |
|
$ |
52,735 |
|
||
Cost of revenues (exclusive of depreciation and |
||||||||
| amortization shown separately below) |
|
52,483 |
|
|
56,703 |
|
||
Depreciation (related to cost of revenues) |
|
7,219 |
|
|
7,858 |
|
||
Amortization of intangibles |
|
4,091 |
|
|
4,116 |
|
||
Gross loss |
$ |
(14,272 |
) |
$ |
(15,942 |
) |
||
Adjusted gross loss reconciliation |
||||||||
Gross loss |
$ |
(14,272 |
) |
$ |
(15,942 |
) |
||
Depreciation (related to cost of revenues) |
|
7,219 |
|
|
7,858 |
|
||
Amortization of intangibles |
|
4,091 |
|
|
4,116 |
|
||
Adjusted gross loss |
$ |
(2,962 |
) |
$ |
(3,968 |
) |
||
NINE ENERGY SERVICE, INC. |
||||||||
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA |
||||||||
(In Thousands) |
||||||||
(Unaudited) |
||||||||
Three Months Ended |
||||||||
September 30,
|
|
June 30,
|
||||||
EBITDA reconciliation: |
||||||||
Net loss |
$ |
(18,502 |
) |
$ |
(24,171 |
) |
||
Interest expense |
|
9,130 |
|
|
9,186 |
|
||
Interest income |
|
(43 |
) |
|
(179 |
) |
||
Depreciation |
|
7,763 |
|
|
8,449 |
|
||
Amortization of intangibles |
|
4,091 |
|
|
4,116 |
|
||
Benefit for income taxes |
|
(37 |
) |
|
(186 |
) |
||
EBITDA |
$ |
2,402 |
|
$ |
(2,785 |
) |
||
Loss on revaluation of contingent liabilities (1) |
|
297 |
|
|
910 |
|
||
Gain on extinguishment of debt |
|
(15,798 |
) |
|
(11,587 |
) |
||
Restructuring charges |
|
459 |
|
|
2,094 |
|
||
Stock-based compensation expense |
|
2,020 |
|
|
2,105 |
|
||
Gain on sale of property and equipment |
|
(535 |
) |
|
(1,790 |
) |
||
Legal fees and settlements (2) |
|
15 |
|
|
20 |
|
||
Adjusted EBITDA |
$ |
(11,140 |
) |
$ |
(11,033 |
) |
||
(1) Amounts relate to the revaluation of contingent liabilities associated with the Company's 2018 acquisitions. |
||||||
(2) Amounts represent fees and legal settlements associated with legal proceedings brought pursuant to the |
||||||
Fair Labor Standards Act and/or similar state laws. |
NINE ENERGY SERVICE, INC. |
||||||||
RECONCILIATION OF ROIC CALCULATION |
||||||||
(In Thousands) |
||||||||
(Unaudited) |
||||||||
Three Months Ended |
||||||||
September 30,
|
June 30,
|
|||||||
Net loss |
$ |
(18,502 |
) |
$ |
(24,171 |
) |
||
Add back: |
||||||||
Interest expense |
|
9,130 |
|
|
9,186 |
|
||
Interest income |
|
(43 |
) |
|
(179 |
) |
||
Restructuring charges |
|
459 |
|
|
2,094 |
|
||
Gain on extinguishment of debt |
|
(15,798 |
) |
|
(11,587 |
) |
||
After-tax net operating loss |
$ |
(24,754 |
) |
$ |
(24,657 |
) |
||
Total capital as of prior period-end: |
||||||||
Total stockholders' equity |
$ |
69,950 |
|
$ |
91,851 |
|
||
Total debt |
|
372,584 |
|
|
386,171 |
|
||
Less cash and cash equivalents |
|
(88,678 |
) |
|
(90,116 |
) |
||
Total capital as of prior period-end |
$ |
353,856 |
|
$ |
387,906 |
|
||
Total capital as of period-end: |
||||||||
Total stockholders' equity |
$ |
53,599 |
|
$ |
69,950 |
|
||
Total debt |
|
349,418 |
|
|
372,584 |
|
||
Less: cash and cash equivalents |
|
(80,338 |
) |
|
(88,678 |
) |
||
Total capital as of period-end: |
$ |
322,679 |
|
$ |
353,856 |
|
||
|
|
|||||||
Average total capital |
$ |
338,268 |
|
$ |
370,881 |
|
||
ROIC |
|
-29 |
% |
|
-27 |
% |
||
NINE ENERGY SERVICE, INC. |
|||||||
RECONCILIATION OF ADJUSTED BASIC EARNINGS (LOSS) PER SHARE CALCULATION |
|||||||
(In Thousands) |
|||||||
(Unaudited) |
|||||||
Three Months Ended |
|||||||
September 30,
|
June 30,
|
||||||
Reconciliation of adjusted net loss: |
|||||||
Net loss |
$ |
(18,502 |
) |
$ |
(24,171 |
) |
|
Add back: |
|||||||
Restructuring charges |
|
459 |
|
|
2,094 |
|
|
Gain on extinguishment of debt (a) |
|
(15,798 |
) |
|
(11,587 |
) |
|
Less: Tax benefit from add-backs |
|
- |
|
|
- |
|
|
Adjusted net loss |
$ |
(33,841 |
) |
$ |
(33,664 |
) |
|
Weighted average shares |
|||||||
Weighted average shares outstanding for basic and |
|
29,849,753 |
|
|
29,844,240 |
|
|
adjusted basic earnings (loss) per share |
|||||||
Loss per share: |
|||||||
Basic loss per share |
$ |
(0.62 |
) |
$ |
(0.81 |
) |
|
Adjusted basic loss per share |
$ |
(1.13 |
) |
$ |
(1.13 |
) |
|
(a) Amounts primarily represent the difference between the repurchase price and the carrying |
||
amount of senior notes repurchased during the respective period. |
AAdjusted EBITDA is defined as net income (loss) before interest, taxes, and depreciation and amortization, further adjusted for (i) property and equipment, goodwill, and/or intangible asset impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) loss or gain on revaluation of contingent liabilities, (iv) gain on the extinguishment of debt, (v) loss or gain on the sale of subsidiaries, (vi) restructuring charges, (vii) stock-based compensation expense, (viii) loss or gain on sale of property and equipment, and (ix) other expenses or charges to exclude certain items which we believe are not reflective of ongoing performance of our business, such as legal expenses and settlement costs related to litigation outside the ordinary course of business. Management believes Adjusted EBITDA is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure and helps identify underlying trends in our operations that could otherwise be distorted by the effect of the impairments, acquisitions and dispositions and costs that are not reflective of the ongoing performance of our business.
BAdjusted Net Income (Loss) is defined as net income (loss) adjusted for (i) property and equipment, goodwill, and/or intangible asset impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) restructuring charges, (iv) loss or gain on the sale of subsidiaries, (v) gain on the extinguishment of debt and (vi) tax impact of such adjustments. Management believes Adjusted Net Income (Loss) is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period and helps identify underlying trends in our operations that could otherwise be distorted by the effect of the impairments and acquisitions.
CAdjusted Basic Earnings (Loss) Per Share is defined as adjusted net income (loss), divided by weighted average basic shares outstanding. Management believes Adjusted Basic Earnings (loss) Per Share is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period and help identify underlying trends in our operations that could otherwise be distorted by the effect of the impairments and acquisitions.
DAdjusted Gross Profit (Loss) is defined as revenues less cost of revenues excluding depreciation and amortization. This measure differs from the GAAP definition of gross profit (loss) because we do not include the impact of depreciation and amortization, which represent non-cash expenses. Our management uses adjusted gross profit (loss) to evaluate operating performance. We prepare adjusted gross profit (loss) to eliminate the impact of depreciation and amortization because we do not consider depreciation and amortization indicative of our core operating performance.
EReturn on Invested Capital (“ROIC”) is defined as after-tax net operating profit (loss), divided by average total capital. We define after-tax net operating profit (loss) as net income (loss) plus (i) property and equipment, goodwill, and/or intangible asset impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) interest expense (income), (iv) restructuring charges, (v) loss or gain on the sale of subsidiaries, (vi) gain on extinguishment of debt, and (vii) the provision or benefit for deferred income taxes. We define total capital as book value of equity plus the book value of debt less balance sheet cash and cash equivalents. We compute the average of the current and prior period-end total capital for use in this analysis. Management believes ROIC is a meaningful measure because it quantifies how well we generate operating income relative to the capital we have invested in our business and illustrates the profitability of a business or project taking into account the capital invested. Management uses ROIC to assist them in making capital resource allocation decisions and in evaluating business performance.
Nine Energy Service Investor Contact:
Heather Schmidt
Vice President, Strategic Development, Investor Relations and Marketing
(281) 730-5113
This email address is being protected from spambots. You need JavaScript enabled to view it.
Portions of Funding to Support 7 Tribal Communities, Residents in 3 Counties Affected by Recent Wildfires
Funding Includes $25,000 to American Red Cross for Evacuation Shelters
SAN FRANCISCO--(BUSINESS WIRE)--As part of an ongoing commitment to supporting residents displaced and impacted by wildfires during this historic California wildfire season, Pacific Gas and Electric Company (PG&E) and The PG&E Corporation Foundation (The Foundation) will contribute $250,000 to tribal communities and organizations assisting residents affected by recent wildfires. These charitable contributions are part of an overall pledge of $1 million for wildfire relief and recovery efforts during this fire season.
This latest phase of funding will support seven tribal communities in Butte, Fresno, Glenn, Humboldt, Madera and Siskiyou counties. The grants will be used for food distribution programs and general relief efforts.
“The Enterprise Rancheria Estom Yumeka Maidu Tribe was heavily impacted by the recent North Complex fires that swept through our communities. Our entire trust land in Butte County and surrounding ancestral homeland was completely burned over, in addition, we had nine tribal member homes destroyed, several dozen members evacuated for weeks and power is still disrupted to our housing community above Lake Oroville. The generous donation from PG&E is essential in assisting our tribal members with the necessities to start on the path to recovery from the devastation from losing their homes and in some cases, their livelihoods. We thank PG&E for their commitment to help our tribal community and truly uphold the value of ‘We are better together,’” said Glenda Nelson, Tribal Chairwoman.
The contributions also will assist residents and communities recovering from recent wildfires in Napa, Sonoma and Shasta counties. This includes a total of $150,000 to support initial relief and recovery efforts on the Glass Fire and Zogg Fire.
“This wildfire season continues to challenge first-responders, volunteers and organizations focused on helping Californians, including members of tribal communities, as they recover from disasters. We’re grateful for their service and will continue to look for ways to support their mission of caring for those affected by these devastating wildfires,” said Robert Kenney, PG&E Vice President of Regulatory and External Affairs.
Included in the contributions announced today, PG&E is providing $25,000 to the American Red Cross to support emergency assistance to people impacted by wildfires, including a place to sleep, warm meals, clothing and counseling.
Continuing Support for Affected Communities
As part of the combined PG&E and The Foundation total commitment of $1 million for wildfire relief and recovery efforts this year, PG&E previously made the following contributions:
These charitable contributions come either from shareholder funds or The Foundation, not PG&E customers.
About PG&E
Pacific Gas and Electric Company, a subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest combined natural gas and electric energy companies in the United States. Based in San Francisco, with more than 23,000 employees, the company delivers some of the nation's cleanest energy to 16 million people in Northern and Central California. For more information, visit pge.com and pge.com/news.
MEDIA RELATIONS:
415-973-5930
PITTSBURGH--(BUSINESS WIRE)--Wabtec Corporation (NYSE: WAB) has been notified of an unsolicited “mini-tender offer” by TRC Capital Investment Corporation, a private Canadian investment company, to purchase up to two million shares of Wabtec’s common stock at a price of $59.25 per share in cash. TRC Capital’s offer price is approximately 4.53% lower than the $62.06 closing price of Wabtec’s common stock on October 23, 2020, the last trading day prior to the date of the offer (October 26, 2020).
Wabtec is not associated in any way with TRC Capital or its mini-tender offer.
Wabtec does not endorse TRC Capital’s unsolicited mini-tender offer and recommends stockholders do not tender their shares because the offer is at a price below the current market value of Wabtec’s shares and is subject to numerous conditions. In addition, mini-tender offers, such as this one by TRC Capital, avoid many of the investor protections afforded to larger tender offers, including the filing of disclosure and other tender offer documents with the U.S. Securities and Exchange Commission (SEC), as well as other procedures mandated by U.S. securities laws. TRC Capital has made similar, unsolicited min-tender offers for shares of other publicly traded companies.
The SEC has issued “Tips for Investors” regarding mini-tender offers, noting that some bidders, in making offers at below-market prices, are “hoping that they will catch investors off guard if the investors do not compare the offer price to the current market price.” The SEC’s advisory may be found on the SEC website at http://www.sec.gov/investor/pubs/minitend.htm
TRC Capital has made its offer subject to numerous conditions and can terminate the offer if the price of Wabtec’s common stock on the New York Stock Exchange decreases below the $59.25 offer price before the offer expires at 12:01 AM EST on November 24, 2020.
Wabtec urges stockholders to obtain current market quotations for their shares of common stock, consult their broker or financial advisor, and exercise caution with respect to TRC Capital’s offer.
Wabtec recommends that stockholders who have not responded to TRC Capital’s offer take no action. Wabtec stockholders who have already tendered their shares may withdraw their shares by providing the written notice described in the TRC Capital offering documents prior to the expiration of the offer. Wabtec urges brokers, dealers and other market participants to review the SEC’s recommendations to broker-dealers in these circumstances, which can be found on the SEC website at http://www.sec.gov/divisions/marketreg/minitenders/sia072401.htm.
Wabtec requests that a copy of this news release be included with the distribution of any materials relating to TRC Capital’s mini-tender offer.
About Wabtec Corporation
Wabtec Corporation is a leading global provider of equipment, systems, digital solutions and value-added services for freight and transit rail. Drawing on nearly four centuries of collective experience across Wabtec, GE Transportation and Faiveley Transport, the company has unmatched digital expertise, technological innovation, and world-class manufacturing and services, enabling the digital-rail-and-transit ecosystems. Wabtec is focused on performance that drives progress, creating transportation solutions that move and improve the world. The freight portfolio features a comprehensive line of locomotives, software applications and a broad selection of mission-critical controls systems, including Positive Train Control (PTC). The transit portfolio provides highly engineered systems and services to virtually every major rail transit system around the world, supplying an integrated series of components for buses and all train-related market segments that deliver safety, efficiency and passenger comfort. Along with its industry-leading portfolio of products and solutions for the rail and transit industries, Wabtec is a leader in mining, marine, and industrial solutions. Based in Pittsburgh, PA, Visit: www.WabtecCorp.com
Wabtec Investor Contact
Kristine Kubacki, CFA / This email address is being protected from spambots. You need JavaScript enabled to view it. / 412-450-2033
Wabtec Media Contact
Deia Campanelli / This email address is being protected from spambots. You need JavaScript enabled to view it. / 773-297-0482
Multi-Emmy award-winning journalist Val Zavala to moderate conversation focused on one of the most pressing issues of the day – climate change, from an ocean perspective
LOS ANGELES--(BUSINESS WIRE)--AltaSea at the Port of Los Angeles announces an upcoming webinar with three of the leading scientists in the field of ocean innovation and conservation. The webinar will focus on the impacts that climate change is having on the ocean and ocean ecosystems, and the innovations that are leading the 21st century approach to find solutions. The webinar will take place on November 13 at 10 AM PST. Pre-registration is required, and space is limited. The link to sign up for the event is: AltaSea-Project-Blue.org/webinars/.
The webinar will feature Dr. Jennifer Smith and Dr. Sarah Purkey from Scripps Institution of Oceanography at the University of California San Diego, and Dr. Cara Field from The Marine Mammal Center in the Bay Area. The three accomplished scientists are recognized leaders in ocean health, conservation, and innovation – from the reefs to the mammals.
“The issue of climate change is increasingly becoming more central to the everyday lives of Americans – from dinner table conversations to presidential debates,” said AltaSea Founding Executive Director Jenny Krusoe. “These three women know it best – they’re on the frontlines of the fight every single day, and they see firsthand how it affects the ocean that Californians love.”
Krusoe will offer opening remarks to kick off the webinar.
Dr. Jennifer Smith is a professor in marine ecology and conservation in the Center for Marine Biodiversity and Conservation at Scripps Institution of Oceanography at UC San Diego. Smith’s research focuses on understanding the factors that influence community structure in marine ecosystems. Her research often goes beyond basic ecology by integrating conservation, restoration, management, and sustainability.
Dr. Sarah Purkey is an assistant professor of climate and atmospheric science and physical oceanography at Scripps Institution of Oceanography. As an oceanographer, her research is focused on quantifying temperature, salinity, and circulation changes in the global ocean, including the deep and abyssal layers – the regions of the ocean that are difficult to access with current technology. Much of her current research is focused on explaining the causes of deep warming, and advancing data collection and measurement in the global ocean.
Dr. Cara Field is the medical director at The Marine Mammal Center in Sausalito, the world’s largest marine mammal hospital. Dr. Field earned the status of Diplomate with a specialization in aquatic marine medicine – one of only 30 veterinarians in the nation to earn that distinction. Her work is focused on managing the care and health of the Center's marine mammal patients, spearheading numerous research projects, and teaching and mentoring the next generation of veterinarians and marine scientists.
The November 13 webinar is the latest in a series of webinars that AltaSea has hosted in 2020 following their launch of Project Blue, a digital education platform designed to provide science-based programming through webinars and live chats and inspire the next generation of explorers.
“This webinar is a prime example of what AltaSea is all about – to convene the greatest minds in the field of ocean conservation and innovation, all fighting for a common goal,” said Krusoe.
AltaSea and Scripps Institution of Oceanography recently joined forces in August to connect Scripps students, innovators, and scientists with AltaSea’s blue economy entrepreneurs for a broad-based research, education, public outreach, and workforce development partnership that is designed to bring about a greater understanding of the ocean and to advance the Blue Economy in Southern California.
Moderating the November 13 webinar will be the multi-Emmy award-winning journalist, Val Zavala. Zavala spent 30 years as a broadcast journalist at KCET in Los Angeles, winning numerous journalism awards. During her career, Zavala has covered a broad spectrum of Southern California issues, including politics, the environment, and the economy.
About AltaSea at the Port of Los Angeles
AltaSea at the Port of Los Angeles is dedicated to accelerating scientific collaboration, advancing an emerging blue economy through business innovation and job creation, and inspiring the next generation, all for a more sustainable, just, and equitable world.
For more information on AltaSea, please see our website: https://altasea.org
Jacob Scott
This email address is being protected from spambots. You need JavaScript enabled to view it.
Operating Income Increases 5 Percent Quarter Over Quarter
Proceeds From Sale of its Texas City Terminals to be Used to Improve Debt Metrics and Help Self-fund Capital Program
Outlines Commitment to West Coast Renewable Energy
Provides Updated 2020 and 2021 Outlook
SAN ANTONIO--(BUSINESS WIRE)--NuStar Energy L.P. (NYSE: NS) today reported operating income of $105 million for the third quarter of 2020, up $5 million, or 5 percent, from $100 million in the third quarter of 2019.
“The improvement in our operating income during these historically challenging times for our country and our industry demonstrate the resilience of our business and the quality of our assets,” said NuStar President and CEO Brad Barron.
“During the third quarter, when a window opened in high-yield bond markets, we were able to successfully issue $1.2 billion of new notes at attractive rates to repay the $500 million term loan we obtained in April to assure liquidity for our near-term debt maturities in the midst of pandemic-related second quarter 2020 bond market headwinds, as well as all of the outstanding borrowings under our revolving credit agreement,” said NuStar CFO Tom Shoaf.
“Our bond issuance not only allowed us to significantly reduce our interest expense, it also cleared our bond maturity runway for the next five years,” Shoaf noted.
NuStar’s repayment of the $500 million term loan required NuStar to record a $138 million non-operational charge, which resulted in a third quarter 2020 net loss of $96.6 million, or ($1.22) per unit, compared to net income from continuing operations of $52.6 million, or $0.15 per unit, in the third quarter of 2019.
“While the loan repayment resulted in the non-operational charge, the loan itself bridged us through a tough time period with mission-critical liquidity to weather the storm in the first half of 2020, and we are pleased to have put this COVID-related issue behind us,” Shoaf said.
Excluding the charge, third quarter 2020 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations were $180 million, an increase of $11 million, or 7 percent, over third quarter 2019 EBITDA from continuing operations.
|
Three Months Ended September 30, |
||||||||||
|
2020 -
|
|
2020 -
|
|
2019 |
||||||
|
|||||||||||
|
(Thousands of Dollars, Except Per Unit and Ratio Data) |
||||||||||
From continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
Operating income |
$ |
105,044 |
|
|
$ |
105,044 |
|
|
$ |
99,972 |
|
(Loss) income |
$ |
(96,640 |
) |
|
$ |
45,227 |
|
|
$ |
52,588 |
|
EPU |
$ |
(1.22 |
) |
|
$ |
0.08 |
|
|
$ |
0.15 |
|
EBITDA |
$ |
38,327 |
|
|
$ |
180,194 |
|
|
$ |
169,128 |
|
DCF |
$ |
(53,950 |
) |
|
$ |
83,954 |
|
|
$ |
87,842 |
|
Distribution coverage ratio |
n/a |
|
|
1.92x |
|
|
1.36x |
|
|||
“To provide an ‘apples-to-apples’ comparison with third quarter 2019 results, without the non-operational charge, NuStar’s third quarter 2020 adjusted net income was $45 million and adjusted earnings per unit (EPU) were $0.08 per unit. As mentioned previously, our adjusted EBITDA from continuing operations were $180 million for the third quarter of 2020, up $11 million or 7 percent from $169 million of EBITDA from continuing operations for the third quarter of 2019.
“Adjusted distributable cash flow (DCF) from continuing operations was $84 million for the third quarter of 2020, compared to $88 million in the third quarter of 2019, and the adjusted distribution coverage ratio to common limited partners from continuing operations was 1.92 times for the current period,” Shoaf concluded.
Barron commented, “Despite the many challenges that COVID-19 has posed for us, I continue to take tremendous pride in how well our employees have persevered in maintaining profitable and safe operations, while also ensuring that our nation has reliable access to the energy needed to overcome this pandemic and re-build our economy.
“Over the course of the third quarter and through October, we have continued to see demand rebound and return to levels at or near normal, pre-COVID levels in the markets we serve. In the third quarter alone, we moved 204 million barrels of crude oil and refined products through our pipelines and terminals, safely and responsibly. We saw refined product demand improve throughout the summer, and we have continued to see stable progress in October and thus far in November. On average, across our refined product systems, so far this quarter, we have returned to 100% of typical demand.
“Seeing sustained demand rebound on our refined products assets bodes well for our crude oil pipeline assets, as recovery in refined product demand should increase refinery utilization, which, in turn, should increase crude prices and production. We are pleased that our Permian crude volumes have remained steady. We averaged around 420,000 barrels per day in October, and our throughputs increased from an average of 401,000 barrels per day (BPD) in the second quarter to 422,000 BPD in the third quarter and November nominations are at 428,000 BPD. These numbers reflect the impact of our Permian system’s geological advantages, lower production costs and higher product quality, which distinguish our core-of-the-core assets in the Midland basin from other shale plays and also other gathering systems in the Permian.
“We are also seeing some indications of recovery in Corpus Christi exports as well, with throughputs increasing from an average of 306,000 BPD in the second quarter to 380,000 in the third quarter, which is above our minimum volume commitments of 377,000 BPD.”
Financial Strength and Resilience
Barron also noted, “While we are encouraged by the hopeful signs we see, we are also keenly aware of the uncertain environment we are facing, here in the U.S. and around the globe. But for the rest of this year and through 2021, we plan to remain focused on our strategic priorities to ensure we continue to build our financial strength and resilience by lowering our leverage and maximizing our ability to fund our spending with internally generated cash flow -- goals which have been aided by the following actions:
Commitment to West Coast Renewable Energy
Barron also discussed NuStar’s commitment to renewable fuels. “Our West Coast renewable fuels logistics network is a great example of the opportunities we are finding embedded in unfolding energy challenges,” Barron noted. “We have developed a series of low-multiple projects across our West Coast terminals in partnership with some of the largest renewables producers in the world to facilitate adoption of low-carbon fuel standards.”
Barron noted that NuStar’s West Coast renewable fuels projects play a significant a role in the low-carbon transition of the largest driving state in the nation. He further noted that in the first quarter of 2020, NuStar handled about 5 percent of California’s total biodiesel volumes; over 15 percent of its ethanol; and close to 30 percent of its renewable diesel volumes. “That’s an impressive share of a key market that we have achieved with a relatively modest investment,” Barron said. “And our market share, along with our associated EBITDA, will continue to ramp up through 2023.
“Our West Coast renewables initiative reflects our Business Development department’s ability to identify and find creative solutions for energy dislocations, adapting as our customers’ needs evolve. That ingenuity and innovation will continue to be the key to NuStar’s ability to thrive as we all navigate the nation’s energy future,” said Barron.
2020 and 2021 Outlook
Barron noted that given the resilience of NuStar’s business and the continued recovery in product demand, NuStar is raising its 2020 adjusted EBITDA outlook to be in the range of $690 to $730 million, which at the mid-point is six percent above its 2019 EBITDA from continuing operations.
“We expect NuStar’s 2021 EBITDA to be comparable to our 2020 results,” said Barron. “That is pretty impressive given that the pre-pandemic first quarter of 2020 was a record-breaker for NuStar on several fronts.
“We also expect our strategic and reliability capital spending for 2021 to be comparable to 2020.”
Barron closed by saying, “I am very proud that our business has continued to perform so well in this difficult year, as evidenced by our operating income and our segment operating income both being up this quarter, and not only outperforming our second quarter of 2020, but also outperforming the same period in 2019. These third quarter results once again demonstrate the diversity and resilience of our asset base even under challenging circumstances.”
Conference Call Details
A conference call with management is scheduled for 9:00 a.m. CT today, November 5, 2020. The partnership plans to discuss the third quarter 2020 earnings results, which will be released earlier that day. Investors interested in listening to the discussion may dial toll-free 844/889-7787, passcode 3097533. International callers may access the discussion by dialing 661/378-9931, passcode 3097533. The partnership intends to have a playback available following the discussion, which may be accessed by dialing toll-free 855/859-2056, passcode 3097533. International callers may access the playback by dialing 404/537-3406, passcode 3097533. The playback will be available until 12:00 p.m. CT on December 5, 2020.
