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Bonanza Creek Energy Announces First Quarter 2019 Financial Results and Operational Update

DENVER, May 08, 2019 (GLOBE NEWSWIRE) -- Bonanza Creek Energy, Inc. (BCEI) (the "Company" or "Bonanza Creek") today announced its first quarter 2019 financial results and operating outlook and has posted an updated investor presentation on its corporate website.

Highlights of the first quarter 2019 include:

  • First quarter 2019 sales volumes increased 17% sequentially to 20.7 thousand barrels of oil equivalent per day ("MBoe/d") on capital expenditures of $44.8 million

  • Net oil and gas revenue of $72.6 million, an increase of 10% sequentially

  • Lease operating expenses of $2.91 per Boe, a decrease of 11% sequentially

  • Rocky Mountain Infrastructure ("RMI") operating expenses of $1.24 per Boe

  • Total general and administrative ("G&A") expense of $10.3 million including $8.9 million or $4.77 per Boe of cash G&A(1) expense. The Company is reiterating full year 2019 cash G&A guidance of $3.70 per Boe to $4.20 per Boe

  • GAAP net loss of $7.0 million or $0.34 per diluted share, inclusive of $1.82 non-cash loss on derivatives

  • Adjusted EBITDAX(1) of $49.2 million, or $2.39 per diluted share, an increase of 17% sequentially

  • Total debt to trailing twelve month Adjusted EBITDAX of less than 0.5x

(1) Non-GAAP measure, see attached reconciliation schedules at the end of this release.

Eric Greager, Chief Executive Officer of Bonanza Creek, commented, "We are pleased with the strong start to 2019. Our skilled technical and operations teams continue to drive positive results, while new well performance in Legacy East continues to demonstrate the quality of our inventory. We remain focused on planning and efficient execution, continuing to improve our cost structure, and generating value for our shareholders.”

First Quarter 2019 Results

During the first quarter of 2019, the Company reported daily sales of 20.7 MBoe/d, which increased 17% from fourth quarter 2018. Product mix for the first quarter of 2019 was 65% oil, 16% NGLs, and 19% residue natural gas. During the first quarter of 2019, the Company drilled 13 gross (11.8 net) operated wells, 10 of which were extended reach lateral ("XRL") wells, and turned to sales 22 gross (14.8 net) operated wells, 8 of which were XRL wells.

The table below provides operating statistics for our Wattenberg assets.

    Three Months Ended March 31,(1)  
    2019     2018     % Change  
Avg. Daily Sales Volumes:                  
Crude oil (Bbls/d)   13,425       8,281       62 %  
Natural gas (Mcf/d)   24,427       18,257       34 %  
Natural gas liquids (Bbls/d)   3,240       2,415       34 %  
Crude oil equivalent (Boe/d)   20,736       13,739       51 %  
                   
Product Mix                  
  Crude oil   65 %     60 %        
  Natural gas   19 %     22 %        
  Natural gas liquids   16 %     18 %        
                   
Average Sales Prices (before derivatives):                  
  Crude oil (per Bbl)   $ 49.83       $ 57.01          
  Natural gas (per Mcf)   $ 3.08       $ 2.64          
  Natural gas liquids (per Bbl)   $ 14.91       $ 22.33          
  Crude oil equivalent (per Boe)   $ 38.22       $ 41.79          
                   

(1) Results for three months ended are for Wattenberg only. Please see tables in the back of this press release and our Quarterly Report on Form 10-Q filed on May 8, 2019 for total Company operating statistics.

Net oil and gas revenue for the first quarter of 2019 was $72.6 million compared to $66.2 million for the fourth quarter of 2018. The increase was primarily a result of increased production partially offset by lower realized prices. Crude oil accounted for approximately 84% of total revenue. Differentials for the Company's Wattenberg oil production during the quarter averaged approximately $5.45 per barrel off of NYMEX WTI.

Wattenberg LOE for the first quarter of 2019 on a unit basis decreased by 11% to $2.91 per Boe from $3.27 per Boe in the fourth quarter of 2018 and compared favorably to full year 2019 guidance of $3.00 per Boe to $3.50 per Boe. Additionally, RMI operating expenses for the first quarter were $1.24 per Boe compared to $1.06 per Boe in fourth quarter of 2018 and in line with the Company's expectations.

