Centennial Resource Development, Inc. (“Centennial” or the
“Company”) (NASDAQ:CDEV) (NASDAQ:CDEVW) today announced its
operating and financial results for full year 2016. On October 11,
2016, the Company completed its acquisition of an approximate 89%
membership interest in Centennial Resource Production, LLC (“CRP”).
Centennial now owns approximately 92% of CRP, its only significant
asset. As a result, the following operational and financial data
refer to the periods from January 1, 2016 through October 10, 2016
(the “Predecessor 2016 period”) and October 11, 2016 through
December 31, 2016 (the “Successor 2016 period”) compared to the
period from January 1, 2015 through December 31, 2015 (the
“Predecessor 2015 period”).
Recent Operational and Financial
Highlights:
- Added approximately 35,500 net acres in Reeves County through
the acquisition of leasehold interests from Silverback Exploration,
LLC (“Silverback”), which closed December 28, 2016
- Delivered strong well results from the Upper and Lower Wolfcamp
A and Wolfcamp B zones across the Company’s acreage position
- Achieved net oil production of approximately 10,000 barrels per
day (“Bbls/d”), as of mid-February 2017
- Increased proved reserves 156% year-over-year to 83.0 million
barrels of oil equivalent (“MMBoe”) at year-end 2016
- Maintained conservative balance sheet with zero borrowings
under CRP’s revolving credit facility and $134 million cash balance
at December 31, 2016
2017 Operational and Financial Plan:
- Expect to grow 2017 oil production approximately 158% from
5,757 Bbls/d in 2016 to 14,850 Bbls/d
- Expect to increase 2017 total company production by
approximately 191% from 8,429 barrels of oil equivalent per day
(“Boe/d”) in 2016 to 24,500 Boe/d
- Currently operating a five rig program with plans to add a
sixth rig in the second quarter of 2017
- Announced full year 2017 total capital budget of approximately
$543 million, which includes $470 million of drilling and
completion (“D&C”) capital expenditures
- Plan to drill and complete approximately 60 to 70 wells during
2017
“Last year marked a transformative year for
Centennial. We closed the acquisition of Centennial Resource
Production in the fourth quarter and subsequently added
approximately 35,500 net acres adjacent to our existing position
through the Silverback acquisition,” said Mark G. Papa, Chairman
and Chief Executive Officer. “More importantly, we are on-track to
deliver our peer-leading production growth goal of 50,000 barrels
of oil per day in 2020.”
Financial Results
Centennial reported a net loss of $8.1 million
during the Successor 2016 period and a net loss of $218.7 million
in the Predecessor 2016 period, which is inclusive of $15.8 million
of transaction costs and $165.4 million of incentive unit
compensation expense. This represents a net loss of $0.05 per share
for the Successor 2016 period.
Centennial incurred D&C capital
expenditures, including facilities and capital workovers, of
approximately $44.4 million in the Successor 2016 period and $53.3
million during the Predecessor 2016 period.
Operational Update on Legacy CRP
Acreage
Centennial’s operations are focused on efficiently developing
its 76,000 net acre position in the oil-window of the Southern
Delaware Basin. Recent well design utilizes approximately 2,000
pounds of proppant per lateral foot and up to 15 clusters per
stage, which represent 33% more proppant and five times as many
clusters as the original concept. These design changes combined
with an ongoing focus on geo-steering have resulted in higher well
productivity and improved recovery rates. Further focusing on
enhanced well economics, Centennial is combining well completion
design with 24-hour geo-steering and recently restructured its
geo-steering team by bringing the expertise in-house.
The recently completed Sieber Trust 4H well is
the first to utilize 10 clusters per stage and had an initial
30-day production rate of 1,759 Boe/d, of which 73% was oil. The
well targeted the Upper Wolfcamp A with an approximate 5,000 foot
effective lateral. In addition, the CWI State 7H well, also in the
Upper Wolfcamp A interval, with an approximate 4,300 foot effective
lateral was completed with an initial 30-day production rate of
1,076 Boe/d, of which 75% was oil.
“Centennial continues to deliver strong well
results on our legacy acreage. We are seeing improved well
productivity from the impact of enhanced completion techniques
combined with 24-hour geo-steering,” Papa said. “Our goal is to
become a technical leader in geoscience, and we will continue to
focus on this objective through 2017 and beyond.”
