RSP PERMIAN INC DALLAS, Aug. 7, 2017 /PRNewswire/ -- RSP Permian, Inc. ("RSP" or the "Company") (NYSE: RSPP) today reported financial and operating results for the quarter ended June 30, 2017. In addition, the Company filed its Quarterly Report on Form 10-Q with the Securities and Exchange Commission (the "SEC") and posted a presentation that supplements the information in this release to its website at www.rsppermian.com.
Second Quarter 2017 and Recent Highlights
-- Production increased 106% to 54.3 MBoe/d (72% oil, 88% liquids),
compared to 2Q16 and increased 20% compared to 1Q17
-- Net income of $31.1 million, or $0.20 per diluted share. Adjusted net
income, which does not include certain items, was $26.0 million, or
$0.17 per diluted share
-- Adjusted EBITDAX increased to $135.5 million, a 132% increase compared
to 2Q16 and a 9% increase compared to 1Q17
-- Cash operating expenses were $9.49 per Boe, 10% lower than 1Q17,
including lease operating expense of $4.72 per Boe (before gathering and
transportation), a 13% decrease from 1Q17
-- Recently closed bolt-on acquisitions of leasehold acreage and mineral
interests in the heart of the Company's Delaware Basin position for an
aggregate purchase price of $227.9 million acquiring approximately 6,000
net acres, 4,500 net royalty acres((1)) and 500 Boe/d of production
-- Increased oil hedges, and now have total oil derivative contracts
covering 5.2 million barrels of 2H17 oil volumes and 6.7 million barrels
of 2018 oil volumes
-- Maintained strong liquidity position, with $33.8 million of cash and
$58.0 million in borrowings outstanding under the Company's revolving
credit facility ($1.1 billion borrowing base, $900 million
Company-elected commitment)((2))
(1) Net royalty acre defined as
one surface acre leased at a
1/8th royalty
(2) Borrowings as of end of
second quarter are prior to
funding remaining $203
million of recently closed
acquisitions
Recent Well Results
-- The Ludeman K 2105H Delaware Basin Lower Wolfcamp A well established a
peak 30-day average rate of 1,905 Boe/d or 401 Boe/d per 1,000' (73%
oil)
-- The Crockett Reese St B 2403H Delaware Basin Lower Wolfcamp A well
established a peak 30-day average rate of 1,706 Boe/d or 247 Boe/d per
1,000' (73% oil) and has produced 147 MBoe in 115 days
-- The Rudd Draw 26-21 01H Delaware Basin Wolfcamp XY well established its
peak 30-day average rate of 2,020 Boe/d or 301 Boe/d per 1,000' (74%
oil) after 189 days online and has produced 300 MBoe in that time period
-- Four Midland Basin wells targeting the Wolfcamp A and B in western
Glasscock County established an average peak 30-day rate of over 1,300
Boe/d, including the Calverley 22 27 102H at 1,597 Boe/d or 209 Boe/d
per 1,000' (68% oil)
Steve Gray, Chief Executive Officer of RSP, commented, "We delivered another strong quarter, increasing our production 20% compared to last quarter and lowering our cash operating costs on a per unit basis. Over the past four quarters we have more than doubled our production volumes and generated positive net income with average realized oil prices less than $50 per barrel over that time period, demonstrating the quality of our assets and our ability to deliver profitable growth in a lower oil price environment.
"I am also pleased to report that our infrastructure projects are on schedule and we will begin growing our production volumes in the Delaware Basin in the second half of the year. Our Delaware Basin wells continue to exceed our acquisition estimates and we expect to complete wells in five distinct zones during the second half of this year. In the Midland Basin, we continue to achieve outstanding and consistent results in several zones across our acreage position.
"We recently closed several acquisitions of acreage and mineral interests located in the heart of our Delaware Basin position. While further blocking up our contiguous acreage position and extending the average lateral length of our inventory, these acquisitions do not require any additional staffing or infrastructure as they are located in areas we have already scheduled to drill. The leasehold acquisitions increase our working interest in 14 sections to a majority working interest position and the mineral interests provide immediate uplift to our returns without any incremental capital requirements or production-related expenses on wells drilled in those areas."
Mr. Gray continued, "As we consider our operating strategy and plans going into next year, we will look to closely balance our capital spending with our cash flow generation while remaining flexible to adjust our activity levels to market conditions. Because of our strong well performance and operating efficiency, we have the capability to continue to grow our annual production volumes on a double-digit basis within cash flow at oil prices below $50 per barrel."
