Jagged Peak Energy Inc. Announces Third Quarter 2019 Financial and Operating Results
DENVER, Nov. 7, 2019 /PRNewswire/ -- Jagged Peak Energy Inc. (NYSE: JAG) ("Jagged Peak" or the "Company") today announced financial and operating results for the third quarter ended September 30, 2019.
Third Quarter Results
During the third quarter of 2019, the Company turned online 17 gross operated wells and reported average daily oil production for the quarter of 30.0 MBbls per day, at the midpoint of the Company's previously announced guidance range of 29.4 - 30.6 MBbls per day. Total equivalent production averaged 39.3 MBoe per day for the third quarter. Third quarter production mix was comprised of 76% oil, 13% NGLs, and 11% natural gas, and is unchanged from the prior quarter.
For the third quarter of 2019, the Company reported net income of $30.6 million, or $0.14 per diluted common share. Net loss for the third quarter of 2018 was $26.6 million, or $0.12 per diluted common share. Adjusted net income (a non-GAAP measure) for the third quarter of 2019, was $21.9 million, or $0.10 per diluted common share, compared to $39.3 million, or $0.18 per diluted common share for the same period in 2018. Adjusted net income (a non-GAAP measure) eliminates certain non-cash and non-recurring items such as certain equity-based compensation, non-cash mark-to-market gains or losses on derivatives and impairment expense, further adjusted for any associated changes in estimated income tax expense. Adjusted EBITDAX (a non-GAAP measure) for the third quarter of 2019 was $108.2 million, a decrease of $10.4 million from the third quarter of 2018.
Please reference the reconciliations of these non-GAAP measures to the most directly comparable GAAP measures at the end of this release.
Revenue for the third quarter of 2019 was $150.1 million, compared to $155.4 million in the third quarter of 2018. The decrease in revenue for the third quarter of 2019 compared to the same period in 2018 was primarily due to an 11% decrease in unhedged realized pricing on a per Boe basis. Average realized prices for the third quarter of 2019 are included in the table below.
Three Months Ended September 30, 2019
Before the Effects of After the Effects of
Derivative Derivatives
Settlements Settlements
Oil
($/Bbl) $
53.55 $
52.29
NGL
($/Bbl) $
3.47 $
3.47
Gas
($/Mcf) $
0.31 $
0.31
Boe
($/Boe) $
41.51 $
40.54
Capital expenditures for DC&E activities were $162.6 million for the three months ended September 30, 2019. Operated and non-operated activity during the quarter included drilling 19 gross (15.8 net) and completing 25 gross (18.3 net) wells. A portion of the capital spent during the third quarter relates to 20 gross (19.6 net) operated wells that were in various stages of being drilled or completed at September 30, 2019. Including capital expenditures for infrastructure of $4.5 million, and leasehold acquisition costs of $17.7 million, total capital expenditures for the quarter were $184.8 million.
The table below provides a comparative breakout of the Company's capital expenditures for the periods indicated:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2019 2018 2019 2018
Acquisitions
Proved properties $
375
$ $
7,782
$
Unproved properties 17,316 7,575 25,295 18,670
Drill, complete, and
equip costs 162,571 151,797 451,261 535,590
Infrastructure costs 4,520 5,439 25,678 13,440
Exploration costs 3 23 3 24
Total oil and gas
capital expenditures $
184,785 $
164,834 $
510,019 $
567,724
The Company continues to drive down its DC&E costs through continued efficiency gains. DC&E costs averaged approximately $1,160 per lateral foot in the third quarter of 2019. Year-to-date the Company has averaged approximately $1,200 per lateral foot, compared to its full-year 2019 goal of $1,250 per lateral foot.
Operational Updates
In the Company's Whiskey River asset, the Company brought online its Coriander project. This project was the Company's first six-well co-development project. The average lateral length of these wells was 8,535 feet and had an average DC&E per lateral foot cost of approximately $1,090. These wells were brought online in late August and produced a pad-average peak IP-30 of 102 Boe per day per 1,000 foot (84% oil).
In mid-October, the Company brought online its second co-development project, the Venom project which consisted of eight wells in the Whiskey River area. The average lateral length of these wells was 7,900 feet and had an average DC&E per lateral foot cost of approximately $1,220. Given the timing of the wells being brought online, meaningful production information is not yet available.