Centennial operated three rigs for the majority
of the Successor 2016 period and exited the year with a four rig
drilling program, including one previously operated by Silverback.
During the Successor 2016 period, nine operated wells were spud and
three operated wells were completed. The completed wells had an
average effective lateral length of 4,664 feet and an average
completed well cost of $6.4 million per well, reflecting the new
well design.
Operational Update on
Silverback
Transforming Centennial into one of the largest
pure-play Delaware Basin focused E&P companies, Centennial
closed the previously announced acquisition of leasehold interests
and related upstream assets in Reeves County from Silverback on
December 28, 2016. The transaction added approximately 35,500 net
acres adjacent to Centennial’s existing position in Reeves County.
Four days of operating and financial results from the Silverback
assets are included in the 2016 results.
Since September 2016, four wells have been
completed on the Silverback properties generating strong initial
production results. Located in the northern portion of the
Silverback acreage, the Pop 4-59 60 1H and Iceman 1H were completed
in the Upper Wolfcamp A and Lower Wolfcamp A intervals,
respectively. The wells were drilled with effective lateral lengths
of approximately 6,725 feet each and had initial 30-day production
rates of 2,463 Boe/d (49% oil) and 1,727 Boe/d (51% oil),
respectively. In the southern portion of the Silverback acreage,
the Parker 5-43 C9-12 1H was completed in the Upper Wolfcamp A. The
well was drilled with a 5,274 foot effective lateral and produced
1,438 Boe/d with 75% oil for the initial 30-day production
period.
Using latest completion techniques, the Admiral
4-48 47 1H was completed in the Wolfcamp B with encouraging
results. Drilled with an 8,663 foot effective lateral, the well had
a 30-day initial production rate of 1,393 Boe/d with a 65% oil cut.
Centennial is extremely encouraged by the results.
“We’re excited about the well results on the
Silverback properties, which confirm our expectations and reinforce
our confidence in the acreage. Additionally, the Admiral well,
targeting the Wolfcamp B zone, generated promising results and
represents future potential upside in this zone across our entire
acreage position,” Papa said.
2017 Operational Plans and
Targets
Centennial is targeting total company production growth of 191%
during 2017. Plans are to increase production quarter-over-quarter
throughout 2017 while taking into account the timing effects of pad
drilling. As of mid-February, Centennial achieved net oil
production of approximately 10,000 Bbls/d, which represents a
significant increase from 6,378 Bbls/d reported during the
Successor 2016 period.
Centennial added a fifth rig in February and
plans to add a sixth rig late in the second quarter of 2017. For
the full year 2017, plans are to average approximately 5.5 operated
rigs, representing a significant increase from an average of one
operated rig during the third quarter of 2016.
“In 2017, we expect to grow our annual oil
production by approximately 9,000 barrels per day, or 158% and end
the year with minimal debt. This significant increase is driven by
increasing rig activity over the course of the year while
continuing to improve our well results,” Papa said. “Assuming
future production profiles based upon actual results from recent
wells completed on both legacy CRP and Silverback acreage, we
estimate these wells will generate an average internal rate of
return of approximately 55% assuming flat pricing of $55.00 per
barrel for oil and $3.00 per MMBtu for gas.”
Estimated fiscal year 2017 capital budget is
approximately $543 million(1), which includes D&C capital,
facilities, seismic, land and other expenditures. Centennial’s
robust production profile is predicated on a D&C budget of $470
million(1), of which over 90% is expected to be associated with
operated activity. (For a detailed table summarizing Centennial’s
2017 operational and financial guidance, please see the Appendix of
this press release.)
The 2017 D&C budget will be focused toward
the Upper and Lower Wolfcamp A zones, with plans to test additional
zones throughout the year. Recent Bone Spring well results around
Centennial’s acreage position have been encouraging, and Centennial
plans to drill at least one Bone Spring well during the fourth
quarter of this year. Plans are to continue evaluating the Bone
Spring through geoscience and petrophysical analyses in order to
determine the optimal drilling locations on Centennial’s
acreage.
(1) Represents the mid-point of our 2017
guidance range
Year-End 2016 Proved
Reserves
Centennial reported year-end 2016 (Successor)
proved reserves of 82,959 MBoe compared to 32,457 MBoe at year-end
2015 (Predecessor). At year-end 2016, proved reserves consisted of
56% oil, 30% natural gas and 14% natural gas liquids (“NGLs”).