Investors interested in listening to the live discussion or a replay via the internet may access the discussion directly at https://edge.media-server.com/mmc/p/bsztt3hp or by logging on to NuStar Energy L.P.’s website at www.nustarenergy.com.
NuStar Energy L.P., a publicly traded master limited partnership based in San Antonio, is one of the largest independent liquids terminal and pipeline operators in the nation. NuStar currently has approximately 10,000 miles of pipeline and 75 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids. The partnership’s combined system has approximately 75 million barrels of storage capacity, and NuStar has operations in the United States, Canada and Mexico. For more information, visit NuStar Energy L.P.'s website at www.nustarenergy.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes, and the related conference call will include, forward-looking statements regarding future events and expectations, such as NuStar’s future performance, plans, capital expenditures, expense reductions and the timing of, expected use of proceeds from and the other anticipated benefits from the sale of NuStar’s Texas City business. All forward-looking statements are based on NuStar’s beliefs as well as assumptions made by and information currently available to NuStar. These statements reflect NuStar’s current views with respect to future events and are subject to various risks, uncertainties and assumptions. These risks, uncertainties and assumptions are discussed in NuStar Energy L.P.’s 2019 annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission. Actual results may differ materially from those described in the forward-looking statements. Except as required by law, NuStar does not intend, or undertake any obligation, to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.
NuStar Energy L.P. and Subsidiaries |
|||||||||||||||
Consolidated Financial Information |
|||||||||||||||
(Unaudited, Thousands of Dollars, Except Unit and Per Unit Data) |
|||||||||||||||
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Statement of Income Data: |
|
|
|
|
|
|
|
||||||||
Revenues: |
|
|
|
|
|
|
|
||||||||
Service revenues |
$ |
295,621 |
|
|
$ |
289,258 |
|
|
$ |
896,518 |
|
|
$ |
830,757 |
|
Product sales |
66,970 |
|
|
88,798 |
|
|
198,404 |
|
|
267,570 |
|
||||
Total revenues |
362,591 |
|
|
378,056 |
|
|
1,094,922 |
|
|
1,098,327 |
|
||||
Costs and expenses: |
|
|
|
|
|
|
|
||||||||
Costs associated with service revenues: |
|
|
|
|
|
|
|
||||||||
Operating expenses |
95,528 |
|
|
100,852 |
|
|
296,788 |
|
|
297,358 |
|
||||
Depreciation and amortization expense |
70,480 |
|
|
66,332 |
|
|
207,755 |
|
|
196,141 |
|
||||
Total costs associated with service revenues |
166,008 |
|
|
167,184 |
|
|
504,543 |
|
|
493,499 |
|
||||
Cost of product sales |
63,977 |
|
|
80,880 |
|
|
182,103 |
|
|
253,451 |
|
||||
Goodwill impairment loss |
— |
|
|
— |
|
|
225,000 |
|
|
— |
|
||||
General and administrative expenses |
25,457 |
|
|
27,804 |
|
|
72,128 |
|
|
78,363 |
|
||||
Other depreciation and amortization expense |
2,105 |
|
|
2,216 |
|
|
6,462 |
|
|
6,154 |
|
||||
Total costs and expenses |
257,547 |
|
|
278,084 |
|
|
990,236 |
|
|
831,467 |
|
||||
Operating income |
105,044 |
|
|
99,972 |
|
|
104,686 |
|
|
266,860 |
|
||||
Interest expense, net |
(64,165) |
|
|
(46,902) |
|
|
(171,158) |
|
|
(136,886) |
|
||||
Loss on extinguishment of debt |
(137,904) |
|
|
— |
|
|
(141,746) |
|
|
— |
|
||||
Other (expense) income, net |
(1,398) |
|
|
608 |
|
|
(5,671) |
|
|
2,020 |
|
||||
(Loss) income from continuing operations before income tax expense |
(98,423) |
|
|
53,678 |
|
|
(213,889) |
|
|
131,994 |
|
||||
Income tax (benefit) expense |
(1,783) |
|
|
1,090 |
|
|
626 |
|
|
3,568 |
|
||||
(Loss) income from continuing operations |
(96,640) |
|
|
52,588 |
|
|
(214,515) |
|
|
128,426 |
|
||||
Loss from discontinued operations, net of tax |
— |
|
|
(4,777) |
|
|
— |
|
|
(312,527) |
|
||||
Net (loss) income |
$ |
(96,640) |
|
|
$ |
47,811 |
|
|
$ |
(214,515) |
|
|
$ |
(184,101) |
|
|
|
|
|
|
|
|
|
||||||||
Basic net (loss) income per common unit: |
|
|
|
|
|
|
|
||||||||
Continuing operations |
$ |
(1.22) |
|
|
$ |
0.15 |
|
|
$ |
(2.96) |
|
|
$ |
0.20 |
|
Discontinued operations |
— |
|
|
(0.04) |
|
|
— |
|
|
(2.90) |
|
||||
Total net (loss) income per common unit |
$ |
(1.22) |
|
|
$ |
0.11 |
|
|
$ |
(2.96) |
|
|
$ |
(2.70) |
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted-average common units outstanding |
109,195,358 |
|
|
107,763,870 |
|
|
109,096,190 |
|
|
107,687,019 |
|
||||
NuStar Energy L.P. and Subsidiaries |
||||||||||||||||||
Consolidated Financial Information |
||||||||||||||||||
(Unaudited, Thousands of Dollars, Except Per Unit and Ratio Data) |
||||||||||||||||||
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|||||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|||||||||||
Other Data, from continuing operations (Note 1): |
|
|
|
|
|
|
|
|||||||||||
Adjusted net income |
$ |
45,227 |
|
|
$ |
52,588 |
|
|
$ |
156,194 |
|
|
$ |
128,426 |
|
|||
Adjusted net income per common unit |
$ |
0.08 |
|
|
$ |
0.15 |
|
|
$ |
0.44 |
|
|
$ |
0.20 |
|
|||
EBITDA |
$ |
38,327 |
|
|
$ |
169,128 |
|
|
$ |
171,486 |
|
|
$ |
471,175 |
|
|||
Adjusted EBITDA |
$ |
180,194 |
|
|
$ |
169,128 |
|
|
$ |
542,195 |
|
|
$ |
471,175 |
|
|||
DCF |
$ |
(53,950) |
|
|
$ |
87,842 |
|
|
$ |
130,860 |
|
|
$ |
238,159 |
|
|||
Adjusted DCF |
$ |
83,954 |
|
|
$ |
87,842 |
|
|
$ |
272,606 |
|
|
$ |
238,159 |
|
|||
Distribution coverage ratio |
n/a |
|
1.36x |
|
1.00x |
|
1.23x |
|||||||||||
Adjusted distribution coverage ratio |
1.92x |
|
1.36x |
|
2.08x |
|
1.23x |
|||||||||||
|
For the Four Quarters Ended September 30, |
|||||||||||||||||
|
2020 |
|
2019 |
|||||||||||||||
Consolidated Debt Coverage Ratio |
4.13x |
|
3.96x |
|||||||||||||||
NuStar Energy L.P. and Subsidiaries |
|||||||||||||||
Consolidated Financial Information - Continued |
|||||||||||||||
(Unaudited, Thousands of Dollars, Except Barrel Data) |
|||||||||||||||
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Pipeline: |
|
|
|
|
|
|
|
||||||||
Crude oil pipelines throughput (barrels/day) |
1,235,176 |
|
|
1,218,913 |
|
|
1,276,834 |
|
|
1,109,856 |
|
||||
Refined products and ammonia pipelines throughput (barrels/day) |
516,295 |
|
|
554,276 |
|
|
521,118 |
|
|
542,713 |
|
||||
Total throughput (barrels/day) |
1,751,471 |
|
|
1,773,189 |
|
|
1,797,952 |
|
|
1,652,569 |
|
||||
Throughput and other revenues |
$ |
176,210 |
|
|
$ |
179,173 |
|
|
$ |
537,999 |
|
|
$ |
507,917 |
|
Operating expenses |
47,121 |
|
|
49,409 |
|
|
147,466 |
|
|
150,437 |
|
||||
Depreciation and amortization expense |
45,268 |
|
|
41,946 |
|
|
132,655 |
|
|
123,646 |
|
||||
Goodwill impairment loss |
— |
|
|
— |
|
|
225,000 |
|
|
— |
|
||||
Segment operating income |
$ |
83,821 |
|
|
$ |
87,818 |
|
|
$ |
32,878 |
|
|
$ |
233,834 |
|
Storage: |
|
|
|
|
|
|
|
||||||||
Throughput (barrels/day) |
466,229 |
|
|
438,999 |
|
|
497,634 |
|
|
400,060 |
|
||||
Throughput terminal revenues |
$ |
29,260 |
|
|
$ |
26,333 |
|
|
$ |
100,182 |
|
|
$ |
71,189 |
|
Storage terminal revenues |
93,175 |
|
|
87,402 |
|
|
264,877 |
|
|
256,449 |
|
||||
Total revenues |
122,435 |
|
|
113,735 |
|
|
365,059 |
|
|
327,638 |
|
||||
Operating expenses |
48,407 |
|
|
51,443 |
|
|
149,322 |
|
|
146,921 |
|
||||
Depreciation and amortization expense |
25,212 |
|
|
24,386 |
|
|
75,100 |
|
|
72,495 |
|
||||
Segment operating income |
$ |
48,816 |
|
|
$ |
37,906 |
|
|
$ |
140,637 |
|
|
$ |
108,222 |
|
Fuels Marketing: |
|
|
|
|
|
|
|
||||||||
Product sales |
$ |
63,946 |
|
|
$ |
85,148 |
|
|
$ |
191,873 |
|
|
$ |
262,776 |
|
Cost of goods |
63,161 |
|
|
80,046 |
|
|
180,230 |
|
|
251,349 |
|
||||
Gross margin |
785 |
|
|
5,102 |
|
|
11,643 |
|
|
11,427 |
|
||||
Operating expenses |
816 |
|
|
834 |
|
|
1,882 |
|
|
2,074 |
|
||||
Segment operating (loss) income |
$ |
(31) |
|
|
$ |
4,268 |
|
|
$ |
9,761 |
|
|
$ |
9,353 |
|
Consolidation and Intersegment Eliminations: |
|
|
|
|
|
|
|
||||||||
Revenues |
$ |
— |
|
|
$ |
— |
|
|
$ |
(9) |
|
|
$ |
(4) |
|
Cost of goods |
— |
|
|
— |
|
|
(9) |
|
|
28 |
|
||||
Total |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(32) |
|
Consolidated Information: |
|
|
|
|
|
|
|
||||||||
Revenues |
$ |
362,591 |
|
|
$ |
378,056 |
|
|
$ |
1,094,922 |
|
|
$ |
1,098,327 |
|
Costs associated with service revenues: |
|
|
|
|
|
|
|
||||||||
Operating expenses |
95,528 |
|
|
100,852 |
|
|
296,788 |
|
|
297,358 |
|
||||
Depreciation and amortization expense |
70,480 |
|
|
66,332 |
|
|
207,755 |
|
|
196,141 |
|
||||
Total costs associated with service revenues |
166,008 |
|
|
167,184 |
|
|
504,543 |
|
|
493,499 |
|
||||
Cost of product sales |
63,977 |
|
|
80,880 |
|
|
182,103 |
|
|
253,451 |
|
||||
Goodwill impairment loss |
— |
|
|
— |
|
|
225,000 |
|
|
— |
|
||||
Segment operating income |
132,606 |
|
|
129,992 |
|
|
183,276 |
|
|
351,377 |
|
||||
General and administrative expenses |
25,457 |
|
|
27,804 |
|
|
72,128 |
|
|
78,363 |
|
||||
Other depreciation and amortization expense |
2,105 |
|
|
2,216 |
|
|
6,462 |
|
|
6,154 |
|
||||
Consolidated operating income |
$ |
105,044 |
|
|
$ |
99,972 |
|
|
$ |
104,686 |
|
|
$ |
266,860 |
|
NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Ratio Data)
Note 1: NuStar Energy L.P. utilizes financial measures, such as earnings before interest, taxes, depreciation and amortization (EBITDA), distributable cash flow (DCF) and distribution coverage ratio, which are not defined in U.S. generally accepted accounting principles (GAAP). Management believes these financial measures provide useful information to investors and other external users of our financial information because (i) they provide additional information about the operating performance of the partnership’s assets and the cash the business is generating, (ii) investors and other external users of our financial statements benefit from having access to the same financial measures being utilized by management and our board of directors when making financial, operational, compensation and planning decisions and (iii) they highlight the impact of significant transactions. We may also adjust these measures and/or calculate them based on continuing operations, to enhance the comparability of our performance across periods.
Our board of directors and management use EBITDA and/or DCF when assessing the following: (i) the performance of our assets, (ii) the viability of potential projects, (iii) our ability to fund distributions, (iv) our ability to fund capital expenditures and (v) our ability to service debt. In addition, our board of directors uses EBITDA, DCF and a distribution coverage ratio, which is calculated based on DCF, as some of the factors in its compensation determinations. DCF is a financial indicator used by the master limited partnership (MLP) investment community to compare partnership performance. DCF is used by the MLP investment community, in part, because the value of a partnership unit is partially based on its yield, and its yield is based on the cash distributions a partnership can pay its unitholders.
None of these financial measures are presented as an alternative to net income, or for any periods presented reflecting discontinued operations, income from continuing operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with GAAP.
The following is a reconciliation of (loss) income from continuing operations to EBITDA from continuing operations, DCF from continuing operations and distribution coverage ratio from continuing operations.
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
(Loss) income from continuing operations |
$ |
(96,640) |
|
|
$ |
52,588 |
|
|
$ |
(214,515) |
|
|
$ |
128,426 |
|
Interest expense, net |
64,165 |
|
|
46,902 |
|
|
171,158 |
|
|
136,886 |
|
||||
Income tax (benefit) expense |
(1,783) |
|
|
1,090 |
|
|
626 |
|
|
3,568 |
|
||||
Depreciation and amortization expense |
72,585 |
|
|
68,548 |
|
|
214,217 |
|
|
202,295 |
|
||||
EBITDA from continuing operations |
38,327 |
|
|
169,128 |
|
|
171,486 |
|
|
471,175 |
|
||||
Interest expense, net |
(64,165) |
|
|
(46,902) |
|
|
(171,158) |
|
|
(136,886) |
|
||||
Reliability capital expenditures |
(7,279) |
|
|
(11,838) |
|
|
(18,330) |
|
|
(20,385) |
|
||||
Income tax benefit (expense) |
1,783 |
|
|
(1,090) |
|
|
(626) |
|
|
(3,568) |
|
||||
Long-term incentive equity awards (a) |
2,416 |
|
|
3,111 |
|
|
6,402 |
|
|
7,646 |
|
||||
Preferred unit distributions |
(31,888) |
|
|
(30,423) |
|
|
(92,995) |
|
|
(91,269) |
|
||||
Goodwill impairment loss (b) |
— |
|
|
— |
|
|
225,000 |
|
|
— |
|
||||
Other items |
6,856 |
|
|
5,856 |
|
|
11,081 |
|
|
11,446 |
|
||||
DCF from continuing operations |
$ |
(53,950) |
|
|
$ |
87,842 |
|
|
$ |
130,860 |
|
|
$ |
238,159 |
|
|
|
|
|
|
|
|
|
||||||||
Distributions applicable to common limited partners |
$ |
43,678 |
|
|
$ |
64,660 |
|
|
$ |
131,086 |
|
|
$ |
194,008 |
|
Distribution coverage ratio from continuing operations (c) |
n/a |
|
1.36x |
|
1.00x |
|
1.23x |
||||||||
NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Ratio Data)
The following is the reconciliation for the calculation of our Consolidated Debt Coverage Ratio, as defined in our revolving credit agreement (the Revolving Credit Agreement). The reconciliation of net loss to EBITDA includes reconciling items from continuing and discontinued operations on a combined basis.
|
For the Four Quarters Ended September 30, |
||||||
|
2020 |
|
2019 |
||||
Net loss |
$ |
(136,107) |
|
|
$ |
(181,975) |
|
Interest expense, net |
217,342 |
|
|
181,558 |
|
||
Income tax expense |
1,812 |
|
|
4,599 |
|
||
Depreciation and amortization expense |
284,846 |
|
|
285,126 |
|
||
EBITDA |
367,893 |
|
|
289,308 |
|
||
Impairment losses (a) |
225,000 |
|
|
— |
|
||
Loss on extinguishment of debt (b) |
141,746 |
|
|
— |
|
||
Other expense (income) (c) |
3,949 |
|
|
(3,674) |
|
||
Equity awards (d) |
12,424 |
|
|
12,742 |
|
||
Pro forma effect of dispositions (e) |
— |
|
|
335,995 |
|
||
Material project adjustments and other items (f) |
12,727 |
|
|
95,479 |
|
||
Consolidated EBITDA, as defined in the Revolving Credit Agreement |
$ |
763,739 |
|
|
$ |
729,850 |
|
|
|
|
|
||||
Total consolidated debt |
$ |
3,585,140 |
|
|
$ |
3,331,040 |
|
NuStar Logistics' floating rate subordinated notes |
(402,500) |
|
|
(402,500) |
|
||
Proceeds held in escrow associated with the Gulf Opportunity Zone Revenue Bonds |
— |
|
|
(41,476) |
|
||
Available Cash Netting Amount, as defined in the Revolving Credit Agreement |
(30,494) |
|
|
— |
|
||
Consolidated Debt, as defined in the Revolving Credit Agreement |
$ |
3,152,146 |
|
|
$ |
2,887,064 |
|
|
|
|
|
||||
Consolidated Debt Coverage Ratio (Consolidated Debt to Consolidated EBITDA) |
4.13x |
|
3.96x |
||||
NuStar Energy, L.P., San Antonio
Investors, Tim Delagarza, Manager, Investor Relations
Investor Relations: 210-918-INVR (4687)
or
Media, Mary Rose Brown, Executive Vice President and Chief Administrative Officer,
Corporate Communications: 210-918-2314
website: http://www.nustarenergy.com
MADISON, Wis.--(BUSINESS WIRE)--MGE Energy, Inc. (Nasdaq: MGEE) today reported financial results for the third quarter of 2020.
MGE Energy's earnings for the third quarter of 2020 were $31.8 million, or 88 cents per share, compared to $30.7 million, or 88 cents per share, for the same period in the prior year.
During the third quarter of 2020, electric net income increased $1.0 million compared to the same period in the prior year. This increase was primarily due to AFUDC equity earned from the construction of Two Creeks and Badger Hollow I and II as well as savings in operating and maintenance costs. AFUDC equity for the Two Creeks and Badger Hollow I and II solar projects increased $0.9 million compared to the same period in the prior year. The Two Creeks and Badger Hollow solar projects will provide MGE electric customers with renewable energy, advancing the company's commitment to achieving net-zero carbon electricity for all customers by 2050. A foundational objective in MGE's ongoing transition toward deep decarbonization is ensuring all customers benefit from new technologies and greater sustainability.
COVID-19 and associated governmental regulations led to a reduction of retail sales and negatively impacted electric earnings in the third quarter of 2020. Electric commercial retail sales dropped approximately 8% in the third quarter of 2020 compared to the same period in the prior year. However, ongoing remote work arrangments contributed to higher electric residential sales, which partially mitigated the impact of COVID-19. Third quarter electric residential sales increased by approximately 9% compared to the third quarter of 2020.
Gas net income in the third quarter of 2020 remained relatively flat compared to the third quarter of 2019.
The situation around the COVID-19 pandemic remains fluid. We have been subject to, and are following, local, state and federal public health and safety regulations and guidance to address the pandemic. We have operated continuously throughout the pandemic and have not suffered any material disruptions in service or employment. We continue to monitor the situation and manage our response.
|
MGE Energy, Inc. |
|
|||
|
(In thousands, except per share amounts) |
|
|||
|
(Unaudited) |
|
|||
|
|
|
|
|
|
|
Three Months Ended September 30, |
2020 |
|
2019 |
|
|
Operating revenue |
$135,211 |
|
$138,198 |
|
|
Operating income |
$38,325 |
|
$38,738 |
|
|
Net income |
$31,794 |
|
$30,657 |
|
|
Earnings per share (basic and diluted) |
$0.88 |
|
$0.88 |
|
|
Weighted average shares outstanding (basic and diluted) |
36,163 |
|
34,668 |
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
2020 |
|
2019 |
|
|
Operating revenue |
$402,124 |
|
$427,914 |
|
|
Operating income |
$91,284 |
|
$89,032 |
|
|
Net income |
$76,622 |
|
$70,212 |
|
|
Earnings per share (basic and diluted) |
$2.16 |
|
$2.03 |
|
|
Weighted average shares outstanding (basic and diluted) |
35,427 |
|
34,668 |
|
About MGE Energy
MGE Energy is a public utility holding company. Its principal subsidiary, Madison Gas and Electric, generates and distributes electricity to 155,000 customers in Dane County, Wis., and purchases and distributes natural gas to 163,000 customers in seven south-central and western Wisconsin counties. MGE's roots in the Madison area date back more than 150 years.
Forward-looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such statements include the risks and uncertainties related to the COVID-19 pandemic. Such forward-looking statements are based on MGE Energy's current expectations, estimates and assumptions regarding future events, which are inherently uncertain. We caution you not to place undue reliance on any forward-looking statements, which are made as of the date of this press release. We undertake no obligation to revise or update publicly any such forward-looking statements to reflect any change in expectations or in events, conditions or circumstances on which any such statements may be based. For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to our business in general, please refer to the "Risk Factors" sections in our Annual Report on Form 10-K for the year ended December 31, 2019 and our Quarterly Report on Form 10-Q during the three and nine months ended September 30, 2020, filed with the Securities and Exchange Commission.
Steve B. Schultz
Corporate Communications Manager
608-252-7219 | This email address is being protected from spambots. You need JavaScript enabled to view it.
Ken Frassetto
Investor Relations
608-252-4723 | This email address is being protected from spambots. You need JavaScript enabled to view it.
DUBLIN--(BUSINESS WIRE)--The "Photovoltaic Market with COVID-19 Impact, by Component (Modules, Inverters), Material (Silicon, Compounds), Installation Type (Ground Mounted, BIPV), Application (Residential, Commercial & Industrial, Utilities) and Region - Global Forecast to 2025" report has been added to ResearchAndMarkets.com's offering.
The photovoltaic market has a promising growth potential due to several factors, including supportive government policies and initiatives, increasing demand for PV systems for residential applications, and decreasing cost of PV systems and energy storage devices.
The major factor restraining the growth of the photovoltaic market is the lack of a skilled workforce for PV installation and maintenance. PV installation requires a spectrum of skilled workers, ranging from PhD level scholars in R&D to technicians requiring specialized training and certification to a wide variety of other professionals for supporting all aspects of the PV industry. The industry does not have enough trained installers to handle the implementation of this technology, and the availability of appropriately skilled manpower has been one of the most prominent challenges in the PV arena. This is expected to impact the photovoltaic market negatively in the coming years.
The market is expected to decline in 2020, mainly due to the impact of COVID-19. The photovoltaic supply chain was disrupted in March and April 2020 due to the lockdown imposed by various governments and labor shortages in the PV industry due to travel restrictions, which would affect the photovoltaic market. Though the market is expected to be impacted in 2020, it is expected to start to recover by 2021 and will fully recover by 2022.
Silicon-based PV systems: The fastest-growing segment of the photovoltaic market, by material
Silicon-based PV systems are the fastest-growing segment of the photovoltaic market by material. Silicon-based photovoltaic solar panels are cost-effective. Ongoing advancements in silicon solar cell technology is the primary factor boosting the growth of the photovoltaic market. The increasing focus of players on manufacturing advanced silicon modules is also fostering market growth. Many players are making efforts to manufacture advanced silicon modules with greater efficiency. These developments are expected to propel the demand for silicon-based PV systems during the forecast period.
Ground-mounted: The largest segment of the photovoltaic market, by installation type
The photovoltaic market for the ground-mounted type is expected to hold the largest market share from 2019 to 2025. With an increasing number of utility-scale projects worldwide, the market for ground-mounted PV systems is expected to witness significant growth during the forecast period. According to the Solar Energy Industries Association (SEIA), there are more than 37,000 MW utility-scale solar projects currently operating in the US, with another 112,000 MW under development. The majority of these projects have ground-mounted installations of PV modules. This is expected to propel the market for ground-mounted type.
Asia Pacific: The fastest-growing region in the photovoltaic market
The APAC region is expected to dominate the photovoltaic market and is projected to grow at the highest CAGR during the forecast period. APAC is home to most top players in the photovoltaic market, including JinkoSolar, JA Solar, Trina Solar, and LONGi. Also, the region has countries like China and India that are at the forefront in terms of the adoption of PV systems. Moreover, the region is the largest producer and consumer of PV modules and related components. These factors are expected to propel the photovoltaic market in APAC.
Key Topics Covered:
1 Introduction
2 Research Methodology
3 Executive Summary
4 Premium Insights
5 Market Overview
5.1 Introduction
5.2 Market Dynamics
5.2.1 Drivers
5.2.1.1 Supportive Government Policies and Initiatives
5.2.1.2 Increasing Demand for PV Systems for Residential Applications
5.2.1.3 Decreasing Cost of PV Systems and Energy Storage Devices
5.2.2 Restraints
5.2.2.1 Lack of Skilled Workforce for PV Installation and Maintenance
5.2.3 Opportunities
5.2.3.1 Upsurge in Demand for Renewable Energy
5.2.3.2 Technological Advancements in Solar Cell Manufacturing
5.2.4 Challenges
5.2.4.1 Lack of Operational Land
5.3 Value Chain Analysis
5.4 Technology Analysis
5.5 Average Selling Price Trend
5.6 Case Study Analysis
5.7 Ecosystem
5.8 Patent Analysis
5.9 Regulations in Various Regions Pertaining to Photovoltaic Market
6 Photovoltaic Market, by Component
7 Photovoltaic Market, by Material
8 Photovoltaic Market, by Cell Type
9 Photovoltaic Market, by Installation Type
10 Photovoltaic Market, by Application
11 Photovoltaic Concentration Systems
12 Photovoltaic System, by Power Capacity
13 Geographic Analysis
14 Competitive Landscape
15 Company Profiles
For more information about this report visit https://www.researchandmarkets.com/r/p1zj06
About ResearchAndMarkets.com
ResearchAndMarkets.com is the world's leading source for international market research reports and market data. We provide you with the latest data on international and regional markets, key industries, the top companies, new products and the latest trends.