Unit operating expenses continue to benefit from lower regulatory, compliance, compression, and labor costs. Additionally, the Company is benefiting from RMI as incremental production is absorbed into existing central production facilities without the need for additional tank batteries, compression or labor. Given positive results to date, the Company is lowering annual LOE guidance to a range of $2.75 per Boe to $3.25 per Boe.

The Company continued to benefit from multiple delivery points on the RMI system in the first quarter. As previously mentioned, the Company’s fourth gas processor (Cureton Midstream) brought online a 60 MMcf per day cryogenic gas processing plant in the fourth quarter of 2018, further enhancing the Company’s downstream optionality. This delivery point flexibility, combined with consistently low line pressures on RMI, has helped minimize production constraints. Line pressure on the Company’s RMI system has remained consistent between 50 and 100 psi, well below typical field-wide operating pressures outside of RMI. Additionally, construction of the Company’s new oil gathering line to Riverside Terminal is underway and is expected to lower oil differentials in the second half of 2019 by $1.25 to $1.50 for each barrel flowing through the line.

The Company's general and administrative ("G&A") expense was $10.3 million for the first quarter of 2019, which included $1.4 million in stock compensation. Cash G&A expense, which excludes stock compensation, was $8.9 million for the first quarter. Cash G&A is a non-GAAP measure. Please see Schedule 7 at the end of this release for a reconciliation from GAAP G&A to cash G&A.

Guidance Summary

Guidance 1Q19 Actuals FY19 Guidance
  Production (MBoe/d)  20.7  20.0 - 24.0
  LOE ($/Boe) $2.91  $2.75 - $3.25
  RMI Opex ($/Boe) $1.24  $1.10 - $1.40
  Cash G&A ($/Boe) $4.77  $3.70 - $4.20
  Severance Ad/Valorem (% of rev)  5.9% 8% - 9%
  Oil Differential ($/bbl)(1) $5.45  $4.25 - $5.25
  Total Capex ($MM) $45  $230 - $255
  D&C Capex ($MM) $39  $210 - $220

(1) Oil differential guidance predicated on $50 WTI and $3 Henry Hub pricing environment.

Conference Call Information

The Company will host a conference call to discuss these results on May 9, 2019 at 9:00 a.m. Mountain Time (11:00 a.m. Eastern Time). A live webcast and replay of this event will be available on the Investor Relations section of the Company’s website at www.bonanzacrk.com. Dial-in information for the conference call is included below.

Type Phone Number Passcode
Live participant 877-793-4362 4198955
Replay 855-859-2056 4198955

About Bonanza Creek Energy, Inc.

Bonanza Creek Energy, Inc. is an independent oil and natural gas company engaged in the acquisition, exploration, development and production of onshore oil and associated liquids-rich natural gas in the United States. The Company’s assets and operations are concentrated in the Rocky Mountain region in the Wattenberg Field, focused on the Niobrara and Codell formations. The Company’s common shares are listed for trading on the NYSE under the symbol: “BCEI.” For more information about the Company, please visit www.bonanzacrk.com. Please note that the Company routinely posts important information about the Company under the Investor Relations section of its website.

Forward-Looking Statements

This press 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. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by the Company based on management’s experience, perception of historical trends and technical analyses, current conditions, anticipated future developments and other factors believed to be appropriate and reasonable by management. When used in this press release, the words “will,” “potential,” “believe,” “estimate,” “intend,” “expect,” “may,” “should,” “anticipate,” “could,” “plan,” “predict,” “project,” “profile,” “model” or their negatives, other similar expressions or the statements that include those words, are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These statements include statements regarding development and completion expectations and strategy; decreasing operating and capital costs; impact of the Company's reorganization; and updated 2019 guidance. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, that may cause actual results to differ materially from those implied or expressed by the forward-looking statements, including the following: changes in natural gas, oil and NGL prices; general economic conditions, including the performance of financial markets and interest rates; drilling results; shortages of oilfield equipment, services and personnel; operating risks such as unexpected drilling conditions; ability to acquire adequate supplies of water; risks related to derivative instruments; access to adequate gathering systems and pipeline take-away capacity; and pipeline and refining capacity constraints. Further information on such assumptions, risks and uncertainties is available in the Company’s SEC filings. We refer you to the discussion of risk factors in our Annual Report on Form 10-K for the year ended December 31, 2018, filed on February 28, 2019, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, filed on May 8, 2019, and other filings submitted by us to the Securities Exchange Commission. The Company’s SEC filings are available on the Company’s website at www.bonanzacrk.com and on the SEC’s website at www.sec.gov. All of the forward-looking statements made in this press release are qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, including guidance, and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