Guidance Update
Due to the definitive merger agreement with Parsley Energy, Inc. ("Parsley"), Jagged Peak has discontinued providing guidance and long-term outlook information regarding its results of operations and does not intend to update the previously issued guidance and long-term outlook information, including the guidance provided in the Company's August 8, 2019 press release announcing its second quarter 2019 financial and operating results (the "second quarter earnings release"). Accordingly, investors are cautioned not to rely on historical forward-looking statements regarding guidance and long-term outlook information, including any such information provided in the second quarter earnings release, as those forward-looking statements were the estimates of management only as of the date provided, have not and will not be updated and were subject to the specific risks and uncertainties that accompanied such forward-looking statements.
Financial Update
At the end of the third quarter of 2019, the Company had $215.0 million drawn on its revolving credit facility and $10.6 million of cash on the balance sheet, resulting in total liquidity of $335.6 million. Net debt to LTM adjusted EBITDAX (a non-GAAP measure) was 1.7x as of the end of the third quarter. Due to the definitive merger agreement with Parsley, the Company has received a waiver from its bank group to postpone its Fall borrowing base redetermination.
Since the hedging update on August 8, 2019, the Company has added to its 2020 WTI swaps, which are now at 20,000 Bbls per day of oil. These additions are included in the commodity hedges schedule at the end of this release.
Conference Call
Jagged Peak will host a short conference call and webcast to discuss its third quarter 2019 financial and operating results on November 8, 2019 at 9:00 am MT (11:00 am ET). This call will not include a Q&A session. The call will be webcast and accessible via the Investor Relations section of the Company's website at www.jaggedpeakenergy.com. Dial-in information for this call is included below:
Phone Number
Conference ID
Live Participant (Domestic)
1-877-823-8605 9192955
Live Participant (International)
1-647-689-5644 9192955
Replay(1) (Domestic)
1-800-585-8367 9192955
Replay(1) (International)
1-416-621-4642 9192955
(1) Replay available from 2:00 PM
Eastern Time on November 8, 2019
through 12:00 midnight Eastern
Time on November 15, 2019
Non-GAAP Financial Measures
Adjusted EBITDAX
Adjusted EBITDAX is a non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. We define Adjusted EBITDAX as net income (loss) before interest expense, net of capitalized interest, depletion, depreciation, amortization and accretion expense, impairment of oil and natural gas properties, exploration expenses, equity-based compensation expense, income taxes, contract termination fees, gains or losses on sales of assets, and net gains or losses on derivatives less net cash from/for derivative settlements. 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 historical costs of depreciable assets and exploration expenses, none of which are components of Adjusted EBITDAX. Our computation of Adjusted EBITDAX may not be comparable to other similarly titled measures of other companies.
Management believes Adjusted EBITDAX is useful because it allows investors 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 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 value 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.
Adjusted Net Income
Adjusted net income is a non-GAAP performance measure used by management to evaluate financial performance, prior to non-cash market-to-market gains or losses on derivatives, impairment expense, exploratory dry hole costs, gain or loss on the sale of property, certain one-time or unusual items, such as certain equity-based compensation, contract termination fees, and the associated changes in estimated income tax. Management believes adjusted net income is useful because it may enhance investors' ability to assess historical and future financial performance. Adjusted net income should not be considered an alternative to net income, operating income, or any other measure of financial performance presented in accordance with GAAP or as an indicator of our operating performance.
Net Debt to LTM Adjusted EBITDAX
Net debt to LTM adjusted EBITDAX is a non-GAAP measure, which is defined as the face value of the Company's long-term debt, including its senior unsecured notes and amounts drawn on its credit facility, less cash and cash equivalents at quarter end, divided by the Company's last twelve month adjusted EBITDAX, as defined above.