ResearchAndMarkets.com
Laura Wood, Senior Press Manager
This email address is being protected from spambots. You need JavaScript enabled to view it.
For E.S.T Office Hours Call 1-917-300-0470
For U.S./CAN Toll Free Call 1-800-526-8630
For GMT Office Hours Call +353-1-416-8900
MIDLAND, Texas--(BUSINESS WIRE)--Ring Energy, Inc. (NYSEAM: REI) (“Ring”) (“Company”) has scheduled a conference call on Tuesday, November 10, 2020 at 11:00 a.m. ET to discuss the third quarter 2020 financial and operating results. Ring expects to issue a press release summarizing these results after the close of market on Monday, November 9, 2020.
To participate, dial 877-709-8150 at least five minutes before the call is to begin. Please reference the Ring Energy conference call. International callers may also participate by dialing 201-689-8354. A telephone replay will also be available for one week beginning two hours after the completion of the live call, and can be accessed by dialing 877-660-6853, or 201-612-7415 for international callers, and entering the conference ID 13713036 when prompted. The results will also be available via live and a 3 month archived webcast at https://public.viavid.com/index.php?id=142384.
About Ring Energy, Inc.
Ring Energy, Inc. is an oil and gas exploration, development and production company with current operations in Texas and New Mexico.
www.ringenergy.com
Safe Harbor Statement
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements involve a wide variety of risks and uncertainties, and include, without limitations, statements with respect to the Company’s strategy and prospects. Such statements are subject to certain risks and uncertainties which are disclosed in the Company’s reports filed with the SEC, including its Form 10-K for the fiscal year ended December 31, 2019, its Form 10Q for the quarter ended June 30, 2020 and its other filings with the SEC. Readers and investors are cautioned that the Company’s actual results may differ materially from those described in the forward-looking statements due to a number of factors, including, but not limited to, the Company’s ability to acquire productive oil and/or gas properties or to successfully drill and complete oil and/or gas wells on such properties, general economic conditions both domestically and abroad, and the conduct of business by the Company, and other factors that may be more fully described in additional documents set forth by the Company.
Bill Parsons
K M Financial, Inc.
(702) 489-4447
DUBLIN--(BUSINESS WIRE)--The "Gas Utility Customer Analysis Ed 1 2020" database has been added to ResearchAndMarkets.com's offering.
Analyse the world population of natural gas distribution utilities by country and size. The purpose of this database report is to provide a tool to segment and target utility markets.
This database is designed as a practical resource for marketers of equipment, technology or services for gas transmission and distribution utilities.
If you sell any products, technology or services to utilities this database will enable you to target your market efficiently, whether you seek the largest utilities with expensive high-end systems or small utilities with low-cost basic products.
This database segments the world natural gas utility market:
Save money by zeroing straight in on your prime targets, the utilities which purchase these and other products and services. Some products or services involve high investment and are designed for large utilities. Many more are in the intermediate or small range. Whichever category you are in, this database provides a basic marketing resource to segment and target your market. 380 natural gas transmission utilities and 4,089 distribution utilities are listed by country and analysed by size.
Globally, there are 4 gas distribution utilities with more than 10 million customers, 12 with 5-10 million, 602 with 1-5 million and 3,471 with under 1 million.
The report is presented in Excel with 12 spreadsheets: - two summarising the global data and analysis and one for each of ten regions; Europe, CIS, Middle East, North Africa, sub-Saharan Africa, Asia, Pacific, North America, South America, and Central America.
For more information about this database visit https://www.researchandmarkets.com/r/5gvcyl
About ResearchAndMarkets.com
ResearchAndMarkets.com is the world's leading source for international market research reports and market data. We provide you with the latest data on international and regional markets, key industries, the top companies, new products and the latest trends.
ResearchAndMarkets.com
Laura Wood, Senior Press Manager
This email address is being protected from spambots. You need JavaScript enabled to view it.
For E.S.T Office Hours Call 1-917-300-0470
For U.S./CAN Toll Free Call 1-800-526-8630
For GMT Office Hours Call +353-1-416-8900
Highlights
TULSA, Okla.--(BUSINESS WIRE)--Blueknight Energy Partners, L.P. (“Blueknight” or the “Partnership”) (Nasdaq: BKEP and BKEPP) today announced its financial results for the three and nine months ended September 30, 2020. Net income was $14.4 million in the third quarter 2020, compared to net income of $7.0 million for the same period in 2019. The increase in third quarter 2020 net income was the result of higher operating margins, which included a $3.6 million non-cash mark-to-market (“MTM”) gain on commodity activities related to short-term storage contracts that settled during the quarter, lower general and administrative costs, and lower interest expense. Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) was $18.6 million in third quarter 2020 compared to $18.1 million for the same period in 2019. Adjusted EBITDA in the third quarter 2020 excluded the non-cash MTM gain of $3.6 million and $0.2 million in transaction legal fees related to the new Ergon seven-year agreements executed during the quarter.
“Our business had another solid quarter and our performance year-to-date continues to outpace last year. For the first nine months of the year, net income, Adjusted EBITDA, and distributable cash flow were higher by $1.7 million, $2.1 million and $8.0 million, respectively, versus the same period in 2019. With these results and our outlook for fourth quarter, we now expect to meet or exceed our 2020 guidance for Adjusted EBITDA, distribution coverage, and leverage,” said Andrew Woodward, Chief Executive Officer.
“As we look forward, we continue to advance our strategy to transform Blueknight into a pure-play, downstream terminalling company focused on infrastructure and transportation end markets. We believe this strategy will further emphasize Blueknight’s unique and differentiated position in the market and better position the business for success over the long-term. A key step in that direction continues to be our evaluation and possible sale of all or a portion of our crude oil business, which we remain committed to progressing despite a challenging market backdrop. We expect an uncertain macroenvironment to persist into next year and are proactively managing our business and cash flow to offset any unforeseen impacts,” added Woodward.
SEGMENT RESULTS
Asphalt Terminalling Services. Total operating margin, excluding depreciation and amortization, in third quarter 2020 was $16.5 million, down 3% compared to the same period last year primarily due to lower excess throughput revenue and higher insurance premiums. Year-to-date, total throughput volumes across the Partnership’s 53 asphalt sites were essentially flat as some regions experienced near record levels of volume while others were either flat or down year-over-year. The weighted average remaining contract term for our asphalt sites was approximately six years following the successful execution of a new seven-year agreement with Ergon effective in August 2020.
Crude Oil Terminalling Services. Total operating margin, excluding depreciation and amortization, in third quarter 2020 was $3.0 million, down $0.3 million compared to the same period last year. Third quarter 2019 included revenue of $0.3 million related to an intersegment storage contract for 0.5 million barrels that ended during the fourth quarter 2019. Average third-party storage volumes increased year-over-year as the segment continues to benefit from the current contango environment. Notably, the Partnership successfully renewed one storage contract during the quarter representing 2.0 million barrels, or approximately 30% of total capacity. The storage contract was previously set to expire on December 31, 2020, and now extends through December 31, 2021, at more favorable terms.
Crude Oil Pipeline Services. Total operating margin, excluding depreciation and amortization, in third quarter 2020 was $5.7 million, up $5.0 million compared to the same period last year. Pipeline earnings were favorably impacted by a $3.6 million non-cash gain on commodity derivative transactions that settled in August 2020, which offset a corresponding unrealized loss recognized during the second quarter 2020. The Partnership realized a $1.5 million net cash gain from the related product sales during third quarter 2020. This gain offset lower pipeline volumes year-over-year, which averaged 15 thousand barrels per day during third quarter 2020.
Crude Oil Trucking Services. Total operating loss, excluding depreciation and amortization, in third quarter 2020 was $0.1 million, down $0.2 million compared to the same period last year as declines in trucking volumes tracked closely with the crude oil pipeline segment. Average trucking volumes for third quarter 2020 were 16 thousand barrels per day.
BALANCE SHEET AND CASH FLOW
Third quarter distributable cash flow was $15.2 million compared to $12.1 million for the same period in 2019. The 26% increase was attributable to lower cash interest payments, lower maintenance capital expenditures, and improved business performance. The calculated coverage ratio on all distributions was 1.87 times for third quarter of 2020 versus 1.49 times for the same period in 2019.
Net capital expenditures in third quarter 2020 were $4.5 million, which included $1.2 million of net maintenance capital and $1.7 million related to the buy-out of operating leases for our crude oil transportation trucks. At September 30, 2020, total debt was $260.6 million. This resulted in a leverage ratio of 4.06 times versus 4.24 times for the same period last year. At September 30, 2020, total availability under the credit facility was approximately $137.7 million, and availability subject to covenant restrictions was $44.8 million. As of October 30, 2020, total debt was $255.6 million.
CONFERENCE CALL DETAILS
The Partnership will discuss third quarter 2020 results during a conference call tomorrow, Thursday, November 5, 2020, at 10:00 a.m. CDT (11:00 a.m. EDT). The conference call will be accessible by telephone at 1-855-327-6837. International participants will be able to access the conference call at 1-631-891-4304. Participants are requested to dial in five to ten minutes before the scheduled start time. An audio replay will be available through the “Investors” section of the Partnership’s website at investor.bkep.com.
Additional information regarding the Partnership’s results of operations will be provided in the Partnership’s Quarterly Report on Form 10-Q for the three months ended September 30, 2020, to be filed with the SEC on November 5, 2020.
Results of Operations
The following table summarizes the Partnership’s financial results for the three and nine months ended September 30, 2019 and 2020 (in thousands, except per unit data):
|
|
Three Months ended
|
|
Nine Months ended
|
||||||||||||
|
|
2019 |
|
2020 |
|
2019 |
|
2020 |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party revenue |
|
$ |
15,716 |
|
|
$ |
12,886 |
|
|
$ |
47,318 |
|
|
$ |
39,935 |
|
Related-party revenue |
|
|
3,934 |
|
|
|
4,849 |
|
|
|
12,189 |
|
|
|
12,945 |
|
Lease revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party revenue |
|
|
11,444 |
|
|
|
9,142 |
|
|
|
31,004 |
|
|
|
27,051 |
|
Related-party revenue |
|
|
5,427 |
|
|
|
7,490 |
|
|
|
15,179 |
|
|
|
19,239 |
|
Product sales revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party revenue |
|
|
55,213 |
|
|
|
51,390 |
|
|
|
173,773 |
|
|
|
119,068 |
|
Total revenue |
|
|
91,734 |
|
|
|
85,757 |
|
|
|
279,463 |
|
|
|
218,238 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense |
|
|
25,215 |
|
|
|
23,715 |
|
|
|
78,432 |
|
|
|
73,066 |
|
Cost of product sales |
|
|
18,972 |
|
|
|
19,833 |
|
|
|
64,069 |
|
|
|
41,133 |
|
Cost of product sales from related party |
|
|
32,691 |
|
|
|
22,627 |
|
|
|
99,886 |
|
|
|
63,671 |
|
General and administrative expense |
|
|
3,840 |
|
|
|
3,401 |
|
|
|
10,495 |
|
|
|
11,008 |
|
Asset impairment expense |
|
|
83 |
|
|
|
- |
|
|
|
2,316 |
|
|
|
6,417 |
|
Total costs and expenses |
|
|
80,801 |
|
|
|
69,576 |
|
|
|
255,198 |
|
|
|
195,295 |
|
Gain (loss) on disposal of assets |
|
|
(40 |
) |
|
|
509 |
|
|
|
1,765 |
|
|
|
426 |
|
Operating income |
|
|
10,893 |
|
|
|
16,690 |
|
|
|
26,030 |
|
|
|
23,369 |
|
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income |
|
|
69 |
|
|
|
176 |
|
|
|
475 |
|
|
|
969 |
|
Interest expense |
|
|
(3,989 |
) |
|
|
(2,472 |
) |
|
|
(12,394 |
) |
|
|
(8,586 |
) |
Income before income taxes |
|
|
6,973 |
|
|
|
14,394 |
|
|
|
14,111 |
|
|
|
15,752 |
|
Provision for income taxes |
|
|
14 |
|
|
|
1 |
|
|
|
39 |
|
|
|
8 |
|
Net income |
|
$ |
6,959 |
|
|
$ |
14,393 |
|
|
$ |
14,072 |
|
|
$ |
15,744 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net income(loss) for calculation of earnings per unit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General partner interest in net income |
|
$ |
110 |
|
|
$ |
228 |
|
|
$ |
268 |
|
|
$ |
249 |
|
Preferred interest in net income |
|
$ |
6,278 |
|
|
$ |
6,278 |
|
|
$ |
18,836 |
|
|
$ |
18,836 |
|
Net income (loss) available to limited partners |
|
$ |
571 |
|
|
$ |
7,887 |
|
|
$ |
(5,032 |
) |
|
$ |
(3,341 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per common unit |
|
$ |
0.01 |
|
|
$ |
0.19 |
|
|
$ |
(0.12 |
) |
|
$ |
(0.08 |
) |
Diluted net income (loss) per common unit(1) |
|
$ |
0.01 |
|
|
$ |
0.18 |
|
|
$ |
(0.12 |
) |
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common units outstanding - basic |
|
|
40,811 |
|
|
|
41,166 |
|
|
|
40,735 |
|
|
|
41,072 |
|
Weighted average common units outstanding - diluted(1) |
|
|
40,811 |
|
|
|
77,646 |
|
|
|
40,735 |
|
|
|
41,072 |
|
(1) |
Diluted earnings per unit is calculated by adding the Preferred interest in net income to the Net income(loss) available to limited partners and dividing by the total number of common and preferred units outstanding. This amount is only reported if the result is lower than the basic earnings per unit calculation. |
The table below summarizes the Partnership’s financial results by segment operating margin, excluding depreciation and amortization for the three and nine months ended September 30, 2019 and 2020 (dollars in thousands):
|
|
Three Months ended |
|
Nine Months ended |
|
Favorable/(Unfavorable) |
||||||||||||||||||||||||||
Operating results |
|
September 30, |
|
September 30, |
|
Three Months |
|
Nine Months |
||||||||||||||||||||||||
|
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
$ |
|
% |
|
$ |
|
% |
||||||||||||||||
Operating margin, excluding depreciation and amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asphalt terminalling services |
|
$ |
17,068 |
|
|
$ |
16,477 |
|
|
$ |
44,274 |
|
|
$ |
44,297 |
|
|
$ |
(591 |
) |
|
|
(3 |
)% |
|
$ |
23 |
|
|
|
0 |
% |
Crude oil terminalling services |
|
|
3,286 |
|
|
|
2,967 |
|
|
|
9,146 |
|
|
|
9,456 |
|
|
|
(319 |
) |
|
|
(10 |
)% |
|
|
310 |
|
|
|
3 |
% |
Crude oil pipeline services |
|
|
614 |
|
|
|
5,661 |
|
|
|
2,738 |
|
|
|
4,473 |
|
|
|
5,047 |
|
|
|
822 |
% |
|
|
1,735 |
|
|
|
63 |
% |
Crude oil trucking services |
|
|
128 |
|
|
|
(85 |
) |
|
|
129 |
|
|
|
(160 |
) |
|
|
(213 |
) |
|
|
(166 |
)% |
|
|
(289 |
) |
|
|
(224 |
)% |
Total operating margin, excluding depreciation and amortization |
|
$ |
21,096 |
|
|
$ |
25,020 |
|
|
$ |
56,287 |
|
|
$ |
58,066 |
|
|
$ |
3,924 |
|
|
|
19 |
% |
|
$ |
1,779 |
|
|
|
3 |
% |
Non-GAAP Financial Measures
This press release contains the non-GAAP financial measures of Adjusted EBITDA, distributable cash flow and total operating margin, excluding depreciation and amortization. Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, non-cash equity-based compensation, asset impairment charges, gains and losses on asset sales, and other select items which management feels decreases the comparability of results among periods. Distributable cash flow is defined as Adjusted EBITDA minus cash paid for interest, maintenance capital expenditures, cash paid for taxes, and other select items which management feels decreases the comparability of results among periods. Operating margin, excluding depreciation and amortization is defined as revenues from related parties and external customers less operating expenses, excluding depreciation and amortization. The use of Adjusted EBITDA, distributable cash flow and operating margin, excluding depreciation and amortization should not be considered as alternatives to GAAP measures such as operating income, net income or cash flows from operating activities. Adjusted EBITDA, distributable cash flow and operating margin, excluding depreciation and amortization are presented because the Partnership believes they provide additional information with respect to its business activities and are used as supplemental financial measures by management and external users of the Partnership’s financial statements, such as investors, commercial banks and others to assess, among other things, the Partnership’s operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing or capital structure. Reconciliations of these measures to their most directly comparable GAAP measures are included in the following tables.
The following table presents a reconciliation of Adjusted EBITDA and distributable cash flow to net income for the periods shown (in thousands, except ratios):
|
|
Three Months ended
|
|
Nine Months ended
|
||||||||||||
|
|
2019 |
|
2020 |
|
2019 |
|
2020 |
||||||||
Net income |
|
$ |
6,959 |
|
|
$ |
14,393 |
|
|
$ |
14,072 |
|
|
$ |
15,744 |
|
Interest expense |
|
|
3,989 |
|
|
|
2,472 |
|
|
|
12,394 |
|
|
|
8,586 |
|
Income taxes |
|
|
14 |
|
|
|
1 |
|
|
|
39 |
|
|
|
8 |
|
Depreciation and amortization |
|
|
6,240 |
|
|
|
5,438 |
|
|
|
19,211 |
|
|
|
17,698 |
|
Non-cash equity-based compensation |
|
|
286 |
|
|
|
220 |
|
|
|
879 |
|
|
|
750 |
|
Asset impairment expense |
|
|
83 |
|
|
|
- |
|
|
|
2,316 |
|
|
|
6,417 |
|
(Gain) loss on disposal of assets |
|
|
40 |
|
|
|
(509 |
) |
|
|
(1,765 |
) |
|
|
(426 |
) |
Non-cash gain on commodity derivatives(1) |
|
|
- |
|
|
|
(3,589 |
) |
|
|
- |
|
|
|
- |
|
Other |
|
|
443 |
|
|
|
160 |
|
|
|
443 |
|
|
|
895 |
|
Adjusted EBITDA |
|
$ |
18,054 |
|
|
$ |
18,586 |
|
|
$ |
47,589 |
|
|
$ |
49,672 |
|
Cash paid for interest |
|
|
(3,844 |
) |
|
|
(2,131 |
) |
|
|
(11,817 |
) |
|
|
(7,817 |
) |
Cash paid for income taxes |
|
|
(1 |
) |
|
|
(54 |
) |
|
|
(219 |
) |
|
|
(55 |
) |
Maintenance capital expenditures, net of reimbursable expenditures |
|
|
(2,127 |
) |
|
|
(1,224 |
) |
|
|
(7,256 |
) |
|
|
(5,514 |
) |
Distributable cash flow |
|
$ |
12,082 |
|
|
$ |
15,177 |
|
|
$ |
28,297 |
|
|
$ |
36,286 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions declared(2) |
|
|
8,083 |
|
|
|
8,109 |
|
|
|
24,248 |
|
|
|
24,326 |
|
Distribution coverage ratio |
|
|
1.49 |
|
|
|
1.87 |
|
|
|
1.17 |
|
|
|
1.49 |
|
__________________________
(1) |
Derivatives have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The Partnership excludes the net impact of these derivatives from its determination of DCF until the transactions are settled and the related products are sold. In the third quarter of 2020, the derivative transactions were settled and the related products were sold, thus, the net impact of the derivatives was included in DCF. |
(2) |
Inclusive of preferred and common unit declared cash distributions. |
The following table presents a reconciliation of total operating margin, excluding depreciation and amortization to operating income for the periods shown (dollars in thousands):
|
|
Three Months ended |
|
Nine Months ended |
|
Favorable/(Unfavorable) |
||||||||||||||||||||||||||
|
|
September 30, |
|
September 30, |
|
Three Months |
|
Nine Months |
||||||||||||||||||||||||
|
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
$ |
|
% |
|
$ |
|
% |
||||||||||||||||
Total operating margin, excluding depreciation and amortization |
|
$ |
21,096 |
|
|
$ |
25,020 |
|
|
$ |
56,287 |
|
|
$ |
58,066 |
|
|
$ |
3,924 |
|
|
|
19 |
% |
|
$ |
1,779 |
|
|
|
3 |
% |
Depreciation and amortization |
|
|
(6,240 |
) |
|
|
(5,438 |
) |
|
|
(19,211 |
) |
|
|
(17,698 |
) |
|
|
802 |
|
|
|
13 |
% |
|
|
1,513 |
|
|
|
8 |
% |
General and administrative expense |
|
|
(3,840 |
) |
|
|
(3,401 |
) |
|
|
(10,495 |
) |
|
|
(11,008 |
) |
|
|
439 |
|
|
|
11 |
% |
|
|
(513 |
) |
|
|
(5 |
)% |
Asset impairment expense |
|
|
(83 |
) |
|
|
- |
|
|
|
(2,316 |
) |
|
|
(6,417 |
) |
|
|
83 |
|
|
|
100 |
% |
|
|
(4,101 |
) |
|
|
(177 |
)% |
Gain (loss) on disposal of assets |
|
|
(40 |
) |
|
|
509 |
|
|
|
1,765 |
|
|
|
426 |
|
|
|
549 |
|
|
|
1,373 |
% |
|
|
(1,339 |
) |
|
|
(76 |
)% |
Operating income |
|
$ |
10,893 |
|
|
$ |
16,690 |
|
|
$ |
26,030 |
|
|
$ |
23,369 |
|
|
$ |
5,797 |
|
|
|
53 |
% |
|
$ |
(2,661 |
) |
|
|
(10 |
)% |
Forward-Looking Statements
This release includes forward-looking statements. Statements included in this release that are not historical facts (including, without limitation, any statements about future financial and operating results, guidance, projected or forecasted financial results, objectives, project timing, expectations and intentions and other statements that are not historical facts) are forward-looking statements. Such forward-looking statements are subject to various risks and uncertainties. These risks and uncertainties include, among other things, uncertainties relating to the Partnership’s debt levels and restrictions in its credit agreement, its exposure to the credit risk of our third-party customers, the Partnership’s future cash flows and operations, future market conditions, current and future governmental regulation, future taxation and other factors discussed in the Partnership’s filings with the Securities and Exchange Commission. If any of these risks or uncertainties materializes, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those expected. The Partnership undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
About Blueknight Energy Partners, L.P.
Blueknight owns and operates a diversified portfolio of complementary midstream energy assets consisting of:
Blueknight provides integrated terminalling, gathering and transportation services for companies engaged in the production, distribution and marketing of liquid asphalt and crude oil. Blueknight is headquartered in Tulsa, Oklahoma. For more information, visit the Partnership’s website at www.bkep.com.
Blueknight Investor Relations
Chase Jacobson, (918) 237-4032
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PRINCETON, N.J.--(BUSINESS WIRE)--$NRG #earnings--NRG Energy, Inc. (NYSE: NRG) today reported third quarter 2020 income from continuing operations of $249 million, or $1.02 per diluted common share and Adjusted EBITDA for the Third quarter of $752 million.
“Our business performed well during the important summer months, delivering stable results amid the COVID-19 pandemic,” said Mauricio Gutierrez, NRG President and Chief Executive Officer. "As we move towards the end of the year, we look forward to closing the Direct Energy acquisition and continue advancing our customer-centric strategy.”
Consolidated Financial Resultsa
|
|
Three Months Ended |
|
|
Nine Months Ended |
||||||||||||
($ in millions) |
|
9/30/2020 |
|
9/30/2019 |
|
|
9/30/2020 |
|
9/30/2019 |
||||||||
Income from Continuing Operations |
|
$ |
249 |
|
|
$ |
374 |
|
|
|
$ |
683 |
|
|
$ |
657 |
|
Cash provided by Continuing Operations |
|
$ |
694 |
|
|
$ |
472 |
|
|
|
$ |
1,386 |
|
|
$ |
889 |
|
Adjusted EBITDA |
|
$ |
752 |
|
|
$ |
792 |
|
|
|
$ |
1,674 |
|
|
$ |
1,593 |
|
Free Cash Flow Before Growth Investments (FCFbG) |
|
$ |
630 |
|
|
$ |
433 |
|
|
|
$ |
1,199 |
|
|
$ |
673 |
|
a. In accordance with GAAP, 2019 results have been recast to reflect the discontinued operations of the South Central Portfolio and Carlsbad Energy Center |
|||||||||||||||||
Segments Results
Table 1: Income/(Loss) from Continuing Operations
($ in millions) |
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
Segment |
|
9/30/2020 |
|
9/30/2019 |
|
9/30/2020 |
|
9/30/2019 |
||||||||
Texas |
|
$ |
288 |
|
|
$ |
348 |
|
|
$ |
800 |
|
|
$ |
757 |
|
East |
|
149 |
|
|
121 |
|
|
319 |
|
|
280 |
|
||||
West/Othera |
|
(188) |
|
|
(95) |
|
|
(436) |
|
|
(380) |
|
||||
Income from Continuing Operationsb |
|
$ |
249 |
|
|
$ |
374 |
|
|
$ |
683 |
|
|
$ |
657 |
|
a. Includes Corporate segment |
||||||||||||||||
b. In accordance with GAAP, 2019 results have been recast to reflect the discontinued operations of the South Central Portfolio and Carlsbad Energy Center. |
||||||||||||||||
Table 2: Adjusted EBITDA
($ in millions) |
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
Segment |
|
9/30/2020 |
|
9/30/2019 |
|
9/30/2020 |
|
9/30/2019 |
||||||||
Texas |
|
$ |
514 |
|
|
$ |
581 |
|
|
$ |
1,087 |
|
|
$ |
1,085 |
|
East |
|
146 |
|
|
143 |
|
|
374 |
|
|
380 |
|
||||
West/Othera |
|
92 |
|
|
68 |
|
|
213 |
|
|
128 |
|
||||
Adjusted EBITDAb |
|
$ |
752 |
|
|
$ |
792 |
|
|
$ |
1,674 |
|
|
$ |
1,593 |
|
a. Includes Corporate segment |
||||||||||||||||
b. In accordance with GAAP, 2019 results have been recast to reflect the discontinued operations of the South Central Portfolio and Carlsbad Energy Center. |
||||||||||||||||
Texas: Third quarter Adjusted EBITDA was $514 million, $67 million lower than third quarter of 2019. This decrease is driven by a reduction of load due to weather and COVID-19 partially offset by lower supply costs resulting from reductions in power and fuel prices.
