Centennial Resource Development, Inc. (the “Company”) (NASDAQ:CDEV)
(NASDAQ:CDEVW) today announced the financial and operating results
of its subsidiary, Centennial Resource Production, LLC (“CRP”), for
the third quarter of 2016. The Company completed its acquisition of
an approximate 89% membership interest in CRP on October 11, 2016,
and such membership interest constitutes the only significant asset
of the Company.
Recent significant events that occurred in October 2016
include the following:
- On October 11, 2016, the Company consummated the previously
announced acquisition of approximately 89% of the outstanding
membership interests in CRP.
- The Company fully repaid $189 million of outstanding debt of
CRP at the closing of the acquisition.
- CRP amended its credit agreement to increase the borrowing base
under the revolving credit facility from $140 million to $200
million, leaving $199.6 million in borrowing capacity, net of $0.4
million of outstanding letters of credit at the closing.
CRP's financial and operating performance and
significant events for the third quarter of 2016 include the
following highlights:
- Average daily production totaled 8,903 barrels of oil
equivalents ("Boe") per day and CRP's average daily oil production
was 6,109 barrels per day, representing approximately 69% of total
production.
- Revenue for the quarter totaled $27.3 million, with oil
revenues representing approximately 86% of total revenues.
- Average realized oil price was $41.62 per barrel, excluding the
impact of commodity derivative transactions.
- Lease operating costs, including workover expenses, totaled
$3.7 million for the quarter or $4.46 per Boe.
- CRP had one rig running for most of the third quarter, spudded
four wells and completed two wells. The completed wells had an
average effective lateral length of 4,496’ and an average field
estimate cost of $5.1 million. These wells averaged 17 days from
spud to total depth.
- CRP incurred capital costs of approximately $24 million,
excluding leasing and acquisition costs, during the third
quarter.
- During the third quarter, CRP completed its third party crude
midstream system and is now piping the majority of its crude to
either Midland or Crane, Texas.
Hedge Position
The following table illustrates CRP's derivative positions as of
September 30, 2016:
|
2016 |
|
2017 |
Crude Oil Swaps: |
|
|
|
Notional
volume (Bbl) |
|
193,200 |
|
|
|
675,250 |
|
Weighted
average floor price ($/Bbl) |
$ |
55.21 |
|
|
$ |
50.41 |
|
Crude Oil Basis
Swaps: |
|
|
|
|
|
Notional
volume (Bbl) |
|
320,300 |
|
|
|
127,750 |
|
Weighted
average floor price ($/Bbl) |
$ |
(0.45 |
) |
|
$ |
(0.20 |
) |
Natural Gas Swaps: |
|
|
|
Notional
volume (MMBtu) |
— |
|
|
|
1,460,000 |
|
Weighted
average floor price ($/MMBtu) |
— |
|
|
$ |
2.94 |
|
Other Information
The Company has
planned to host a conference call to discuss CRP's third quarter
2016 results at 8:00 a.m., Mountain time, on Thursday, November 10,
2016. Anyone wishing to participate may do so in the following
ways:
- At the Company’s website: www.cdevinc.com. To participate
in the audio-only webcast, please log on 15 minutes in advance of
the scheduled call to download the necessary software. A webcast
replay will be available approximately two hours after the
conference call and will be available through November 17,
2016.
- By telephone: The telephone dial-in number in the U.S. is (844)
348-0017. For participants outside of the U.S., the dial-in
number is (213) 358-0877. The conference ID number is
12970930.
- If you are unable to participate in the original conference
call, a replay will be available beginning at approximately 11:00
a.m., Mountain time, on November 10, 2016, and ending at 11:00
a.m., Mountain time, on November 17, 2016. The replay dial-in
number for U.S. participants is (855) 859-2056 and for participants
outside of the U.S. is (404) 537-3406. The replay conference ID
number is 12970930.
About Centennial Resource Development, Inc.