Netherland Sewell & Associates, Inc., an independent reserve
engineering firm, prepared CRP’s year-end reserves estimates as of
December 31, 2016, which include the acquisition of Silverback’s
upstream oil and gas assets. Using SEC prices and discounting the
present value at 10% (“PV-10”), the value of Centennial’s total
proved reserves at December 31, 2016 was $427.5 million. (For
additional information relating to our reserves, please see the
Appendix of this press release.)
Capital Structure and
Liquidity
Consistent with the Company’s conservative
financial philosophy, Centennial fully funded the $855 million cash
acquisition of leasehold interests and related upstream assets from
Silverback through a placement of equity securities with certain
accredited investors, including Riverstone, for total gross
proceeds of $910 million. In conjunction with the closing of the
acquisition, Centennial increased the borrowing base under CRP’s
revolving credit facility to $250 million from $200 million.
As of December 31, 2016, CRP had zero borrowings
under its revolving credit facility and $134.1 million in cash on
hand. Including the $250 million borrowing base available and cash
on hand, less $0.4 million of outstanding letters of credit, CRP’s
liquidity at December 31, 2016 (Successor) totaled approximately
$383.7 million.
Public Warrant Redemption
On March 1, 2017, Centennial delivered notice
for the redemption of all of its outstanding warrants originally
sold as part of the Units in its initial public offering in
February 2016 (the “Public Warrants”). The Company is requiring all
holders of the Public Warrants to exercise the Public Warrants on a
“cashless basis” and, accordingly, the Company will not receive any
cash proceeds from the exercise. On March 31, 2017, all Public
Warrants that have not been exercised by that date will be redeemed
by the Company at a price of $0.01 per Public Warrant. Assuming all
warrants are exercised by holders, Centennial will issue
approximately 6.27 million shares of Class A Common Stock to the
Public Warrant holders, resulting in a share count of approximately
253 million shares outstanding, which includes shares of Class A
Common Stock, the Series B Preferred Stock held by Riverstone
(assuming conversion to Class A Common Stock on a 250-to-one
basis), and the Class C Common Stock held by the Centennial
Contributors. An additional 8.0 million warrants purchased by an
affiliate of Riverstone in a private placement at the closing of
the initial public offering remain outstanding.
“Redeeming our outstanding Public Warrants is an
important step towards simplifying our capital structure,
clarifying our share count and minimizing potential future dilution
to Centennial shareholders,” Papa said. “We encourage all of our
Public Warrant holders to exercise their warrants before the
redemption period ends on March 31, 2017.”
Hedge Position
For the full year 2017, Centennial has 675.3
MBbls of oil hedged at a weighted average fixed price of $50.41 per
barrel. These contracts represent approximately 12% of CRP’s total
expected oil production in 2017(1). In addition, Centennial has
36.5 MBbls of oil hedged in 2018 at a weighted average fixed price
of $55.95 per barrel.
Centennial has a nominal amount of natural gas
hedges and crude oil basis swaps in place for 2017. The Company
continues to explore adding additional natural gas hedges and crude
oil and natural gas basis swaps in the future. (For a summary table
of crude oil and natural gas derivatives contracts, please see the
Appendix of this press release.)
“We remain bullish on the long-term prices of
oil as we believe global demand will begin to outpace global supply
within the next four years. Our acreage is located in the
oil-window of one of the premier basins in the U.S., positioning
Centennial to benefit from any future increase in oil prices,” Papa
said.
(1) Represents the mid-point of our 2017
guidance range
Annual Report on Form 10-K
Centennial’s financial statements and related
footnotes will be available in its Annual Report on Form 10-K for
the year ended December 31, 2016, which is expected be filed with
the U.S. Securities and Exchange Commission (“SEC”) on or before
March 23, 2017.
Conference Call and Webcast
Centennial will host an investor conference call
on Thursday, March 23, 2017 at 8:00 a.m. Mountain (10:00 a.m.
Eastern) to discuss these operating and financial results.
Interested parties may join the webcast by visiting Centennial’s
website at www.cdevinc.com and clicking on the webcast link or by
dialing (800) 789-3525, or (442) 268-1041 for international calls,
(Conference ID: 66880120) at least 15 minutes prior to the start of
the call. A replay of the call will be available on Centennial’s
website or by phone at (855) 859-2056 (Conference ID: 66880120) for
a 14-day period following the call.