East: Third quarter Adjusted EBITDA was $146 million, $3 million higher than third quarter of 2019. This increase is driven by higher gross margins and increased sales of portable power products; partially offset by lower capacity revenues and higher operating expenses.
West/Other: Third quarter Adjusted EBITDA was $92 million, $24 million higher than third quarter of 2019. This increase is driven by higher gross margin primarily due to MISO uplift payments resulting from out-of-market dispatch during an extreme weather event and increased California resource adequacy pricing, partially offset by lower realized pricing in the West, lower generation from forced outages at Cottonwood facility in 2020 and the sales of emissions in 2019.
Liquidity and Capital Resources
Table 3: Corporate Liquidity
($ in millions) |
|
09/30/20 |
|
12/31/19 |
||||
Cash and Cash Equivalents |
|
$ |
697 |
|
|
$ |
345 |
|
Restricted Cash |
|
6 |
|
|
8 |
|||
Total |
|
$ |
703 |
|
|
$ |
353 |
|
Total credit facility availability |
|
2,815 |
|
|
1,794 |
|
||
Total Liquidity, excluding collateral received |
|
$ |
3,518 |
|
|
$ |
2,147 |
|
As of September 30, 2020, NRG cash was at $0.7 billion, and $2.8 billion was available under the Company’s credit facilities. Total liquidity was $3.5 billion, including restricted cash. Overall liquidity as of the end of the third quarter 2020 was approximately $1.4 billion higher than at the end of 2019, driven by improved cash from operations and the increase in credit facilities of approximately $0.9 billion during the third quarter. This increase in credit facilities reflects mainly the additional liquidity associated with the new Receivables Securitization and Repurchase facilities but excludes the additional commitments to the Company's existing revolving credit facility which become available coincident with the closing of the Direct Energy acquisition.
NRG Strategic Developments
Acquisition of Direct Energy
On July 24, 2020, the Company entered into a definitive purchase agreement with Centrica to acquire Direct Energy. Direct Energy is a leading retail provider of electricity, natural gas, and home and business energy related products and services in North America.
The Company will pay an aggregate purchase price of $3.625 billion in cash, subject to purchase price adjustment, including a working capital adjustment. The Company updated its financing plan and is now expecting to fund the purchase price using a combination of increased cash on hand and approximately $2.9 billion in newly-issued secured and unsecured corporate debt — a $0.5 billion increase from the previous estimate. The portion of the purchase price previously expected to be funded by $750 million in equity/equity-linked securities is now expected to be funded with a combination of the expected increases of 2020 cash on hand and debt to be repaid in 2021 with future targeted asset sale proceeds.
As part of NRG’s ongoing portfolio optimization strategy, NRG expects to realize a minimum $250 million net proceeds (net of debt repayment associated with assets sold) over the next 6-12 months from ongoing and prospective monetization of non-core assets and businesses. The first $200 million in net proceeds will be used to repay a portion of the increased leverage associated with Direct Energy acquisition in order to maintain investment grade metrics in 2021 and any additional proceeds will be available for capital allocation.
The acquisition remains on track to close by year end 2020. The shareholders of Centrica approved the acquisition on August 20, 2020. The transaction has received approvals under the Canadian Competition Act and early termination of the waiting period under the HSR Act has been granted. The transaction remains subject to customary closing conditions, including the receipt of approval under the Federal Power Act.
Increase in collateral facilities to support the acquisition of Direct Energy
During the third quarter, the Company amended its existing credit agreement to, among other things, increase the existing revolving commitments by an aggregate amount of $1,075 million. The increase will become effective upon closing of the Direct Energy acquisition and total revolving commitments available at that time, and subject to usage, will be $3.7 billion.
In September 2020, the Company also entered into a revolving accounts receivable financing facility for an amount up to $750 million, subject to adjustments on a seasonal basis, and an uncommitted repurchase facility related to the Receivable Securitization for up to $75 million.
Finally, as of November 5, 2020, the Company had extended and increased its existing $80 million CDS LC facility by an incremental $87 million.
The incremental liquidity available under these facilities will cover approximately $2.0 billion of the $3.5 billion of incremental collateral needs associated with the Direct Energy acquisition.
Midwest Generation lease buyout
On September 29, 2020, Midwest Generation, LLC closed on the purchase agreement and acquired all of the ownership interests in the Powerton facility and Units 7 and 8 of the Joliet facility, which were being leased through 2034 and 2030, respectively, for approximately $260 million. The Company has initially funded the purchase with cash on hand and expects that before year end NRG will borrow under its Revolving Credit Facility in an amount equal to the operating lease liability of $148 million.
COVID-19
In March 2020, the World Health Organization categorized COVID-19 as a pandemic and the President of the United States declared the COVID-19 outbreak a national emergency. Electricity was deemed a 'critical and essential business operation' under various state and federal governmental COVID-19 mandates. NRG had activated its Crisis Management Team ("CMT") in January 2020 to proactively manage the Company's response to the impacts of COVID-19.
NRG continues to remain focused on protecting the health and well-being of its employees, while supporting its customers and the communities in which it operates and assuring the continuity of its operations. In June 2020, summer-critical office employees returned to the offices and safety protocols were successfully implemented. The Company will continue to evaluate additional return to normal work operations on a location by location basis as COVID-19 conditions evolve.
The Company continues to maintain certain restrictions on business travel and face-to-face sales channels, remote work practices remain in place and there are enhanced cleaning and hygiene protocols in all of its facilities. In addition, select essential employees and contractors are continuing to report to plant and certain office locations. The Company also continues to require pre-entry screening, including temperature checks, separation of work crews, additional personal protective equipment for employees and contractors when social distancing cannot be maintained, and a ban on all non-essential visitors. The Company has not experienced any material disruptions in its ability to continue its business operations to date.
2020 and 2021 Guidance
NRG has narrowed the range of its Adjusted EBITDA guidance, while increasing Cash From Operations and Free Cash Flow before Growth Investments (FCFbG) guidance for 2020; NRG is maintaining its Adjusted EBITDA guidance for fiscal year 2021 while lowering its Cash Flow From Operations and FCFbG guidance due to the deferral of certain cash flow items into 2021.
Table 4: 2020 and 2021 Adjusted EBITDA, Cash from Operations, and FCFbG Guidance
|
2020 |
|
2021 |
($ in millions) |
Narrowed Guidance |
|
Updated Guidance |
Adjusted EBITDAa |
$1,950-$2,050 |
|
$1,900-$2,100 |
Cash From Operations |
$1,590-$1,690 |
|
$1,350-$1,550 |
FCFbG |
$1,450-$1,550 |
|
$1,200-$1,400 |
a. Non-GAAP financial measure; see Appendix Tables A-5 for GAAP Reconciliation to Net Income that excludes fair value adjustments related to derivatives. The Company is unable to provide guidance for Net Income due to the impact of such fair value adjustments related to derivatives in a given year |
Capital Allocation Update
As part of the Company's long-term capital allocation policy, the return of capital to shareholders during the nine months ending September 30, 2020 was comprised of a quarterly dividend of $.30 per share, or $221 million, and share repurchases of $228 million through August 6, 2020 at an average price of $33.05 per share. Upon completion of the previously announced November 2020 dividend, the total amount of capital returned to shareholders during 2020 will be $523 million.
The Company does not anticipate executing any further share repurchases over the remainder of 2020 and has allocated all of its remaining 2020 excess capital to fund the Direct Energy acquisition.
The Company's common stock dividend, debt reduction and share repurchases are subject to available capital, market conditions and compliance with associated laws and regulations.
Earnings Conference Call
On November 5, 2020, NRG will host a conference call at 9:00 a.m. Eastern to discuss these results. Investors, the news media and others may access the live webcast of the conference call and accompanying presentation materials by logging on to NRG’s website at www.nrg.com and clicking on “Investors” then "Presentations & Webcasts." The webcast will be archived on the site for those unable to listen in real time.
About NRG
At NRG, we’re bringing the power of energy to people and organizations by putting customers at the center of everything we do. We generate electricity and provide energy solutions and natural gas to more than 3.7 million residential, small business, and commercial and industrial customers through our diverse portfolio of retail brands. A Fortune 500 company, operating in the United States and Canada, NRG delivers innovative solutions while advocating for competitive energy markets and customer choice, and by working towards a sustainable energy future. More information is available at www.nrg.com. Connect with NRG on Facebook, LinkedIn and follow us on Twitter @nrgenergy.
Forward-Looking Statements
In addition to historical information, the information presented in this press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. These statements involve estimates, expectations, projections, goals, assumptions, known and unknown risks and uncertainties and can typically be identified by terminology such as “may,” “should,” “could,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “expect,” “intend,” “seek,” “plan,” “think,” “anticipate,” “estimate,” “predict,” “target,” “potential” or “continue” or the negative of these terms or other comparable terminology. Such forward-looking statements include, but are not limited to, statements about the Company’s future revenues, income, indebtedness, capital structure, plans, expectations, objectives, projected financial performance and/or business results and other future events, and views of economic and market conditions.
Although NRG believes that its expectations are reasonable, it can give no assurance that these expectations will prove to be correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated herein include, among others, the potential impact of COVID-19 or any other pandemic on the Company’s operations, financial position, risk exposure and liquidity, general economic conditions, hazards customary in the power industry, weather conditions, competition in wholesale power markets, the volatility of energy and fuel prices, failure of customers to perform under contracts, changes in the wholesale power markets, changes in government regulations, the condition of capital markets generally, our ability to access capital markets, cyberterrorism and inadequate cybersecurity, unanticipated outages at our generation facilities, adverse results in current and future litigation, failure to identify, execute or successfully implement acquisitions, repowerings or asset sales, our ability to implement value enhancing improvements to plant operations and companywide processes, our ability to achieve margin enhancement under our publicly announced transformation plan, our ability to achieve our net debt targets, our ability to maintain investment grade credit metrics, our ability to proceed with projects under development or the inability to complete the construction of such projects on schedule or within budget, the inability to maintain or create successful partnering relationships, our ability to operate our business efficiently, our ability to retain retail customers, our ability to realize value through our commercial operations strategy, the ability to consummate the Direct Energy acquisition, the ability to successfully integrate businesses of acquired companies including Direct Energy, our ability to realize anticipated benefits of transactions (including expected cost savings and other synergies) or the risk that anticipated benefits may take longer to realize than expected, and our ability to execute our Capital Allocation Plan. Achieving investment grade credit metrics is not a indication of or guarantee that the Company will receive investment grade credit ratings. Debt and share repurchases may be made from time to time subject to market conditions and other factors, including as permitted by United States securities laws. Furthermore, any common stock dividend is subject to available capital and market conditions.
NRG undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The adjusted EBITDA, free cash flow guidance and excess cash guidance are estimates as of November 5, 2020. These estimates are based on assumptions the company believed to be reasonable as of that date. NRG disclaims any current intention to update such guidance, except as required by law. The foregoing review of factors that could cause NRG’s actual results to differ materially from those contemplated in the forward-looking statements included in this press release should be considered in connection with information regarding risks and uncertainties that may affect NRG's future results included in NRG's filings with the Securities and Exchange Commission at www.sec.gov.
NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
Three months ended
|
|
Nine months ended
|
||||||||||||
(In millions, except for per share amounts) |
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Operating Revenues |
|
|
|
|
|
|
|
||||||||
Total operating revenues |
$ |
2,809 |
|
|
$ |
2,996 |
|
|
$ |
7,066 |
|
|
$ |
7,626 |
|
Operating Costs and Expenses |
|
|
|
|
|
|
|
||||||||
Cost of operations |
2,034 |
|
|
2,153 |
|
|
4,925 |
|
|
5,649 |
|
||||
Depreciation and amortization |
99 |
|
|
91 |
|
|
318 |
|
|
261 |
|
||||
Impairment losses |
29 |
|
|
— |
|
|
29 |
|
|
1 |
|
||||
Selling, general and administrative costs |
253 |
|
|
210 |
|
|
670 |
|
|
615 |
|
||||
Reorganization costs |
— |
|
|
1 |
|
|
3 |
|
|
16 |
|
||||
Development costs |
1 |
|
|
1 |
|
|
6 |
|
|
5 |
|
||||
Total operating costs and expenses |
2,416 |
|
|
2,456 |
|
|
5,951 |
|
|
6,547 |
|
||||
Gain on sale of assets |
— |
|
|
— |
|
|
6 |
|
|
2 |
|
||||
Operating Income |
393 |
|
|
540 |
|
|
1,121 |
|
|
1,081 |
|
||||
Other Income/(Expense) |
|
|
|
|
|
|
|
||||||||
Equity in earnings of unconsolidated affiliates |
36 |
|
|
29 |
|
|
37 |
|
|
8 |
|
||||
Impairment losses on investments |
— |
|
|
(107) |
|
|
(18) |
|
|
(107) |
|
||||
Other income, net |
11 |
|
|
17 |
|
|
52 |
|
|
49 |
|
||||
Loss on debt extinguishment, net |
— |
|
|
— |
|
|
(1) |
|
|
(47) |
|
||||
Interest expense |
(99) |
|
|
(99) |
|
|
(292) |
|
|
(318) |
|
||||
Total other expense |
(52) |
|
|
(160) |
|
|
(222) |
|
|
(415) |
|
||||
Income from Continuing Operations Before Income Taxes |
341 |
|
|
380 |
|
|
899 |
|
|
666 |
|
||||
Income tax expense |
92 |
|
|
6 |
|
|
216 |
|
|
9 |
|
||||
Income from Continuing Operations |
249 |
|
|
374 |
|
|
683 |
|
|
657 |
|
||||
(Loss)/income from discontinued operations, net of income tax |
— |
|
|
(2) |
|
|
— |
|
|
399 |
|
||||
Net Income |
249 |
|
|
372 |
|
|
683 |
|
|
1,056 |
|
||||
Less: Net income attributable to redeemable noncontrolling interests |
— |
|
|
— |
|
|
— |
|
|
1 |
|
||||
Net Income Attributable to NRG Energy, Inc |
$ |
249 |
|
|
$ |
372 |
|
|
$ |
683 |
|
|
$ |
1,055 |
|
Earnings per Share |
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding — basic |
244 |
|
|
254 |
|
|
246 |
|
|
266 |
|
||||
Income from continuing operations per weighted average common share — basic |
$ |
1.02 |
|
|
$ |
1.47 |
|
|
$ |
2.78 |
|
|
$ |
2.47 |
|
(Loss)/income from discontinued operations per weighted average common share — basic |
$ |
— |
|
|
$ |
(0.01) |
|
|
$ |
— |
|
|
$ |
1.50 |
|
Earnings per Weighted Average Common Share — Basic |
$ |
1.02 |
|
|
$ |
1.46 |
|
|
$ |
2.78 |
|
|
$ |
3.97 |
|
Weighted average number of common shares outstanding — diluted |
245 |
|
|
256 |
|
|
247 |
|
|
268 |
|
||||
Income from continuing operations per weighted average common share — diluted |
$ |
1.02 |
|
|
$ |
1.46 |
|
|
$ |
2.77 |
|
|
$ |
2.45 |
|
(Loss)/income from discontinued operations per weighted average common share — diluted |
$ |
— |
|
|
$ |
(0.01) |
|
|
$ |
— |
|
|
$ |
1.49 |
|
Earnings per Weighted Average Common Share — Diluted |
$ |
1.02 |
|
|
$ |
1.45 |
|
|
$ |
2.77 |
|
|
$ |
3.94 |
|
NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
|
(In millions) |
||||||||||||||
Net Income |
$ |
249 |
|
|
$ |
372 |
|
|
$ |
683 |
|
|
$ |
1,056 |
|
Other Comprehensive Income/(Loss) |
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments |
4 |
|
|
(4) |
|
|
2 |
|
|
(4) |
|
||||
Available-for-sale securities |
— |
|
|
(14) |
|
|
— |
|
|
(13) |
|
||||
Defined benefit plans |
— |
|
|
(41) |
|
|
— |
|
|
(47) |
|
||||
Other comprehensive income/(loss) |
4 |
|
|
(59) |
|
|
2 |
|
|
(64) |
|
||||
Comprehensive Income |
253 |
|
|
313 |
|
|
685 |
|
|
992 |
|
||||
Less: Comprehensive income attributable to redeemable noncontrolling interest |
— |
|
|
— |
|
|
— |
|
|
1 |
|
||||
Comprehensive Income Attributable to NRG Energy, Inc |
$ |
253 |
|
|
$ |
313 |
|
|
$ |
685 |
|
|
$ |
991 |
|
|
|
|
|
|
|
|
|
||||||||
NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
|
September 30, 2020 |
|
December 31, 2019 |
||||
(In millions, except share data) |
(Unaudited) |
|
(Audited) |
||||
ASSETS |
|
|
|
||||
Current Assets |
|
|
|
||||
Cash and cash equivalents |
$ |
697 |
|
|
$ |
345 |
|
Funds deposited by counterparties |
15 |
|
|
32 |
|
||
Restricted cash |
6 |
|
|
8 |
|
||
Accounts receivable, net |
1,126 |
|
|
1,025 |
|
||
Inventory |
330 |
|
|
383 |
|
||
Derivative instruments |
578 |
|
|
860 |
|
||
Cash collateral paid in support of energy risk management activities |
77 |
|
|
190 |
|
||
Prepayments and other current assets |
258 |
|
|
245 |
|
||
Total current assets |
3,087 |
|
|
3,088 |
|
||
Property, plant and equipment, net |
2,573 |
|
|
2,593 |
|
||
Other Assets |
|
|
|
||||
Equity investments in affiliates |
376 |
|
|
388 |
|
||
Operating lease right-of-use assets, net |
345 |
|
|
464 |
|
||
Goodwill |
579 |
|
|
579 |
|
||
Intangible assets, net |
721 |
|
|
789 |
|
||
Nuclear decommissioning trust fund |
828 |
|
|
794 |
|
||
Derivative instruments |
315 |
|
|
310 |
|
||
Deferred income taxes |
3,087 |
|
|
3,286 |
|
||
Other non-current assets |
314 |
|
|
240 |
|
||
Total other assets |
6,565 |
|
|
6,850 |
|
||
Total Assets |
$ |
12,225 |
|
|
$ |
12,531 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
||||
Current Liabilities |
|
|
|
||||
Current portion of long-term debt |
$ |
3 |
|
|
$ |
88 |
|
Current portion of operating lease liabilities |
69 |
|
|
73 |
|
||
Accounts payable |
753 |
|
|
722 |
|
||
Derivative instruments |
495 |
|
|
781 |
|
||
Cash collateral received in support of energy risk management activities |
15 |
|
|
32 |
|
||
Accrued expenses and other current liabilities |
651 |
|
|
663 |
|
||
Total current liabilities |
1,986 |
|
|
2,359 |
|
||
Other Liabilities |
|
|
|
||||
Long-term debt |
5,792 |
|
|
5,803 |
|
||
Non-current operating lease liabilities |
297 |
|
|
483 |
|
||
Nuclear decommissioning reserve |
311 |
|
|
298 |
|
||
Nuclear decommissioning trust liability |
508 |
|
|
487 |
|
||
Derivative instruments |
318 |
|
|
322 |
|
||
Deferred income taxes |
17 |
|
|
17 |
|
||
Other non-current liabilities |
1,062 |
|
|
1,084 |
|
||
Total other liabilities |
8,305 |
|
|
8,494 |
|
||
Total Liabilities |
10,291 |
|
|
10,853 |
|
||
Redeemable noncontrolling interest in subsidiaries |
— |
|
|
20 |
|
||
Commitments and Contingencies |
|
|
|
||||
Stockholders' Equity |
|
|
|
||||
Common stock; $0.01 par value; 500,000,000 shares authorized; 423,041,349 and 421,890,790 shares issued and 244,147,420
|
4 |
|
|
4 |
|
||
Additional paid-in-capital |
8,511 |
|
|
8,501 |
|
||
Accumulated deficit |
(1,157) |
|
|
(1,616) |
|
||
Less treasury stock, at cost - 178,893,929 and 172,894,601 shares at September 30, 2020 and December 31, 2019, respectively |
(5,234) |
|
|
(5,039) |
|
||
Accumulated other comprehensive loss |
(190) |
|
|
(192) |
|
||
Total Stockholders' Equity |
1,934 |
|
|
1,658 |
|
||
Total Liabilities and Stockholders' Equity |
$ |
12,225 |
|
|
$ |
12,531 |
|
NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
Nine months ended September 30, |
||||||
(In millions) |
2020 |
|
2019 |
||||
Cash Flows from Operating Activities |
|
|
|
||||
Net Income |
$ |
683 |
|
|
$ |
1,056 |
|
Income from discontinued operations, net of income tax |
— |
|
|
399 |
|
||
Income from continuing operations |
683 |
|
|
657 |
|
||
Adjustments to reconcile net income to cash provided by operating activities: |
|
|
|
||||
Distributions from and equity in losses/(earnings) of unconsolidated affiliates |
6 |
|
|
(5) |
|
||
Depreciation and amortization |
318 |
|
|
261 |
|
||
Accretion of asset retirement obligations |
46 |
|
|
31 |
|
||
Provision for credit losses |
74 |
|
|
87 |
|
||
Amortization of nuclear fuel |
40 |
|
|
40 |
|
||
Amortization of financing costs and debt discount/premiums |
23 |
|
|
20 |
|
||
Loss on debt extinguishment, net |
1 |
|
|
47 |
|
||
Amortization of emissions allowances and energy credits |
60 |
|
|
28 |
|
||
Amortization of unearned equity compensation |
17 |
|
|
15 |
|
||
Gain on sale and disposal of assets |
(22) |
|
|
(20) |
|
||
Impairment losses |
47 |
|
|
108 |
|
||
Changes in derivative instruments |
(7) |
|
|
36 |
|
||
Changes in deferred income taxes and liability for uncertain tax benefits |
202 |
|
|
(3) |
|
||
Changes in collateral deposits in support of energy risk management activities |
96 |
|
|
129 |
|
||
Changes in nuclear decommissioning trust liability |
39 |
|
|
27 |
|
||
Changes in other working capital |
(237) |
|
|
(569) |
|
||
Cash provided by continuing operations |
1,386 |
|
|
889 |
|
||
Cash provided by discontinued operations |
— |
|
|
8 |
|
||
Net Cash Provided by Operating Activities |
1,386 |
|
|
897 |
|
||
Cash Flows from Investing Activities |
|
|
|
||||
Payments for acquisitions of assets and businesses |
(277) |
|
|
(348) |
|
||
Capital expenditures |
(167) |
|
|
(183) |
|
||
Net proceeds from notes receivable |
— |
|
|
2 |
|
||
Net (purchases)/sales of emission allowances |
(15) |
|
|
14 |
|
||
Investments in nuclear decommissioning trust fund securities |
(360) |
|
|
(295) |
|
||
Proceeds from the sale of nuclear decommissioning trust fund securities |
318 |
|
|
271 |
|
||
Proceeds from sale of assets, net of cash disposed and sale of discontinued operations, net of fees |
15 |
|
|
1,293 |
|
||
Changes in investments in unconsolidated affiliates |
2 |
|
|
(94) |
|
||
Contributions to discontinued operations |
— |
|
|
(44) |
|
||
Cash (used)/provided by continuing operations |
(484) |
|
|
616 |
|
||
Cash used by discontinued operations |
— |
|
|
(2) |
|
||
Net Cash (Used)/Provided by Investing Activities |
(484) |
|
|
614 |
|
||
Cash Flows from Financing Activities |
|
|
|
||||
Payments of dividends to common stockholders |
(221) |
|
|
(24) |
|
||
Payments for share repurchase activity |
(229) |
|
|
(1,322) |
|
||
Payments for debt extinguishment costs |
— |
|
|
(24) |
|
||
Purchase of and distributions to noncontrolling interests from subsidiaries |
(2) |
|
|
(1) |
|
||
Proceeds from issuance of common stock |
1 |
|
|
3 |
|
||
Proceeds from issuance of long-term debt |
59 |
|
|
2,668 |
|
||
Payments of debt issuance costs |
(24) |
|
|
(34) |
|
||
Repayments of long-term debt |
(62) |
|
|
(2,892) |
|
||
Net repayments of Revolving Credit Facility |
(83) |
|
|
(215) |
|
||
Other |
(6) |
|
|
— |
|
||
Cash used by continuing operations |
(567) |
|
|
(1,841) |
|
||
Cash provided by discontinued operations |
— |
|
|
43 |
|
||
Net Cash Used by Financing Activities |
(567) |
|
|
(1,798) |
|
||
Effect of exchange rate changes on cash and cash equivalents |
(2) |
|
|
— |
|
||
Change in Cash from discontinued operations |
— |
|
|
49 |
|
||
Net Increase/(Decrease) in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash.. |
333 |
|
|
(336) |
|
||
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at Beginning of Period |
385 |
|
|
613 |
|
||
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at End of Period |
$ |
718 |
|
|
$ |
277 |
|
Media:
Candice Adams
609.524.5428
Investors:
Kevin L. Cole, CFA
609.524.4526
HOUSTON--(BUSINESS WIRE)--SilverBow Resources, Inc. (NYSE: SBOW) (“SilverBow” or the “Company”) today announced operating and financial results for the third quarter of 2020. Highlights include:
MANAGEMENT COMMENTS
Sean Woolverton, SilverBow’s Chief Executive Officer, commented, "As year-end quickly approaches, SilverBow is well-positioned to benefit from higher natural gas prices with exposure to unconstrained, premium Gulf Coast markets. Our team continues to execute on the factors within our control by driving down costs, optimizing our production and generating free cash flow to reduce absolute debt. 2020 has presented unique challenges to the oil and gas industry due to the ongoing global pandemic and extreme volatility in commodity prices, and these challenges are not likely to abate in the near term. In the face of it all, SilverBow generated $9 million of free cash flow during the third quarter, marking our third consecutive quarter of positive free cash flow, and we are on pace to deliver full year free cash flow of approximately $50 million. During the third quarter, we completed and turned to sales eight wells one month ahead of schedule. Compared to the first quarter of 2020, we have reduced our revolver borrowings by $37 million to $253 million at quarter-end."
