Roan Resources, Inc. (NYSE: ROAN) (“Roan” or the “Company”)
today announced third quarter 2019 operating and financial
results.
Merger with Citizen Energy
- On October 1, 2019, the Company entered into an Agreement and
Plan of Merger (the “Merger Agreement”) by and among Citizen Energy
Operating, LLC, a Delaware limited liability company (“Citizen
Operating”), Citizen Energy Pressburg, Inc., a Delaware corporation
and wholly owned subsidiary of Citizen Operating (“Merger Sub”) and
the Company. The Merger Agreement provides for, among other things,
the merger of the Company into Merger Sub with the Company as the
surviving entity and a wholly owned subsidiary of Citizen Operating
(the “Merger”).
- Roan expects the Merger to close during the fourth quarter of
2019 or the first quarter of 2020, subject to Roan stockholder
approval, regulatory approvals and the satisfaction of other
customary closing conditions.
- Shareholders are invited to attend the special meeting on
December 4, 2019, to consider and vote on proposals related to the
proposed acquisition of the company. Please refer to the Proxy
Statement filed with the SEC on November 4, 2019 for additional
details.
- For further information related to the Merger, interested
parties are invited to access the Merger Proxy Statement on the
Company’s website at www.RoanResources.com under the “Investors”
section of the site.
Third Quarter 2019 Highlights
- Production of approximately 53.7 thousand barrels of oil
equivalent per day (MBoe/d) (26% oil, 27% natural gas liquids
(NGLs), 47% gas), which represented an increase of 15% as compared
to the third quarter of 2018. The Company elected to be in ethane
rejection for the quarter; 3Q 2019 2Q 2019
3Q 2018 Production Data Oil (MBbls)
1,291
1,198
1,089
Natural gas (MMcf)
13,820
12,533
11,417
Natural gas liquids (MBbls)
1,345
1,339
1,286
Total volumes (MBoe)
4,939
4,626
4,278
Average daily total volumes (MBoe/d)
53.7
50.8
46.5
- Net income was $19.3 million, or $0.13 per diluted share;
Adjusted EBITDAX(1) (non-GAAP) was $86.8 million;
- Capital expenditures totaled approximately $130.9 million;
- The Company drilled 14 gross (8.3 net) operated wells (26.0
gross lateral miles) during the third quarter. The Company also
brought online 18 gross (14.2 net) operated wells during the third
quarter.
3Q 2019 YTD 2019 Operated Well Data Drilled
gross wells
14
50
Drilled net wells
8.3
34.3
Drilled gross lateral miles
26.0
91
First sales gross wells
18
55
First sales net wells
14.2
42.2
1)
Please see the supplemental financial
information in the table under “Non-GAAP Financial Measures” at the
end of this earnings release for a reconciliation of the non-GAAP
financial measure of Adjusted EBITDAX to its most directly
comparable GAAP financial measure
Financial Update
Third quarter 2019 net income was $19.3 million, or $0.13 per
dilutive share, and adjusted net income (non-GAAP) was $13.9
million, or $0.09 per dilutive share. Third quarter 2019 Adjusted
EBITDAX (non-GAAP) was $86.8 million.
See the definitions and reconciliations of adjusted net income,
adjusted net income per share, Adjusted EBITDAX, net funded debt
and cash general and administrative (G&A) expense presented
within this release to the most directly comparable U.S. generally
accepted accounting principles (GAAP) financial measures provided
in the supporting tables or definitions at the conclusion of this
press release.
Third quarter 2019 average realized prices were $54.51 per
barrel of oil (Bo), $8.05 per barrel of NGLs and $0.81 per Mcf of
natural gas, resulting in a total equivalent unhedged price of
$18.70 per Boe or a total equivalent hedged price of $22.05 per
Boe. Average prices excluding the impact of hedges were
approximately 11% lower than the previous quarter primarily due to
further weakness in the NGL and natural gas markets.
The Company’s adjusted cash operating costs (non-GAAP) for the
third quarter were $4.49 per Boe, including production expense of
$2.61 per Boe, production tax of $0.98 per Boe and adjusted cash
G&A expense (non-GAAP) of $0.90 per Boe. Cash G&A expense
was lower as compared to the second quarter primarily due to a
reversal of accrued amounts related to anticipated 2019 performance
bonuses.
