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Bonanza Creek Energy Second Quarter 2021 Results

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   |    Monday,August 09,2021

Bonanza Creek Energy, Inc. reported its Q2 2021 results.

Highlights include:

• Paid first-ever quarterly dividend of $0.35 per share in June, representing a 3.7% annual dividend yield based on Bonanza Creek's August 6, 2021 closing stock price
• Bonanza Creek Board of Directors has declared the third quarter 2021 fixed dividend of $0.35 per share will be paid on September 30, 2021 to shareholders of record at the close of business on September 15, 2021
• Average sales volumes for the second quarter of 42.3 thousand barrels of oil equivalent per day ("MBoe/d") with oil representing 49.5% of total volumes
• Total capital expenditures of $40.8 million for the second quarter
• Lease operating expense ("LOE") of $2.95 per Boe for the second quarter
• Rocky Mountain Infrastructure ("RMI") operating expense was $1.10 per Boe for the second quarter
• RMI net effective cost⁽¹⁾ for the second quarter was $0.96 per Boe, which offsets RMI operating expense with $0.14 per Boe of RMI operating revenue from working interest partners
• General and administrative ("G&A") expenses were $12.1 million for the second quarter of 2021, which included $2.2 million in non-cash stock-based compensation and $1.3 million of other non-recurring G&A
• Recurring cash G&A⁽¹⁾ expense, which excludes non-recurring and non-cash items was $8.7 million for the second quarter or $2.25 per Boe
• Revising production guidance up from 40 to 44 MBoe/d to 41 to 44 MBoe/d, and lowering LOE guidance from $3.00 to $3.25 per Boe to $2.85 to $3.00 per Boe for the third quarter
• Previously provided guidance for oil mix, annual capital expenditures, RMI opex, and severance and valorem taxes are all reaffirmed, but guidance has been limited to the third quarter 2021 as a result of expected merger closings in early fourth quarter 2021
• GAAP net loss for the second quarter of $25.3 million
• Adjusted EBITDAX⁽¹⁾ of $88.1 million, or $2.87 per diluted share
• Bonanza Creek's existing credit facility lenders have reaffirmed the Company's stand-alone borrowing base at $500 million with elected commitments of $400 million, and with certain additional lenders, have given initial commitments that would reflect a $1.0 billion borrowing base with $800 million in aggregate elected commitments pro forma for the pending Extraction and Crestone Peak mergers
• The Company had $85 million outstanding on its credit facility as of August 9, 2021

Eric Greager, President and Chief Executive Officer of Bonanza Creek, commented, "The integration of BCEI and HPR is proceeding well and ahead of schedule. We are pleased with the combined company results for Q2. Our margin was the highest in over three years, at almost 70%, and with this release we're revising LOE guidance lower, and production guidance higher for Q3.

"Synergy savings for BCEI-HPR are exceeding our expectations, and we are now deep-into planning the integration of the previously announced Civitas mergers between BCEI, XOG, and Crestone Peak. We will provide additional information on those transactions as we progress toward closing in early Q4. Toward the end of this release we have included certain Q2 metrics for the individual companies making up Civitas."

Second Quarter 2021 Results

During the second quarter of 2021, the Company reported average daily sales of 42.3 MBoe/d. Product mix for the second quarter was 49.5% oil, 22.8% NGLs, and 27.7% residue natural gas. The Company expects its third quarter average daily sales volume to be in the range of 41 to 44 MBoe/d with oil representing 48% to 52% of total volumes. The table below provides sales volumes, product mix, and average sales prices for the second quarter 2021 and 2020.

Capital expenditures were $40.8 million for the second quarter of 2021. During the quarter, the Company completed 19 gross (16.9 net) wells, and turned to sales 11 gross (9.6 net) wells, 10 of which were standard reach lateral ("SRL") wells. Year-to-date capital expenditures through the second quarter were $73.6 million versus previously provided full year guidance of $150 million to $170 million. The Company expects its third quarter capital expenditures to be in the range of $55 million to $65 million.

Net oil and gas revenue for the second quarter of 2021 was $156.0 million compared to $74.2 million for the first quarter of 2021. The increase was a result of the HighPoint merger as well as higher oil and NGL realized prices. Crude oil accounted for approximately 74% of total revenue for the quarter. Differentials for the Company's oil production increased slightly during the quarter to approximately $5.28 per barrel off NYMEX WTI versus approximately $4.75 per barrel during the first quarter of 2021, due to strengthening oil prices. The Company expects its third quarter 2021 oil differential to average between $6.50 and $7.00 per barrel based on current WTI strip pricing.

LOE for the second quarter of 2021 on a per unit basis decreased 3% to $2.95 per Boe from $3.05 per Boe in the first quarter of 2021. LOE on a per unit basis decreased during the second quarter due to increased volumes associated with the HighPoint merger. The Company's LOE guidance for the third quarter 2021 has been reduced to a range of $2.85 to $3.00 per Boe.

RMI net effective cost for the second quarter 2021 was $0.96 per Boe, which consists of $1.10 per Boe of RMI operating expense offset by $0.14 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's RMI operating expense guidance for third quarter 2021 remains at a range of $0.85 to $1.15 per Boe.

The Company's general and administrative ("G&A") expenses were $12.1 million for the second quarter of 2021, which included $2.2 million in non-cash stock-based compensation and $1.3 million of other non-recurring G&A. Recurring cash G&A, which excludes non-recurring and non-cash items, of $8.7 million for the second quarter of 2021 increased compared to first quarter 2021 primarily as a result of staff joining from HighPoint, as well as continued M&A activity since the closing of the HighPoint merger. On a per-unit basis, the Company's recurring cash G&A decreased 45% to $2.25 per Boe in the second quarter of 2021 from $4.07 per Boe in the first quarter of 2021. The Company expects its third quarter 2021 recurring cash G&A to be between $8.0 million to $9.5 million.

RMI net effective cost and recurring cash G&A are non-GAAP measures. Please see Schedule 6 and Schedule 7 at the end of this release for a reconciliation to the most comparable GAAP measure.

Guidance Summary

The table below outlines the Company's guidance for the third quarter of 2021.

Civitas Update

The table below outlines certain operating and financial results for the second quarter of 2021 for the three companies separately, that when merged will constitute Civitas Resources, Inc. The mergers are subject to stockholder approval and other customary closing conditions. The information for Extraction Oil & Gas, Inc. ("Extraction") and Crestone Peak Resources ("Crestone Peak") was provided to the Company by Extraction and Crestone Peak, respectively, and has not been independently verified by the Company.

⁽³⁾ Includes $750.3 million of Related Party Notes that will be eliminated upon, or before, the closing of the Crestone Peak Merger
⁽⁴⁾ Net working capital calculated as current assets minus current liabilities, excluding cash and derivatives