Mr. Woolverton commented further, "As we look ahead, we began our nine-well gas development program in October, targeting our high-rate-of-return Webb County dry gas assets. Our strategy of maintaining a balanced portfolio and low-cost structure has allowed us to generate significant free cash flow and pay down debt while organically funding these high-return gas projects. We see favorable underlying supply and demand factors supporting a sustained improvement of natural gas prices and stand to benefit from our gas development, mix of collars, and unhedged production. Our returns-focused mindset remains at the core of our business strategy. Given our current scale and balance sheet, we will continue to prioritize debt reduction as our primary use of cash flow over the near-term. Based on preliminary estimates for next year, we expect to achieve modest production growth, sustain a maintenance level of capex, and generate a meaningful amount of free cash flow. As always, we are opportunistic in identifying accretive transactions, large or small, that further support our mission to be the premier Eagle Ford oil and gas company. I want to thank our stakeholders who underpin SilverBow's success."
OPERATIONS HIGHLIGHTS
During the third quarter of 2020, SilverBow resumed completion activity by bringing online eight wells in its McMullen Oil area. The Company completed three of these wells in the first quarter of 2020, but deferred bringing them online due to prevailing market conditions. The remaining five wells were drilled but uncompleted during the first quarter of 2020. As planned, all eight of these oil-weighted wells were placed on production in the third quarter of 2020, with the five DUCs completed nearly one month ahead of schedule. SilverBow's total well costs for the five DUCs were $8 million below budget, collectively. In addition to resuming capital activity, all remaining curtailed oil volumes were returned to sales during the third quarter. Approximately 20 MMcf/d of net gas production remained shut-in at quarter-end. The Company recently returned these volumes to production in late October to align with favorable natural gas prices.
To date, wells that have been returned to sales have not experienced any degradation and in some cases have exhibited higher production rates compared to pre-shut-in levels, as noted last quarter. SilverBow continues to monitor and analyze well data in real-time and implement choke management practices that optimize and preserve the integrity of each well. The Company believes these are primary drivers for the strong performance of the wells returned to sales.
The operations team carried out significant pre-planning and contingency practices, and engaged in rigorous vendor bidding activities, to ensure continuation of the Company’s low-cost platform and operational efficiencies given the activity hiatus in the second quarter of 2020. The team also performed regular, in-depth reviews of operating and capital costs. On the operating cost side, labor, compression, salt-water disposal and chemicals were the notable areas that led to further lease operating expense ("LOE") savings. On the capital side, service-pricing remains in a deflationary environment and the SilverBow team has been able to capture further savings through selective de-bundling of capital costs and process efficiencies.
At the beginning of October, the Company resumed drilling activity in the Webb County Gas area. SilverBow drilled the first three wells in the Upper Eagle Ford at Fasken with first production expected towards year-end. The other six wells comprise the second, co-developed La Mesa pad. The first pad was drilled and completed last year and has demonstrated some of the strongest returns in the Company's portfolio. SilverBow expects to finish the drilling and completion of the six-well La Mesa pad in early 2021, with first sales expected by the end of the first quarter.
PRODUCTION VOLUMES, OPERATING COSTS AND REALIZED PRICES
SilverBow's total net production for the third quarter averaged approximately 183 MMcfe/d. Production mix for the third quarter consisted of approximately 71% natural gas, 17% oil and 12% natural gas liquids ("NGLs"). Natural gas comprised 51% of total oil and gas sales for the third quarter, compared to 73% in the second quarter of 2020.
LOE were $0.31 per million cubic feet of natural gas equivalent ("Mcfe") for the third quarter. After deducting $1.1 million of non-cash compensation expense, cash G&A costs were $4.8 million for the third quarter, with a per unit cash cost of $0.28 per Mcfe. Transportation and processing expenses ("T&P") came in at $0.30 per Mcfe and production and ad valorem taxes were 5.5% of oil and gas revenue for the third quarter. Total production expenses, which include LOE, T&P and production taxes, were $0.76 per Mcfe for the quarter. The Company's all-in cash operating expenses for the quarter, which includes cash G&A costs, were $1.05 per Mcfe. Beginning in 2021, SilverBow expects to save approximately $2.5 million in annualized G&A costs as a result of corporate cost initiatives.
The Company continues to benefit from strong basis pricing in the Eagle Ford, while recent conditions have impacted historical oil averages. Crude oil and natural gas realizations in the third quarter were 92% of West Texas Intermediate ("WTI") and 100% of Henry Hub, respectively, excluding hedging. SilverBow’s average realized natural gas price, excluding the effect of hedging, was $1.98 per thousand cubic feet of natural gas ("Mcf") compared to $2.32 per Mcf in the third quarter of 2019. The average realized crude oil selling price, excluding the effect of hedging, was $37.45 per barrel compared to $57.14 per barrel in the third quarter of 2019. The average realized NGLs selling price in the quarter was $12.79 per barrel (31% of WTI benchmark) compared to $11.99 per barrel (21% of WTI benchmark) in the third quarter of 2019.
FINANCIAL RESULTS
SilverBow reported total oil and gas sales of $45.7 million and a net loss of $6.9 million for the third quarter. Included in the third quarter’s net loss is an unrealized loss on the value of the SilverBow's derivative contracts of $19.2 million and a $0.6 million net tax benefit.
For the third quarter, SilverBow generated Adjusted EBITDA (a non-GAAP measure) of $36.0 million and FCF (a non-GAAP measure) of $9.1 million.
At quarter-end, the Company's net debt was $451.8 million, calculated as total long-term debt of $453.0 million less $1.2 million of cash, a $25.9 million reduction compared to year-end 2019.
Capital expenditures during the third quarter, excluding acquisition and divestiture activity, totaled $20.2 million on an accrual basis.
2020 GUIDANCE AND PRELIMINARY 2021 OUTLOOK
For the fourth quarter, SilverBow is guiding for estimated production of 170-183 MMcfe/d, with natural gas volumes expected to comprise 125-133 MMcf/d, although commodity prices or other impacts from the Coronavirus Disease 2019 ("COVID-19") pandemic could affect production guidance. The Company carefully considers the production economics and the net benefit to its borrowing base and its financials before committing to future capital investment.
For the full year 2020, SilverBow's capital expenditure guidance of $95-$100 million is $3 million lower at the midpoint compared to prior guidance of $95-$105 million. As planned, the Company added a rig at the beginning of the fourth quarter, commencing the nine-well gas development program in Webb County. For the full year, SilverBow is guiding to a production range of 181-184 MMcfe/d with natural gas volumes expected to comprise 138-140 MMcf/d. Commodity prices or other impacts from the COVID-19 pandemic could result in lower full year production and adversely affect the Company's ability to achieve FCF and other guidance. SilverBow anticipates FCF to be approximately $50 million, at the high end of its previously stated guidance range of $40-$50 million for the full year.
While still finalizing the 2021 budget, SilverBow is planning for single digit production growth, capital expenditures consistent with 2020 levels, and FCF1 generation of $20-$40 million, implying a greater than 50% FCF yield with strip pricing.
Additional detail concerning SilverBow's fourth quarter and full year 2020 guidance can be found in the table included with today’s news release and the Corporate Presentation uploaded to the Investor Relations section of the Company’s website.
HEDGING UPDATE
Hedging continues to be an important element of SilverBow's strategy to protect cash flow. The Company's active hedging program provides greater predictability of cash flows and preserves exposure to higher commodity prices. In conjunction with unwinding oil derivative contracts in 2020 and 2021, SilverBow is amortizing the $38 million of cash inflow it received in discrete amounts for each month over the same time period. The amortized hedge gains will factor into the Company's calculation of Adjusted EBITDA for covenant compliance purposes through the end of 2021.
As of October 31, 2020, the Company had 71% of total estimated production volumes hedged for the remainder of 2020, using the midpoint of production guidance. For the remainder of 2020, SilverBow has 95 MMcf/d of natural gas production hedged at an average price of $2.67 per million British thermal units ("MMBtu") and 5,094 barrels per day ("Bbls/d") of oil hedged at an average price of $44.88 per barrel. For 2021, the Company has 67 MMcf/d of natural gas production hedged at an average price of $2.87 per MMBtu and 3,294 Bbls/d of oil hedged at an average price of $47.43 per barrel. Notably, SilverBow's hedges are a combination of swaps and collars with the weighted average price factoring in the ceiling price of the collars.
Please see SilverBow's Form 10-Q filing for the third quarter of 2020, which the Company expects to file on Thursday, November 5, 2020, for a detailed summary of its derivative contracts.
CAPITAL STRUCTURE AND LIQUIDITY
As of September 30, 2020, SilverBow's liquidity position was $78.2 million, consisting of $1.2 million of cash and $77.0 million of availability under the Company’s credit facility, which had a $330 million borrowing base as of such date prior to the November 2, 2020 redetermination. SilverBow’s net debt was $451.8 million, calculated as total long-term debt of $453.0 million less $1.2 million of cash, a 5% decrease from December 31, 2019. Subsequent to quarter end, the borrowing base under the Company's credit facility was redetermined as of November 2, 2020 to be $310 million, and the maximum leverage ratio2 was decreased to 3.5x from 4.0x. As of October 28, 2020, SilverBow had 11.9 million total common shares outstanding.
CONFERENCE CALL AND UPDATED INVESTOR PRESENTATION
SilverBow will host a conference call for investors on Thursday, November 5, 2020, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time). Investors and participants can register for the call in advance by visiting http://www.directeventreg.com/registration/event/5165505. After registering, instructions and dial-in information will be provided on how to join the call. A simultaneous webcast of the call may be accessed over the internet by visiting SilverBow's website at www.sbow.com, clicking on “Investor Relations” and “Events and Presentations” and then clicking on the “Third Quarter 2020 Earnings Conference Call” link. The webcast will be archived for replay on the Company's website for 14 days. Additionally, an updated Corporate Presentation will be uploaded to the Investor Relations section of SilverBow's website before the conference call.
ABOUT SILVERBOW RESOURCES, INC.
SilverBow Resources, Inc. (NYSE: SBOW) is a Houston-based energy company actively engaged in the exploration, development, and production of oil and gas in the Eagle Ford Shale in South Texas. With over 30 years of history operating in South Texas, the Company possesses a significant understanding of regional reservoirs which it leverages to assemble high quality drilling inventory while continuously enhancing its operations to maximize returns on capital invested. For more information, please visit www.sbow.com.
FORWARD-LOOKING STATEMENTS
This 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. These forward-looking statements represent management's expectations or beliefs concerning future events, and it is possible that the results described in this release will not be achieved. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from the results discussed in the forward-looking statements, including among other things: the severity and duration of world health events, including the COVID-19 pandemic, related economic repercussions and the resulting severe disruption in the oil and gas industry and negative impact on demand for oil and gas, which is negatively impacting our business; the current significant surplus in the supply of crude oil and actions by the members of the Organization of the Petroleum Exporting Countries (“OPEC”) and Russia (together with OPEC and other allied producing countries, “OPEC+”) with respect to oil production levels and announcements of potential changes in such levels, including the ability of the OPEC+ countries to agree on and comply with supply limitations; operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions; shut-in or curtailment of production due to decreases in available storage capacity or other factors; oil, natural gas and NGL price levels and volatility; our ability to satisfy our short- or long-term liquidity needs; our ability to execute our business strategy, including the success of our drilling and development efforts; timing, cost and amount of future production of oil and natural gas; expectations regarding future FCF; and other factors discussed in the Company’s reports filed with the Securities and Exchange Commission ("SEC"), including its Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed thereafter. All statements, other than historical facts included in this press release, regarding our strategy, future operations, financial position, future cash flows, estimated production levels, expected oil and natural gas pricing, estimated oil and natural gas reserves or the present value thereof, reserve increases, capital expenditures, budget, projected costs, prospects, plans and objectives of management are forward-looking statements.
All forward-looking statements speak only as of the date of this news release. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this release are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved. The risk factors and other factors noted herein and in the Company's SEC filings could cause its actual results to differ materially from those contained in any forward-looking statement. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.
All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the foregoing. We undertake no obligation to publicly release the results of any revisions to any such statements that may be made to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all such factors.
(Footnotes)
1 A forward-looking estimate of net income (loss) is not provided with the forward-looking estimate of FCF (a non-GAAP measure) because the items necessary to estimate net income (loss) are not accessible or estimable at this time.
2 Leverage ratio is defined as total long-term debt, before unamortized discounts, divided by Adjusted EBITDA for Leverage Ratio (a non-GAAP measure defined and reconciled in the tables included with today’s news release) for the trailing twelve-month period.
(Financial Highlights to Follow)
Condensed Consolidated Balance Sheets (Unaudited) SilverBow Resources, Inc. and Subsidiary (in thousands, except share amounts) |
|||||||
|
September 30, 2020 |
|
December 31, 2019 |
||||
ASSETS |
|
|
|
||||
Current Assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
1,222 |
|
|
$ |
1,358 |
|
Accounts receivable, net |
|
28,884 |
|
|
|
36,996 |
|
Fair value of commodity derivatives |
|
11,850 |
|
|
|
12,833 |
|
Other current assets |
|
2,628 |
|
|
|
2,121 |
|
Total Current Assets |
|
44,584 |
|
|
|
53,308 |
|
Property and Equipment: |
|
|
|
||||
Property and equipment, full cost method, including $30,661 and $41,201, respectively, of unproved property costs not being amortized at the end of each period |
|
1,323,789 |
|
|
|
1,247,717 |
|
Less – Accumulated depreciation, depletion, amortization & impairment |
|
(787,830 |
) |
|
|
(380,728 |
) |
Property and Equipment, Net |
|
535,959 |
|
|
|
866,989 |
|
Right of Use Assets |
|
6,093 |
|
|
|
9,374 |
|
Fair Value of Long-Term Commodity Derivatives |
|
2,291 |
|
|
|
3,854 |
|
Deferred Tax Asset |
|
— |
|
|
|
22,669 |
|
Other Long-Term Assets |
|
1,752 |
|
|
|
3,622 |
|
Total Assets |
$ |
590,679 |
|
|
$ |
959,816 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||||
Current Liabilities: |
|
|
|
||||
Accounts payable and accrued liabilities |
$ |
22,707 |
|
|
$ |
39,343 |
|
Fair value of commodity derivatives |
|
10,420 |
|
|
|
6,644 |
|
Accrued capital costs |
|
4,915 |
|
|
|
17,889 |
|
Accrued interest |
|
892 |
|
|
|
1,397 |
|
Current lease liability |
|
4,807 |
|
|
|
6,707 |
|
Undistributed oil and gas revenues |
|
8,619 |
|
|
|
9,166 |
|
Total Current Liabilities |
|
52,360 |
|
|
|
81,146 |
|
Long-Term Debt, Net |
|
447,644 |
|
|
|
472,900 |
|
Non-Current Lease Liability |
|
1,392 |
|
|
|
2,813 |
|
Deferred Tax Liabilities |
|
— |
|
|
|
1,582 |
|
Asset Retirement Obligations |
|
4,344 |
|
|
|
4,055 |
|
Fair Value of Long-Term Commodity Derivatives |
|
4,045 |
|
|
|
1,613 |
|
Other Long-Term Liabilities |
|
292 |
|
|
|
— |
|
Commitments and Contingencies |
|
|
|
||||
Stockholders' Equity: |
|
|
|
||||
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued |
|
— |
|
|
|
— |
|
Common stock, $0.01 par value, 40,000,000 shares authorized, 12,053,763 and 11,895,032 shares issued, respectively, and 11,936,679 and 11,806,679 shares outstanding, respectively |
|
121 |
|
|
|
119 |
|
Additional paid-in capital |
|
296,629 |
|
|
|
292,916 |
|
Treasury stock, held at cost, 117,084 and 88,353 shares, respectively |
|
(2,372 |
) |
|
|
(2,282 |
) |
(Accumulated deficit) Retained earnings |
|
(213,776 |
) |
|
|
104,954 |
|
Total Stockholders’ Equity |
|
80,602 |
|
|
|
395,707 |
|
Total Liabilities and Stockholders’ Equity |
$ |
590,679 |
|
|
$ |
959,816 |
|
|
|
|
|
||||
Condensed Consolidated Statements of Operations (Unaudited) SilverBow Resources, Inc. and Subsidiary (in thousands, except per-share amounts) |
|||||||
|
Three Months Ended
|
|
Three Months Ended
|
||||
Revenues: |
|
|
|
||||
Oil and gas sales |
$ |
45,699 |
|
|
$ |
72,014 |
|
|
|
|
|
||||
Operating Expenses: |
|
|
|
||||
General and administrative, net |
|
5,833 |
|
|
|
6,247 |
|
Depreciation, depletion, and amortization |
|
13,975 |
|
|
|
24,937 |
|
Accretion of asset retirement obligations |
|
90 |
|
|
|
88 |
|
Lease operating costs |
|
5,211 |
|
|
|
5,507 |
|
Workovers |
|
8 |
|
|
|
93 |
|
Transportation and gas processing |
|
5,094 |
|
|
|
6,782 |
|
Severance and other taxes |
|
2,512 |
|
|
|
3,778 |
|
Write-down of oil and gas properties |
|
— |
|
|
|
— |
|
Total Operating Expenses |
|
32,723 |
|
|
|
47,432 |
|
|
|
|
|
||||
Operating Income (Loss) |
|
12,976 |
|
|
|
24,582 |
|
|
|
|
|
||||
Non-Operating Income (Expense) |
|
|
|
||||
Gain (loss) on commodity derivatives, net |
|
(12,944 |
) |
|
|
13,409 |
|
Interest expense, net |
|
(7,444 |
) |
|
|
(9,435 |
) |
Other income (expense), net |
|
(56 |
) |
|
|
134 |
|
|
|
|
|
||||
Income (Loss) Before Income Taxes |
|
(7,468 |
) |
|
|
28,690 |
|
|
|
|
|
||||
Provision (Benefit) for Income Taxes |
|
(572 |
) |
|
|
1,039 |
|
|
|
|
|
||||
Net Income (Loss) |
$ |
(6,896 |
) |
|
$ |
27,651 |
|
|
|
|
|
||||
Per Share Amounts |
|
|
|
||||
|
|
|
|
||||
Basic: Net Income (Loss) |
$ |
(0.58 |
) |
|
$ |
2.35 |
|
|
|
|
|
||||
Diluted: Net Income (Loss) |
$ |
(0.58 |
) |
|
$ |
2.35 |
|
|
|
|
|
||||
Weighted-Average Shares Outstanding - Basic |
|
11,935 |
|
|
|
11,762 |
|
|
|
|
|
||||
Weighted-Average Shares Outstanding - Diluted |
|
11,935 |
|
|
|
11,780 |
|
Condensed Consolidated Statements of Operations (Unaudited) SilverBow Resources, Inc. and Subsidiary (in thousands, except per-share amounts) |
|||||||
|
Nine Months Ended
|
|
Nine Months Ended
|
||||
Revenues: |
|
|
|
||||
Oil and gas sales |
$ |
123,921 |
|
|
$ |
218,781 |
|
|
|
|
|
||||
Operating Expenses: |
|
|
|
||||
General and administrative, net |
|
17,926 |
|
|
|
19,146 |
|
Depreciation, depletion, and amortization |
|
51,130 |
|
|
|
70,771 |
|
Accretion of asset retirement obligations |
|
263 |
|
|
|
257 |
|
Lease operating costs |
|
16,023 |
|
|
|
15,074 |
|
Workovers |
|
8 |
|
|
|
613 |
|
Transportation and gas processing |
|
16,291 |
|
|
|
19,917 |
|
Severance and other taxes |
|
7,513 |
|
|
|
11,044 |
|
Write-down of oil and gas properties |
|
355,948 |
|
|
|
— |
|
Total Operating Expenses |
|
465,102 |
|
|
|
136,822 |
|
|
|
|
|
||||
Operating Income (Loss) |
|
(341,181 |
) |
|
|
81,959 |
|
|
|
|
|
||||
Non-Operating Income (Expense) |
|
|
|
||||
Gain (loss) on commodity derivatives, net |
|
66,884 |
|
|
|
34,312 |
|
Interest expense, net |
|
(23,876 |
) |
|
|
(27,500 |
) |
Other income (expense), net |
|
50 |
|
|
|
173 |
|
|
|
|
|
||||
Income (Loss) Before Income Taxes |
|
(298,123 |
) |
|
|
88,944 |
|
|
|
|
|
||||
Provision (Benefit) for Income Taxes |
|
20,607 |
|
|
|
(19,464 |
) |
|
|
|
|
||||
Net Income (Loss) |
$ |
(318,730 |
) |
|
$ |
108,408 |
|
|
|
|
|
||||
Per Share Amounts |
|
|
|
||||
|
|
|
|
||||
Basic: Net Income (Loss) |
$ |
(26.81 |
) |
|
$ |
9.24 |
|
|
|
|
|
||||
Diluted: Net Income (Loss) |
$ |
(26.81 |
) |
|
$ |
9.21 |
|
|
|
|
|
||||
Weighted-Average Shares Outstanding - Basic |
|
11,890 |
|
|
|
11,739 |
|
|
|
|
|
||||
Weighted-Average Shares Outstanding - Diluted |
|
11,890 |
|
|
|
11,776 |
|
Jeff Magids
Director of Finance & Investor Relations
(281) 874-2700, (888) 991-SBOW
WALTHAM, Mass.--(BUSINESS WIRE)--Global Partners LP (NYSE: GLP) today reported financial results for the quarter ended September 30, 2020.
“Global continues to perform well despite near-term uncertainties associated with COVID-19,” said Eric Slifka, the Partnership’s President and Chief Executive Officer. “Our vertically integrated portfolio of supply, terminaling storage and retail assets are part of the basic infrastructure necessary to power everyday life and the movement of goods, services and people across all of the markets we serve.
“While the pandemic in the short-term has reduced fuel and in-store demand, our strong network and adaptability enables us to continue executing on our strategy while remaining focused on taking advantage of opportunities in the market to grow our business organically and through acquisitions. Throughout our network we are taking steps to increase our flexibility to move renewable fuels and diversify our offerings to serve increasing demand for those products,” said Slifka.
Financial Highlights
Net income attributable to the Partnership was $18.2 million, or $0.47 per diluted common limited partner unit, for the third quarter of 2020 compared with net income attributable to the Partnership of $15.1 million, or $0.38 per diluted common limited partner unit, for the same period of 2019.
Net income attributable to the Partnership, EBITDA, Adjusted EBITDA and DCF in the third quarter of 2019 included a $13.1 million loss on the early extinguishment of debt related to the Partnership's July 2019 repurchase of its 6.25% senior notes.
Earnings before interest, taxes, depreciation and amortization (EBITDA) was $65.0 million in the third quarter of 2020 compared with $65.1 million in the comparable period of 2019.
Adjusted EBITDA was $65.9 million in the third quarter of 2020 versus $66.1 million in the year-earlier period.
Distributable cash flow (DCF) was $31.3 million in the third quarter of 2020 compared with $30.4 million in the same period of 2019.
Gross profit in the third quarter of 2020 was $169.2 million compared with $187.8 million in the third quarter of 2019, due to lower product margins in all three segments. Combined product margin, which is gross profit adjusted for depreciation allocated to cost of sales, was $189.3 million in the third quarter of 2020 compared with $210.2 million in the third quarter of 2019.
Combined product margin, EBITDA, Adjusted EBITDA, and DCF are non-GAAP (Generally Accepted Accounting Principles) financial measures, which are explained in greater detail below under “Use of Non-GAAP Financial Measures.” Please refer to Financial Reconciliations included in this news release for reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures for the three and nine months ended September 30, 2020 and 2019.
GDSO segment product margin was $158.9 million in the third quarter of 2020 compared with $168.7 million in the same period of 2019. This result primarily reflected lower fuel volume and reduced convenience store activity due to COVID-19, partly offset by higher fuel margins.
Wholesale segment product margin was $27.6 million in the third quarter of 2020 compared with $34.2 million in the same period of 2019. This result primarily reflected less favorable market conditions in gasoline and gasoline blendstocks and other oils and related products.
Commercial segment product margin was $2.8 million in the third quarter of 2020 compared with $7.2 million in the third quarter of 2019, primarily reflecting a decrease in bunkering activity.
Sales were $2.0 billion in the third quarter of 2020 compared with $3.2 billion in the third quarter of 2019, due to decreases in prices and volume. Wholesale segment sales were $1.1 billion in the third quarter of 2020 compared with $1.8 billion in the third quarter of 2019. GDSO segment sales were $0.8 billion in the third quarter of 2020 compared with $1.1 billion in the third quarter of 2019. Commercial segment sales were $181.9 million in the third quarter of 2020 compared with $313.8 million in the third quarter of 2019.
Volume in the third quarter of 2020 was 1.4 billion gallons compared with 1.6 billion gallons in the same period of 2019. Wholesale segment volume was 837.8 million gallons in the third quarter of 2020 compared with 995.6 million gallons in the same period of 2019. GDSO volume was 376.3 million gallons in the third quarter of 2020 compared with 423.3 million gallons in the third quarter of 2019. Commercial segment volume was 139.9 million gallons in the third quarter of 2020 compared with 171.5 million gallons in the third quarter of 2019.
Recent Developments
Business Outlook
“Our 2020 performance remains largely dependent on the extent and duration of COVID-19,” Slifka said. “While we continue to see our integrated business model and diversified product portfolio as long-term strategic assets for the Partnership, ongoing uncertainty about the economic effects of COVID-19 continues to limit near-term visibility.”
Any COVID-19 related events or conditions, or other unforeseen consequences of COVID-19 could significantly adversely affect our business and financial condition and the business and financial condition of our customers, suppliers and counterparties. The ultimate extent of the impact of COVID-19 on our business, financial condition and results of operations depends in large part on future developments which are uncertain and cannot be predicted at this time. That uncertainty includes the duration (including its potential return) of the COVID-19 pandemic, the geographic regions so impacted, the extent of said impact within specific boundaries of those areas and, lastly, the impact to the local, state and national economies.