No Offer or Solicitation
This release includes information related to a proposed business combination transaction (the "Transaction") between Jagged Peak and Parsley. This release is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, in any jurisdiction, pursuant to the Transaction or otherwise, nor shall there be any sale, issuance, exchange or transfer of the securities referred to in this release in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Important Additional Information
In connection with the Transaction, Parsley has filed with the U.S. Securities and Exchange Commission ("SEC") a registration statement on Form S-4, that will include a joint proxy statement of Jagged Peak and Parsley and a prospectus of Parsley. The Transaction will be submitted to Jagged Peak's stockholders and Parsley's stockholders for their consideration. Jagged Peak and Parsley may also file other documents with the SEC regarding the Transaction. The definitive joint proxy statement/prospectus will be sent to the stockholders of Parsley and Jagged Peak. This release is not a substitute for the registration statement and joint proxy statement/prospectus that will be filed with the SEC or any other documents that Parsley or Jagged Peak may file with the SEC or send to stockholders of Parsley or Jagged Peak in connection with the Transaction. INVESTORS AND SECURITY HOLDERS OF JAGGED PEAK AND PARSLEY ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE TRANSACTION WHEN IT BECOMES AVAILABLE AND ALL OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION AND RELATED MATTERS.
Investors and security holders will be able to obtain free copies of the registration statement and the joint proxy statement/prospectus (when available) and all other documents filed or that will be filed with the SEC by Parsley or Jagged Peak through the website maintained by the SEC at http://www.sec.gov. Copies of documents filed with the SEC by Jagged Peak will be made available free of charge on Jagged Peak's website at http://www.jaggedpeakenergy.com, under the heading "SEC Filings," or by directing a request to Investor Relations, Jagged Peak Energy Inc., 1401 Lawrence Street, Suite 1800, Denver, CO 80202, Tel. No. (720) 215-3754. Copies of documents filed with the SEC by Parsley will be made available free of charge on Parsley's website at http://www.parsleyenergy.com/investors or by directing a request to Investor Relations, Parsley Energy, Inc., 303 Colorado Street, Suite 3000, Austin, TX 78701, Tel. No. (512) 505-5199.
Participants in the Solicitation
Parsley, Jagged Peak and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect to the Transaction.
Information regarding Jagged Peak's directors and executive officers is contained in the proxy statement for Jagged Peak's 2019 Annual Meeting of Stockholders filed with the SEC on April 10, 2019, and certain of its Current Reports on Form 8-K. You can obtain a free copy of this document at the SEC's website at http://www.sec.gov or by accessing Jagged Peak's website at http://www.jaggedpeakenergy.com. Information regarding Parsley's executive officers and directors is contained in the proxy statement for the Parsley's 2019 Annual Meeting of Stockholders filed with the SEC on April 8, 2019 and certain of its Current Reports on Form 8-K. You can obtain a free copy of this release at the SEC's website at www.sec.gov or by accessing the Parsley's website at http://www.parsleyenergy.com/investors.
Investors may obtain additional information regarding the interests of those persons and other persons who may be deemed participants in the Transaction by reading the joint proxy statement/prospectus regarding the Transaction when it becomes available. You may obtain free copies of this release as described above.
Forward-Looking Statements and Cautionary Statements
The foregoing 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 fact, included in this release that address activities, events or developments that Parsley or Jagged Peak expects, believes or anticipates will or may occur in the future are forward-looking statements. Words such as "estimate," "project," "predict," "believe," "expect," "anticipate," "potential," "create," "intend," "could," "may," "foresee," "plan," "will," "guidance," "look," "outlook," "goal," "future," "assume," "forecast," "build," "focus," "work," "continue" or the negative of such terms or other variations thereof and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements include, but are not limited to, statements regarding the Transaction, pro forma descriptions of the combined company and its operations, integration and transition plans, synergies, opportunities and anticipated future performance. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this release. These include the expected timing and likelihood of completion of the Transaction, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the Transaction that could reduce anticipated benefits or cause the parties to abandon the Transaction, the ability to successfully integrate the businesses, the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, the possibility that stockholders of Parsley may not approve the issuance of new shares of common stock in the Transaction or that stockholders of Jagged Peak may not approve the merger agreement, the risk that the parties may not be able to satisfy the conditions to the Transaction in a timely manner or at all, risks related to disruption of management time from ongoing business operations due to the Transaction, the risk that any announcements relating to the Transaction could have adverse effects on the market price of Parsley's common stock or Jagged Peak's common stock, the risk that the Transaction and its announcement could have an adverse effect on the ability of Parsley and Jagged Peak to retain customers and retain and hire key personnel and maintain relationships with their suppliers and customers and on their operating results and businesses generally, the risk the pending Transaction could distract management of both entities and they will incur substantial costs, the risk that problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected, the risk that the combined company may be unable to achieve synergies or it may take longer than expected to achieve those synergies and other important factors that could cause actual results to differ materially from those projected. All such factors are difficult to predict and are beyond Parsley's or Jagged Peak's control, including those detailed in Parsley's annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K that are available on its website at http://www.parsleyenergy.com/investors and on the SEC's website at http://www.sec.gov, and those detailed in Jagged Peak's annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K that are available on Jagged Peak's website at http://www.jaggedpeakenergy.com and on the SEC's website at http://www.sec.gov. All forward-looking statements are based on assumptions that Parsley or Jagged Peak believe to be reasonable but that may not prove to be accurate. Any forward-looking statement speaks only as of the date on which such statement is made, and Parsley and Jagged Peak undertake 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. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.