About Centennial Resource Development,
Inc.
Centennial Resource Development, Inc. is an
independent oil and natural gas company focused on the development
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 Centennial Resource
Production, LLC, 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 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 SEC on January 19, 2017 (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.
Appendix
Operational results for the Successor 2016
period and operational guidance for 2017 reflect the operations of
CRP on an 8/8ths basis and have not been adjusted to reflect our
approximate 92% membership interest in CRP.
Non-GAAP Financial Measure
In this press release, we refer to Adjusted
EBITDAX, a supplemental non-GAAP financial measure that is used by
management and external users of our consolidated and combined
financial statements, such as industry analysts, investors, lenders
and rating agencies. We define Adjusted EBITDAX as net income
(loss) before interest expense, income taxes, depreciation,
depletion and amortization and accretion of asset retirement
obligations, exploration costs, 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,
transaction costs and other non-cash and non-recurring operating
items. Adjusted EBITDAX is not a measure of net income as
determined by GAAP.
Our management believes Adjusted EBITDAX is
useful because it allows them to more effectively evaluate our
operating performance and compare the results of our operations
from period to period and against our peers without regard to our
financing methods or capital structure. We exclude the items listed
above from net income 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 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. Our presentation of Adjusted EBITDAX should not be
construed as an inference that our results will be unaffected by
unusual or non-recurring items. Our 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, our most directly comparable
financial measure calculated and presented in accordance with
GAAP:
|
Successor |
|
|
Predecessor |
|
October 11, 2016 through
December 31, 2016 |
|
|
January 1, 2016 through
October 10, 2016 |
|
Year Ended December 31, |
(in
thousands) |
|
|
|
2015 |
|
2014 |
Adjusted
EBITDAX reconciliation to net income: |
|
|
|
|
|
|
|
|
Net (loss) income
attributable to Centennial Resource Development, Inc. |
$ |
(8,081 |
) |
|
|
$ |
(218,724 |
) |
|
$ |
(38,325 |
) |
|
$ |
17,790 |
|
Less net loss
attributable to noncontrolling interest |
904 |
|
|
|
— |
|
|
— |
|
|
2 |
|
Interest expense |
378 |
|
|
|
5,626 |
|
|
6,266 |
|
|
2,475 |
|
Income tax (benefit)
expense |
— |
|
|
|
(406 |
) |
|
(572 |
) |
|
1,524 |
|
Depreciation, depletion
and amortization and accretion of asset retirement obligations |
14,877 |
|
|
|
62,964 |
|
|
90,084 |
|
|
69,110 |
|
Abandonment expense and
impairment of unproved properties |
— |
|
|
|
2,545 |
|
|
7,619 |
|
|
20,025 |
|
Exploration |
844 |
|
|
|
— |
|
|
84 |
|
|
— |
|
Loss (gain) on
derivatives |
1,548 |
|
|
|
6,838 |
|
|
(20,756 |
) |