Financial Results Conference Call
Management will review the Partnership’s third-quarter 2020 financial results in a teleconference call for analysts and investors today.
Time: |
10:00 a.m. ET |
|
Dial-in numbers: |
(877) 709-8155 (U.S. and Canada) |
|
|
(201) 689-8881 (International) |
Due to the expected high demand on our conference call provider, please plan to dial in to the call at least 20 minutes prior to the start time.
The call also will be webcast live and archived on Global’s website, https://ir.globalp.com.
Use of Non-GAAP Financial Measures
Product Margin
Global Partners views product margin as an important performance measure of the core profitability of its operations. The Partnership reviews product margin monthly for consistency and trend analysis. Global Partners defines product margin as product sales minus product costs. Product sales primarily include sales of unbranded and branded gasoline, distillates, residual oil, renewable fuels, crude oil and propane, as well as convenience store sales, gasoline station rental income and revenue generated from logistics activities when the Partnership engages in the storage, transloading and shipment of products owned by others. Product costs include the cost of acquiring products and all associated costs including shipping and handling costs to bring such products to the point of sale as well as product costs related to convenience store items and costs associated with logistics activities. The Partnership also looks at product margin on a per unit basis (product margin divided by volume). Product margin is a non‑GAAP financial measure used by management and external users of the Partnership’s consolidated financial statements to assess its business. Product margin should not be considered an alternative to net income, operating income, cash flow from operations, or any other measure of financial performance presented in accordance with GAAP. In addition, product margin may not be comparable to product margin or a similarly titled measure of other companies.
EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are non-GAAP financial measures used as supplemental financial measures by management and may be used by external users of Global Partners’ consolidated financial statements, such as investors, commercial banks and research analysts, to assess the Partnership’s:
Adjusted EBITDA is EBITDA further adjusted for gains or losses on the sale and disposition of assets and goodwill and long-lived asset impairment charges. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA and Adjusted EBITDA exclude some, but not all, items that affect net income, and these measures may vary among other companies. Therefore, EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
Distributable Cash Flow
Distributable cash flow is an important non-GAAP financial measure for the Partnership’s limited partners since it serves as an indicator of success in providing a cash return on their investment. Distributable cash flow as defined by the Partnership’s partnership agreement is net income plus depreciation and amortization minus maintenance capital expenditures, as well as adjustments to eliminate items approved by the audit committee of the board of directors of the Partnership’s general partner that are extraordinary or non-recurring in nature and that would otherwise increase distributable cash flow.
Distributable cash flow as used in our partnership agreement also determines our ability to make cash distributions on our incentive distribution rights. The investment community also uses a distributable cash flow metric similar to the metric used in our partnership agreement with respect to publicly traded partnerships to indicate whether or not such partnerships have generated sufficient earnings on a current or historic level that can sustain distributions on preferred or common units or support an increase in quarterly cash distributions on common units. Our partnership agreement does not permit adjustments for certain non-cash items, such as net losses on the sale and disposition of assets and goodwill and long-lived asset impairment charges.
Distributable cash flow should not be considered as an alternative to net income, operating income, cash flow from operations, or any other measure of financial performance presented in accordance with GAAP. In addition, distributable cash flow may not be comparable to distributable cash flow or similarly titled measures of other companies.
About Global Partners LP
With approximately 1,550 locations primarily in the Northeast, Global Partners is one of the region’s largest independent owners, suppliers and operators of gasoline stations and convenience stores. Global Partners also owns, controls or has access to one of the largest terminal networks in New England and New York, through which it distributes gasoline, distillates, residual oil and renewable fuels to wholesalers, retailers and commercial customers. In addition, Global Partners engages in the transportation of petroleum products and renewable fuels by rail from the mid-continental U.S. and Canada. Global Partners LP, a master limited partnership, trades on the New York Stock Exchange under the ticker symbol “GLP.” For additional information, visit www.globalp.com.
Forward-looking Statements
Certain statements and information in this press release may constitute “forward-looking statements.” The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could” or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on Global Partners’ current expectations and beliefs concerning future developments and their potential effect on the Partnership. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting the Partnership will be those that it anticipates. All comments concerning the Partnership’s expectations for future revenues and operating results and otherwise are based on forecasts for its existing operations and do not include the potential impact of any future acquisitions. Forward-looking statements involve significant risks and uncertainties (some of which are beyond the Partnership’s control) including, without limitation, the impact and duration of the COVID-19 pandemic, uncertainty around the timing of an economic recovery in the United States which will impact the demand for the products we sell and the services we provide, uncertainty around the impact of the COVID-19 pandemic to our counterparties and our customers and their corresponding ability to perform their obligations and/or utilize the products we sell and/or services we provide, uncertainty around the impact and duration of federal, state and municipal regulations related to the COVID-19 pandemic, and assumptions that could cause actual results to differ materially from the Partnership’s historical experience and present expectations or projections.
For additional information regarding known material factors that could cause actual results to differ from the Partnership’s projected results, please see Global Partners’ filings with the SEC, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date thereof. The Partnership undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
| GLOBAL PARTNERS LP | |||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
| (In thousands, except per unit data) | |||||||||||
| (Unaudited) | |||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||
| September 30, | September 30, | ||||||||||
2020 |
|
2019 |
|
2020 |
|
2019 |
|||||
| Sales | $ | 2,061,382 |
$ | 3,245,653 |
$ | 6,126,052 |
$ | 9,732,819 |
|||
| Cost of sales | 1,892,141 |
3,057,884 |
5,571,126 |
9,221,063 |
|||||||
| Gross profit | 169,241 |
187,769 |
554,926 |
511,756 |
|||||||
| Costs and operating expenses: | |||||||||||
| Selling, general and administrative expenses | 43,218 |
45,333 |
143,158 |
127,391 |
|||||||
| Operating expenses | 82,235 |
87,827 |
241,502 |
257,222 |
|||||||
| Lease exit and termination gain | - |
- |
- |
(493) |
|||||||
| Amortization expense | 2,712 |
2,766 |
8,137 |
8,719 |
|||||||
| Net loss (gain) on sale and disposition of assets | 691 |
323 |
623 |
(252) |
|||||||
| Long-lived asset impairment | 203 |
643 |
1,927 |
643 |
|||||||
| Total costs and operating expenses | 129,059 |
136,892 |
395,347 |
393,230 |
|||||||
| Operating income | 40,182 |
50,877 |
159,579 |
118,526 |
|||||||
| Interest expense | (19,854) |
(22,091) |
(62,544) |
(68,113) |
|||||||
| Loss on early extinguishment of debt | - |
(13,080) |
- |
(13,080) |
|||||||
| Income before income tax (expense) benefit | 20,328 |
15,706 |
97,035 |
37,333 |
|||||||
| Income tax (expense) benefit | (2,136) |
(813) |
205 |
(1,275) |
|||||||
| Net income | 18,192 |
14,893 |
97,240 |
36,058 |
|||||||
| Net loss attributable to noncontrolling interest | 38 |
187 |
528 |
637 |
|||||||
| Net income attributable to Global Partners LP | 18,230 |
15,080 |
97,768 |
36,695 |
|||||||
| Less: General partner's interest in net income, including | |||||||||||
| incentive distribution rights | 324 |
395 |
857 |
1,065 |
|||||||
| Less: Series A preferred limited partner interest in net income | 1,682 |
1,682 |
5,046 |
5,046 |
|||||||
| Net income attributable to common limited partners | $ | 16,224 |
$ | 13,003 |
$ | 91,865 |
$ | 30,584 |
|||
| Basic net income per common limited partner unit (1) | $ | 0.48 |
$ | 0.38 |
$ | 2.71 |
$ | 0.91 |
|||
| Diluted net income per common limited partner unit (1) | $ | 0.47 |
$ | 0.38 |
$ | 2.68 |
$ | 0.89 |
|||
| Basic weighted average common limited partner units outstanding | 33,924 |
33,865 |
33,887 |
33,791 |
|||||||
| Diluted weighted average limited partner units outstanding | 34,209 |
34,266 |
34,241 |
34,255 |
|||||||
| (1) Under the Partnership's partnership agreement, for any quarterly period, the incentive distribution rights ("IDRs") participate in net income only to the extent of the amount of cash distributions actually declared, thereby excluding the IDRs from participating in the Partnership's undistributed net income or losses. Accordingly, the Partnership's undistributed net income or losses is assumed to be allocated to the common unitholders and to the General Partner's general partner interest. Net income attributable to common limited partners is divided by the weighted average common units outstanding in computing the net income per limited partner unit. | |||||||||||
| GLOBAL PARTNERS LP | ||||||
| CONSOLIDATED BALANCE SHEETS | ||||||
| (In thousands) | ||||||
| (Unaudited) | ||||||
September 30, |
|
December 31, |
||||
2020 |
|
2019 |
||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 4,861 |
$ | 12,042 |
||
| Accounts receivable, net | 239,396 |
413,195 |
||||
| Accounts receivable - affiliates | 5,282 |
7,823 |
||||
| Inventories | 328,706 |
450,482 |
||||
| Brokerage margin deposits | 23,455 |
34,466 |
||||
| Derivative assets | 43,159 |
4,564 |
||||
| Prepaid expenses and other current assets | 92,295 |
81,940 |
||||
| Total current assets | 737,154 |
1,004,512 |
||||
| Property and equipment, net | 1,070,251 |
1,104,863 |
||||
| Right of use assets, net | 287,787 |
296,746 |
||||
| Intangible assets, net | 38,627 |
46,765 |
||||
| Goodwill | 323,889 |
324,474 |
||||
| Other assets | 28,596 |
31,067 |
||||
| Total assets | $ | 2,486,304 |
$ | 2,808,427 |
||
| Liabilities and partners' equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 186,794 |
$ | 373,386 |
||
| Working capital revolving credit facility - current portion | 10,100 |
148,900 |
||||
| Lease liability - current portion | 70,965 |
68,160 |
||||
| Environmental liabilities - current portion | 5,009 |
5,009 |
||||
| Trustee taxes payable | 30,077 |
42,932 |
||||
| Accrued expenses and other current liabilities | 99,898 |
102,802 |
||||
| Derivative liabilities | 6,589 |
12,698 |
||||
| Total current liabilities | 409,432 |
753,887 |
||||
| Working capital revolving credit facility - less current portion | 150,000 |
175,000 |
||||
| Revolving credit facility | 188,000 |
192,700 |
||||
| Senior notes | 691,765 |
690,533 |
||||
| Long-term lease liability - less current portion | 229,307 |
239,349 |
||||
| Environmental liabilities - less current portion | 50,416 |
54,262 |
||||
| Financing obligations | 146,994 |
148,127 |
||||
| Deferred tax liabilities | 56,399 |
42,879 |
||||
| Other long-term liabilities | 54,926 |
52,451 |
||||
| Total liabilities | 1,977,239 |
2,349,188 |
||||
| Partners' equity | ||||||
| Global Partners LP equity | 509,065 |
458,065 |
||||
| Noncontrolling interest | - |
1,174 |
||||
| Total partners' equity | 509,065 |
459,239 |
||||
| Total liabilities and partners' equity | $ | 2,486,304 |
$ | 2,808,427 |
||
| GLOBAL PARTNERS LP | |||||||||||||
| FINANCIAL RECONCILIATIONS | |||||||||||||
| (In thousands) | |||||||||||||
| (Unaudited) | |||||||||||||
Three Months Ended |
|
Nine Months Ended |
|||||||||||
September 30, |
|
September 30, |
|||||||||||
2020 |
|
2019 |
|
2020 |
|
2019 |
|||||||
| Reconciliation of gross profit to product margin | |||||||||||||
| Wholesale segment: | |||||||||||||
| Gasoline and gasoline blendstocks | $ | 16,318 |
$ | 20,194 |
$ | 83,241 |
$ | 76,568 |
|||||
| Crude oil | (2,729) |
(3,019) |
2,004 |
(10,043) |
|||||||||
| Other oils and related products | 14,031 |
17,071 |
58,764 |
40,566 |
|||||||||
| Total | 27,620 |
34,246 |
144,009 |
107,091 |
|||||||||
| Gasoline Distribution and Station Operations segment: | |||||||||||||
| Gasoline distribution | 101,405 |
107,620 |
305,405 |
282,919 |
|||||||||
| Station operations | 57,462 |
61,109 |
154,904 |
169,621 |
|||||||||
| Total | 158,867 |
168,729 |
460,309 |
452,540 |
|||||||||
| Commercial segment | 2,855 |
7,213 |
11,773 |
18,217 |
|||||||||
| Combined product margin | 189,342 |
210,188 |
616,091 |
577,848 |
|||||||||
| Depreciation allocated to cost of sales | (20,101) |
(22,419) |
(61,165) |
(66,092) |
|||||||||
| Gross profit | $ | 169,241 |
$ | 187,769 |
$ | 554,926 |
$ | 511,756 |
|||||
| Reconciliation of net income to EBITDA and Adjusted EBITDA | |||||||||||||
| Net income | $ | 18,192 |
$ | 14,893 |
$ | 97,240 |
$ | 36,058 |
|||||
| Net loss attributable to noncontrolling interest | 38 |
187 |
528 |
637 |
|||||||||
| Net income attributable to Global Partners LP | 18,230 |
15,080 |
97,768 |
36,695 |
|||||||||
| Depreciation and amortization, excluding the impact of noncontrolling interest | 24,745 |
27,110 |
75,192 |
81,022 |
|||||||||
| Interest expense, excluding the impact of noncontrolling interest | 19,854 |
22,091 |
62,544 |
68,113 |
|||||||||
| Income tax expense (benefit) | 2,136 |
813 |
(205) |
1,275 |
|||||||||
| EBITDA | 64,965 |
65,094 |
235,299 |
187,105 |
|||||||||
| Net loss (gain) on sale and disposition of assets | 691 |
323 |
623 |
(252) |
|||||||||
| Long-lived asset impairment | 203 |
643 |
1,927 |
643 |
|||||||||
| Adjusted EBITDA | $ | 65,859 |
$ | 66,060 |
$ | 237,849 |
$ | 187,496 |
|||||
| Reconciliation of net cash provided by operating activities to EBITDA and Adjusted EBITDA | |||||||||||||
| Net cash provided by operating activities | $ | 88,286 |
$ | 143,017 |
$ | 250,289 |
$ | 109,525 |
|||||
| Net changes in operating assets and liabilities and certain non-cash items | (45,321) |
(100,890) |
(77,621) |
8,077 |
|||||||||
| Net cash from operating activities and changes in operating | |||||||||||||
| assets and liabilities attributable to noncontrolling interest | 10 |
63 |
292 |
115 |
|||||||||
| Interest expense, excluding the impact of noncontrolling interest | 19,854 |
22,091 |
62,544 |
68,113 |
|||||||||
| Income tax expense (benefit) | 2,136 |
813 |
(205) |
1,275 |
|||||||||
| EBITDA | 64,965 |
65,094 |
235,299 |
187,105 |
|||||||||
| Net loss (gain) on sale and disposition of assets | 691 |
323 |
623 |
(252) |
|||||||||
| Long-lived asset impairment | 203 |
643 |
1,927 |
643 |
|||||||||
| Adjusted EBITDA | $ | 65,859 |
$ | 66,060 |
$ | 237,849 |
$ | 187,496 |
|||||
| Reconciliation of net income to distributable cash flow | |||||||||||||
| Net income | $ | 18,192 |
$ | 14,893 |
$ | 97,240 |
$ | 36,058 |
|||||
| Net loss attributable to noncontrolling interest | 38 |
187 |
528 |
637 |
|||||||||
| Net income attributable to Global Partners LP | 18,230 |
15,080 |
97,768 |
36,695 |
|||||||||
| Depreciation and amortization, excluding the impact of noncontrolling interest | 24,745 |
27,110 |
75,192 |
81,022 |
|||||||||
| Amortization of deferred financing fees and senior notes discount | 1,329 |
1,352 |
3,896 |
4,679 |
|||||||||
| Amortization of routine bank refinancing fees | (1,008) |
(902) |
(2,933) |
(2,814) |
|||||||||
| Maintenance capital expenditures, excluding the impact of noncontrolling interest | (11,963) |
(12,235) |
(24,789) |
(33,301) |
|||||||||
| Distributable cash flow (1)(2) | 31,333 |
30,405 |
149,134 |
86,281 |
|||||||||
| Distributions to Series A preferred unitholders (3) | (1,682) |
(1,682) |
(5,046) |
(5,046) |
|||||||||
| Distributable cash flow after distributions to Series A preferred unitholders | $ | 29,651 |
$ | 28,723 |
$ | 144,088 |
$ | 81,235 |
|||||
| Reconciliation of net cash provided by operating activities to distributable cash flow | |||||||||||||
| Net cash provided by operating activities | $ | 88,286 |
$ | 143,017 |
$ | 250,289 |
$ | 109,525 |
|||||
| Net changes in operating assets and liabilities and certain non-cash items | (45,321) |
(100,890) |
(77,621) |
8,077 |
|||||||||
| Net cash from operating activities and changes in operating | |||||||||||||
| assets and liabilities attributable to noncontrolling interest | 10 |
63 |
292 |
115 |
|||||||||
| Amortization of deferred financing fees and senior notes discount | 1,329 |
1,352 |
3,896 |
4,679 |
|||||||||
| Amortization of routine bank refinancing fees | (1,008) |
(902) |
(2,933) |
(2,814) |
|||||||||
| Maintenance capital expenditures, excluding the impact of noncontrolling interest | (11,963) |
(12,235) |
(24,789) |
(33,301) |
|||||||||
| Distributable cash flow (1)(2) | 31,333 |
30,405 |
149,134 |
86,281 |
|||||||||
| Distributions to Series A preferred unitholders (3) | (1,682) |
(1,682) |
(5,046) |
(5,046) |
|||||||||
| Distributable cash flow after distributions to Series A preferred unitholders | $ | 29,651 |
$ | 28,723 |
$ | 144,088 |
$ | 81,235 |
|||||
(1) |
As defined by the Partnership's partnership agreement, distributable cash flow is not adjusted for certain non-cash items, such as net losses on the sale and disposition of assets and goodwill and long-lived asset impairment charges. |
||||||||||||
(2) |
Distributable cash flow includes a net loss (gain) on sale and disposition of assets and long-lived asset impairment of $0.9 million for each of the three months ended September 30, 2020 and 2019, and $2.5 million and $0.3 million for the nine months ended September 30, 2020 and 2019, respectively. Excluding these charges, distributable cash flow would have been $32.2 million and $31.3 million for the three months ended September 30, 2020 and 2019, respectively, and $151.6 million and $86.6 million for the nine months ended September 30, 2020 and 2019, respectively. |
||||||||||||
(3) |
Distributions to Series A preferred unitholders represent the distributions payable to the preferred unitholders during the period. Distributions on the Series A Preferred Units are cumulative and payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year. |
||||||||||||
Daphne H. Foster
Chief Financial Officer
Global Partners LP
(781) 894-8800
Edward J. Faneuil
Executive Vice President, General Counsel and Secretary
Global Partners LP
(781) 894-8800
DALLAS--(BUSINESS WIRE)--Pioneer Natural Resources Company (NYSE: PXD) ("Pioneer" or "the Company") today reported financial and operating results for the quarter ended September 30, 2020. Pioneer reported a third quarter net loss attributable to common stockholders of $20 million, or $0.12 per diluted share. These results include the effects of noncash mark-to-market adjustments and certain other unusual items. Excluding these items, non-GAAP adjusted income for the third quarter was $26 million, or $0.17 per diluted share. Cash flow from operating activities for the third quarter was $391 million.
Highlights
President and CEO Scott D. Sheffield stated, "Pioneer continues to execute at a high level and delivered another strong quarter, generating $131 million of free cash flow1. For the second consecutive quarter, Pioneer increased our 2020 production guidance while keeping capital guidance unchanged, driven by strong operational efficiencies and cost reduction efforts. We continue to improve cash margins, with controllable cash costs being reduced by 25% this year when compared to 2019. Pioneer’s investment framework will be further strengthened in 2021 through our pending acquisition of Parsley Energy. We expect this highly accretive transaction to reduce our reinvestment rate to a range of 65% to 75%, allowing for significant free cash flow generation while maintaining a strong balance sheet. We believe these factors, in addition to our maintenance capital breakeven WTI oil price being in the low thirties, which includes coverage of the base dividend, position Pioneer as the premier independent energy investment."
Financial Highlights
Pioneer maintains a strong balance sheet, with unrestricted cash on hand at the end of the third quarter of $1.3 billion and net debt of $2.0 billion. The Company had $2.8 billion of liquidity as of September 30, 2020, comprised of $1.3 billion of unrestricted cash and a $1.5 billion unsecured credit facility (undrawn as of September 30, 2020).
During the third quarter, the Company’s drilling, completion and facilities capital expenditures totaled $277 million. The Company’s total capital expenditures2, including water infrastructure, totaled $291 million.
Cash flow from operating activities during the third quarter was $391 million, leading to free cash flow1 of $131 million for the quarter.
Financial Results
For the third quarter, the average realized price for oil was $39.22 per barrel. The average realized price for natural gas liquids (NGLs) was $16.93 per barrel, and the average realized price for gas was $1.74 per thousand cubic feet. These prices exclude the effects of derivatives.
Production costs, including taxes, averaged $6.89 per barrel of oil equivalent (BOE). Depreciation, depletion and amortization (DD&A) expense averaged $12.04 per BOE. Exploration and abandonment costs were $16 million. General and administrative (G&A) expense was $64 million. Interest expense was $34 million. The net cash flow impact related to purchases and sales of oil and gas, including firm transportation, was a loss of $63 million. Other expense was $98 million, or $9 million excluding unusual items3.
Operations Update
Pioneer continued to see strong efficiency gains during the third quarter, enabling the Company to place 37 horizontal wells on production despite lower activity levels earlier in the year. During the first nine months of 2020, drilling operations averaged approximately 1,150 drilled feet per day and completion operations averaged approximately 1,800 completed feet per day, surpassing our strong results for the six months ended June 30, 2020. Pioneer's well costs continue to benefit from these efficiency gains, leading to additional cost reductions during the quarter of approximately $250 thousand per well, or a reduction of approximately $2 million per well when compared to the Company's original 2020 budget. The trend of lower well costs continues to significantly improve capital efficiency. Pioneer expects approximately 60% of the achieved well cost savings this year to be sustainable through commodity price cycles.
The Company's controllable cash costs, inclusive of lease operating expense, G&A and interest expense, continue to trend lower and represent an approximately 25% reduction per BOE in 2020 when compared to 2019. Pioneer's improved cost structure continues to drive strong margins and provide incremental cash flow. Cash flow is forecasted to improve even further once the pending acquisition of Parsley is completed, and the Company begins to realize the expected annual synergies associated with the acquisition of approximately $325 million.
The Company continues to proactively curtail lower-margin, higher-cost vertical well production in the current commodity price environment, benefiting operating costs. Pioneer curtailed approximately 5.5 MBOPD of net production during the third quarter and expects the same amount to remain curtailed in the current commodity price environment. The majority of the vertical wells associated with this production are expected to be plugged and abandoned and are not expected to return to production. Decisions to curtail production are economically driven and evaluated on a well-by-well basis.
Full-Year 2020 Update
The Company is maintaining its 2020 drilling, completions and facilities capital budget range of $1.3 billion to $1.5 billion, with an additional approximately $100 million budgeted for Pioneer's differentiated water infrastructure, resulting in a total 2020 capital budget2 range of $1.4 billion to $1.6 billion.
Pioneer is increasing its guidance for 2020 oil production to a range of 209 to 211 MBOPD and total production range of 365 to 369 MBOEPD. The Company continues to monitor the fluid macroeconomic environment and will remain flexible and responsive to changing market conditions to preserve its strong balance sheet.
The Company is currently operating eight horizontal drilling rigs and four frac fleets. The operated drilling rigs include one horizontal drilling rig in the southern joint venture area and one horizontal drilling rig associated with Pioneer's nine-well DrillCo agreement in the southern joint venture area. Pioneer will continue to evaluate its drilling and completions program on an economic basis, with future activity levels assessed regularly and governed by its reinvestment framework.
Pioneer has redefined its investment proposition to prioritize free cash flow generation and return of capital. This capital allocation framework is intended to create long-term value for shareholders by optimizing the reinvestment of cash flow to accelerate the Company's free cash flow profile. The acquisition of Parsley is expected to reduce the reinvestment rate from a range of 70% to 80% to a range of 65% to 75%, enhancing the value proposition for shareholders through increased free cash flow generation. Pioneer is targeting a 10% total annual return, inclusive of a strong and growing base dividend4, a variable dividend4 and high-return oil growth. The Company believes this differentiated strategy will position Pioneer to be competitive across sectors.
Pioneer continues to maintain substantial oil derivative coverage in order to protect the balance sheet, providing the Company with operational and financial flexibility. The Company’s financial and derivative mark-to-market results and open derivatives positions are outlined in the attached schedules.
Fourth Quarter 2020 Guidance
Fourth quarter 2020 oil production is forecasted to average between 197 to 207 MBOPD and total production is expected to average between 355 to 370 MBOEPD. Production costs are expected to average $6.25 per BOE to $7.75 per BOE. DD&A expense is expected to average $11.75 per BOE to $13.75 per BOE. Total exploration and abandonment expense is forecasted to be $5 million to $15 million. G&A expense is expected to be $56 million to $66 million. Interest expense is expected to be $35 million to $40 million. Other expense is forecasted to be $20 million to $30 million, excluding stacked drilling rig fees, idle frac fleet fees and other fees associated with reduced activity levels. Accretion of discount on asset retirement obligations is expected to be $2 million to $5 million. The cash flow impact related to purchases and sales of oil and gas, including firm transportation, is expected to be a loss of $40 million to $80 million, based on forward oil price estimates for the quarter. The Company’s effective income tax rate is expected to be less than 21%. Cash income taxes are expected to be nominal.
Environmental, Social & Governance
Pioneer views sustainability as a multidisciplinary focus that balances economic growth, environmental stewardship and social responsibility. The Company emphasizes developing natural resources in a manner that protects surrounding communities and preserves the environment.
