Bonanza Creek Energy Announces Third Quarter 2020 Financial Results

DENVER, Nov. 05, 2020 (GLOBE NEWSWIRE) — Bonanza Creek Energy, Inc. (NYSE: BCEI) (the “Company” or “Bonanza Creek”) today announced its third quarter 2020 financial results and operating outlook. The Company has also posted an updated investor presentation to its website.

Highlights of the third quarter 2020 include:

• Average sales volumes up 6% over second quarter to 26.2 thousand barrels of oil equivalent per day (“MBoe/d”), with oil representing 53% of total volumes
• Increasing annual production guidance to a range of 25.0 to 25.5 MBoe/d, and tightening oil mix guidance to a range of 54% to 56%
• Capital expenditures of $1.8 million for the third quarter bringing YTD capital expenditures to $64.6 million; reiterating annual capex guidance range of $60 to $70 million
• Lease operating expense (“LOE”) of $2.23 per Boe for the third quarter; down 13% from second quarter 2020, bringing the YTD metric to $2.43 per Boe
• Lowering annual LOE guidance to a range of $2.40 to $2.60 per Boe
• Recurring cash general and administrative (“G&A”)⁽¹⁾ expense, which excludes stock-based compensation, cash severance costs and other non-recurring expenses, was $6.2 million for the quarter, or $2.56 per Boe, down 6% from second quarter 2020
• Lowering annual recurring cash G&A expense guidance to a range of $26 to $28 million
• Rocky Mountain Infrastructure (“RMI”) third quarter 2020 net effective cost⁽¹⁾ was $1.07 per Boe, which consists of approximately $1.64 per Boe of RMI operating expense offset by $0.57 per Boe of RMI operating revenue from working interest partners
• Exited the quarter with $20.0 million drawn on the revolving facility and a leverage ratio of 0.1x
• GAAP net income of $3.3 million, or $0.16 per diluted share, including a $0.92 non-cash loss on derivatives
• Adjusted EBITDAX⁽¹⁾ of $41.5 million, or $1.98 per diluted share.

⁽¹⁾ Non-GAAP measure; see attached reconciliation schedules at the end of this release.

Eric Greager, President and Chief Executive Officer of Bonanza Creek, commented, “Total production  has remained resilient despite lower new well activity since the first quarter. Asset quality and the skill of our operations team have resulted in continued strong quarterly performance.”

Greager continued, “The free cash generated during the quarter allowed us to reduce our revolver debt by another $38 million, and prior to filing our third quarter 10-Q, we paid down our revolver to $10 million. We plan to start completing DUCs from inventory in early January 2021, and we’ll provide additional color on our 2021 plan following year end.”

Third Quarter 2020 Results

During the third quarter of 2020, the Company reported average daily sales of 26.2 MBoe/d, up 6% over second quarter volumes. Product mix for the quarter was 53% oil, 22% NGLs, and 25% residue natural gas. Oil volumes were flat from second quarter to third quarter 2020, but the oil mix of 53% for the third quarter was down from 56% in the previous quarter. The oil mix fluctuates due to the timing and thermal maturity of wells turned to sales in recent quarters. The table below provides sales volumes, product mix, and average sales prices for the third quarter 2020 and 2019.

Capital expenditures were $1.8 million for the third quarter of 2020. During the quarter, the Company turned to sales 2 gross (1.6 net) wells, one of which was a standard reach lateral (“SRL”) well. Capital expenditures for the fourth quarter are expected to be minimal, and the Company reiterates its annual guidance of $60 to $70 million, with $64.6 million invested YTD.

Net oil and gas revenue for the third quarter of 2020 was $58.9 million compared to $36.2 million for the second quarter of 2020. The increase was a result of a partial recovery of oil, natural gas, and NGL realized prices. Crude oil accounted for approximately 80% of total revenue for the quarter. Differentials for the Company’s oil production improved during the quarter to approximately $4.48 per barrel off NYMEX WTI versus approximately $5.53 per barrel during the second quarter. The YTD oil differential was approximately $5.25 per barrel off WTI, and the Company expects its full-year 2020 oil differential to average between $4.75 and $5.25 per barrel.

LOE for the third quarter of 2020 on a per-unit basis decreased 13% to $2.23 per Boe from $2.56 per Boe in the second quarter of 2020, bringing YTD LOE per Boe to $2.43 per Boe. The Company has lowered its annual LOE guidance to $2.40 to $2.60 per Boe, down from $2.50 to $2.90 per Boe.