About Jagged Peak Energy Inc.
Jagged Peak Energy Inc. is an independent oil and natural gas company focused on the acquisition and development of unconventional oil and associated liquids-rich natural gas reserves in the southern Delaware Basin, a sub-basin of the Permian Basin of West Texas.
Jagged Peak Energy Inc.
Selected Operating Highlights
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
---
Production volumes:
---
Oil (MBbls) 2,758 2,531 7,937 6,947
Natural gas (MMcf) 2,331 2,139 6,834 6,025
NGLs (MBbls) 469 436 1,320 1,001
Total (MBoe) 3,616 3,323 10,396 8,952
Average daily production volumes:
---
Oil (Bbls/d) 29,980 27,507 29,073 25,447
Natural gas (Mcf/d) 25,339 23,245 25,034 22,069
NGLs (Bbls/d) 5,096 4,738 4,836 3,665
Total (Boe/d) 39,299 36,118 38,081 32,790
Average Sales Prices Excluding Realized Hedge Settlements:
---
Oil (per Bbl) $
53.55 $
55.95 $
52.52 $
59.15
Natural gas (per Mcf) $
0.31 $
1.19 $
0.13 $
1.29
NGLs (per Bbl) $
3.47 $
24.81 $
6.58 $
23.71
Combined (per Boe) $
41.51 $
46.64 $
41.02 $
49.42
Average Sales Prices Including Realized Hedge Settlements:
---
Oil (per Bbl) $
52.29 $
53.45 $
50.67 $
54.30
Natural gas (per Mcf) $
0.31 $
1.19 $
0.13 $
1.29
NGLs (per Bbl) $
3.47 $
24.81 $
6.58 $
23.71
Combined (per Boe) $
40.54 $
44.73 $
39.61 $
45.66
Average Operating Costs (per Boe):
---
Lease operating expenses $
4.85 $
3.37 $
4.50 $
3.51
Production and ad valorem tax expenses $
3.11 $
2.86 $
3.09 $
2.95
Depletion, depreciation, amortization and
accretion $
18.27 $
17.35 $
17.93 $
17.93
General and administrative expense (before
equity-based compensation expense) $
2.65 $
2.92 $
2.80 $
3.22
Jagged Peak Energy Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
September 30, 2019 December 31, 2018
(in thousands)
Assets:
Cash and cash equivalents $
10,603 $
35,229
Other current assets 113,226 165,905
Property and equipment, net 1,818,187 1,530,285
Other noncurrent assets 64,729 35,722
Total assets $
2,006,745 $
1,767,141
Liabilities and Stockholders' Equity:
Current liabilities $
224,387 $
187,982
Long-term debt 705,269 489,239
Deferred income taxes 118,432 124,418
Other long-term liabilities 22,787 17,552
Stockholders' equity 935,870 947,950
Total liabilities and stockholders' equity $
2,006,745 $
1,767,141
Jagged Peak Energy Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30,
September 30,
2019 2018 2019 2018
---
(in thousands, except per share amounts)
Revenues
Oil, natural gas and NGL
sales $
150,065 $
154,964 $
426,408 $
442,421
Other operating revenues - 414 9 686
Total revenues 150,065 155,378 426,417 443,107
Operating Expenses
Lease operating expenses 17,554 11,184 46,758 31,390
Production and ad valorem
taxes 11,263 9,517 32,100 26,437
Exploration 3 23 3 24
Depletion, depreciation,
amortization and
accretion 66,069 57,660 186,365 160,552
Impairment of unproved oil
and natural gas
properties 31,817 32,763 53
Other operating expenses - 19 3,206 65
General and administrative
(before equity-based
compensation) 9,571 9,707 29,116 28,800
General and
administrative, equity-
based compensation 4,098 2,614 11,025 80,671
Total operating expenses 140,375 90,724 341,336 327,992
Income (Loss) from
Operations 9,690 64,654 85,081 115,115
Other Income and Expense
Gain (loss) on commodity
derivatives 39,421 (96,516) (85,702) (110,426)
Gain on sale of assets - 6,225 6,225
Interest expense and other (9,956) (8,244) (27,788) (17,065)
Total other income (loss) 29,465 (98,535) (113,490) (121,266)
Income (Loss) before
Income Taxes 39,155 (33,881) (28,409) (6,151)