Centennial Resource Development, Inc., is an independent oil and
natural gas company focused on the development and acquisition of
unconventional oil and associated liquids-rich natural gas reserves
in the Permian Basin. The Company’s assets and operations, which
are held and conducted through CRP, are concentrated in the
Delaware Basin, a sub-basin of the Permian Basin. For additional
information about the Company, please visit
www.cdevinc.com.
Cautionary Note Regarding Forward-Looking
Statements
The information in 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 included in this press release, regarding our
strategy, future operations, financial position, estimated revenues
and losses, projected costs, prospects, plans and objectives of
management are forward-looking statements. When used in this press
release, the words “could,” “believe,” “anticipate,” “intend,”
“estimate,” “expect,” “project” and similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain such identifying words. These
forward-looking statements are based on management’s current
expectations and assumptions about future events and are based on
currently available information as to the outcome and timing of
future events.
Forward-looking statements may include statements about:
- our business strategy;
- our reserves;
- our drilling prospects, inventories, projects and
programs;
- our ability to replace the reserves we produce through drilling
and property acquisitions;
- our financial strategy, liquidity and capital required for our
development program;
- our realized oil, natural gas and natural gas liquids (“NGL”)
prices;
- the timing and amount of our future production of oil, natural
gas and NGLs;
- our hedging strategy and results;
- our future drilling plans;
- our competition and government regulations;
- our ability to obtain permits and governmental approvals;
- our pending legal or environmental matters;
- our marketing of oil, natural gas and NGLs;
- our leasehold or business acquisitions;
- our costs of developing our properties;
- general economic conditions;
- credit markets;
- uncertainty regarding our future operating results;
- our plans, objectives, expectations and intentions contained in
this press release that are not historical; and
- the other factors described in our Registration Statement on
Form S-1 filed with the Securities and Exchange Commission (the
“SEC”) on October 31, 2016 (the “Registration Statement”), and any
updates to those factors set forth in our subsequent Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on
Form 8-K.
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, incident to
the development, production, gathering and sale of oil and natural
gas. These risks include, but are not limited to, 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 described under “Risk
Factors” in the Registration Statement beginning on page 8.
Reserve engineering is a process of estimating underground
accumulations of oil and natural gas 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 and
natural gas that are ultimately recovered.
Should one or more of the risks or uncertainties described in
this press release 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
press 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 press release.
SOURCE: Centennial Resource Development,
Inc.
Non-GAAP Financial Measure
In this press release, we refer to CRP’s Adjusted EBITDAX, a
supplemental non-GAAP financial measure used by our management and
external users of our financial statements, such as industry
analysts, investors, lenders and rating agencies. We define CRP’s
Adjusted EBITDAX as net income (loss) before interest expense,
income taxes, depreciation, depletion and amortization and
accretion of asset retirement obligations, abandonment expense and
impairment of unproved properties, (gains) losses on derivatives
excluding net cash receipts (payments) on settled derivatives,
non-cash equity based compensation, gains and losses from the sale
of assets and other non-cash and non-recurring operating items.
Adjusted EBITDAX is not a measure of net income as determined by
United States generally accepted accounting principles
(“GAAP”).
Our management believes CRP’s Adjusted EBITDAX is useful because
it allows them to more effectively evaluate the operating
performance of CRP and compare the results of its operations from
period to period and against its peers without regard to CRP’s
financing methods or capital structure. We exclude the items listed
above from net income in arriving at CRP’s Adjusted EBITDAX because
these amounts can vary substantially from company to company within
the oil and natural gas industry depending upon accounting methods
and book values of assets, capital structures and the method by
which the assets were acquired. CRP’s Adjusted EBITDAX should not
be considered as an alternative to, or more meaningful than, net
income as determined in accordance with GAAP or as an indicator of
CRP’s 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 CRP’s Adjusted EBITDAX. CRP’s presentation of Adjusted EBITDAX
should not be construed as an inference that its results will be
unaffected by unusual or non-recurring items. CRP’s computations of
Adjusted EBITDAX may not be comparable to other similarly titled
measures of other companies.
