Quarterly / Earnings Reports | Fourth Quarter (4Q) Update | Reserves | Financial Results | Capital Markets | Capital Expenditure

Bonanza Creek Fourth Quarter, Full Year 2020 Results

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Bonanza Creek Energy, Inc. reported its Q4 and full year 2020 results.

Highlights:

• Average sales volumes of 25.0 thousand barrels of oil equivalent per day ("MBoe/d") for the fourth quarter, with oil representing 54% of total volumes
• Average sales volumes of 25.2 MBoe/d for the full year (54% oil), up 8% over full-year 2019; at the mid-point of the most recent annual 2020 guidance range of 25.0 to 25.5 MBoe/d
• Total capital expenditures for the fourth quarter of $3.2 million, bringing the total 2020 capital expenditures to approximately $67.7 million; within the annual guidance range of $60 to $70 million
• Lease operating expenses ("LOE") of $2.20 per Boe for the fourth quarter; down slightly from the third quarter of 2020, and down 27% from the fourth quarter of 2019
• Full-year 2020 LOE of approximately $2.38 per Boe down 19% from 2019; below our most recent annual guidance range of $2.40 to $2.60 per Boe
• Rocky Mountain Infrastructure ("RMI") net effective cost of $1.01 per Boe for the fourth quarter, which is comprised of approximately $1.57 per Boe of operating expenses, offset by $0.56 per Boe of RMI operating revenue from working interest partners
• Full-year 2020 RMI net effective cost of $1.03 per Boe, with operating expenses of $1.62 per Boe versus annual guidance range of $1.50 to $1.80 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 $7.4 million for the quarter, or $3.20 per Boe, up sequentially from $2.56 per Boe in the third quarter of 2020 primarily related to lower volumes and year-end accrual adjustments
• Full-year recurring cash G&A expense was $27.4 million, within the Company's expectations and full-year guidance of $26 to $28 million. On a per unit basis, recurring cash G&A was $2.97 per Boe in 2020, down 21% from $3.74 per Boe in 2019
• Exited 2020 with approximately $285 million of liquidity, including an undrawn credit facility and approximately $25 million of cash
• 2020 GAAP net income of $103.5 million
• Adjusted EBITDAX⁽¹⁾ of $169.4 million, or $8.10 per diluted share
• Year-end 2020 proved reserves of 118.2 MMBoe, down 3% from 2019 year-end reserves, with a Standardized Measure and PV-10 of $437.1 million

Eric Greager, President and Chief Executive Officer, commented, "Despite the significant challenges presented in 2020, I couldn't be more proud of how the BCEI team responded. The Company continued to deliver the safe and consistent operational performance that our shareholders have come to expect. Due to the skill and tenacity of our employees, we exceeded production expectations for the year, continued to improve our margins, and concluded with the announcement of a transformative acquisition of HighPoint Resources in the fourth quarter."

Greager continued, "We continue to make steady progress toward closing the HighPoint transaction. Last week we announced key milestones, and we look forward to providing additional updates regarding the transaction and plan for the combined companies following our March 12th stockholder meeting."

Fourth Quarter 2020 Results

During the fourth quarter of 2020, the Company reported average daily sales of 25.0 MBoe/d. Product mix for the fourth quarter was 54% oil, 20% NGLs, and 26% residue natural gas, which was relatively consistent with the third quarter of 2020. The table below provides sales volumes, product mix, and average sales prices for the fourth quarter and full-year 2020 and 2019.

Capital expenditures were $3.2 million for the fourth quarter of 2020 and $67.7 million for the full-year 2020. The Company did not have any drilling or completion related activity or wells turned to sales during the fourth quarter of 2020. For the year, the Company drilled 14 gross (10.5 net) operated wells. Of the 14 gross operated wells drilled, all were drilled during the first quarter of the year, and all were standard reach lateral ("SRL") wells. The Company completed 9 gross (8.5 net) operated wells during the year, including 8 in the first quarter, and 1 in the second quarter. Of the 9 gross operated wells completed in 2020, 4 were SRLs and 5 were extended reach lateral ("XRL") wells. The Company also turned to sales 26 gross (23.1 net) operated wells during the year, including 16 during the first quarter, 8 in the second quarter, and 2 in the third quarter. Of the 26 gross operated wells turned to sales, 9 were SRLs and 17 were XRLs.