For further information, please contact:
Doug Atkinson
Senior Manager, Investor Relations
720-225-6690
datkinson@bonanzacrk.com

Scott Landreth
Director, Finance & Treasurer
720-225-6679
slandreth@bonanzacrk.com

Schedule 1: Statements of Operations
(in thousands, expect for per share amounts, unaudited)

   
  Three Months
Ended March 31,
2019
  Three Months
Ended March 31,
2018
Operating net revenues:      
Oil and gas sales $ 72,594     $ 64,193  
Operating expenses:      
Lease operating expense 5,426     10,459  
Gas plant and midstream operating expense 2,321     3,613  
Gathering, transportation, and processing 4,022     2,338  
Severance and ad valorem taxes 4,248     5,233  
Exploration 97     29  
Depreciation, depletion, and amortization 15,759     7,508  
Abandonment and impairment of unproved properties 879     2,502  
Unused commitments     21  
General and administrative expense (including $1,380 and $1,008, respectively, of stock-based compensation) 10,278     9,533  
Total operating expenses 43,030     41,236  
Income from operations 29,564     22,957  
Other income (expense):      
Derivative loss (36,544 )   (8,742 )
Interest expense (1,151 )   (357 )
Gain on sale of properties 1,126      
Other income 12     12  
Total other expense (36,557 )   (9,087 )
Income (loss) from operations before taxes (6,993 )   13,870  
Income tax benefit (expense)      
Net income (loss) $ (6,993 )   $ 13,870  
       
Comprehensive income (loss) $ (6,993 )   $ 13,870  
       
Basic net income (loss) per common share $ (0.34 )   $ 0.68  
       
Diluted net income (loss) per common share $ (0.34 )   $ 0.68  
       
Basic weighted-average common shares outstanding 20,557     20,454  
       
Diluted weighted-average common shares outstanding 20,557     20,470  
 
 

Schedule 2: Statements of Cash Flows
(in thousands, unaudited)

   
  Three Months
Ended March 31,
2019
  Three Months
Ended March 31,
2018
Cash flows from operating activities:      
Net income (loss) $ (6,993 )   $ 13,870  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:      
Depreciation, depletion, and amortization 15,759     7,508  
Abandonment and impairment of unproved properties 879     2,502  
Well abandonment costs and dry hole expense 62      
Stock-based compensation 1,380     1,008  
Amortization of deferred financing costs 125      
Derivative loss 36,544     8,742  
Derivative cash settlements 936     (4,312 )
Gain on sale of oil and gas properties (1,126 )    
Other (900 )   172  
Changes in current assets and liabilities:      
  Accounts receivable 6,237     (15,758 )
  Prepaid expenses and other assets (440 )   3,402  
  Accounts payable and accrued liabilities (10,150 )   (566 )
  Settlement of asset retirement obligations (592 )   (665 )
    Net cash provided by operating activities 41,721     15,903  
Cash flows from investing activities:      
Acquisition of oil and gas properties (1,362 )   (98 )
Exploration and development of oil and gas properties (36,503 )   (37,664 )
Proceeds from sale of oil and gas properties 1,153     20  
Additions to property and equipment - non oil and gas (76 )   (103 )
    Net cash used in investing activities (36,788 )   (37,845 )
Cash flows from financing activities:      
Proceeds from current credit facility 15,000      
Proceeds from prior credit facility     15,000  
Payment of employee tax withholdings in exchange for the return of common stock (153 )    
  Net cash provided by financing activities 14,847     15,000  
Net change in cash, cash equivalents and restricted cash 19,780     (6,942 )
Cash, cash equivalents and restricted cash:      
Beginning of period 13,002     12,782  
End of period $ 32,782     $ 5,840  
 
 

Schedule 3: Condensed Consolidated Balance Sheets
(in thousands, unaudited)