Capital expenditures for third quarter 2019 totaled
approximately $130.9 million, a $16.6 million increase as compared
to the second quarter 2019. The increase in capital expenditures is
primarily due to increases in working interests as producing well
ownership was finalized through the pooling process.
As of the end of the third quarter, Roan had $3.5 million of
cash on the balance sheet, $732.6 million drawn on its revolving
credit facility and $50.0 million funded on its term loan,
resulting in net funded debt (non-GAAP) of $779.2 million. The
Company had approximately $50 million of available liquidity
through the committed but unfunded balances in the Roan Inc. Term
Loan and approximately $17 million of availability on its Credit
Facility as of September 30, 2019.
For the fourth quarter, the Company has 13 thousand barrels per
day of oil hedged at $60.75 per barrel, 120 thousand MMBtu per day
of natural gas hedged at $2.90 per MMBtu, 80 thousand MMBtu per day
of natural gas basis hedged at $0.52 per MMBtu and 10 thousand
barrels per day of NGLs hedged at $25.65 per barrel. Tables showing
the Company’s derivative contracts as of November 4, 2019 are
provided at the conclusion of this press release.
Guidance
Roan has also elected to temporarily curtail its drilling and
development activity and to suspend all completion activity. This
reduction in activity is to allow our new CEO, Rick Gideon, time to
assess the Company’s overall operations plan. As a result of this
change, investors should no longer rely on the guidance provided by
the Company on its last quarterly investor call, and Roan does not
expect to otherwise update or provide further guidance.
Third Quarter 2019 Earnings Conference Call
Due to the pending proposed merger, Roan will not host a
conference call in conjunction with its third quarter 2019
earnings. Interested parties are invited to access Roan’s Form 10-Q
for the third quarter 2019 on the Company’s website at
www.RoanResources.com under the “Investors” section of the
site.
About Roan Resources
Roan is an independent oil and natural gas company headquartered
in Oklahoma City, OK focused on the development, exploration and
acquisition of unconventional oil and natural gas reserves in the
Merge, SCOOP and STACK plays of the Anadarko Basin in Oklahoma. For
more information, please visit www.RoanResources.com, where we
routinely post announcements, updates, events, investor
information, presentations and recent news releases.
Cautionary Statements
This press 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. All statements, other than statements of
historical fact, are forward-looking statements which contain our
current expectations about future results. These forward-looking
statements are based on certain assumptions and expectations made
by the Company, which reflect management’s experience, estimates
and perception of historical trends, current conditions and
anticipated future developments. Such statements are subject to a
number of assumptions, risks and uncertainties, many of which are
beyond the control of the Company, which may cause actual results
to differ materially from those implied or anticipated in the
forward-looking statements. When considering these forward-looking
statements, you should keep in mind the risk factors and other
cautionary statements found in the Company’s filings with the
Securities and Exchange Commission, including its Annual Report on
Form 10-K for the year ended December 31, 2018 and any subsequently
filed quarterly reports on Form 10-Q.
We caution you that these forward-looking statements are subject
to all of the risks and uncertainties, most of which are difficult
to predict and many of which are beyond our control, or incidental
to the development, production, gathering and sale of oil, natural
gas and NGLs. These risks include, but are not limited to, the
expectations of plans, strategies, objectives and growth and
anticipated financial and operational performance, the structure
and timing of any transaction or strategic alternative and whether
any transaction or strategic alternative will be completed,
commodity price volatility, inflation, lack of availability of
drilling and production equipment and services, environmental
risks, drilling and other operating risks, regulatory changes, the
uncertainty inherent in estimating reserves and in projecting
future rates of production, cash flow and access to capital, the
timing of development expenditures and the other risks.
Reserve engineering is a process of estimating underground
accumulations of oil, natural gas and NGLs that cannot be measured
in an exact way. The accuracy of any reserve estimate depends on
the quality of available data, the interpretation of such data and
price and cost assumptions made by reserve engineers. In addition,
the results of drilling, testing and production activities may
justify revisions of estimates that were made previously. If
significant, such revisions would change the schedule of any
further production and development drilling. Accordingly, reserve
estimates may differ significantly from the quantities of oil,
natural gas and NGLs that are ultimately recovered.
Should one or more of the risks or uncertainties described
occur, or should underlying assumptions prove incorrect, our actual
results and plans could differ materially from those expressed in
any forward-looking statements.
