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Extraction Oil & Gas First Quarter 2020 Results

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Extraction Oil & Gas Inc. reported financial and operational results for the first quarter of 2020.

First-Quarter 2020 Highlights

• Average net sales volumes of 94,247 barrels of oil equivalent per day (Boe/d), including 38,502 barrels per day (Bbl/d) of crude oil
• Net income of $9 million, or $(0.03) per basic and diluted share, driven by a gain on commodity derivatives of $263 million. This compared to a net loss of $94 million, or $(0.60) per basic and diluted share¹, for the same period in 2019. Adjusted EBITDAX, Unhedged² was $85 million and Adjusted EBITDAX² was $124 million
• Implemented lease operating expense (LOE) and general and administrative (G&A) cost reduction initiatives
• Subsequent to quarter end, borrowing base was reduced to $650 million
• Withdrawing 2020 guidance due to unprecedented pricing environment and business uncertainty related to the COVID-19 pandemic

Financial Results

For the first quarter, Extraction reported crude oil, natural gas and NGL sales revenue of $165 million, as compared to $222 million during the same period in 2019, representing a decrease of $57 million, driven primarily by lower crude oil, natural gas and NGL prices. Revenue decreased sequentially, primarily driven by lower production and lower commodity prices.

Extraction reported net income of $9 million, or $(0.03) per basic and diluted share for the first quarter, driven primarily by a $263 million gain on commodity derivatives. This compared to a net loss of $94 million for the same period in 2019. Adjusted EBITDAX, Unhedged was $85 million for the first quarter, down 46% year-over-year. Adjusted EBITDAX was $124 million for the first quarter, down 10% year-over-year. Please read "Non-GAAP Financial Measures," included herein.

Debt and Liquidity

Extraction ended the first quarter with $32 million of cash on its balance sheet and $470 million drawn on its revolving credit facility. On April 27, 2020, Extraction's borrowing base under its revolving credit facility was lowered to $650 million from $950 million, driven primarily by lower oil prices. Pro forma for the lower borrowing base and after giving effect to letters of credit, Extraction ended the first quarter with approximately $163 million of available liquidity.

Operational Results

First quarter crude oil volumes of 38,502 Bbl/d decreased 3% year-over-year. First quarter average net sales volumes were 94,247 BOE/d, an increase of 17% year-over-year. Crude oil accounted for approximately 75% of the Company's total revenues recorded during the first quarter.

Extraction's first-quarter 2020 aggregate drilling, completion and leasehold capital expenditures totaled $155 million, of which $147 million was for drilling and completions activity.

During the first quarter, Extraction drilled 34 gross (25 net) wells with an average lateral length of approximately 2.3 miles, completed 28 gross (23 net) wells with an average lateral length of approximately 2.3 miles and turned to sales 13 gross (12 net) wells with an average lateral length of approximately 2.1 miles.

2020 Guidance Withdrawal

As a result of unprecedented volatility and macroeconomic uncertainty driven by the combination of the COVID-19 pandemic and the OPEC-related price war, Extraction has withdrawn all guidance. Previous guidance should no longer be relied upon.

Extraction has established a shut-in strategy to curtail production from older horizontal wells in response to low commodity prices.