   
  March 31, 2019   December 31, 2018
ASSETS      
Current assets:      
Cash and cash equivalents $ 32,695     $ 12,916  
Accounts receivable:      
Oil and gas sales 47,281     31,799  
Joint interest and other 25,858     47,577  
Prepaid expenses and other 5,073     4,633  
Inventory of oilfield equipment 2,484     3,478  
Derivative assets 6,400     34,408  
     Total current assets 119,791     134,811  
Property and equipment (successful efforts method):      
Proved properties 782,323     719,198  
Less: accumulated depreciation, depletion and amortization (67,886 )   (52,842 )
Total proved properties, net 714,437     666,356  
Unproved properties 154,599     154,352  
Wells in progress 73,993     93,617  
Other property and equipment, net of accumulated depreciation of $2,701 in 2019 and $2,546 in 2018 3,570     3,649  
Total property and equipment, net 946,599     917,974  
Long-term derivative assets     3,864  
Right-of-use assets 31,999      
Other noncurrent assets 4,998     4,885  
Total assets $ 1,103,387     $ 1,061,534  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable and accrued expenses $ 56,021     $ 79,390  
Oil and gas revenue distribution payable 31,314     19,903  
Current portion of right-of-use liability 8,429      
Derivative liability 4,889     183  
Total current liabilities 100,653     99,476  
       
Long-term liabilities:      
Credit facility 65,000     50,000  
Right-of-use liability 24,359      
Ad valorem taxes 25,850     18,740  
Asset retirement obligations for oil and gas properties 29,378     29,405  
Total liabilities 245,240     197,621  
       
Commitments and contingencies      
       
Stockholders’ equity:      
Preferred stock, $.01 par value, 25,000,000 shares authorized, none outstanding      
Common stock, $.01 par value, 225,000,000 shares authorized, 20,558,591 and 20,543,940 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively 4,286     4,286  
Additional paid-in capital 697,688     696,461  
Retained earnings 156,173     163,166  
Total stockholders’ equity 858,147     863,913  
Total liabilities and stockholders’ equity $ 1,103,387     $ 1,061,534  
 
 

Schedule 4: Per unit operating margins
(unaudited)

  Three Months Ended March 31,(1)  
  2019   2018   Percent
Change
 
Sales volume            
Oil (MBbl) 1,208     895     35 %  
Gas (MMcf) 2,198     2,135     3 %  
NGL (MBbl) 292     258     13 %  
Equivalent (MBoe) 1,866     1,509     24 %  
             
Realized pricing (before derivatives)            
Oil ($/Bbl) $ 49.83     $ 57.89     (14 )%  
Gas ($/Mcf) $ 3.08     $ 2.78     11 %  
NGL ($/Bbl) $ 14.91     $ 23.33     (36 )%  
Equivalent ($/Boe) $ 38.22     $ 42.27     (10 )%  
             
Per Unit Costs ($/Boe)            
Realized price equivalent (before derivatives) $ 38.22     $ 42.27     (10 )%  
Lease operating expense 2.91     6.93     (58 )%  
Gathering, transportation and processing 2.16     1.55     39 %  
Gas plant and midstream operating expense 1.24     2.39     (48 )%  
Severance and ad valorem 2.28     3.47     (34 )%  
Cash general and administrative(2) 4.77     5.65     (16 )%  
Total cash operating costs $ 13.36     $ 19.99     (33 )%  
Cash operating margin (before derivatives) $ 24.86     $ 22.28     12 %  
Derivative cash settlements 0.50     (2.85 )   %  
Cash operating margin (after derivatives) $ 25.36     $ 19.43     31 %  
             
Non-cash items            
Non-cash general and administrative $ 0.74     $ 0.67     10 %  
                       

(1) The Mid-Continent region assets were sold August 6, 2018, and therefore, the data in the table above excludes the Mid-Continent region activity during the three months ended March 31, 2019 as compared to the three months ended March 31, 2018.
(2) Cash general and administrative expense excludes stock-based compensation of $1.4 million and $1.0 million for the three months ended March 31, 2019 and 2018, respectively.