All forward-looking statements, expressed or implied, included
in this release are expressly qualified in their entirety by this
cautionary statement. This cautionary statement should also be
considered in connection with any subsequent written or oral
forward-looking statements that we or persons acting on our behalf
may issue.
Except as otherwise required by applicable law, we disclaim any
duty to update any forward-looking statements, all of which are
expressly qualified by the statements in this section, to reflect
events or circumstances after the date of this release.
Financial Statements
The information in the following financial statements and tables
reflect the results of Roan Resources LLC prior to September 24,
2018 and on and after September 24, 2018, the results of Roan
Resources, Inc.
Roan Resources, Inc. Condensed Consolidated Statements of
Operations (Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Revenues Oil sales
$
70,371
$
74,987
$
200,138
$
197,356
Natural gas sales
7,114
10,442
24,962
31,900
Natural gas sales - Affiliates
4,070
7,617
21,092
17,056
Natural gas liquid sales
6,901
12,983
23,721
38,127
Natural gas liquid sales - Affiliates
3,924
14,123
18,126
27,250
Gain (loss) on derivative contracts
40,675
(36,704
)
(5,913
)
(100,920
)
Total revenues
133,055
83,448
282,126
210,769
Operating Expenses Production expenses
7,439
14,737
29,008
30,111
Production expenses
5,431
-
10,011
-
Production taxes
4,839
6,210
14,943
10,892
Exploration expenses
14,578
11,646
38,472
30,129
Depreciation, depletion, amortization and accretion
55,504
37,164
141,969
83,630
General and administrative
8,752
13,177
36,888
40,283
Gain on sale of other assets
(31
)
-
(645
)
-
Total operating expenses
96,512
82,934
270,646
195,045
Total operating income
36,543
514
11,480
15,724
Other income (expense) Interest expense, net
(9,051
)
(2,092
)
(24,230
)
(4,978
)
Interest expense - Affiliates
(2,317
)
-
(2,344
)
-
Other
18
-
(10
)
-
Net income (loss) before income taxes
25,193
(1,578
)
(15,104
)
10,746
Income tax expense (benefit)
5,898
299,662
(3,589
)
299,662
Net income (loss)
$
19,295
$
(301,240
)
$
(11,515
)
$
(288,916
)
Earnings (loss) per share Basic
$
0.13
$
(1.97
)
$
(0.08
)
$
(1.90
)
Diluted
$
0.13
$
(1.97
)
$
(0.08
)
$
(1.90
)
Weighted average number of shares outstanding Basic
154,150
152,540
153,104
152,129
Diluted
154,150
152,540
153,104
152,129
Roan Resources, Inc. Condensed Consolidated Balance
Sheets (Unaudited) September 30, 2019 December 31,
2018 (in thousands, except par value and share data)
ASSETS Current assets Cash and cash equivalents
$
3,464
$
6,883
Accounts receivable Oil, natural gas and natural gas liquid sales
41,635
55,564
Joint interest owners and other, net
146,449
133,387
Affiliates
2,684
9,669
Prepaid drilling advances
3,898
28,977
Derivative contracts
47,840
82,180
Other current assets
5,922
6,655
Total current assets
251,892
323,315
Noncurrent assets Oil and natural gas properties, successful
efforts method
3,040,279
2,628,333
Accumulated depreciation, depletion, amortization and impairment
(400,710
)
(230,836
)
Oil and natural gas properties, net
2,639,569
2,397,497
Derivative contracts
18,794
20,638
Other
11,780
7,659
Total assets
$
2,922,035
$
2,749,109
LIABILITIES AND EQUITY Current liabilities
Accounts payable
$
67,821
$
49,746
Accrued liabilities
84,716
176,494
Accounts payable and accrued liabilities - Affiliates
7,721
8,577
Revenue payable
99,623
97,963
Drilling advances
15,885
31,058
Derivative contracts
-
845
Other current liabilities
2,666
790
Total current liabilities
278,432
365,473
Noncurrent liabilities Long-term debt
732,639
514,639
Long-term debt, net - Affiliates
45,595
-
Deferred tax liabilities, net
353,274
356,862
Asset retirement obligations
17,887
16,058
Derivative contracts
-
141
Other
5,661
902
Total liabilities