Pioneer is focused on reducing emissions and emission intensities. Between 2016 and 2018, the Company's greenhouse gas (GHG) emissions have been reduced by 24%, total GHG emission intensity has decreased by 38% and methane intensity has declined by 41%. Additionally, between January 2018 and July 2019, the Company was able to limit Permian flaring to less than 2% of its produced gas, one of the lowest flaring percentages in the Permian Basin. The Company's proactive measures, including monitoring 100% of its Permian facilities aerially for leak detection and repair and only producing a well once it is fully connected to a gas line, help to make Pioneer a leader in environmental stewardship.
Socially, Pioneer maintains a proactive safety culture, supports a diverse workforce and inspires teamwork to drive innovation. The Board of Directors has a Health, Safety and Environment Committee and a Nominating and Corporate Governance Committee to provide director-level oversight of these activities. These committees help to promote a culture of continuous improvement in safety and environmental practices.
For more details, see Pioneer’s 2019 Sustainability Report at pxd.com/sustainability. Pioneer expects to publish its comprehensive 2020 Sustainability Report during the fourth quarter.
Earnings Conference Call
On Thursday, November 5, 2020, at 9:00 a.m. Central Time, Pioneer will discuss its financial and operating results for the quarter ended September 30, 2020, with an accompanying presentation. Instructions for listening to the call and viewing the accompanying presentation are shown below.
Internet: www.pxd.com
Select "Investors," then "Earnings & Webcasts" to listen to the discussion, view the presentation and see other related material.
Telephone: Dial (800) 353-6461 and enter confirmation code 6756515 five minutes before the call.
A replay of the webcast will be archived on Pioneer’s website. This replay will be available through December 1, 2020. Click here to register for the call-in audio replay and you will receive the dial-in information.
Pioneer is a large independent oil and gas exploration and production company, headquartered in Dallas, Texas, with operations in the United States. For more information, visit www.pxd.com.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in respect of the proposed transaction. The proposed transaction will be submitted to Pioneer’s stockholders and Parsley’s stockholders for their consideration. Pioneer and Parsley intend to file a joint proxy statement/prospectus (the “Joint Proxy Statement/Prospectus”) with the SEC in connection with the solicitation of proxies by Pioneer and Parsley in connection with the proposed transaction. Pioneer intends to file a registration statement on Form S-4 (the “Form S-4”) with the SEC, in which the Joint Proxy Statement/Prospectus will be included. Pioneer and Parsley also intend to file other relevant documents with the SEC regarding the proposed transaction. The definitive Joint Proxy Statement/Prospectus will be mailed to Pioneer’s stockholders and Parsley’s stockholders when available. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED TRANSACTION, INVESTORS AND STOCKHOLDERS OF PIONEER AND INVESTORS AND STOCKHOLDERS OF PARSLEY ARE URGED TO READ THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND OTHER RELEVANT MATERIALS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
The Joint Proxy Statement/Prospectus, any amendments or supplements thereto and other relevant materials, and any other documents filed by Pioneer or Parsley with the SEC, may be obtained once such documents are filed with the SEC free of charge at the SEC’s website at www.sec.gov or free of charge from Pioneer at www.pxd.com or by directing a request to Pioneer’s Investor Relations Department at This email address is being protected from spambots. You need JavaScript enabled to view it. or free of charge from Parsley at www.parsleyenergy.com or by directing a request to Parsley’s Investor Relations Department at This email address is being protected from spambots. You need JavaScript enabled to view it..
No Offer or Solicitation
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act.
Participants in the Solicitation
Pioneer, Parsley and certain of their respective executive officers, directors, other members of management and employees may, under the rules of the SEC, be deemed to be “participants” in the solicitation of proxies in connection with the proposed transaction. Information regarding Pioneer’s directors and executive officers is available in its Proxy Statement on Schedule 14A for its 2020 Annual Meeting of Stockholders, filed with the SEC on April 9, 2020 and in its Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 24, 2020. Information regarding Parsley’s directors and executive officers is available in its Proxy Statement on Schedule 14A for its 2020 Annual Meeting of Stockholders, filed with the SEC on April 6, 2020 and in its Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 21, 2020. These documents may be obtained free of charge from the sources indicated above. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Form S-4, the Joint Proxy Statement/Prospectus and other relevant materials relating to the proposed transaction to be filed with the SEC when they become available. Stockholders and other investors should read the Joint Proxy Statement/Prospectus carefully when it becomes available before making any voting or investment decisions.
Cautionary Statement Regarding Forward-Looking Information
Except for historical information contained herein, the statements in this news release are forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements and the business prospects of Pioneer are subject to a number of risks and uncertainties that may cause Pioneer’s actual results in future periods to differ materially from the forward-looking statements. These risks and uncertainties include, among other things, volatility of commodity prices, product supply and demand; the impact of a widespread outbreak of an illness, such as the COVID-19 pandemic, on global and U.S. economic activity; competition; the ability to obtain environmental and other permits and the timing thereof; other government regulation or action; the ability to obtain approvals from third parties and negotiate agreements with third parties on mutually acceptable terms; litigation; the costs and results of drilling and operations; availability of equipment, services, resources and personnel required to perform the Company’s drilling and operating activities; access to and availability of transportation, processing, fractionation, refining, storage and export facilities; Pioneer's ability to replace reserves; implement its business plans or complete its development activities as scheduled; access to and cost of capital; the financial strength of counterparties to Pioneer's credit facility, investment instruments and derivative contracts and purchasers of Pioneer's oil, natural gas liquids and gas production; uncertainties about estimates of reserves and resource potential; identification of drilling locations and the ability to add proved reserves in the future; the assumptions underlying forecasts, including forecasts of production, cash flow, well costs, capital expenditures, rates of return, expenses, cash flow from purchases and sales of oil and gas, net of firm transportation commitments; sources of funding; tax rates; quality of technical data; environmental and weather risks, including the possible impacts of climate change; cybersecurity risks; ability to implement stock repurchases; the risks associated with the ownership and operation of the Company's oilfield services businesses and acts of war or terrorism. These and other risks are described in Pioneer's Annual Report on Form 10-K for the year ended December 31, 2019, Quarterly Reports on Form 10-Q filed thereafter and other filings with the United States Securities and Exchange Commission. In addition, the Company may be subject to currently unforeseen risks that may have a materially adverse effect on it.
Additionally, the information in this Report contains forward-looking statements related to the recently announced merger transaction between the Company and Parsley. Such forward-looking statements are subject to risks and uncertainties that are difficult to predict and, in many cases, beyond the Company's control. These risks and uncertainties include, among other things, the risk that the businesses of Pioneer and Parsley will not be integrated successfully; the cost savings, synergies and growth from the proposed transaction may not be fully realized or may take longer to realize than expected; management time may be diverted on transaction-related issues; the potential adverse effect of future regulatory or legislative actions on Pioneer and Parsley or the industries in which they operate, including the risk of new restrictions with respect to development activities on Pioneer's or Parsley's assets; the credit ratings of the combined company or its subsidiaries may be different from what Pioneer expects; Pioneer or Parsley may be unable to obtain governmental and regulatory approvals required for the proposed transaction, or that required governmental and regulatory approvals may delay the proposed transaction or result in the imposition of conditions that could reduce the anticipated benefits from the proposed transaction or cause the parties to abandon the proposed transaction; a condition to closing of the proposed transaction may not be satisfied; the length of time necessary to consummate the proposed transaction may be longer than anticipated for various reasons; potential liability resulting from pending or future litigation related to the proposed transaction; the potential impact of the announcement or consummation of the proposed transaction on relationships with customers, suppliers, and competitors; and transaction costs may be higher than anticipated.
Accordingly, no assurances can be given that the actual events and results will not be materially different than the anticipated results described in the forward-looking statements. Pioneer undertakes no duty to publicly update these statements except as required by law.
Footnote 1: Free cash flow is a non-GAAP measure. See reconciliation to comparable GAAP number in supplemental schedules.
Footnote 2: Excludes acquisitions, asset retirement obligations, capitalized interest, geological and geophysical G&A, information technology and corporate facilities.
Footnote 3: Unusual items include the following: (i) $74 million of employee-related charges associated with the Company's 2020 corporate restructuring and (ii) COVID-19 operational plan changes that led to (a) $14 million in charges related to idle frac fleet fees, stacked drilling rig charges and drilling rig early termination charges and (b) $1 million in sand take-or-pay deficiencies and other payments. See reconciliation in supplemental schedules.
Footnote 4: The declaration and payment of future dividends is at the discretion of the Company's Board of Directors and will depend on, among other things, the Company's earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations that the Board of Directors deems relevant.
PIONEER NATURAL RESOURCES COMPANY UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in millions) |
|||||||
|
September 30, 2020 |
|
December 31, 2019 |
||||
ASSETS |
|||||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
1,325 |
|
|
$ |
631 |
|
Restricted cash |
66 |
|
|
74 |
|
||
Accounts receivable, net |
662 |
|
|
1,035 |
|
||
Income taxes receivable |
22 |
|
|
7 |
|
||
Inventories |
191 |
|
|
205 |
|
||
Derivatives |
49 |
|
|
32 |
|
||
Investment in affiliate |
67 |
|
|
187 |
|
||
Other |
38 |
|
|
20 |
|
||
Total current assets |
2,420 |
|
|
2,191 |
|
||
Oil and gas properties, successful efforts method of accounting |
24,070 |
|
|
23,028 |
|
||
Accumulated depletion, depreciation and amortization |
(9,719) |
|
|
(8,583) |
|
||
Total oil and gas properties, net |
14,351 |
|
|
14,445 |
|
||
Other property and equipment, net |
1,603 |
|
|
1,632 |
|
||
Operating lease right of use assets |
198 |
|
|
280 |
|
||
Goodwill |
261 |
|
|
261 |
|
||
Other assets |
144 |
|
|
258 |
|
||
|
$ |
18,977 |
|
|
$ |
19,067 |
|
|
|
|
|
||||
LIABILITIES AND EQUITY |
|||||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
1,008 |
|
|
$ |
1,411 |
|
Interest payable |
17 |
|
|
53 |
|
||
Income taxes payable |
2 |
|
|
3 |
|
||
Current portion of long-term debt |
140 |
|
|
450 |
|
||
Derivatives |
51 |
|
|
12 |
|
||
Operating leases |
99 |
|
|
136 |
|
||
Other |
371 |
|
|
431 |
|
||
Total current liabilities |
1,688 |
|
|
2,496 |
|
||
Long-term debt |
3,148 |
|
|
1,839 |
|
||
Derivatives |
14 |
|
|
8 |
|
||
Deferred income taxes |
1,406 |
|
|
1,389 |
|
||
Operating leases |
113 |
|
|
170 |
|
||
Other liabilities |
954 |
|
|
1,046 |
|
||
Equity |
11,654 |
|
|
12,119 |
|
||
|
$ |
18,977 |
|
|
$ |
19,067 |
|
PIONEER NATURAL RESOURCES COMPANY UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended
|
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Revenues and other income: |
|
|
|
|
|
|
|
||||||||
Oil and gas |
$ |
922 |
|
|
$ |
1,235 |
|
|
$ |
2,617 |
|
|
$ |
3,567 |
|
Sales of purchased oil and gas |
935 |
|
|
1,171 |
|
|
2,391 |
|
|
3,463 |
|
||||
Interest and other income (loss), net |
13 |
|
|
(222) |
|
|
(145) |
|
|
(42) |
|
||||
Derivative gain (loss), net |
(57) |
|
|
121 |
|
|
60 |
|
|
150 |
|
||||
Gain (loss) on disposition of assets, net |
2 |
|
|
20 |
|
|
7 |
|
|
(477) |
|
||||
|
1,815 |
|
|
2,325 |
|
|
4,930 |
|
|
6,661 |
|
||||
Costs and expenses: |
|
|
|
|
|
|
|
||||||||
Oil and gas production |
163 |
|
|
227 |
|
|
506 |
|
|
667 |
|
||||
Production and ad valorem taxes |
63 |
|
|
86 |
|
|
182 |
|
|
223 |
|
||||
Depletion, depreciation and amortization |
393 |
|
|
438 |
|
|
1,243 |
|
|
1,271 |
|
||||
Purchased oil and gas |
998 |
|
|
1,125 |
|
|
2,598 |
|
|
3,184 |
|
||||
Exploration and abandonments |
16 |
|
|
11 |
|
|
35 |
|
|
46 |
|
||||
General and administrative |
64 |
|
|
72 |
|
|
180 |
|
|
246 |
|
||||
Accretion of discount on asset retirement obligations |
2 |
|
|
2 |
|
|
7 |
|
|
7 |
|
||||
Interest |
34 |
|
|
29 |
|
|
94 |
|
|
88 |
|
||||
Other |
98 |
|
|
32 |
|
|
273 |
|
|
390 |
|
||||
|
1,831 |
|
|
2,022 |
|
|
5,118 |
|
|
6,122 |
|
||||
Income (loss) before income taxes |
(16) |
|
|
303 |
|
|
(188) |
|
|
539 |
|
||||
Income tax benefit (provision) |
(4) |
|
|
(72) |
|
|
18 |
|
|
(127) |
|
||||
Net income (loss) attributable to common stockholders |
$ |
(20) |
|
|
$ |
231 |
|
|
$ |
(170) |
|
|
$ |
412 |
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net income (loss) per share attributable to common
|
$ |
(0.12) |
|
|
$ |
1.38 |
|
|
$ |
(1.03) |
|
|
$ |
2.44 |
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted weighted average shares outstanding |
165 |
|
|
167 |
|
|
165 |
|
|
168 |
|
||||
Pioneer Natural Resources Company Contacts:
Investors
Neal Shah - 972-969-3900
Tom Fitter - 972-969-1821
Michael McNamara - 972-969-3592
Greg Wright - 972-969-1770
Media and Public Affairs
Tadd Owens - 972-969-5760
DUBLIN--(BUSINESS WIRE)--The "Bio-alcohols Market - Growth, Trends, and Forecast (2020-2025)" report has been added to ResearchAndMarkets.com's offering.
The global bio-alcohols market is expected to grow with a CAGR greater than 8% during the forecast period. One of the major factors driving the market is the growing demand for bio-based products. However, the declining automotive production is hindering the growth of the market studied.
Key Market Trends
Bio-ethanol to Dominate the Market
Asia-Pacific to Witness the Highest Growth Rate
Competitive Landscape
The global bio-alcohols market is moderately consolidated as the market of the market share is divided among few players. Some of the key players in the market include BASF SE, Asahi Kasei Corporation, INVISTA, Evonik Industries AG, and Toray Industries, Inc., among others.
Key Topics Covered:
1 INTRODUCTION
2 RESEARCH METHODOLOGY
3 EXECUTIVE SUMMARY
4 MARKET DYNAMICS
4.1 Drivers
4.1.1 Growing Demand for Bio-based Products
4.1.2 Other Drivers
4.2 Restraints
4.2.1 Declining Automotive Production
4.2.2 Impact of COVID-19 Pandemic
4.3 Industry Value-chain Analysis
4.4 Porter's Five Forces Analysis
4.4.1 Bargaining Power of Suppliers
4.4.2 Bargaining Power of Consumers
4.4.3 Threat of New Entrants
4.4.4 Threat of Substitute Products and Services
4.4.5 Degree of Competition
5 MARKET SEGMENTATION
5.1 Product Type
5.1.1 Bio-methanol
5.1.2 Bio-ethanol
5.1.3 Bio-butanol
5.1.4 Bio-BDO
5.1.5 Other Product Types
5.2 Application
5.2.1 Transportation
5.2.2 Construction
5.2.3 Electronics
5.2.4 Pharmaceutical
5.2.5 Other Applications
5.3 Geography
6 COMPETITIVE LANDSCAPE
6.1 Mergers and Acquisitions, Joint Ventures, Collaborations, and Agreements
6.2 Market Share/Ranking Analysis
6.3 Strategies Adopted by Leading Players
6.4 Company Profiles
7 MARKET OPPORTUNITIES AND FUTURE TRENDS
Companies Mentioned
For more information about this report visit https://www.researchandmarkets.com/r/kxbola
About ResearchAndMarkets.com
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THE WOODLANDS, Texas--(BUSINESS WIRE)--Earthstone Energy, Inc. (NYSE: ESTE) (“Earthstone”, the “Company”, “we”, “our” or “us”), today announced financial and operating results for the three months ended September 30, 2020.
Third Quarter 2020 Highlights
Year-to-Date 2020 Highlights
(1) Represents reported sales volumes
(2) See "Non-GAAP Financial Measures" section below.
Management Comments
Mr. Robert J. Anderson, President and CEO of Earthstone, commented, “We produced outstanding operational and financial results in the third quarter, buoyed in particular by strong production volumes and our continued focus on managing operational and corporate costs. These results continue to validate our economic inventory and operating track record. For the third quarter, despite no drilling or completion activities, we managed to generate Adjusted EBITDAX of over $36 million, which is only a 5% decrease from the first quarter before the impact of COVID-19 on commodity prices had fully occurred. Further, we generated nearly $34 million in Free Cash Flow which allowed us to pay down over $38 million in debt. Since year-end 2019, we generated nearly $64 million in Free Cash Flow which allowed us to pay down debt by $40 million. All of this has contributed to our continued expectation that we will meet our target of being below 1x net debt to Adjusted EBITDAX at year-end.”
Mr. Anderson commented further, “With the strength of our production results, we are increasing our production guidance for full year 2020, largely comprised of higher natural gas and natural gas liquids volumes, with oil volumes approximately the same. We are also tightening our lease operating expense guidance, as we have been successful in driving down these costs.
“Additionally, we have initiated completions on a six-well pad in Upton County based on the current forecast for oil prices, reduction in service costs and our expectation of significant production and economic results from this pad, which we expect to be online around year-end. We also anticipate completing the remaining five drilled but uncompleted wells in our inventory in the first quarter of 2021. This completion activity is expected to keep our production relatively flat in 2021, on a year over year basis, which would contribute to significant Free Cash Flow in 2021.”
Updated 2020 Guidance
The Company has updated its 2020 guidance based on activities to date and expected for the remainder of 2020 as shown below. The Company has increased its average daily production guidance and decreased its per unit lease operating expense guidance. Further, the Company is increasing its capital expenditure guidance for the year by $12.5 million at the midpoint, which reflects incremental expected fourth quarter 2020 expenditures of approximately $20 million for newly added well completion activities, but offset by lower year-to-date spending of approximately $7.5 million than anticipated.
2020 Capital Expenditures |
$ millions (Net) |
Gross / Net Operated Wells Drilled & Awaiting Completion |
Gross / Net Operated Wells On Line |
Net Non-Operated Wells On Line |
Drilling and Completions |
$60 – 65 |
5 / 3.7 |
9 / 9.0 |
3.1 |
Land / Infrastructure |
5 |
|
|
|
2020 Total Capital Expenditures |
$65 – 70 |
|
|
|
|
|
|
|
|
2020 Average Daily Production (Boepd) |
14,000 – 14,500 |
|
|
|
% Oil |
58% – 59% |
|
|
|
% Liquids |
79% – 80% |
|
|
|
|
|
|
|
|
2020 Operating Costs |
|
|
|
|
Lease Operating Expense ($/Boe) |
$5.25 – $5.50 |
|
|
|
Production and Ad Valorem Taxes (% of Revenue) |
6.25% – 7.25% |
|
|
|
Cash G&A (1) ($mm) |
$15.5 – $16.5 |
|
|
|
Note: Guidance is forward-looking information that is subject to considerable change and numerous risks and uncertainties, many of which are beyond Earthstone’s control. See “Forward-Looking Statements” section below. |
| (1) | Cash G&A is a non-GAAP measure defined as general and administrative expenses less stock-based compensation which is not settled in cash. |
||
Operations Update
We have initiated completions on six drilled but uncompleted wells on our Ratliff project in Upton County (100% working interest). These six wells have an average lateral length of approximately 8,400 feet with laterals in the Wolfcamp A, Wolfcamp B Upper and Lower and Wolfcamp C. These four zones have all been successfully produced by us or offset operators in close proximity to this project. These wells are expected to be online by year-end 2020, but we do not anticipate any meaningful production contribution in 2020. We plan to begin completions activity of the remaining five drilled but uncompleted wells on the Hamman Upton project (75% working interest) in January 2021.
Selected Financial Data (unaudited) |
|||||||||||||||
($000s except where noted) |
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Total revenues |
$ |
41,047 |
|
|
$ |
39,204 |
|
|
$ |
107,848 |
|
|
$ |
124,474 |
|
|
|
|
|
|
|
|
|
||||||||
Lease operating expense |
7,044 |
|
|
6,419 |
|
|
21,971 |
|
|
20,485 |
|
||||
|
|
|
|
|
|
|
|
||||||||
General and administrative expense (excluding stock-based compensation) |
3,393 |
|
|
3,850 |
|
|
11,950 |
|
|
13,268 |
|
||||
Stock-based compensation (non-cash) |
2,403 |
|
|
2,207 |
|
|
7,665 |
|
|
6,680 |
|
||||
General and administrative expense |
$ |
5,796 |
|
|
$ |
6,057 |
|
|
$ |
19,615 |
|
|
$ |
19,948 |
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income |
$ |
(11,858 |
) |
|
$ |
26,127 |
|
|
$ |
(11,053 |
) |
|
$ |
7,220 |
|
Less: Net (loss) income attributable to noncontrolling interest |
(6,413 |
) |
|
14,357 |
|
|
(5,977 |
) |
|
3,877 |
|
||||
Net (loss) income attributable to Earthstone Energy, Inc. |
(5,445 |
) |
|
11,770 |
|
|
(5,076 |
) |
|
3,343 |
|
||||
Net (loss) income per common share(1) |
|
|
|
|
|
|
|
||||||||
Basic |
(0.18 |
) |
|
0.41 |
|
|
(0.17 |
) |
|
0.12 |
|
||||
Diluted |
(0.18 |
) |
|
0.41 |
|
|
(0.17 |
) |
|
0.12 |
|
||||
Adjusted EBITDAX(2)(5) |
$ |
36,399 |
|
|
$ |
29,963 |
|
|
$ |
114,448 |
|
|
$ |
96,379 |
|
|
|
|
|
|
|
|
|
||||||||
Production(3): |
|
|
|
|
|
|
|
||||||||
Oil (MBbls) |
839 |
|
|
646 |
|
|
2,520 |
|
|
2,027 |
|
||||
Gas (MMcf) |
2,010 |
|
|
1,248 |
|
|
5,031 |
|
|
3,318 |
|
||||
NGL (MBbls) |
386 |
|
|
267 |
|
|
870 |
|
|
705 |
|
||||
Total (MBoe)(4) |
1,560 |
|
|
1,121 |
|
|
4,229 |
|
|
3,285 |
|
||||
Average Daily Production (Boepd) |
16,959 |
|
|
12,181 |
|
|
15,433 |
|
|
12,033 |
|
||||
Average Prices: |
|
|
|
|
|
|
|
||||||||
Oil ($/Bbl) |
39.50 |
|
|
54.89 |
|
|
36.92 |
|
|
55.08 |
|
||||
Gas ($/Mcf) |
1.31 |
|
|
0.72 |
|
|
0.96 |
|
|
0.64 |
|
||||
NGL ($/Bbl) |
13.60 |
|
|
10.71 |
|
|
11.46 |
|
|
15.17 |
|
||||
Total ($/Boe) |
26.31 |
|
|
34.98 |
|
|
25.50 |
|
|
37.89 |
|
||||
Adj. for Realized Derivatives Settlements: |
|
|
|
|
|
|
|
||||||||
Oil ($/Bbl)(5) |
49.34 |
|
|
59.43 |
|
|
55.14 |
|
|
60.42 |
|
||||
Gas ($/Mcf)(5) |
1.45 |
|
|
1.34 |
|
|
1.31 |
|
|
1.49 |
|
||||
NGL ($/Bbl) |
13.60 |
|
|
10.71 |
|
|
11.46 |
|
|
15.17 |
|
||||
Total ($/Boe)(5) |
31.78 |
|
|
38.29 |
|
|
36.77 |
|
|
42.05 |
|
||||
Operating Margin per Boe |
|
|
|
|
|
|
|
||||||||
Average realized price(5) |
$ |
26.31 |
|
|
$ |
34.98 |
|
|
$ |
25.50 |
|
|
$ |
37.89 |
|
Lease operating expense |
4.51 |
|
|
5.73 |
|
|
5.20 |
|
|
6.24 |
|
||||
Production and ad valorem taxes |
1.73 |
|
|
2.41 |
|
|
1.70 |
|
|
2.44 |
|
||||
Operating margin per Boe(2) |
20.07 |
|
|
26.84 |
|
|
18.60 |
|
|
29.21 |
|
||||
Realized hedge settlements |
5.47 |
|
|
3.31 |
|
|
11.27 |
|
|
4.16 |
|
||||
Operating margin per Boe (including realized hedge settlements)(2) |
$ |
25.54 |
|
|
$ |
30.15 |
|
|
$ |
29.87 |
|
|
$ |
33.37 |
|
(1) |
Net (loss) income per common share attributable to Earthstone Energy, Inc. |
|
(2) |
See “Non-GAAP Financial Measures” section below. |
|
(3) |
Represents reported sales volumes. |
|
(4) |
Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equals one barrel of oil equivalent (Boe). |
|
(5) |
Includes $5.7 million and $2.1 million of cash proceeds related to hedges unwound during the second quarter of 2020 and first quarter of 2019, respectively. |
Liquidity Update
As of September 30, 2020, we had $5.3 million in cash and $130.0 million of long-term debt outstanding under our senior secured revolving credit facility (our “Credit Facility”) with a borrowing base of $240 million. With the $110.0 million of undrawn borrowing base capacity and $5.3 million in cash, we had total liquidity of approximately $115.3 million. Through September 30, 2020, we had incurred $46.4 million of our updated estimated $65 - $70 million in capital expenditures for 2020. We expect to fund our remaining 2020 capital expenditures through internally generated funds.
As of September 30, 2020, we had outstanding borrowings under our Credit Facility of $130 million, which represents a reduction of 24% compared to the $170 million in outstanding borrowings as of December 31, 2019. In addition to this $40 million of debt reduction, we have reduced our Adjusted Working Capital Deficit(1) by $23.4 million since December 31, 2019. We remain in compliance with all covenants under our Credit Facility.