RMI third quarter 2020 net effective cost was $1.07 per Boe, which consists of approximately $1.64 per Boe of RMI operating expense offset by $0.57 per Boe of RMI operating revenue from working interest partners. RMI operating revenue from working interest partners is based on production volumes, and the fees are not tied to oil or natural gas prices. The Company has lowered its annual RMI operating expense guidance to a range of $1.50 to $1.80 per Boe, down from $1.50 to $1.85 per Boe.

The Company’s general and administrative (“G&A”) expenses were $8.9 million for the third quarter of 2020, which included $1.7 million in non-cash stock-based compensation, $0.9 million in non-recurring advisor fees, and $0.1 million related to one-time cash severance costs. Recurring cash G&A, which excludes non-recurring and non-cash items, of $6.2 million for the third quarter of 2020 remained flat compared to second quarter 2020. On a per-unit basis, the Company’s recurring cash G&A decreased 6% to $2.56 per Boe in the third quarter of 2020 from $2.72 per Boe in the second quarter of 2020. The Company lowered its annual recurring cash G&A guidance to $26 to $28 million, down from $27 to $29 million.

RMI net effective cost and recurring cash G&A are non-GAAP measures. Please see Schedule 7 and Schedule 8 at the end of this release for a reconciliation to the most comparable GAAP measure.

The Company’s severance and ad valorem taxes were a credit of $7.1 million for the third quarter of 2020, which included a one-time true-up of accrued severance and ad valorem taxes as a result of a refinement to our tax estimate based on current mill levies, taxing districts, and company and industry results. Excluding this adjustment, recurring severance and ad valorem taxes were $5.5 million, or 9.4% of revenue, for the third quarter of 2020. The Company expects its fourth quarter severance and ad valorem taxes to be approximately 8 to 9% of revenue.

Guidance Summary

The table below provides YTD and third quarter results for 2020 guidance metrics:

⁽²⁾ Third quarter and YTD 2020 recurring severance / ad valorem taxes exclude a one-time true-up of accrued taxes made in the third quarter. See attached reconciliation tables at the end of this release.

Conference Call Information

The Company will host a conference call to discuss these results on November 6, 2020 at 9:00 a.m. Mountain Time (11:00 a.m. Eastern Time). A live webcast and replay of this event will be available on the Investor Relations section of the Company’s website at www.bonanzacrk.com. Dial-in information for the conference call is included below.

About Bonanza Creek Energy, Inc.

Bonanza Creek Energy, Inc. is an independent oil and natural gas company engaged in the acquisition, exploration, development, and production of oil and associated liquids-rich natural gas in the Rocky Mountain region of the United States. The Company’s assets and operations are concentrated in rural, unincorporated Weld County, Colorado, within the Wattenberg Field, focused on the Niobrara and Codell formations. The Company’s common shares are listed for trading on the NYSE under the symbol: “BCEI.” For more information about the Company, please visit www.bonanzacrk.com. Please note that the Company routinely posts important information about the Company under the Investor Relations section of its website.

Forward-Looking Statements

This press release 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 facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by the Company based on management’s experience, perception of historical trends and technical analyses, current conditions, anticipated future developments and other factors believed to be appropriate and reasonable by management. When used in this press release, the words “will,” “potential,” “believe,” “estimate,” “intend,” “expect,” “may,” “should,” “anticipate,” “could,” “plan,” “predict,” “project,” “profile,” “model” or their negatives, other similar expressions or the statements that include those words, are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These statements include statements regarding development and completion expectations and strategy; decreasing operating and capital costs; impact of the Company’s reorganization; and 2020 guidance. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, that may cause actual results to differ materially from those implied or expressed by the forward-looking statements, including the following: changes in natural gas, oil and NGL prices; general economic conditions, including the performance of financial markets and interest rates; drilling results; shortages of oilfield equipment, services and personnel; operating risks such as unexpected drilling conditions; ability to acquire adequate supplies of water; risks related to derivative instruments; access to adequate gathering systems and pipeline take-away capacity; and pipeline and refining capacity constraints. Further information on such assumptions, risks and uncertainties is available in the Company’s SEC filings. We refer you to the discussion of risk factors in our Annual Report on Form 10-K for the year ended December 31, 2019, filed on February 27, 2020, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed on May 7, 2020, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, filed on August 6, 2020, our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, filed on November 5, 2020, and other filings submitted by us to the Securities Exchange Commission. The Company’s SEC filings are available on the Company’s website at www.bonanzacrk.com and on the SEC’s website at www.sec.gov. All of the forward-looking statements made in this press release are qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, including guidance, and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