Operational Results
Three Months Ended June 30,
2017 2016
---- ----
Production data:
Oil (MBbls) 3,527 1,760
Natural gas (MMcf) 3,651 1,725
NGLs (MBbls) 809 355
--- ---
Total (MBoe) 4,945 2,403
Average net daily
production (Boe/d) 54,341 26,407
====== ======
Average prices before
effects of hedges (1)
(2):
Oil (per Bbl) $45.48 $42.50
Natural gas (per Mcf) 2.70 1.47
NGLs (per Bbl) 15.88 11.69
Total (per Boe) $37.03 $33.91
====== ======
Average realized prices
after effects of hedges
(1) (2):
Oil (per Bbl) $45.27 $43.05
Natural gas (per Mcf) 2.70 1.47
NGLs (per Bbl) 15.88 11.69
Total (per Boe) $36.88 $34.32
====== ======
Average costs (per Boe):
Lease operating expenses
(excluding gathering and
transportation) $4.72 $5.37
Gathering and
transportation 1.12 0.49
Production and ad valorem
taxes 2.05 2.06
Depreciation, depletion
and amortization 13.77 19.68
General and administrative
-recurring cash
component 1.60 2.06
General and administrative
-recurring stock comp
(3) 0.90 1.46
General and administrative
- non-recurring stock
comp (4) - 0.28
(1) Average prices shown in the table reflect
prices both before and after the effects
of our cash payments/receipts on our
commodity derivative transactions. Our
calculation of such effects includes
realized gains or losses on cash
settlements for commodity derivative
transactions and an adjustment to reflect
premiums incurred previously or upon
settlement that are attributable to
instruments settled in the period, if
applicable.
(2) Average prices for oil are net of
transportation costs. Average prices for
natural gas do not include transportation
costs; instead, transportation costs
related to our natural gas production and
sales are included in gathering and
transportation which is included in lease
operating expenses in our consolidated
statements of operations. No
transportation costs are associated with
NGL production and sales.
(3) Represents compensation expense related to
restricted stock awards and performance
share awards granted as part of the
Company's ongoing compensation and
retention programs.
(4) Non-recurring stock comp in 2016 was a
one-time compensation charge associated
with the retirement of an officer of the
Company.
Production volumes for the quarter ended June 30, 2017 averaged 54,341 Boe/d, or a total of 4,945 MBoe, an increase of 106% over prior year's second quarter of 26,407 Boe/d. Production for the second quarter of 2017 was comprised of 72% crude oil, 12% natural gas and 16% NGLs. RSP's average realized oil price for the second quarter of 2017, before the effects of hedges, was $45.48 per barrel, a negative $2.80 differential compared to average NYMEX WTI pricing of $48.28 per barrel for the same period, or 94% of NYMEX WTI pricing. RSP's average realized natural gas price for the second quarter of 2017, before the effects of hedges, was $2.70 per Mcf, a negative $0.49 differential compared to average NYMEX Henry Hub pricing of $3.19 per MMBtu for the same period, or 85% of NYMEX Henry Hub pricing. RSP's average realized NGL price for the second quarter of 2017, before the effects of hedges, was $15.88 per Bbl, or 33% of NYMEX WTI pricing for the same time period. RSP's average realized commodity price per barrel of oil equivalent for the second quarter of 2017, before the effects of hedges, was $37.03. Per unit cash operating expenses excluding interest expense but including lease operating expense, gathering and transportation expense, production and ad valorem taxes and recurring cash general and administrative expenses were $9.49 per Boe.
Operational Update
The Company operated four horizontal rigs in the Midland Basin during the second quarter 2017. In the Delaware Basin, the Company operated two horizontal rigs during the entire second quarter and added a third horizontal rig in May 2017. RSP utilized one full-time completion crew during the second quarter in the Midland Basin and a nearly full-time crew in the Delaware Basin. RSP drilled 22 operated horizontal wells and completed 18 operated horizontal wells (Midland: two Lower Spraberry, five Wolfcamp A, three Wolfcamp B; Delaware: six Wolfcamp A, one Wolfcamp XY, one Second Bone Spring). The Company began the quarter with 18 operated horizontal drilled but uncompleted wells ("DUCs") and exited the quarter with a total of 22 operated horizontal DUCs.