Income tax expense
(benefit) 8,597 (7,315) (5,986) 14,737
Net Income (Loss) $
30,558 $
(26,566) $
(22,423) $
(20,888)
Net income (loss) per common share:
Basic $
0.14 $
(0.12) $
(0.11) $
(0.10)
Diluted $
0.14 $
(0.12) $
(0.11) $
(0.10)
Weighted-average common shares outstanding:
Basic 213,403 213,180 213,349 213,109
Diluted 213,700 213,180 213,349 213,109
Jagged Peak Energy Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended Nine Months Ended
September 30,
September 30,
2019 2018 2019 2018
---
(in thousands)
Cash Flows from Operating Activities
Net income (loss) $
30,558 $
(26,566) $
(22,423) $
(20,888)
Adjustments to reconcile to net cash provided by
operating activities:
Depletion, depreciation,
amortization and accretion 66,069 57,660 186,365 160,552
Impairment of unproved oil and
natural gas properties 31,817 32,763 53
Amortization of debt issuance
costs 594 732 1,770 1,753
Deferred income taxes 8,597 (7,315) (5,986) 14,737
Equity-based compensation 4,098 2,614 11,025 80,671
(Gain) Loss on commodity
derivatives (39,421) 96,516 85,702 110,426
Net cash receipts (payments) on
settled derivatives (3,484) (6,347) (14,651) (33,705)
Gain on sale of oil and natural
gas properties - (6,225) (6,225)
Other (91) (78) (98) (234)
Change in operating assets and liabilities:
Accounts receivable and other
current assets (1,688) (11,305) (2,407) (29,854)
Accounts payable and accrued
liabilities 7,405 18,247 641 40,461
Net cash provided by operating
activities 104,454 117,933 272,701 317,747
Cash Flows from Investing Activities
Leasehold and acquisitions costs (17,364) (7,801) (32,931) (18,854)
Development of oil and natural
gas properties (165,816) (158,091) (477,681) (551,059)
Other capital expenditures (385) (1,364) (837) (3,245)
Proceeds from sale of oil and
natural gas properties - 8,377 8,377
Net cash used in investing
activities (183,565) (158,879) (511,449) (564,781)
Cash Flows from Financing Activities
Proceeds from senior notes - 500,000
Proceeds from senior secured
revolving credit facility 65,000 215,000 165,000
Repayment of senior secured
revolving credit facility - (320,000)
Debt issuance costs (56) (607) (197) (13,350)
Employee tax withholding for
settlement of equity
compensation awards (26) (681) (200)
Net cash provided by financing
activities 64,918 (607) 214,122 331,450
Net Change in Cash and Cash
Equivalents (14,193) (41,553) (24,626) 84,416
Cash and Cash Equivalents,
Beginning of Period 24,796 135,492 35,229 9,523
Cash and Cash Equivalents, End
of Period $
10,603 $
93,939 $
10,603 $
93,939
Jagged Peak Energy Inc.
Commodity Hedges
The Company hedges its oil production to reduce cash flow volatility and to support funding
of its capital expenditure program. The schedule below summarizes the hedges the Company
has in place to hedge the price of WTI and the differential between the Cushing and Midland
oil prices.
As of November 6, 2019, the Company had the following commodity hedges in place for future
production:
Production
Period Volumes Weighted
Average Price
--- ---
(MBbls) ($/Bbl)
Oil Swaps:
Fourth Quarter
2019 1,932 $
59.95
First Quarter
2020 1,820 $
58.25
Second Quarter
2020 1,820 $
58.25
Third Quarter
2020 1,840 $
58.25
Fourth Quarter
2020 1,840 $
58.25
Full Year 2020 7,320 $
58.25
Oil Basis Swaps:
Fourth Quarter
2019 2,300 $
(4.79)
First Quarter
2020 2,366 $
(1.31)
Second Quarter
2020 2,366 $
(1.31)
Third Quarter
2020 2,392 $
(1.31)
Fourth Quarter
2020 2,392 $
(1.31)
Full Year 2020 9,516 $
(1.31)
Jagged Peak Energy Inc.