For further information, please contact:
Scott Landreth
Senior Director, Finance & Investor Relations and Treasurer
720-225-6679
[email protected]

Schedule 1: Condensed Consolidated Statements of Operations and Comprehensive Income
(in thousands, expect for per share amounts, unaudited)

Schedule 2: Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)

Schedule 3: Condensed Consolidated Balance Sheets
(in thousands, unaudited)

Schedule 4: Per unit cash cost margins
(unaudited)

⁽¹⁾ Crude oil and natural gas sales excludes $1.4 million, $1.6 million, $4.2 million, and $4.4 million of oil transportation and gas gathering revenues from third parties, which do not have associated sales volumes for the three months ended September 30, 2020 and 2019, and the nine months ended September 30, 2020 and 2019, respectively. Alternatively, the aforementioned oil transportation and gas gathering revenues from third parties have been netted against the midstream operating expense to arrive at the RMI net effective cost. See Schedule 8 for a reconciliation from GAAP midstream operating expense to RMI net effective cost.
⁽²⁾ Recurring severance and ad valorem taxes exclude one-time tax adjustments based on current mill levies, taxing districts, and company and industry results.
⁽³⁾ Recurring cash general and administrative expense excludes stock-based compensation, cash severance costs, and other non-recurring advisor fees. Please see Schedule 7 for a reconciliation from GAAP G&A to recurring cash G&A.

Schedule 5: Adjusted Net Income
(in thousands, except per share amounts, unaudited)

Adjusted net income is a supplemental non-GAAP financial measure that is used by management to present a more comparable, recurring profitability between periods. The Company defines adjusted net income as net income after adjusting for (1) the impact of certain non-cash items and one-time transactions and correspondingly (2) the related tax effect in each period. Adjusted net income is not a measure of net income as determined by GAAP.

The following table presents a reconciliation of the GAAP financial measure of net income to the non-GAAP financial measure of adjusted net income.

Schedule 6: Adjusted EBITDAX
(in thousands, unaudited)

Adjusted EBITDAX is a supplemental non-GAAP financial measure that is used by management to provide a metric of the Company’s ability to internally generate funds for exploration and development of oil and gas properties. The metric excludes items which are non-recurring in nature. Management believes adjusted EBITDAX provides external users of the Company’s consolidated financial statements such as industry analysts, investors, lenders, and rating agencies with additional information to assist in their analysis of the Company. The Company defines Adjusted EBITDAX as earnings before interest, income taxes, depreciation, depletion, and amortization, impairment, exploration expenses and other similar non-cash and non-recurring charges. Adjusted EBITDAX is not a measure of net income or cash flows as determined by GAAP.

The following table presents a reconciliation of the GAAP financial measure of net income to the non-GAAP financial measure of Adjusted EBITDAX.

Schedule 7: Recurring Cash G&A
(in thousands, unaudited)

Recurring cash G&A is a supplemental non-GAAP financial measure that is used by management to provide only the cash portion of its G&A expense, which can be used to evaluate cost management and operating efficiency on a comparable basis from period to period. Management believes recurring cash G&A provides external users of the Company’s consolidated financial statements such as industry analysts, investors, lenders, and rating agencies with additional information to assist in their analysis of the Company. The Company defines recurring cash G&A as GAAP general and administrative expense exclusive of the Company’s stock-based compensation and one-time charges. The Company refers to recurring cash G&A to provide typical recurring cash G&A costs that are planned for in a given period. Recurring cash G&A is not a fully inclusive measure of general and administrative expense as determined by GAAP.

The following table presents a reconciliation of the GAAP financial measure of general and administrative expense to the non-GAAP financial measure of recurring cash G&A.

Schedule 8: Rocky Mountain Infrastructure (“RMI”) Net Effective Cost
(in thousands, unaudited)

RMI net effective cost is a supplemental non-GAAP financial measure that is used by management to assess only the net cash impact the Company’s wholly owned subsidiary, Rocky Mountain Infrastructure, LLC, has on the Company’s consolidated financials. Management believes the net effective cost provides external users of the Company’s consolidated financial statements, such as industry analysts, investors, lenders, and rating agencies, with additional information to assist in their analysis of the Company. The Company defines the RMI net effective cost as GAAP midstream operating expense less revenue generated from working interest partners utilizing the RMI assets.

The following table presents a reconciliation of the GAAP financial measures of midstream operating expense and RMI working interest partner revenue to the non-GAAP financial measure of RMI net effective cost.