Financial Results
(In thousands, except per share data)
Three Months Ended
------------------
June 30, March 31,
---------
2017 2016 2017
---- ---- ----
Total Revenues $183,100 $81,485 $169,931
Net Cash from Derivative Instruments (716) 974 (2,812)
---- --- ------
Adjusted Total Revenues 182,384 82,459 167,119
Net Income (Loss) $31,090 $(9,801) $38,934
Net Income (Loss) per Common Share - Diluted 0.20 (0.10) 0.26
Adjusted Net Income (Loss)(1) $26,048 $(3,758) $24,212
Adjusted Net Income (Loss) per Common Share - Diluted 0.17 (0.04) 0.16
Adjusted EBITDAX(1) $135,450 $58,453 $124,451
(1) Adjusted EBITDAX and Adjusted
Net Income (loss) are non-GAAP
financial measures. For a
definition of Adjusted EBITDAX
and Adjusted Net Income (loss)
and a reconciliation of
Adjusted EBITDAX and Adjusted
Net Income (loss) to Net Income
(loss), see "Use of Non-GAAP
financial measures" and our
quarterly statements of
operations at the end of this
release.
For the quarter ended June 30, 2017, total revenues, excluding the revenue impact from realized derivative instruments, were $183.1 million, a 125% increase over the prior year quarter of $81.5 million. Adjusted total revenues, including the net cash from derivative instruments, were $182.4 million, a 121% increase from the prior year quarter of $82.5 million. Net income for the second quarter of 2017 was $31.1 million, or $0.20 per diluted share, while net loss for the prior year quarter was $9.8 million, or negative $0.10 per diluted share. Adjusted net income for the second quarter of 2017 was $26.0 million, or $0.17 per diluted share, compared to an Adjusted net loss for the prior year quarter of negative $3.8 million or negative $0.04 per diluted share. Adjusted EBITDAX was $135.5 million, a 132% increase from the prior year quarter of $58.5 million.
Capital Expenditures
RSP's development capital expenditures, which includes our investment in drilling and completing wells, infrastructure, capitalized workovers, and other, but excludes the cost of acquisitions, for the quarter ended June 30, 2017 totaled $179.6 million ($168.7 million of drilling and completion and $10.9 million of infrastructure and other). Of the development capital, approximately $21.4 million, or 12%, was spent on non-operated properties.
Additionally, during the second quarter of 2017 the Company acquired $15.5 million of oil and gas properties.
Liquidity
As of June 30, 2017, the Company had $33.8 million of cash and $58.0 million of borrowings outstanding on its revolving credit facility, which has a $1.1 billion borrowing base and a $900 million Company-elected commitment.
Hedging
The summary below includes all hedges in place for the second half of 2017 and for 2018, as of August 7, 2017.
Crude Oil Hedges
(Bbl, $/Bbl) Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
------- ------- ------- ------- ------- -------
Three-Way
Collars(1) 552,000 2,219,000 1,941,000 1,319,000 1,227,000
Ceiling $54.10 $58.81 $59.07 $60.56 $60.96
Floor $45.00 $46.96 $47.11 $47.79 $48.00
Short Put $35.00 $36.96 $37.11 $37.79 $38.00
Costless
Collars(1) 1,150,000 1,150,000
Ceiling $60.05 $60.05
Floor $45.00 $45.00
Deferred
Premium
Puts(1) 920,000 920,000
Floor $48.50 $48.50
Deferred
Premium(2) $(4.00) $(4.00)
Swaps(1) 552,000
Swap $48.95
Total Hedge
Volumes 2,070,000 3,174,000 2,219,000 1,941,000 1,319,000 1,227,000
Weighted
Average
Floor(3) $44.78 $45.54 $46.96 $47.11 $47.79 $48.00
Mid-Cush
Differential
Swaps(4) 920,000 276,000
Swap $(0.38) $(0.50)
(1) The crude oil derivative
contracts are settled based
on the arithmetic average of
the closing settlement price
for the front month contract
NYMEX price of West Texas
Intermediate Light Sweet
Crude.
(2) The deferred premium is not
paid until expiration date,
aligning cash inflows and
outflows with the settlement
of the derivative contract.
(3) Weighted average floor assumes
the long put in three-way
collars and put spreads and
reflects the impact of
premiums paid.
(4) The Mid-Cush swap contracts
are settled based on the
difference in the arithmetic
average during the
calculation period of WTI
MIDLAND ARGUS and WTI ARGUS
prices in the Argus Americas
Crude publication for the
relevant period.
Natural Gas Hedges
(MMBtu, $/MMBtu) Q3 2017 Q4 2017
------- -------
Costless Collars(1) 2,422,000 2,545,000
Ceiling $3.86 $3.86
Floor $3.00 $3.00
(1) The natural gas
derivative contracts are
settled based on the
last trading day's
closing price for the
front month contract
relevant to each period.