1,433,488
1,254,075
Commitments and contingencies Equity Class A common
stock, $0.001 par value; 800,000,000 shares authorized; 154,333,746
shares issued and outstanding at September 30, 2019 and 152,539,532
shares issued and outstanding at December 31, 2018
154
153
Preferred stock, $0.001 par value; 50,000,000 shares authorized; no
shares issued and outstanding at September 30, 2019 or December 31,
2018
-
-
Additional paid-in capital
1,651,556
1,646,401
Treasury stock
(128
)
-
Accumulated deficit
(163,035
)
(151,520
)
Total equity
1,488,547
1,495,034
Total liabilities and equity
$
2,922,035
$
2,749,109
Roan Resources, Inc. Condensed Consolidated Statements of
Cash Flows (Unaudited) Nine Months Ended September
30,
2019
2018
Cash flows from operating activities Net loss
$
(11,515
)
$
(288,916
)
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation, depletion, amortization and accretion
141,969
83,630
Unproved leasehold amortization and impairment
35,932
25,642
Gain on sale of other assets
(645
)
-
Amortization of deferred financing costs
2,332
571
Loss on derivative contracts
5,913
100,920
Net cash received (paid) upon settlement of derivative contracts
20,006
(27,462
)
Equity-based compensation
2,838
8,060
Deferred income taxes
(3,589
)
299,662
Other
4,110
551
Changes in operating assets and liabilities increasing (decreasing)
cash: Accounts receivable and other assets
(31,775
)
(154,716
)
Accounts payable and other liabilities
4,422
158,702
Net cash provided by operating activities
169,998
206,644
Cash flows from investing activities Acquisition of
oil and natural gas properties
-
(22,935
)
Capital expenditures for oil and natural gas properties
(447,433
)
(485,580
)
Acquisition of other property and equipment
(83
)
(2,353
)
Proceeds from sale of other assets
1,475
-
Net cash used in investing
activities
(446,041
)
(510,868
)
Cash flows from financing activities Proceeds from
borrowings
263,000
309,300
Proceeds from borrowings - Affiliates
48,750
-
Repayment of borrowings
(45,000
)
-
Other
5,874
(2,647
)
Net cash provided by financing
activities
272,624
306,653
Net (decrease) increase in cash and cash equivalents
(3,419
)
2,429
Cash and cash equivalents, beginning of period
6,883
1,471
Cash and cash equivalents, end of period
$
3,464
$
3,900
The following table represents the Company's open commodity
contracts at September 30, 2019:
2019
2020
2021
Total
Oil fixed prices swaps
Volume (Bbl)
1,200,730
3,429,500
1,730,000
6,360,230
Weighted-average price
$
60.75
$
60.57
$
56.08
$
59.38
Natural gas fixed price swaps
Volume (MMBtu)
11,040,000
19,665,000
7,250,000
37,955,000
Weighted-average price
$
2.90
$
2.63
$
2.65
$
2.71
Natural gas basis swaps
Volume (MMBtu)
7,360,000
10,980,000
—
18,340,000
Weighted-average price
$
0.52
$
0.49
$
—
$
0.50
Natural gas liquids fixed prices
swaps
Volume (Bbl)
460,000
1,281,000
730,000
2,471,000
Weighted-average price
$
28.66
$
23.22
$
21.90
$
23.84
Per the covenants of the Merger Agreement, the Company was
required to enter into additional commodity contracts. The
following table presents the additional derivative contracts
entered into in October 2019:
2019
2020
2021
2022
2023
2024
Oil fixed price swaps
Volume (Bbl)
—
—
—
1,261,500
1,047,000
686,500
Weighted-average price
$
—
$
—
$
—
$
50.00
$
50.00
$
50.00
Natural gas fixed price swaps
Volume (MMBtu)
—
9,845,000
15,370,000
—
—
—
Weighted-average price
$
—
$
2.39
$
2.39
$
—
$
—
$
—
Natural gas basis swaps
Volume (MMBtu)
—
18,580,000
22,610,000
—
—
—
Weighted-average price
$
—
$
0.45
$
0.38
$
—
$
—
$
—
Natural gas liquids fixed price
swaps
Volume (Bbl)
456,500
1,574,400
1,441,100
—
—
—
Weighted-average price
$
22.62
$
19.09
$
18.91
$
—
$
—
$
—
Results of Operations
The following tables represent the
Company's production and average realized prices:
Three Months EndedSeptember 30,