|
(41,943 |
) |
Net cash receipts on
settled derivatives |
1,054 |
|
|
|
16,623 |
|
|
36,430 |
|
|
4,611 |
|
Incentive unit
compensation |
— |
|
|
|
165,394 |
|
|
— |
|
|
— |
|
Equity based
compensation expense |
1,333 |
|
|
|
— |
|
|
— |
|
|
12,420 |
|
Contract termination
and rig stacking |
— |
|
|
|
— |
|
|
2,387 |
|
|
— |
|
Write-off of IPO
related offering costs |
— |
|
|
|
1,181 |
|
|
1,585 |
|
|
— |
|
Transaction costs |
4,097 |
|
|
|
15,792 |
|
|
3 |
|
|
670 |
|
Gain (loss) on sale of
assets |
(24 |
) |
|
|
(11 |
) |
|
(2,439 |
) |
|
2,096 |
|
Adjusted EBITDAX |
$ |
16,930 |
|
|
|
$ |
57,822 |
|
|
$ |
82,366 |
|
|
$ |
88,780 |
|
Centennial Resource Development,
Inc. |
Operating Highlights |
|
|
Successor |
|
|
Predecessor |
|
Combined |
|
Predecessor |
|
October 11, 2016 through
December 31, 2016 |
|
|
January 1, 2016 through
October 10, 2016 |
|
Year Ended December 31,
2016 |
|
Year Ended December 31,
2015 |
|
|
|
|
Revenues (in
thousands): |
|
|
|
|
|
|
|
|
Oil
sales |
$ |
24,313 |
|
|
|
$ |
59,787 |
|
|
$ |
84,100 |
|
|
$ |
77,643 |
|
Natural
gas sales |
3,449 |
|
|
|
6,045 |
|
|
9,494 |
|
|
7,965 |
|
NGL
sales |
1,955 |
|
|
|
3,284 |
|
|
5,239 |
|
|
4,852 |
|
Total
Revenues |
$ |
29,717 |
|
|
|
$ |
69,116 |
|
|
$ |
98,833 |
|
|
$ |
90,460 |
|
Average sales
price (1): |
|
|
|
|
|
|
|
|
Oil (per
Bbl) |
$ |
46.49 |
|
|
|
$ |
37.74 |
|
|
$ |
39.91 |
|
|
$ |
42.43 |
|
Natural
gas (per Mcf) |
3.10 |
|
|
|
2.27 |
|
|
2.52 |
|
|
2.60 |
|
NGL (per
Bbl) |
20.36 |
|
|
|
12.98 |
|
|
15.01 |
|
|
14.66 |
|
Total
(per Boe) |
$ |
36.92 |
|
|
|
$ |
30.31 |
|
|
$ |
32.04 |
|
|
$ |
33.87 |
|
Production: |
|
|
|
|
|
|
|
|
Oil
(MBbls) |
523 |
|
|
|
1,584 |
|
|
2,107 |
|
|
1,830 |
|
Natural
gas (MMcf) |
1,113 |
|
|
|
2,660 |
|
|
3,773 |
|
|
3,058 |
|
NGLs
(MBbls) |
96 |
|
|
|
253 |
|
|
349 |
|
|
331 |
|
Total
(MBoe)(2) |
805 |
|
|
|
2,280 |
|
|
3,085 |
|
|
2,671 |
|
Average daily
production volume: |
|
|
|
|
|
|
|
|
Oil
(Bbls/d) |
6,378 |
|
|
|
5,577 |
|
|
5,757 |
|
|
5,014 |
|
Natural
gas (Mcf/d) |
13,573 |
|
|
|
9,366 |
|
|
10,309 |
|
|
8,378 |
|
NGLs
(Bbls/d) |
1,171 |
|
|
|
891 |
|
|
954 |
|
|
907 |
|
Total
(Boe/d)(2) |
9,811 |
|
|
|
8,029 |
|
|
8,429 |
|
|
7,317 |
|
(1) Average prices shown in the table reflect
prices before the effects of our realized commodity derivative
transactions.(2) Total may not sum or recalculate due to
rounding.
Centennial Resource Development,
Inc. |
Operating Expenses |
|
|
Successor |
|
|
Predecessor |
|
Combined |
|
Predecessor |
|
October 11, 2016 through
December 31, 2016 |
|
|
January 1, 2016 through
October 10, 2016 |
|
Year Ended December 31,
2016 |
|
Year Ended December 31,
2015 |
|
|
|
|
Operating
Expenses (in thousands): |
|
|
|
|
|
|
|
|
Lease
operating expenses |
$ |
3,541 |
|
|
|
$ |
11,036 |
|
|
$ |
14,577 |
|
|
$ |
21,173 |
|
Severance
and ad valorem taxes |
1,636 |
|
|
|
3,696 |
|
|
5,332 |
|
|
5,021 |
|
Transportation, processing, gathering and other operating
expense |
2,187 |
|
|
|
4,583 |
|
|
6,770 |
|
|
5,732 |
|
Production
costs per Boe: |
|
|
|
|
|
|
|
|
Lease
operating expenses |
$ |