The following table presents a reconciliation of Adjusted
EBITDAX to net income, Management's most directly comparable
financial measure calculated and presented in accordance with U.S.
GAAP:
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
(in thousands) |
Adjusted
EBITDAX reconciliation to net income: |
|
|
|
|
|
|
|
Net income (loss) |
$ |
(5,134 |
) |
|
$ |
3,326 |
|
|
$ |
(35,727 |
) |
|
$ |
(25,282 |
) |
Interest expense |
1,983 |
|
|
1,469 |
|
|
5,422 |
|
|
4,743 |
|
Income tax benefit |
— |
|
|
— |
|
|
(406 |
) |
|
— |
|
Depreciation, depletion
and amortization and accretion of asset retirement obligations |
18,454 |
|
|
19,880 |
|
|
60,939 |
|
|
64,003 |
|
Abandonment expense and
impairment of unproved properties |
1,649 |
|
|
— |
|
|
2,546 |
|
|
3,851 |
|
Loss (gain) on
derivatives |
(1,741 |
) |
|
(13,344 |
) |
|
4,184 |
|
|
(12,320 |
) |
Net cash receipts on
settled derivatives |
1,952 |
|
|
9,185 |
|
|
16,623 |
|
|
25,972 |
|
Contract termination
and rig stacking |
— |
|
|
221 |
|
|
— |
|
|
2,388 |
|
Gain on sale of
assets |
(15 |
) |
|
(9 |
) |
|
(11 |
) |
|
(2,688 |
) |
Adjusted EBITDAX |
$ |
17,148 |
|
|
$ |
20,728 |
|
|
$ |
53,570 |
|
|
$ |
60,667 |
|
Centennial Resource Development,
Inc. |
Operating Highlights |
(Unaudited) |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenues (in
thousands): |
|
|
|
|
|
|
|
Oil sales |
$ |
23,388 |
|
|
$ |
18,913 |
|
|
$ |
56,975 |
|
|
$ |
59,068 |
|
Natural gas sales |
2,629 |
|
|
2,054 |
|
|
5,717 |
|
|
6,082 |
|
NGL sales |
1,304 |
|
|
926 |
|
|
3,097 |
|
|
3,590 |
|
Total
Revenues |
$ |
27,321 |
|
|
$ |
21,893 |
|
|
$ |
65,789 |
|
|
$ |
68,740 |
|
Average sales
price (1): |
|
|
|
|
|
|
|
Oil (per Bbl) |
$ |
41.62 |
|
|
$ |
42.31 |
|
|
$ |
37.48 |
|
|
$ |
44.45 |
|
Natural gas (per
Mcf) |
2.67 |
|
|
2.85 |
|
|
2.24 |
|
|
2.76 |
|
NGL (per Bbl) |
14.02 |
|
|
10.89 |
|
|
12.80 |
|
|
14.83 |
|
Total
(per BOE) |
$ |
33.36 |
|
|
$ |
33.58 |
|
|
$ |
30.08 |
|
|
$ |
35.45 |
|
Average sales price (effect of cash
derivatives): |
|
|
|
|
Oil (per Bbl) |
$ |
3.47 |
|
|
$ |
19.99 |
|
|
$ |
10.94 |
|
|
$ |
18.85 |
|
Natural gas (per
Mcf) |
$ |
— |
|
|
$ |
0.35 |
|
|
$ |
— |
|
|
$ |
0.42 |
|
Production: |
|
|
|
|
|
|
|
Oil (MBbls) |
562 |
|
|
447 |
|
|
1,520 |
|
|
1,329 |
|
Natural gas (MMcf) |
984 |
|
|
721 |
|
|
2,551 |
|
|
2,205 |
|
NGLs (MBbls) |
93 |
|
|
85 |
|
|
242 |
|
|
242 |
|
Total
(MBoe)(2) |
819 |
|
|
652 |
|
|
2,187 |
|
|
1,939 |
|
Average daily
production volume: |
|
|
|
|
|
|
|
Oil (Bbls/d) |
6,109 |
|
|
4,859 |
|
|
5,547 |
|
|
4,868 |
|
Natural gas
(Mcf/d) |
10,696 |
|
|
7,837 |
|
|
9,310 |
|
|
8,077 |
|
NGLs (Bbls/d) |
1,011 |
|
|
924 |
|
|
883 |
|
|
886 |
|
Total
(Boe/d)(2) |
8,903 |
|
|
7,089 |
|
|
7,982 |
|
|
7,101 |
|
(1) Average prices shown in
the table reflect prices before the effects of CRP’s realized
commodity derivative transactions.