2019
2018
Production Data Oil (MBbls)
1,291
1,089
Natural gas (MMcf)
13,820
11,417
Natural gas liquids (MBbls)
1,345
1,286
Total volumes (MBoe)
4,939
4,278
Average daily total volumes (MBoe/d)
53.7
46.5
Average Prices - as reported Oil (per Bbl)
$
54.51
$
68.86
Natural gas (per Mcf)
$
0.81
$
1.58
Natural gas liquids (per Bbl)
$
8.05
$
21.08
Total (per Boe)
$
18.70
$
28.09
Average Prices - including impact of derivative contract
settlements Oil (per Bbl)
$
58.13
$
55.71
Natural gas (per Mcf)
$
1.36
$
1.62
Natural gas liquids (per Bbl)
$
11.17
$
21.08
Total (per Boe)
$
22.05
$
24.83
Average Prices - excluding gathering, transportation and
processing Oil (per Bbl)
$
54.57
$
68.93
Natural gas (per Mcf)
$
1.49
$
1.90
Natural gas liquids (per Bbl)
$
12.49
$
27.37
Total (per Boe)
$
21.84
$
30.86
Nine Months EndedSeptember 30,
2019
2018
Production Data Oil (MBbls)
3,628
3,004
Natural gas (MMcf)
37,973
29,486
Natural gas liquids (MBbls)
4,013
3,042
Total volumes (MBoe)
13,970
10,960
Average daily total volumes (MBoe/d)
51.2
40.1
Average Prices - as reported Oil (per Bbl)
$
55.16
$
65.70
Natural gas (per Mcf)
$
1.21
$
1.66
Natural gas liquids (per Bbl)
$
10.43
$
21.49
Total (per Boe)
$
20.62
$
28.44
Average Prices - including impact of derivative contract
settlements Oil (per Bbl)
$
58.56
$
55.70
Natural gas (per Mcf)
$
1.40
$
1.73
Natural gas liquids (per Bbl)
$
12.85
$
21.49
Total (per Boe)
$
22.71
$
25.90
Average Prices - excluding gathering, transportation and
processing Oil (per Bbl)
$
55.29
$
65.72
Natural gas (per Mcf)
$
1.91
$
2.07
Natural gas liquids (per Bbl)
$
14.78
$
27.53
Total (per Boe)
$
23.80
$
31.21
Operating Expenses
Three Months EndedSeptember 30,
2019
2018
(in thousands, except costs per Boe)
Operating Expenses
Production expenses
$
12,870
$
14,737
Production taxes
4,839
6,210
Exploration expenses
14,578
11,646
Depreciation, depletion, amortization and accretion
55,504
37,164
General and administrative (1)
8,752
13,177
Loss on sale of other assets
(31
)
-
Total
$
96,512
$
82,934
Average Costs per Boe Production expenses
$
2.61
$
3.44
Production taxes
0.98
1.45
Exploration expenses
2.95
2.72
Depreciation, depletion, amortization and accretion
11.24
8.69
General and administrative (1)
1.77
3.08
Loss on sale of other assets
(0.01
)
-
Total
$
19.54
$
19.38
(1)
General and administrative expenses for the three months ended
September 30, 2019 and 2018 include $3.0 million, or $0.61 per Boe,
and $2.9 million, or $0.69 per Boe, of equity-based compensation
expense, respectively. General and administrative expenses for the
three months ended September 30, 2019 includes ($1.2) million, or
($0.25) per Boe, of reversal of bad debt expense due to a change in
the allowance for doubtful accounts.
Nine Months EndedSeptember
30,
2019
2018
(in thousands, except costs per Boe)
Operating Expenses
Production expenses
$
39,019
$
30,111
Production taxes
14,943
10,892
Exploration expenses
38,472
30,129
Depreciation, depletion, amortization and accretion
141,969
83,630
General and administrative (1)
36,888
40,283
Gain on sale of other assets
(645
)
-
Total
$
270,646
$
195,045
Average Costs per Boe Production expenses
$
2.79
$
2.75
Production taxes
1.07
0.99
Exploration expenses
2.75
2.75
Depreciation, depletion, amortization and accretion
10.16
7.63
General and administrative (1)
2.64
3.68
Gain on sale of other assets
(0.05
)
-
Total
$
19.36
$
17.80
(1)
General and administrative expenses for the nine months ended
September 30, 2019 and 2018 include $2.8 million, or $0.20 per Boe,
and $8.1 million, or $0.74 per Boe, of equity-based compensation
expense, respectively. General and administrative expenses for the
nine months ended September 30, 2019 includes $4.1 million, or
$0.29 per Boe, of bad debt expense and $2.5 million, or $0.18 per
Boe, of aborted offering costs.