Net oil and gas revenue for the fourth quarter of 2020 increased to $62.6 million compared to $58.9 million for the third quarter of 2020. The increase was a result of higher oil, natural gas, and NGL realized prices, partially offset by a slight decline in sales volumes. Crude oil accounted for approximately 75% of total revenue for the quarter. Differentials for the Company's oil production averaged approximately $4.53 per barrel and $5.08 per barrel off NYMEX WTI for the fourth quarter and full-year, respectively. The Company's annual oil differential guidance for 2020 had been $4.75 to $5.25 per barrel.

LOE for the fourth quarter of 2020 on a unit basis remained relatively flat at $2.20 per Boe, compared to $2.23 per Boe in the third quarter of 2020. Full-year 2020 LOE of $2.38 per Boe was below the Company's annual guidance range of $2.40 to $2.60 per Boe.

RMI net effective cost for the fourth quarter 2020 was $1.01 per Boe, which consists of $1.57 per Boe of RMI operating expense offset by $0.56 per Boe of RMI operating revenue from working interest partners. RMI full-year 2020 net effective cost was $1.03 per Boe, which consists of $1.62 per Boe of RMI operating expense offset by $0.59 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. RMI operating expense for full-year 2020 was within the Company's annual guidance range of $1.50 to $1.80 per Boe.

The Company's general and administrative ("G&A") expenses were $9.1 million for the fourth quarter of 2020, which included $1.7 million in non-cash stock-based compensation. Recurring cash G&A, which excludes non-recurring and non-cash items, was $7.4 million for the fourth quarter of 2020. On a per unit basis, the Company's recurring cash G&A increased 25% sequentially from $2.56 per Boe in the third quarter of 2020 to $3.20 per Boe in the fourth quarter of 2020. For full-year 2020, recurring cash G&A of $27.4 million was within the Company's expectations and full-year guidance of $26 to $28 million.

RMI net effective cost and recurring cash G&A are non-GAAP measures. Please see Schedule 8 and Schedule 9 at the end of this release for a reconciliation to the most comparable GAAP measure.

2020 Proved Reserves

As of year-end 2020, the Company had proved reserves of 118.2 MMBoe, a 3% decrease from year-end 2019 reserves. The Company's year-end 2020 proved reserves were comprised of 52.8 MMbbls of oil, 26.1 MMbbls of NGLs, and 235.7 Bcf of natural gas, and 50% of the total proved reserves were proved-developed-producing. At year-end, the Company's proved reserves PV-10, utilizing Securities and Exchange Commission ("SEC") pricing, was $437.1 million. Bonanza Creek's independent reserve engineering firm, Ryder Scott Company, LP., completed its estimate of the Company's year-end 2020 proved reserves in accordance with SEC guidelines using pricing of $39.57 per barrel for crude oil and $1.99 per million British Thermal Units (MMBtu) for natural gas. Please see Schedule 7 at the end of this release for information on SEC pricing and a reconciliation of PV-10 to the GAAP figure "Standardized Measure of Oil and Gas."

A breakout of the Company's costs incurred are provided in the table below.

Proved Reserve Roll-Forward

First Quarter 2021 Bonanza Creek Guidance

The Company previously provided guidance for the first quarter of 2021 for Bonanza Creek as a stand-alone company. We have since updated our production guidance to a range of 20.0 to 23.0 MBoe/d, down from 22.0 to 24.0 MBoe/d. This change captures impacts due to extreme weather that occurred in mid-February. We have also updated our expectations for oil mix for the quarter to a range of 48% to 50%, up from 45% to 50%. Additional guidance for 2021 will be provided after the closing of the HighPoint transaction.