4.40 |
|
|
|
$ |
4.84 |
|
|
$ |
4.73 |
|
|
$ |
7.93 |
|
Severance
and ad valorem taxes |
2.03 |
|
|
|
1.62 |
|
|
1.73 |
|
|
1.88 |
|
Transportation, processing, gathering and other operating
expense |
2.72 |
|
|
|
2.01 |
|
|
2.19 |
|
|
2.15 |
|
Centennial Resource Development,
Inc. |
Consolidated and Combined Statements of
Operations |
(in thousands, except per share
data) |
|
|
Successor |
|
|
Predecessor |
|
October 11, 2016 through
December 31, 2016 |
|
|
January 1, 2016 through
October 10, 2016 |
|
Year Ended December 31, |
|
|
|
|
2015 |
|
2014 |
Revenues |
|
|
|
|
|
|
|
|
Oil
sales |
$ |
24,313 |
|
|
|
$ |
59,787 |
|
|
$ |
77,643 |
|
|
$ |
114,955 |
|
Natural
gas sales |
3,449 |
|
|
|
6,045 |
|
|
7,965 |
|
|
9,670 |
|
NGL
sales |
1,955 |
|
|
|
3,284 |
|
|
4,852 |
|
|
7,200 |
|
Total
revenues |
29,717 |
|
|
|
69,116 |
|
|
90,460 |
|
|
131,825 |
|
Operating expenses |
|
|
|
|
|
|
|
|
Lease
operating expenses |
3,541 |
|
|
|
11,036 |
|
|
21,173 |
|
|
17,690 |
|
Severance
and ad valorem taxes |
1,636 |
|
|
|
3,696 |
|
|
5,021 |
|
|
6,875 |
|
Transportation, processing, gathering and other operating
expense |
2,187 |
|
|
|
4,583 |
|
|
5,732 |
|
|
4,772 |
|
Depreciation, depletion, amortization and accretion of asset
retirement obligations |
14,877 |
|
|
|
62,964 |
|
|
90,084 |
|
|
69,110 |
|
Abandonment expense and impairment of unproved properties |
— |
|
|
|
2,545 |
|
|
7,619 |
|
|
20,025 |
|
Exploration |
844 |
|
|
|
— |
|
|
84 |
|
|
— |
|
Contract
termination and rig stacking |
— |
|
|
|
— |
|
|
2,387 |
|
|
— |
|
General
and administrative expenses |
13,715 |
|
|
|
25,581 |
|
|
14,206 |
|
|
31,694 |
|
Incentive
unit compensation |
— |
|
|
|
165,394 |
|
|
— |
|
|
— |
|
Total
operating expenses |
36,800 |
|
|
|
275,799 |
|
|
146,306 |
|
|
150,166 |
|
Gain (loss) on
sale of oil and natural gas properties |
24 |
|
|
|
11 |
|
|
2,439 |
|
|
(2,096 |
) |
Total operating
loss |
(7,059 |
) |
|
|
(206,672 |
) |
|
(53,407 |
) |
|
(20,437 |
) |
Other (expense)
income |
|
|
|
|
|
|
|
|
Interest
expense |
(378 |
) |
|
|
(5,626 |
) |
|
(6,266 |
) |
|
(2,475 |
) |
Gain
(loss) on derivative instruments |
(1,548 |
) |
|
|
(6,838 |
) |
|
20,756 |
|
|
41,943 |
|
Other
(expense) income |
— |
|
|
|
6 |
|
|
20 |
|
|
281 |
|
Total
other (expense) income |
(1,926 |
) |
|
|
(12,458 |
) |
|
14,510 |
|
|
39,749 |
|
(Loss) income before
income taxes |
(8,985 |
) |
|
|
(219,130 |
) |
|
(38,897 |
) |
|
19,312 |
|
Income tax benefit
(expense) |
— |
|
|
|
406 |
|
|
572 |
|
|
(1,524 |
) |
Net (loss) income |
(8,985 |
) |
|
|
(218,724 |
) |
|
(38,325 |
) |
|
17,788 |
|
Less net loss
attributable to noncontrolling interest |
(904 |
) |
|
|
— |
|
|
— |
|
|
(2 |
) |
Net (loss) income
attributable to Centennial Resource Development, Inc. |
(8,081 |
) |
|
|
(218,724 |
) |
|
(38,325 |
) |
|
17,790 |
|
Loss per share: |
|
|
|
|
|
|
|
|
Basic |
$ |
(0.05 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
$ |
(0.05 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Details of our 2017 operational and financial
guidance are presented below:
|
2017 FY Guidance Range |