(1) |
See "Non-GAAP Financial Measures" section below. |
|
Subsequent to September 30, 2020 and through October 31, 2020, we have paid down an additional $8 million in outstanding borrowings under our Credit Facility. This debt reduction is in line with our 2020 expectations to generate adequate cash flows to further reduce our outstanding borrowings absent any extraordinary events. However, it should be noted that we may borrow temporarily as the timing of our cash flows may fluctuate between reporting periods.
Commodity Hedging
The following table sets forth our outstanding derivative contracts as of September 30, 2020. When aggregating multiple contracts, the weighted average contract price is disclosed.
As of September 30, 2020: |
|||||||||
|
|
Price Swaps |
|||||||
Period |
|
Commodity |
|
Volume (Bbls / MMBtu) |
|
Weighted Average Price ($/Bbl / $/MMBtu) |
|||
Q4 2020 |
|
Crude Oil |
|
552,000 |
|
|
$ |
60.65 |
|
Q1 - Q4 2021 |
|
Crude Oil |
|
1,460,000 |
|
|
$ |
55.16 |
|
Q4 2020 |
|
Crude Oil Basis Swap (1) |
|
598,000 |
|
|
$ |
(1.50 |
) |
Q4 2020 |
|
Crude Oil Basis Swap (2) |
|
92,000 |
|
|
$ |
2.55 |
|
Q4 2020 |
|
Crude Oil Roll Swap (3) |
|
552,000 |
|
|
$ |
(1.79 |
) |
Q1 - Q4 2021 |
|
Crude Oil Basis Swap (1) |
|
1,825,000 |
|
|
$ |
1.05 |
|
Q4 2020 |
|
Natural Gas |
|
644,000 |
|
|
$ |
2.85 |
|
Q1 - Q4 2021 |
|
Natural Gas |
|
4,380,000 |
|
|
$ |
2.76 |
|
Q4 2020 |
|
Natural Gas Basis Swap (4) |
|
644,000 |
|
|
$ |
(1.07 |
) |
Q1 - Q4 2021 |
|
Natural Gas Basis Swap (4) |
|
4,380,000 |
|
|
$ |
(0.45 |
) |
(1) |
The basis differential price is between WTI Midland Argus Crude and the WTI NYMEX. |
|
(2) |
The basis differential price is between WTI Houston and the WTI NYMEX. |
|
(3) |
The swap is between WTI Roll and the WTI NYMEX. |
|
(4) |
The basis differential price is between W. Texas (WAHA) and the Henry Hub NYMEX. |
|
Conference Call Details
Earthstone is hosting a conference call on Thursday, November 5, 2020 at 12:30 p.m. Eastern (11:30 a.m. Central) to discuss the Company’s financial results for the third quarter of 2020 and its outlook for the remainder of 2020. Prepared remarks by Robert J. Anderson, President and Chief Executive Officer, and Mark Lumpkin, Jr., Executive Vice President and Chief Financial Officer, will be followed by a question and answer session.
Investors and analysts are invited to participate in the call by dialing 877-407-6184 for domestic calls or 201-389-0877 for international calls, in both cases asking for the Earthstone conference call. A webcast will also be available through the Company website (www.earthstoneenergy.com). Please select “Events & Presentations” under the “Investors” section of the Company’s website and log on at least 10 minutes in advance to register.
A replay of the call and webcast will be available on the Company’s website and by telephone until 12:30 p.m. Eastern (11:30 a.m. Central), Thursday, November 19, 2020. The number for the replay is 877-660-6853 for domestic calls or 201-612-7415 for international calls, using Replay ID: 13712498.
About Earthstone Energy, Inc.
Earthstone Energy, Inc. is a growth-oriented, independent energy company engaged in development and operation of oil and natural gas properties. The Company’s primary assets are in the Midland Basin of west Texas and the Eagle Ford Trend of south Texas. Earthstone is traded on NYSE under the symbol “ESTE.” For more information, visit the Company’s website at www.earthstoneenergy.com.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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,” “forecast,” “guidance,” “target,” “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 expectations and assumptions and analyses made by Earthstone and its management in light of experience and perception of historical trends, current conditions and expected future developments, as well as other factors appropriate under the circumstances 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 Earthstone’s annual report on Form 10-K for the year ended December 31, 2019, quarterly reports on Form 10-Q, recent current reports on Form 8-K, and other Securities and Exchange Commission (“SEC”) filings. Earthstone undertakes no obligation to revise or update publicly any forward-looking statements except as required by law.
EARTHSTONE ENERGY, INC. |
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) |
||||||||
(In thousands, except share and per share amounts) |
||||||||
|
||||||||
|
|
September 30, |
|
December 31, |
||||
ASSETS |
|
2020 |
|
2019 |
||||
Current assets: |
|
|
|
|
||||
Cash |
|
$ |
5,311 |
|
|
$ |
13,822 |
|
Accounts receivable: |
|
|
|
|
||||
Oil, natural gas, and natural gas liquids revenues |
|
12,097 |
|
|
29,047 |
|
||
Joint interest billings and other, net of allowance of $80 and $83 at September 30, 2020 and December 31, 2019, respectively |
|
11,548 |
|
|
6,672 |
|
||
Derivative asset |
|
25,097 |
|
|
8,860 |
|
||
Prepaid expenses and other current assets |
|
1,560 |
|
|
1,867 |
|
||
Total current assets |
|
55,613 |
|
|
60,268 |
|
||
|
|
|
|
|
||||
Oil and gas properties, successful efforts method: |
|
|
|
|
||||
Proved properties |
|
995,666 |
|
|
970,808 |
|
||
Unproved properties |
|
236,482 |
|
|
260,271 |
|
||
Land |
|
5,382 |
|
|
5,382 |
|
||
Total oil and gas properties |
|
1,237,530 |
|
|
1,236,461 |
|
||
|
|
|
|
|
||||
Accumulated depreciation, depletion and amortization |
|
(271,012 |
) |
|
(195,567 |
) |
||
Net oil and gas properties |
|
966,518 |
|
|
1,040,894 |
|
||
|
|
|
|
|
||||
Other noncurrent assets: |
|
|
|
|
||||
Goodwill |
|
— |
|
|
17,620 |
|
||
Office and other equipment, net of accumulated depreciation and amortization of $3,558 and $3,180 at September 30, 2020 and December 31, 2019, respectively |
|
1,044 |
|
|
1,311 |
|
||
Derivative asset |
|
4,727 |
|
|
770 |
|
||
Operating lease right-of-use assets |
|
2,769 |
|
|
3,108 |
|
||
Other noncurrent assets |
|
1,331 |
|
|
1,572 |
|
||
TOTAL ASSETS |
|
$ |
1,032,002 |
|
|
$ |
1,125,543 |
|
LIABILITIES AND EQUITY |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Accounts payable |
|
$ |
6,910 |
|
|
$ |
25,284 |
|
Revenues and royalties payable |
|
28,047 |
|
|
35,815 |
|
||
Accrued expenses |
|
12,844 |
|
|
19,538 |
|
||
Asset retirement obligation |
|
308 |
|
|
308 |
|
||
Derivative liability |
|
1,040 |
|
|
6,889 |
|
||
Advances |
|
93 |
|
|
11,505 |
|
||
Operating lease liabilities |
|
768 |
|
|
570 |
|
||
Finance lease liabilities |
|
96 |
|
|
206 |
|
||
Other current liabilities |
|
11 |
|
|
43 |
|
||
Total current liabilities |
|
50,117 |
|
|
100,158 |
|
||
|
|
|
|
|
||||
Noncurrent liabilities: |
|
|
|
|
||||
Long-term debt |
|
130,000 |
|
|
170,000 |
|
||
Deferred tax liability |
|
15,294 |
|
|
15,154 |
|
||
Asset retirement obligation |
|
2,027 |
|
|
1,856 |
|
||
Derivative liability |
|
577 |
|
|
— |
|
||
Operating lease liabilities |
|
2,001 |
|
|
2,539 |
|
||
Finance lease liabilities |
|
15 |
|
|
85 |
|
||
Other noncurrent liabilities |
|
138 |
|
|
— |
|
||
Total noncurrent liabilities |
|
150,052 |
|
|
189,634 |
|
||
|
|
|
|
|
||||
Equity: |
|
|
|
|
||||
Preferred stock, $0.001 par value, 20,000,000 shares authorized; none issued or outstanding |
|
— |
|
|
— |
|
||
Class A Common Stock, $0.001 par value, 200,000,000 shares authorized; 30,210,749 and 29,421,131 issued and outstanding at September 30, 2020 and December 31, 2019, respectively |
|
30 |
|
|
29 |
|
||
Class B Common Stock, $0.001 par value, 50,000,000 shares authorized; 35,009,371 and 35,260,680 issued and outstanding at September 30, 2020 and December 31, 2019, respectively |
|
35 |
|
|
35 |
|
||
Additional paid-in capital |
|
537,990 |
|
|
527,246 |
|
||
Accumulated deficit |
|
(186,787 |
) |
|
(181,711 |
) |
||
Total Earthstone Energy, Inc. equity |
|
351,268 |
|
|
345,599 |
|
||
Noncontrolling interest |
|
480,565 |
|
|
490,152 |
|
||
Total equity |
|
831,833 |
|
|
835,751 |
|
||
|
|
|
|
|
||||
TOTAL LIABILITIES AND EQUITY |
|
$ |
1,032,002 |
|
|
$ |
1,125,543 |
|
|
|
|
|
|
||||
EARTHSTONE ENERGY, INC. |
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) |
||||||||||||||||
(In thousands, except share and per share amounts) |
||||||||||||||||
|
||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
September 30, |
|
September 30, |
||||||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
REVENUES |
|
|
|
|
||||||||||||
Oil |
|
$ |
33,158 |
|
|
$ |
35,443 |
|
|
$ |
93,017 |
|
|
$ |
111,657 |
|
Natural gas |
|
2,642 |
|
|
903 |
|
|
4,855 |
|
|
2,126 |
|
||||
Natural gas liquids |
|
5,247 |
|
|
2,858 |
|
|
9,976 |
|
|
10,691 |
|
||||
Total revenues |
|
41,047 |
|
|
39,204 |
|
|
107,848 |
|
|
124,474 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
OPERATING COSTS AND EXPENSES |
|
|
|
|
|
|
|
|
||||||||
Lease operating expense |
|
7,044 |
|
|
6,419 |
|
|
21,971 |
|
|
20,485 |
|
||||
Production and ad valorem taxes |
|
2,696 |
|
|
2,698 |
|
|
7,198 |
|
|
8,001 |
|
||||
Rig termination expense |
|
— |
|
|
— |
|
|
426 |
|
|
— |
|
||||
Depreciation, depletion and amortization |
|
28,538 |
|
|
14,079 |
|
|
76,096 |
|
|
42,281 |
|
||||
Impairment expense |
|
2,115 |
|
|
— |
|
|
62,548 |
|
|
— |
|
||||
General and administrative expense |
|
5,796 |
|
|
6,057 |
|
|
19,615 |
|
|
19,948 |
|
||||
Transaction costs |
|
(705 |
) |
|
215 |
|
|
(324 |
) |
|
797 |
|
||||
Accretion of asset retirement obligation |
|
47 |
|
|
52 |
|
|
137 |
|
|
160 |
|
||||
Exploration expense |
|
— |
|
|
— |
|
|
298 |
|
|
— |
|
||||
Total operating costs and expenses |
|
45,531 |
|
|
29,520 |
|
|
187,965 |
|
|
91,672 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
(Loss) gain on sale of oil and gas properties |
|
— |
|
|
(120 |
) |
|
198 |
|
|
(446 |
) |
||||
|
|
|
|
|
|
|
|
|
||||||||
(Loss) income from operations |
|
(4,484 |
) |
|
9,564 |
|
|
(79,919 |
) |
|
32,356 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
||||||||
Interest expense, net |
|
(1,186 |
) |
|
(1,609 |
) |
|
(4,207 |
) |
|
(4,735 |
) |
||||
(Loss) gain on derivative contracts, net |
|
(6,040 |
) |
|
18,726 |
|
|
73,065 |
|
|
(19,672 |
) |
||||
Other income (expense), net |
|
(18 |
) |
|
21 |
|
|
120 |
|
|
(1 |
) |
||||
Total other income (expense) |
|
(7,244 |
) |
|
17,138 |
|
|
68,978 |
|
|
(24,408 |
) |
||||
|
|
|
|
|
|
|
|
|
||||||||
(Loss) income before income taxes |
|
(11,728 |
) |
|
26,702 |
|
|
(10,941 |
) |
|
7,948 |
|
||||
Income tax expense |
|
(130 |
) |
|
(575 |
) |
|
(112 |
) |
|
(728 |
) |
||||
Net (loss) income |
|
(11,858 |
) |
|
26,127 |
|
|
(11,053 |
) |
|
7,220 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Less: Net (loss) income attributable to noncontrolling interest |
|
(6,413 |
) |
|
14,357 |
|
|
(5,977 |
) |
|
3,877 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income attributable to Earthstone Energy, Inc. |
|
$ |
(5,445 |
) |
|
$ |
11,770 |
|
|
$ |
(5,076 |
) |
|
$ |
3,343 |
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income per common share attributable to Earthstone Energy, Inc.: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
$ |
(0.18 |
) |
|
$ |
0.41 |
|
|
$ |
(0.17 |
) |
|
$ |
0.12 |
|
Diluted |
|
$ |
(0.18 |
) |
|
$ |
0.41 |
|
|
$ |
(0.17 |
) |
|
$ |
0.12 |
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
30,073,635 |
|
|
29,032,842 |
|
|
29,810,705 |
|
|
28,883,907 |
|
||||
Diluted |
|
30,073,635 |
|
|
29,032,842 |
|
|
29,810,705 |
|
|
28,883,907 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
EARTHSTONE ENERGY, INC. |
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
||||||||
(In thousands) |
||||||||
|
||||||||
|
|
For the Nine Months Ended
|
||||||
|
|
2020 |
|
2019 |
||||
Cash flows from operating activities: |
|
|
||||||
Net (loss) income |
|
$ |
(11,053 |
) |
|
$ |
7,220 |
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation, depletion and amortization |
|
76,096 |
|
|
42,281 |
|
||
Impairment of proved and unproved oil and gas properties |
|
44,928 |
|
|
— |
|
||
Impairment of goodwill |
|
17,620 |
|
|
— |
|
||
Accretion of asset retirement obligations |
|
137 |
|
|
160 |
|
||
Settlement of asset retirement obligations |
|
— |
|
|
(179 |
) |
||
(Gain) loss on sale of oil and gas properties |
|
(198 |
) |
|
446 |
|
||
Total (gain) loss on derivative contracts, net |
|
(73,065 |
) |
|
19,672 |
|
||
Operating portion of net cash received in settlement of derivative contracts |
|
47,599 |
|
|
13,660 |
|
||
Stock-based compensation |
|
7,665 |
|
|
6,680 |
|
||
Deferred income taxes |
|
112 |
|
|
728 |
|
||
Amortization of deferred financing costs |
|
241 |
|
|
336 |
|
||
Changes in assets and liabilities: |
|
|
|
|
||||
(Increase) decrease in accounts receivable |
|
12,102 |
|
|
(5,585 |
) |
||
(Increase) decrease in prepaid expenses and other current assets |
|
(264 |
) |
|
(28 |
) |
||
Increase (decrease) in accounts payable and accrued expenses |
|
1,976 |
|
|
(8,330 |
) |
||
Increase (decrease) in revenues and royalties payable |
|
(7,768 |
) |
|
(9,042 |
) |
||
Increase (decrease) in advances |
|
(11,412 |
) |
|
17,720 |
|
||
Net cash provided by operating activities |
|
104,716 |
|
|
85,739 |
|
||
Cash flows from investing activities: |
|
|
|
|
||||
Additions to oil and gas properties |
|
(72,869 |
) |
|
(120,685 |
) |
||
Additions to office and other equipment |
|
(111 |
) |
|
(379 |
) |
||
Proceeds from sales of oil and gas properties |
|
409 |
|
|
2 |
|
||
Net cash used in investing activities |
|
(72,571 |
) |
|
(121,062 |
) |
||
Cash flows from financing activities: |
|
|
|
|
||||
Proceeds from borrowings |
|
93,923 |
|
|
165,272 |
|
||
Repayments of borrowings |
|
(133,923 |
) |
|
(119,099 |
) |
||
Cash paid related to the exchange and cancellation of Class A Common Stock |
|
(531 |
) |
|
(827 |
) |
||
Cash paid for finance leases |
|
(125 |
) |
|
(355 |
) |
||
Deferred financing costs |
|
— |
|
|
(228 |
) |
||
Net cash (used in) provided by financing activities |
|
(40,656 |
) |
|
44,763 |
|
||
Net (decrease) increase in cash |
|
(8,511 |
) |
|
9,440 |
|
||
Cash at beginning of period |
|
13,822 |
|
|
376 |
|
||
Cash at end of period |
|
$ |
5,311 |
|
|
$ |
9,816 |
|
Supplemental disclosure of cash flow information |
|
|
|
|
||||
Cash paid for: |
|
|
|
|
||||
Interest |
|
$ |
3,613 |
|
|
$ |
4,235 |
|
Non-cash investing and financing activities: |
|
|
|
|
||||
Accrued capital expenditures |
|
$ |
2,213 |
|
|
$ |
50,615 |
|
Lease asset additions - ASC 842 |
|
$ |
— |
|
|
$ |
4,710 |
|
Asset retirement obligations |
|
$ |
44 |
|
|
$ |
43 |
|
Earthstone Energy, Inc.
Non-GAAP Financial Measures
Unaudited
The non-GAAP financial measures of Adjusted Diluted Shares, Adjusted EBITDAX, Adjusted Net Income, All-In Cash Costs, Free Cash Flow, Adjusted Working Capital Deficit and Operating Margin per Boe, as defined and presented below, are intended to provide readers with meaningful information that supplements our financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Further, these non-GAAP measures should only be considered in conjunction with financial statements and disclosures prepared in accordance with GAAP and should not be considered in isolation or as a substitute for GAAP measures, such as net income or loss, operating income or loss or any other GAAP measure of financial position or results of operations. Adjusted EBITDAX and Adjusted Net Income are presented herein and reconciled from the GAAP measure of net (loss) income because of their wide acceptance by the investment community as a financial indicator.
I. Adjusted Diluted Shares
We define “Adjusted Diluted Shares” as the weighted average shares of Class A Common Stock - Diluted outstanding plus the weighted average shares of Class B Common Stock outstanding.
Our Adjusted Diluted Shares measure provides a comparable per share measurement when presenting results such as Adjusted EBITDAX and Adjusted Net Income that include the interests of both Earthstone and the noncontrolling interest. Adjusted Diluted Shares is used in calculating several metrics that we use as supplemental financial measurements in the evaluation of our business, none of which should be considered as an alternative to, or more meaningful than, net income as an indicator of operating performance.
Mark Lumpkin, Jr.
Executive Vice President – Chief Financial Officer
Earthstone Energy, Inc.
1400 Woodloch Forest Drive, Suite 300
The Woodlands, TX 77380
281-298-4246
This email address is being protected from spambots. You need JavaScript enabled to view it.
Scott Thelander
Vice President of Finance
Earthstone Energy, Inc.
1400 Woodloch Forest Drive, Suite 300
The Woodlands, TX 77380
281-298-4246
This email address is being protected from spambots. You need JavaScript enabled to view it.
LONDON--(BUSINESS WIRE)--#CommandandControlSystemsMarket--Technavio has been monitoring the command and control systems market and it is poised to grow by USD 3.28 billion during 2020-2024, progressing at a CAGR of over 3% during the forecast period. The report offers an up-to-date analysis regarding the current market scenario, latest trends and drivers, and the overall market environment.
Technavio’s in-depth research has all your needs covered as our research reports include all foreseeable market scenarios, including pre- & post-COVID-19 analysis. Download Latest Free Sample Report on COVID-19 Analysis
The market is fragmented, and the degree of fragmentation will accelerate during the forecast period. BAE Systems Plc, General Dynamics Corp., L3Harris Technologies Inc., Leonardo Spa, Lockheed Martin Corp., Northrop Grumman Corp., Raytheon Technologies Corp., Saab AB, Thales Group, and The Boeing Co. are some of the major market participants. To make the most of the opportunities, market vendors should focus more on the growth prospects in the fast-growing segments, while maintaining their positions in the slow-growing segments.
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Rising need for integrated situation awareness system has been instrumental in driving the growth of the market. However, barriers to adopting new technology and equipment might hamper market growth.
Technavio's custom research reports offer detailed insights on the impact of COVID-19 at an industry level, a regional level, and subsequent supply chain operations. This customized report will also help clients keep up with new product launches in direct & indirect COVID-19 related markets, upcoming vaccines and pipeline analysis, and significant developments in vendor operations and government regulations. Download a Free Sample Report on COVID-19 Impacts
Command and Control Systems Market 2020-2024: Segmentation
Command and Control Systems Market is segmented as below:
Command and Control Systems Market 2020-2024: Scope
Technavio presents a detailed picture of the market by the way of study, synthesis, and summation of data from multiple sources. The command and control systems market report covers the following areas:
This study identifies rising investments in satellite navigation programs as one of the prime reasons driving the Command and Control Systems Market growth during the next few years.
Technavio suggests three forecast scenarios (optimistic, probable, and pessimistic) considering the impact of COVID-19. Technavio’s in-depth research has direct and indirect COVID-19 impacted market research reports.
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Command and Control Systems Market 2020-2024: Key Highlights
Table of Contents:
Executive Summary
Market Landscape
Market Sizing
Five Forces Analysis
Market Segmentation by Platform
Customer landscape
Geographic Landscape
Vendor Landscape
Vendor Analysis
Appendix
About Us
Technavio is a leading global technology research and advisory company. Their research and analysis focus on emerging market trends and provides actionable insights to help businesses identify market opportunities and develop effective strategies to optimize their market positions. With over 500 specialized analysts, Technavio’s report library consists of more than 17,000 reports and counting, covering 800 technologies, spanning across 50 countries. Their client base consists of enterprises of all sizes, including more than 100 Fortune 500 companies. This growing client base relies on Technavio’s comprehensive coverage, extensive research, and actionable market insights to identify opportunities in existing and potential markets and assess their competitive positions within changing market scenarios.
Technavio Research
Jesse Maida
Media & Marketing Executive
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MINNEAPOLIS--(BUSINESS WIRE)--Northern Oil and Gas, Inc. (NYSE American: NOG) (the “Company” or “Northern”) today announced that the borrowing base under its reserves-based revolving credit facility has been reaffirmed at $660.0 million. The 14 lender syndicate unanimously reaffirmed this amount, effective as of November 2, 2020. No changes were made to the terms of the credit facility, and Northern is in full compliance with all covenants. Northern anticipates ample cash on hand and liquidity to satisfy its sole short-term amortization payment in January 2021.
HEDGING UPDATE
Northern remains majority hedged on its projected oil production at above-market prices through 2021. Additionally, Northern has 5,000 barrels/day hedged at $51.77/barrel for the first quarter of 2022 and 1,000 barrels/day hedged at $50.05/bbl for the remaining three quarters of 2022. The following table summarizes Northern’s crude oil swap contracts.
Period |
Production |
NYMEX WTI Price |
Q4:20 |
~25.8 Mbo/d |
~$58.03 |
2021 |
~19.4 Mbo/d |
~$55.68 |
Q1:22 |
~5.0 Mbo/d |
~$51.77 |
Q2-Q4:22 |
~1.0 Mbo/d |
~$50.05 |
MANAGEMENT COMMENT
“We are pleased that our strong reserves base and excellent hedge profile continue to support a reaffirmation of our borrowing base,” commented Chad Allen, Northern’s Chief Financial Officer, “Due to Northern’s free cash flow profile, Northern anticipates substantial reductions in facility borrowings by year end 2021. While we don’t require significant liquidity to operate, our business plan should deliver a strong liquidity base for potential acquisitions and debt reduction over time.”
ABOUT NORTHERN OIL AND GAS
Northern Oil and Gas, Inc. is a company with a primary strategy of investing in non-operated minority working and mineral interests in oil & gas properties, with a core area of focus in the Williston Basin Bakken and Three Forks play in North Dakota and Montana. More information about Northern Oil and Gas, Inc. can be found at www.northernoil.com.
SAFE HARBOR
This press release contains forward-looking statements regarding future events and future results that are subject to the safe harbors created under the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”). All statements other than statements of historical facts included in this release regarding Northern’s financial position, operating and financial performance, business strategy, plans and objectives of management for future operations, industry conditions, and indebtedness covenant compliance are forward-looking statements. When used in this release, forward-looking statements are generally accompanied by terms or phrases such as “estimate,” “project,” “predict,” “believe,” “expect,” “continue,” “anticipate,” “target,” “could,” “plan,” “intend,” “seek,” “goal,” “will,” “should,” “may” or other words and similar expressions that convey the uncertainty of future events or outcomes. Items contemplating or making assumptions about actual or potential future sales, market size, collaborations, and trends or operating results also constitute such forward-looking statements.
Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our company’s control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: the effects of the COVID-19 pandemic and related economic slowdown, changes in crude oil and natural gas prices, the pace of drilling and completions activity on Northern’s current properties, infrastructure constraints and related factors affecting Northern’s properties, ongoing legal disputes over and potential shutdown of the Dakota Access Pipeline, Northern’s ability to acquire additional development opportunities, Northern’s ability to consummate any pending acquisition transactions, other risks and uncertainties related to the closing of pending acquisition transactions, changes in Northern’s reserves estimates or the value thereof, general economic or industry conditions, nationally and/or in the communities in which Northern conducts business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, Northern’s ability to raise or access capital, changes in accounting principles, policies or guidelines, financial or political instability, health-related epidemics, acts of war or terrorism, and other economic, competitive, governmental, regulatory and technical factors affecting Northern’s operations, products and prices.
Northern has based these forward-looking statements on its current expectations and assumptions about future events. While management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond Northern’s control. Northern does not undertake any duty to update or revise any forward-looking statements, except as may be required by the federal securities laws.
Mike Kelly, CFA
EVP Finance
952-476-9800
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