Non-GAAP Financial Measures
Adjusted Net Income and Adjusted Net Income per Share
Adjusted net income and adjusted net income per share are
non-GAAP performance measures. The Company defines adjusted net
income and adjusted net income per share as net income (loss) and
net income (loss) per share excluding non-cash gains or losses on
derivatives, gains on early terminations of derivative contracts,
exploration expense, strategic alternative and merger related
expenses, aborted offering costs, severance and other employee
matter expense and gain on the sale of other assets. Management
uses adjusted net income and adjusted net income per share as an
indicator of the Company's operational trends and performance
relative to other oil and natural gas companies. Adjusted net
income and adjusted net income per share should not be considered
an alternative to net income (loss), operating income, or any other
measure of financial performance presented in accordance with GAAP
or as an indicator of our operating performance.
Reconciliation of Net Income (Loss) to Adjusted Net Income
and Adjusted Net Income per Share
For the Three Months Ended September 30,
2019
2018
(in thousands) (per diluted share) (in thousands) (per diluted
share) Net income (loss)
$
19,295
$
0.13
$
(301,240
)
$
(1.97
)
Adjusted for (Gain) loss on derivative contracts
(40,675
)
(0.26
)
36,704
0.24
Cash received (paid) upon settlement of derivative contracts
16,541
0.11
(13,551
)
(0.09
)
Exploration expense
14,578
0.09
11,646
0.08
Strategic alternative and merger related expenses
1,153
0.01
-
-
Aborted offering costs
330
0.00
-
-
Severance and other employee matters
1,049
0.01
-
-
Gain on sale of other assets
(31
)
(0.00
)
-
-
Income tax expense resulting from Reorganization
-
-
299,662
1.96
Total tax effect of adjustments (1)
1,651
0.01
(571
)
(0.00
)
Adjusted net income
$
13,891
$
0.09
$
32,650
$
0.21
(1)
Computed by applying a combined federal and state effective tax
rate of 23.4% and 25.5% for the three months ended September 30,
2019 and the period subsequent to the Reorganization through
September 30, 2018, respectively.
For the Nine Months Ended
September 30,
2019
2018
(in thousands) (per diluted share) (in thousands) (per diluted
share) Net loss
$
(11,515
)
$
(0.08
)
$
(288,916
)
$
(1.90
)
Adjusted for Loss on derivative contracts
5,913
0.04
100,920
0.66
Cash received (paid) upon settlement of derivative contracts (1)
29,284
0.19
(27,839
)
(0.18
)
Exploration expense
38,472
0.25
30,129
0.20
Strategic alternative and merger related expenses
1,153
0.01
-
-
Aborted offering costs
2,485
0.02
-
-
Severance and employee matters
1,422
0.01
-
-
Gain on sale of other assets
(645
)
(0.00
)
-
-
Income tax expense resulting from Reorganization
-
-
299,662
1.97
Total tax effect of adjustments (2)
(18,584
)
(0.12
)
(571
)
(0.00
)
Adjusted net income
$
47,985
$
0.31
$
113,385
$
0.75
(1)
The nine month period ended September 30, 2018 excludes cash
received upon settlement of derivative contracts prior to the
original contractual maturity. There were no cash receipts or
payments related to settlement of derivative contracts prior to the
original contractual maturity during the nine months ended
September 30, 2019.
(2)
Computed by applying a combined federal and state effective tax
rate of 23.8% and 25.5% for the nine months ended September 30,
2019 and the period subsequent to the Reorganization through
September 30, 2018, respectively.
Adjusted EBITDAX
Adjusted EBITDAX is a non-GAAP financial measure. The Company
defines Adjusted EBITDAX as net income (loss) adjusted for interest
expense, income tax expense (benefit), depreciation, depletion,
amortization and accretion, exploration expense, non-cash
equity-based compensation expense, strategic alternative and merger
related expenses, aborted offering costs, severance and employee
matter expenses, expense for allowance for doubtful accounts,
(gain) loss on derivative contracts, and cash (paid) received upon
settlement of derivative contracts, excluding amounts on contracts
settled prior to contract maturity. Adjusted EBITDAX is not a
measure of net income (loss) as determined by GAAP. Our accounting
predecessor, Roan LLC, passed through its taxable income to its
owners for income tax purposes and thus, the Company did not incur
historical income tax expenses.