Reconciliation of Adjusted Net Income, Adjusted EBITDAX and Adjusted EBITDAX Margin
(Unaudited)
The following tables provide reconciliations of the GAAP financial measure of Net Income (Loss) to the non-GAAP financial measures of Adjusted Net Income (Loss) and Adjusted EBITDAX. A description of the reconciliations is
included in the section titled "Reconciliation of Non-GAAP Financial Measures."
Three Months Ended Nine Months Ended
September 30,
September 30,
2019 2018 2019 2018
---
(in thousands, except for per share and Boe metrics)
Adjusted Net Income (Loss)
Net income (loss) $
30,558 $
(26,566) $
(22,423) $
(20,888)
Adjustments to reconcile to adjusted net
income
Impairment of unproved
oil and natural gas
properties 31,817 32,763 53
(Gain) loss on commodity
derivatives, net, less
net cash for/from
derivative settlements (42,905) 90,169 71,051 76,721
Equity-based
compensation expense
related to allocated
management incentive
units (1) - 74,470
Contract termination fee
(2) - 3,200
Gain on sale of assets - (6,225) (6,225)
Income tax effect for the
above items 2,435 (18,124) (22,549) (15,218)
Adjusted net income $
21,905 $
39,254 $
62,042 $
108,913
Adjusted net income per
basic common share $
0.10 $
0.18 $
0.29 $
0.51
Adjusted net income per
diluted common share $
0.10 $
0.18 $
0.29 $
0.51
Basic common shares 213,403 213,180 213,349 213,109
Diluted common shares (3) 213,700 213,675 213,458 213,192
Adjusted EBITDAX
Net income (loss) $
30,558 $
(26,566) $
(22,423) $
(20,888)
Adjustments to reconcile to adjusted
EBITDAX
Interest expense, net of
capitalized 9,974 8,256 27,683 17,095
Income tax expense
(benefit) 8,597 (7,315) (5,986) 14,737
Depletion, depreciation,
amortization and
accretion 66,069 57,660 186,365 160,552
Impairment of unproved
oil and natural gas
properties 31,817 32,763 53
Contract termination fee
(2) - 3,200
Exploration expenses 3 23 3 24
(Gain) loss on commodity
derivatives, net, less
net cash from derivative
settlements (42,905) 90,169 71,051 76,721
Equity-based
compensation expense 4,098 2,614 11,025 80,671
Gain on sale of assets - (6,225) (6,225)
Adjusted EBITDAX $
108,211 $
118,616 $
303,681 $
322,740
Total production (MBoe) 3,616 3,323 10,396 8,952
Adjusted EBITDAX margin
per Boe (4) $
29.93 $
35.70 $
29.21 $
36.05
(1) In connection with the IPO,
management incentive units were
converted to common stock. A
portion of this common stock was
transferred to JPE Management
Holdings LLC and became subject to
the terms and conditions of the
amended and restated JPE
Management Holdings LLC limited
liability company agreement (the
"Holdco Agreement"). The
compensation expense related to
these shares was primarily
recognized ratably as they vested
according to the terms of the
Holdco Agreement. However, in
February 2018, the Company
incurred $71.3 million in
accelerated compensation expense
related to the modification of
service requirements. Only
compensation expense related to
management incentive units
allocated at the time of the IPO
is excluded from the calculation
of adjusted net income.
(2) Contract termination fee relates to
the early termination of a frac
fleet contract. These amounts are
included as a part of Other
operating expenses on the
Condensed Consolidated Statements
of Operations.
(3) Reflects the weighted-average
number of common shares
outstanding during the period as
adjusted for the dilutive effects
of outstanding restricted stock
unit and performance stock unit
awards.
(4) Adjusted EBITDAX margin is
calculated as Adjusted EBITDAX
divided by total production,
expressed as adjusted EBITDAX per
Boe.
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SOURCE Jagged Peak Energy Inc.