(2) Total may not sum or
recalculate due to rounding.
|
Centennial Resource Development,
Inc. |
Operating Expenses |
(Unaudited) |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Operating Expenses (in thousands): |
|
|
|
|
|
|
Lease operating
expenses |
$ |
3,656 |
|
|
$ |
4,355 |
|
|
$ |
10,295 |
|
|
$ |
17,317 |
|
Severance and ad
valorem taxes |
1,432 |
|
|
1,555 |
|
|
3,523 |
|
|
3,833 |
|
Transportation,
processing, gathering and other operating expense |
1,787 |
|
|
1,424 |
|
|
4,375 |
|
|
4,352 |
|
Depreciation,
depletion, amortization and accretion of asset retirement
obligations |
18,454 |
|
|
19,880 |
|
|
60,939 |
|
|
64,003 |
|
Abandonment expense and
impairment of unproved properties |
1,649 |
|
|
— |
|
|
2,546 |
|
|
3,851 |
|
Contract termination
and rig stacking |
— |
|
|
221 |
|
|
— |
|
|
2,388 |
|
General and
administrative expenses |
5,250 |
|
|
3,007 |
|
|
10,655 |
|
|
8,538 |
|
Total
operating expenses before gain on oil and natural gas
properties |
32,228 |
|
|
30,442 |
|
|
92,333 |
|
|
104,282 |
|
Gain on sale of oil and
natural gas properties |
(15 |
) |
|
(9 |
) |
|
(11 |
) |
|
(2,688 |
) |
Total
operating expenses after gain on oil and natural gas
properties |
$ |
32,213 |
|
|
$ |
30,433 |
|
|
$ |
92,322 |
|
|
$ |
101,594 |
|
Expenses per
Boe: |
|
|
|
|
|
|
|
Lease operating
expenses |
$ |
4.46 |
|
|
$ |
6.68 |
|
|
$ |
4.71 |
|
|
$ |
8.93 |
|
Severance and ad
valorem taxes |
1.75 |
|
|
2.38 |
|
|
1.61 |
|
|
1.98 |
|
Transportation,
processing, gathering and other operating expense |
2.18 |
|
|
2.18 |
|
|
2.00 |
|
|
2.24 |
|
Depreciation,
depletion, amortization and accretion of asset retirement
obligations |
22.53 |
|
|
30.49 |
|
|
27.86 |
|
|
33.01 |
|
Abandonment expense and
impairment of unproved properties |
2.01 |
|
|
— |
|
|
1.16 |
|
|
1.99 |
|
Contract termination
and rig stacking |
— |
|
|
0.34 |
|
|
— |
|
|
1.23 |
|
General and
administrative expenses |
6.41 |
|
|
4.61 |
|
|
4.87 |
|
|
4.40 |
|
Total
operating expenses per Boe |
$ |
39.34 |
|
|
$ |
46.68 |
|
|
$ |
42.21 |
|
|
$ |
53.78 |
|
* * * * * * * * * * * * * * * * *
*
Definitions |
|
per Bbl |
U.S. Dollars per
barrel |
per Boe |
U.S. Dollars per barrel of
oil equivalent |
per Mcf |
U.S. Dollars per thousand
cubic feet |
MBbls |
Thousand barrels per
day |
MBoe |
Thousand barrels of oil
equivalent |
MMcf |
Million cubic feet |
|
|
Contact:
George S. Glyphis
Chief Financial Officer
(720) 441-5515
Centennial Resource (NASDAQ:CDEVW)
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