2017 Annual Guidance
1H17 Actuals 2017 Guidance
------------ -------------
Completions
-----------
Operated Gross
Horizontal
Completions 32 80 - 85(1)
Operated Average
Working Interest 89% 88%
Midland Basin Average
Lateral Length ~8,300' ~8,500'
Delaware Basin
Average Lateral
Length ~5,700' ~6,250'
Production
----------
Average Daily
Production (Boe/d) 49,779 53,000 - 57,000
% Oil 73% 71% - 73%
% Natural Gas 12% 11% - 13%
% NGLs 15% 15% - 17%
Development Capital
Expenditures ($ in
MM)
-------------------
Drilling and
Completion (D&C) $279.2 $575 - $625
Infrastructure,
Capitalized
Workovers & Other $16.0 $50 - $75
----- ---------
Total Development
Capital Expenditures $295.2 $625 - $700
% Midland Basin 69% 60% - 70%
% Delaware Basin 31% 30% - 40%
% Non-Operated 12% 8% - 12%(1)
Income Statement
($/Boe)
----------------
Lease operating
expenses (including
workovers) $5.03 $4.50 - $5.50
Gathering and
transportation $1.00 $1.10 - $1.40
Exploration expenses $0.60 $0.40 - $0.60
General and
administrative -
recurring cash
component $1.74 $1.25 - $1.75
General and
administrative -
recurring stock comp $0.93 $0.70 - $0.90
Depreciation,
depletion, and
amortization $14.33 $14.00 - $16.00
Production and ad
valorem taxes (% of
oil and gas
revenues) 5.6% 6.0% - 8.0%
(1) Represents updated 2017
guidance range.
Second Quarter 2017 Earnings Release and Conference Call
RSP will host a conference call for investors at 1:00 PM Central Time on Tuesday, August 8, 2017, to discuss second quarter 2017 results. Hosting the call will be Steve Gray, Chief Executive Officer, Scott McNeill, Chief Financial Officer, Zane Arrott, Chief Operating Officer and other members of RSP's management team.
The call may be accessed live over the telephone by dialing (877) 705-6003, or for international callers, (201) 493-6725. A replay will be available shortly after the call and can be accessed by dialing (844) 512-2921, or for international callers (412) 317-6671. The passcode for the replay is 13667248. The replay will be available until August 22, 2017. Interested parties may also listen to a simultaneous webcast of the conference call by logging onto RSP's website at www.rsppermian.com in the Investor Relations section. A replay of the webcast will also be available for approximately 30 days following the call.
About RSP Permian, Inc.
RSP is an independent oil and natural gas company focused on the acquisition, exploration, development and production of unconventional oil and associated liquids-rich natural gas reserves in the Permian Basin of West Texas. The vast majority of our acreage is located on large, contiguous acreage blocks in the core of the Midland and Delaware Basins, sub-basins of the Permian Basin. The Company's common stock is traded on the NYSE under the ticker symbol "RSPP." For more information, visit www.rsppermian.com.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the federal securities laws. All statements, other than historical facts, that address activities that RSP assumes, plans, expects, believes, intends or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. Forward-looking statements are based on management's current beliefs, based on currently available information, as to the outcome and timing of future events. These forward-looking statements involve certain risks and uncertainties that could cause the results to differ materially from those expected by the management of RSP. Information concerning these risks and other factors can be found in RSP's filings with the SEC, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, which can be obtained free of charge on the SEC's web site located at http://www.sec.gov. RSP undertakes no obligation to update or revise any forward-looking statement.
