Bonanza Creek Energy, Inc. (NYSE: BCEI) (“Bonanza Creek” or
the “Company”) today updated its 2020 operating plan due to
the unprecedented drop in commodity prices.
Consistent with the Company’s focus on economic returns,
financial strength, and operational flexibility, Bonanza Creek is
significantly reducing planned development activity in 2020.
- The Company’s operated drilling rig will finish the final well
on its current pad this week and then be released
- Ongoing completion activities involving the two final XRL wells
of an 8-well pad will be finished within two weeks and the pad will
be brought online later this year. Further completion activities
will be suspended
Absent additional development activity, the Company expects to
exit 2020 with no debt and 4Q 2020 production that is approximately
flat with 4Q 2019. Should commodity prices recover, and the
economic returns justify their completion, the Company can quickly
restart development activity with the completion of two pads in
late 2020 that should maintain flat production into 2Q 2021.
- Full Year 2020 production is expected to be 24.0 - 25.0
MBoe/d
- Total 2020 annual capital expenditures are expected to be $80 -
$100 million excluding the completion of the two aforementioned
pads in late 2020
- Outside-operated activities in French Lake are now expected to
start in 2021
- A flat 2020 production profile, together with reduced capex and
2020 hedge revenue, is expected to generate significant free cash
in 2020
- The Company currently has $80 million drawn on its credit
facility, and its leverage ratio (net debt / last-twelve-months’
Adjusted EBITDAX) was 0.3x as of 12/31/19
- The Company plans to use 2020 free cash flow to reduce the
amount drawn on its credit facility, and exit 2020 with a lower
leverage ratio
- The Company has approximately 90% of its 2020 oil production
hedged with an average floor price of approximately $50 per
barrel
- The Company will continue to work aggressively to optimize its
base production and reduce cash costs related to G&A and
operating expenses
“Due to the unprecedented decline in commodity prices, we are
exercising our operational flexibility to maintain financial
strength and very low leverage,” said Eric Greager, President and
Chief Executive Officer of Bonanza Creek. “This updated 2020 plan
will generate significant free cash, which will further strengthen
our balance sheet and help ensure our success through this volatile
period.”
Greager concluded, “We remain focused on generating shareholder
value over the long term, and our agility allows us to prudently
and swiftly respond to market conditions.”
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 oil and associated liquids-rich natural gas in the
Rocky Mountain region of the United States. The Company’s assets
and operations are concentrated in rural, unincorporated Weld
County within 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, 2019, filed on February 28, 2020, 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:Scott
LandrethSenior Director, Finance & Investor Relations and
Treasurer720-225-6679slandreth@bonanzacrk.com
Schedule 1: Net Debt(in thousands)
Net Debt is a supplemental non-GAAP financial measure that is
used by management and external users of the Company’s consolidated
financial statements, such as industry analysts, investors, lenders
and rating agencies. The Company defines net debt as GAAP long-term
debt less GAAP cash and cash equivalents. We believe net debt is an
important element for assessing the Company’s liquidity.
The following table presents a reconciliation of GAAP financial
measure of long term debt to the non-GAAP financial measure of net
debt (in thousands):
|
|
As of |
|
|
12/31/2019 |
Total Long-Term Debt |
|
$ |
80,000 |
|
Cash and cash equivalents |
|
|
(11,008 |
) |
Net Debt |
|
$ |
68,992 |
|
Schedule 2: 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 to the non-GAAP financial measure
of Adjusted EBITDAX.
|
Twelve Months Ended |
|
December 31, |
|
2019 |
Net Income
(loss) |
$ |
67,067 |
|
|
Exploration |
797 |
|
|
Depreciation, depletion and amortization |
76,453 |
|
|
Amortization of deferred financing costs |
248 |
|
|
Abandonment and impairment of unproved properties |
11,201 |
|
|
Stock-based compensation |
6,886 |
|
|
Cash severance costs |
751 |
|
|
Unused commitments |
— |
|
|
Gain on sale of oil and gas properties |
(1,177 |
) |
|
Ad valorem reimbursement |
— |
|
|
Interest expense |
2,650 |
|
|
Derivative (gain) loss |
37,145 |
|
|
Derivative cash settlements |
1,691 |
|
|
Adjusted
EBITDAX |
$ |
203,712 |
|
|
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