|
|
|
|
Net Average
Daily Production (Boe/d) |
22,500 |
|
— |
26,500 |
|
Oil Net Average
Daily Production (Bo/d) |
14,000 |
|
— |
15,700 |
|
|
|
|
|
Production
Costs |
|
|
|
Lease Operating
Expense ($/Boe) |
$ |
(3.25 |
) |
— |
$ |
(3.75 |
) |
Transportation,
Processing, Gathering |
$ |
(3.10 |
) |
— |
$ |
(3.60 |
) |
and Other ($/Boe) |
|
|
|
Depreciation,
Depletion, Amortization and |
$ |
(18.00 |
) |
— |
$ |
(20.00 |
) |
Accretion of Asset Retirement Obligations ($/Boe) |
|
|
|
Cash General and
Administrative ($/Boe) |
$ |
(3.00 |
) |
— |
$ |
(3.75 |
) |
Severance and Ad
Valorem Taxes (% of Revenue) |
6 |
% |
— |
8 |
% |
|
|
|
|
Capital
Expenditure Program (in millions) |
$ |
500 |
|
— |
$ |
585 |
|
D&C Capital
Expenditure |
$ |
440 |
|
— |
$ |
500 |
|
Land |
$ |
50 |
|
— |
$ |
70 |
|
Facilities,
Seismic and Other |
$ |
10 |
|
— |
$ |
15 |
|
|
|
|
|
Operated
Drilling Program |
|
|
|
Wells Spud
(Gross) |
60 |
|
— |
70 |
|
Wells Completed
(Gross) |
60 |
|
— |
70 |
|
Average Working
Interest |
|
|
|
85 |
% |
|
|
|
Average Lateral
Length (Feet) |
|
|
|
6,386 |
|
|
|
|
The following table summarizes estimated proved
reserves, PV-10, and standardized measure of discounted future cash
flows as of December 31, 2016 (Successor) and December 31, 2015
(Predecessor):
|
Successor |
|
|
Predecessor |
|
December 31, 2016 |
|
|
December 31, 2015 |
Proved
developed reserves: |
|
|
|
|
Oil (MBbls) |
14,551 |
|
|
|
9,347 |
|
Natural gas (MMcf) |
42,190 |
|
|
|
12,711 |
|
NGL (MBbls) |
3,618 |
|
|
|
1,603 |
|
Total
(MBoe)(1) |
25,200 |
|
|
|
13,068 |
|
Proved
undeveloped reserves: |
|
|
|
|
Oil (MBbls) |
31,914 |
|
|
|
13,852 |
|
Natural gas (MMcf) |
106,154 |
|
|
|
19,731 |
|
NGL (MBbls) |
8,152 |
|
|
|
2,248 |
|
Total
(MBoe)(1) |
57,759 |
|
|
|
19,389 |
|
Total proved
reserves: |
|
|
|
|
Oil (MBbls)(1) |
46,466 |
|
|
|
23,199 |
|
Natural gas
(MMcf)(1) |
148,344 |
|
|
|
32,442 |
|
NGL (MBbls)(1) |
11,770 |
|
|
|
3,851 |
|
Total
(MBoe)(1) |
82,959 |
|
|
|
32,457 |
|
|
|
|
|
|
Reserve data
(in millions): |
|
|
|
|
Proved developed
PV-10 |
$ |
242.1 |
|
|
|
$ |
141.4 |
|
Proved undeveloped
PV-10 |
185.4 |
|
|
|
4.1 |
|
Total proved PV-10 |
$ |
427.5 |
|
|
|
$ |
145.5 |
|
Standardized measure of
discounted future net cash flows |
$ |
375.1 |
|
|
|
$ |
135.1 |
|
(1) Totals may
not sum or calculate due to rounding. |
|
|
|
|
|
|
|
|
The following table summarizes the approximate volumes and
average contract prices of swap contracts the Company had in place
as of December 31, 2016:
|
2017 |
|
2018 |
Crude Oil Swaps: |
|
|
|
Notional
volume (Bbl) |
675,250 |
|
36,500 |
Weighted
average fixed price ($/Bbl) |
$ |
50.41 |
|
|
$ |
55.95 |
Crude Oil Basis
Swaps: |
|
|
|
Notional
volume (Bbl) |
127,750 |
|
- |
Weighted
average fixed price ($/Bbl) |
$ |
(0.20 |
) |
|
- |
Natural Gas Swaps: |
|
|
|
Notional
volume (MMBtu) |
1,460,000 |
|
- |
Weighted
average fixed price ($/MMBtu) |
$ |
2.94 |
|
|
- |
Contact:
Hays Mabry
Director, Investor Relations
(346) 309-0205
ir@cdevinc.com
Centennial Resource (NASDAQ:CDEVW)
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