SECOND QUARTER 2020 OPERATIONAL AND FINANCIAL HIGHLIGHTS AND RECENT DEVELOPMENTS
Daily production volumes of 8,854 Boe/d (71% liquids, 50% oil)
Production volumes up 31% from Q2 2019 with Permian production volumes up 73% from Q2 2019
Production volumes down 15% sequentially, largely driven by roughly 700 Boe/d of Q2 2020 production curtailments by our operators in response to the price collapse from COVID-19 demand destruction, which based on operator disclosures, we expect much of it to return on line in Q3 2020
Mineral and royalty revenues totaling
Revenue down 56% sequentially from Q1 2020 primarily driven by 48% lower realized pricing
Net loss totaling
Adjusted EBITDA(1) totaling
Declared Q2 2020 dividend of
Acquired 300 net royalty acres deploying
Acquisition costs totaling
Remaining highly disciplined with acquisitions given volatile market conditions
705 gross (4.6 net) drilled but uncompleted locations ('DUCs') as of
Converted 222 (25%) gross and 1.2 (21%) net DUCs during Q2 2020
Approximately 60% of
Anticipate majority of DUCs to be completed by
Subsequent to completion of
Approximately
Non-GAAP measure.
Ben M. ('Bud') Brigham, Executive Chairman, commented, 'The unprecedented challenges posed by COVID-19 and the
Robert M. ('Rob') Roosa, Chief Executive Officer, commented, 'Challenging macro conditions in the energy space drove record low rig counts and a substantial decline in frac crews during the second quarter. Although the challenging conditions resulted in a sequential decline in our second quarter production, our data indicates that approximately one-third of our DUCs in inventory at the end of the second quarter have been treated and can potentially be rapidly turned in line to production during the second half of 2020. Given both our treated DUCs and operator commentary indicating curtailed volumes will largely be back on line beginning in the third quarter, we believe our production volumes will stabilize and average in excess of 9,000 Boe/d in the second half of 2020. Further, our permitting inventory remains strong due to continued strength in new Permian activity that will provide the basis for future production. Finally, our technical teams are excited by the recent significant deal flow that has transpired, which points to a potential thawing of the acquisition markets and the opportunity to jump start our ground game acquisitions during the remainder of 2020 at lower pricing levels. Thus far in the third quarter, we've closed or have under contract
Non-GAAP measure.
Mineral and Royalty Interest Ownership Update
Due to the ongoing COVID-19 pandemic and crude market volatility, the Company was focused on preserving balance sheet flexibility and liquidity during the second quarter 2020. During the quarter, the Company closed seven transactions acquiring 300 net royalty acres (standardized to a 1/8th royalty interest) deploying
DUC Conversions Updates
The Company saw approximately 222 gross (1.2 net) DUCs converted to production during the second quarter, which represented 25% of its gross DUC inventory (21% of net DUCs) at the end of the first quarter of 2020.
Drilling Activity Update
During the second quarter 2020, the Company identified 36 gross (0.2 net) wells spud on its mineral position. In 2019 and 2018, respectively, the Company averaged 219 gross (1.4 net) and 135 gross (1.0 net) wells spud per quarter.
DUC and Permit Inventory Update
Given the aforementioned challenges facing the global crude market and our operators, the near-term conversion of wells from DUCs or permits to proved developed producing was delayed and may continue to be delayed or deferred relative to historic conversion rates.
FINANCIAL UPDATE
For the three months ended
Second quarter 2020 average realized prices were
The Company's net loss was
As of
QUARTERLY CASH DIVIDEND
The Company's Board of Directors (the 'Board') has declared a quarterly cash dividend incorporating results for the second quarter 2020 of
Future declarations of dividends are subject to approval by the Board and to the Board's continuing determination that the declarations of dividends are in the best interests of the Company and its stockholders. Future dividends may be adjusted at the Board's discretion based on market conditions and capital availability.
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA, Adjusted EBITDA ex lease bonus, and Discretionary Cash Flow are non-GAAP supplemental financial measures used by our management and by external users of our financial statements such as investors, research analysts and others to assess the financial performance of our assets and their ability to sustain dividends over the long term without regard to financing methods, capital structure or historical cost basis.
We define Adjusted EBITDA as net income (loss) before depreciation, depletion and amortization, share based compensation expense, interest expense, gain or loss on derivative instruments and income tax expense, less other income and gain or loss on sale of oil and gas properties. We define Adjusted EBITDA ex lease bonus as Adjusted EBITDA further adjusted to eliminate the impacts of lease bonus revenue we receive due to the unpredictability of timing and magnitude of the revenue. We define Discretionary Cash Flow as Adjusted EBITDA, less cash interest expense and cash taxes.
Adjusted EBITDA, Adjusted EBITDA ex lease bonus, and Discretionary Cash Flow do not represent and should not be considered alternatives to, or more meaningful than, net income, income from operations, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of our financial performance. Adjusted EBITDA, Adjusted EBITDA ex lease bonus, and Discretionary Cash Flow have important limitations as analytical tools because they exclude some but not all items that affect net income, the most directly comparable GAAP financial measure. Our computation of Adjusted EBITDA, Adjusted EBITDA ex lease bonus, and Discretionary Cash Flow may differ from computations of similarly titled measures of other companies.
ABOUT
Cautionary Statement Concerning Forward-Looking Statements
This press release contains forward-looking statements. 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. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expectations of plans, strategies, objectives and anticipated financial and operating results of the Company, including production and other guidance included within this press release. These statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. 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 expressed by the forward-looking statements. These include, but are not limited to, continued downturns or delays in resuming operator activity due to commodity price fluctuations, the Company's ability to integrate acquisitions into its existing business, changes in oil, natural gas and NGL prices, weather and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, operational factors affecting the commencement or maintenance of producing wells on the Company's properties, the condition of the capital markets generally, as well as the Company's ability to access them, the proximity to and capacity of transportation and storage facilities, uncertainties regarding environmental regulations or litigation, global or national health events, including the ongoing spread and economic effects of the ongoing COVID-19 pandemic, potential future pandemics, the actions of the
Any forward-looking statement speaks only as of the date on which such statement is made 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.
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