The Company believes Adjusted EBITDAX is useful because it
allows our management to more effectively evaluate the operating
performance and compare the results of our operations from period
to period without regard to our financing methods or capital
structure. The Company adds the items listed above to net income
(loss) in arriving at Adjusted EBITDAX because these amounts can
vary substantially from company to company within our industry
depending upon accounting methods and book values of assets,
capital structures and the method by which the assets were
acquired. Adjusted EBITDAX should not be considered as an
alternative to, or more meaningful than, net income (loss) as
determined in accordance with GAAP or as an indicator of our
operating performance or liquidity. Certain items excluded from
Adjusted EBITDAX are significant components in understanding and
assessing a company’s financial performance, such as a company’s
cost of capital and tax structure, as well as the historic costs of
depreciable assets, none of which are components of Adjusted
EBITDAX.
Roan’s computations of Adjusted EBITDAX may not be comparable to
other similarly titled measures of other companies or to such
measure in our revolving credit facility or any of our other
contracts.
The following tables present a reconciliation of Adjusted
EBITDAX to net income (loss), our most directly comparable
financial measure calculated and presented in accordance with GAAP
for each of the periods indicated.
Reconciliation of Net Income
(Loss) to Adjusted EBITDAX
For the Three Months Ended
September 30,
2019
2018
(in thousands)
Net income (loss)
$
19,295
$
(301,240
)
Adjusted for
Interest
11,368
2,092
Income tax expense
5,898
299,662
Depreciation, depletion, amortization and
accretion
55,504
37,164
Exploration expense
14,578
11,646
Non-cash equity-based compensation
2,995
2,933
Strategic alternative and merger related
expenses
1,153
-
Aborted offering costs
330
-
Severance and employee matters
1,049
-
Allowance for doubtful accounts
(1,245
)
-
Gain on sale of other assets
(31
)
-
(Gain) loss on derivative contracts
(40,675
)
36,704
Cash received (paid) upon settlement of
derivative contracts
16,541
(13,551
)
Adjusted EBITDAX
$
86,760
$
75,410
For the Nine Months Ended September 30,
2019
2018
(in thousands) Net loss
$
(11,515
)
$
(288,916
)
Adjusted for Interest
26,574
4,978
Income tax (benefit) expense
(3,589
)
299,662
Depreciation, depletion, amortization and accretion
141,969
83,630
Exploration expense
38,472
30,129
Non-cash equity-based compensation
2,838
8,060
Strategic alternative and merger related expenses
1,153
-
Aborted offering costs
2,485
-
Severance and employee matters
1,422
-
Allowance for doubtful accounts
4,093
-
Gain on sale of other assets
(645
)
-
Loss on derivative contracts
5,913
100,920
Cash received (paid) upon settlement of derivative contracts (1)
29,284
(27,839
)
Adjusted EBITDAX
$
238,454
$
210,624
(1)
The nine month period ended September 30, 2018 excludes cash
received upon settlement of derivative contracts prior to the
original contractual maturity. There were no cash receipts or
payments related to settlement of derivative contracts prior to the
original contractual maturity during the nine months ended
September 30, 2019.
Net Debt
Net Debt is a non-GAAP financial measure equal to long-term debt
outstanding on the credit facility and term loan, exclusive of any
discounts or fees, less cash on hand.
Net Funded Debt Reconciliation
3Q 2019 Credit Facility
$
732,639
Term Loan, net
45,595
Unamortized original issue discount on Term Loan
1,022
Deferred financing costs on Term Loan
3,480
Repayment Premium on Term Loan
(97
)
Funded debt
$
782,639
Less: Cash
$
3,464
Net Debt
$
779,175
Cash general and administrative expenses per Boe
Cash G&A expense is a non-GAAP measure, which is defined as
total general and administrative expense as determined in
accordance with GAAP less equity-based compensation expense,
expense for allowance for doubtful accounts, severance and employee
matter expense, strategic alternatives and merger related costs and
aborted offering costs. Cash G&A expense should not be
considered as an alternative to, or more meaningful than, total
general and administrative expense as determined in accordance with
GAAP and may not be comparable to other companies’ similarly titled
measures.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191106006035/en/
Elijah Lavicky Vice President of Finance 405-896-8449
IR@RoanResources.com
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