Statements of Operations
------------------------
(In thousands, except per share data)
Three Months Ended June 30, Three Months
Ended March 31,
---------------
2017 2016 2017
---- ---- ----
Revenues
Oil sales $160,395 $74,799 $151,637
Natural gas sales 9,859 2,537 7,378
NGL sales 12,846 4,149 10,916
------ ----- ------
Total revenues 183,100 81,485 169,931
Operating expenses
Lease operating
expenses 28,892 14,094 25,411
Production and ad
valorem taxes 10,142 4,960 9,469
Depreciation,
depletion, and
amortization 68,104 47,296 61,040
Asset retirement
obligation
accretion 150 123 153
Impairments 5,312 3,177 125
Exploration
expenses 2,869 405 2,580
General and
administrative
expenses 12,343 9,135 11,712
Acquisition costs 401 - 4,052
Total operating
expenses 128,213 79,190 114,542
------- ------ -------
Operating income 54,887 2,295 55,389
Other income (expense)
Other income, net 589 104 720
Net gain (loss) on
derivative
instruments 12,194 (3,684) 17,121
Interest expense (19,508) (12,954) (19,224)
Total other
expense (6,725) (16,534) (1,383)
------ ------- ------
Income (loss)
before income
taxes 48,162 (14,239) 54,006
Income tax
(expense) benefit (17,072) 4,438 (15,072)
Net income (loss) $31,090 $(9,801) $38,934
======= ======= =======
Net income (loss)
per common share
-Basic $0.20 $(0.10) $0.27
Net income (loss)
per common share
-Diluted $0.20 $(0.10) $0.26
Weighted Average Common Shares
Outstanding
Basic 156,856 100,189 146,054
Diluted 157,827 100,189 147,005
Summary Balance Sheet
---------------------
(In thousands)
June 30, 2017 December 31, 2016
------------- -----------------
Cash and cash
equivalents $33,775 $690,776
Other current
assets 95,377 85,486
------ ------
Total current
assets 129,152 776,262
Property, plant
and equipment,
net 5,657,788 4,129,635
Other long-
term assets 72,133 90,530
------ ------
Total assets $5,859,073 $4,996,427
========== ==========
Current
liabilities 138,949 108,269
Long-term debt 1,190,965 1,132,275
Other long-
term
liabilities 377,612 338,571
Total
stockholders'
equity 4,151,547 3,417,312
Total
liabilities
and
stockholders'
equity $5,859,073 $4,996,427
========== ==========
Use of Non-GAAP Financial Measures
We define Adjusted EBITDAX as oil and gas revenues including net cash receipts (payments) on settled derivative instruments and premiums paid on put options that settled during the period, less lease operating expenses, production and ad valorem taxes, and general and administrative expenses excluding stock based compensation. Adjusted Net Income deducts from Adjusted EBITDAX depreciation, depletion, and amortization, accretion on asset retirement obligations, exploration expenses, interest expense, stock-based compensation, acquisition costs and adjusted income tax expense.
Management believes Adjusted EBITDAX and Adjusted Net Income are useful because they allow us to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure. We exclude the items listed above in arriving at Adjusted EBITDAX and Adjusted Net Income 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 and Adjusted Net Income 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 and Adjusted Net Income 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 computations of Adjusted EBITDAX and Adjusted Net Income may not be comparable to other similarly titled measures of other companies.
The following tables include a reconciliation of the non-GAAP financial measures of Adjusted EBITDAX and Adjusted Net Income to the GAAP financial measure of net income.
Reconciliation of Net Income (Loss) to Adjusted EBITDAX
-------------------------------------------------------
(In thousands)
Three Months Ended June 30, Three Months
Ended March 31,
2017 2016 2017
---- ---- ----
Net income (loss) $31,090 $(9,801) $38,934
Interest expense 19,508 12,954 19,224
Income tax expense
(benefit) 17,072 (4,438) 15,072
Depreciation,
depletion, and
amortization 68,104 47,296 61,040
Asset retirement
obligation
accretion 150 123 153
Exploration
expenses 2,869 405 2,580
Acquisition costs 401 - 4,052
Impairment of
unproved
properties 5,312 3,177 125
(Gain) loss on
derivative
instruments (12,194) 3,684 (17,121)
Net settled
derivative
instruments (716) 974 (2,812)
Stock-based
compensation 4,443 4,183 3,924
Other income, net (589) (104) (720)
Adjusted EBITDAX $135,450 $58,453 $124,451
======== ======= ========
Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)
----------------------------------------------------------------
(In thousands)
Three Months Ended June 30, Three Months
Ended March 31,
2017 2016 2017
---- ---- ----
Net income (loss) $31,090 $(9,801) $38,934
Acquisition costs 401 - 4,052
Impairment of
unproved
properties 5,312 3,177 125
(Gain) loss on
derivative
instruments (12,194) 3,684 (17,121)
Net settled
derivative
instruments (716) 974 (2,812)
Stock-based
compensation -
non-recurring - 682 -
Other income, net (589) (104) (720)
Income tax expense
(benefit) for
above items 2,744 (2,370) 1,754
----- ------ -----
Adjusted Net
Income (Loss) $26,048 $(3,758) $24,212
======= ======= =======
View original content:http://www.prnewswire.com/news-releases/rsp-permian-inc-announces-second-quarter-2017-financial-and-operating-results-300500575.html
SOURCE RSP Permian, Inc.