Schedule 5: Adjusted Net Income
(in thousands, except per share amounts, unaudited)

Adjusted net income is a supplemental non-GAAP financial measure that is used by management to present recurring profitability that is more comparable between periods by excluding items that are non-recurring in nature or items which are not easily estimable. Management believes adjusted net income provides external users of the Company's consolidated financial statements such as industry analysts, investors, creditors, and rating agencies with additional information to assist in their analysis of the Company. The Company defines adjusted net income as net income after adjusting first for (1) the impact of certain non-cash items and one-time transactions and then (2) the non-cash and one time items’ impact on taxes based on a tax rate that approximates the Company's effective tax rate in each period. Adjusted net income is not a measure of net income (loss) as determined by GAAP.

The following table presents a reconciliation of the GAAP financial measure of net income (loss) to the non-GAAP financial measure of adjusted net income.

    Three Months Ended
March 31,
 
    2019   2018  
Net income (loss)   $ (6,993 )   $ 13,870    
Adjustments to net income (loss):          
Derivative loss   36,544     8,742    
Derivative cash settlements   936     (4,312 )  
Gain on sale of oil and gas properties   (1,126 )      
Abandonment and impairment of unproved properties   879     2,502    
Exploratory dry hole expense   62        
Unused commitments       21    
Stock-based compensation (1)   1,380     1,008    
Severance costs (1)   418        
Total adjustments before taxes   39,093     7,961    
Income tax effect          
Total adjustments after taxes   $ 39,093     $ 7,961    
           
Adjusted net income   $ 32,100     $ 21,831    
Adjusted net income per diluted share   $ 1.56     $ 1.07    
           
Diluted weighted-average common shares outstanding   20,557     20,470    
           
(1) Included as a portion of general and administrative expense in the statements of operations.
 

Schedule 6: Adjusted EBITDAX
(in thousands, unaudited)

Adjusted EBITDAX is a supplemental non-GAAP financial measure that is used by management to provide a metric of the Company's ability to internally generate funds for exploration and development of oil and gas properties. The metric excludes items which are non-recurring in nature and/or items which are not reasonably estimable. Management believes adjusted EBITDAX provides external users of the Company’s consolidated financial statements such as industry analysts, investors, lenders, and rating agencies with additional information to assist in their analysis of the Company. The Company defines Adjusted EBITDAX as earnings before interest expense, income taxes, depreciation, depletion, amortization, impairment, exploration expenses and other similar non-cash and non-recurring charges. Adjusted EBITDAX is not a measure of net income (loss) or cash flows as determined by GAAP.

The following table presents a reconciliation of the GAAP financial measure of net income (loss) to the non-GAAP financial measure of Adjusted EBITDAX.

    Three Months Ended March 31,  
    2019   2018  
Net income (loss)   $ (6,993 )   $ 13,870    
Exploration   97     29    
Depreciation, depletion and amortization   15,759     7,508    
Amortization of deferred financing costs   125        
Abandonment and impairment of unproved properties   879     2,502    
Unused commitments       21    
Stock-based compensation (1)   1,380     1,008    
Severance costs (1)   418        
Interest expense   1,151     357    
Derivative loss   36,544     8,742    
Derivative cash settlements   936     (4,312 )  
Gain on sale of oil and gas properties   (1,126 )      
Adjusted EBITDAX   $ 49,170     $ 29,725    
           
(1) Included as a portion of general and administrative expense in the statements of operations.
 
 

Schedule 7: Recurring Cash G&A
(in thousands, unaudited)

Recurring cash G&A is a supplemental non-GAAP financial measure that is used by management to provide only the cash portion of its G&A expense, which can be used to evaluate cost management and operating efficiency on a comparable basis from period to period. Management believes recurring cash G&A provides external users of the Company’s consolidated financial statements such as industry analysts, investors, lenders, and rating agencies with additional information to assist in their analysis of the Company. The Company defines recurring cash G&A as GAAP general and administrative expense exclusive of the Company's stock based compensation and one-time charges. The Company refers to recurring cash G&A to provide typical recurring cash G&A costs that are planned for in a given period. Recurring cash G&A is not a fully inclusive measure of general and administrative expense as determined by GAAP.

The following table presents a reconciliation of the GAAP financial measure of general and administrative expense to the non-GAAP financial measure of recurring cash G&A.

    Three Months Ended March 31,  
    2019   2018  
General and administrative   $ 10,278     $ 9,533    
Stock-based compensation   (1,380 )   (1,008 )  
Cash G&A   $ 8,898     $ 8,525