Latest News and Analysis
Deals and Transactions
Track Drilling (Rigs by operator) | Completions (Frac Spreads)

Drilling & Completions | Quarterly / Earnings Reports | First Quarter (1Q) Update | Financial Results | Hedging | Capital Markets | Capital Expenditure | Drilling Activity | Capital Expenditure - 2021

Vine Energy Inc. First Quarter 2021 Results

emailEmail    |    printPrint    |    bookmarkBookmark
   |    Monday,May 17,2021

Vine Energy Inc. reported first-quarter 2021 results and provided full-year 2021 guidance and select guidance for the second-quarter 2021.

Highlights:

  • Completed IPO on March 17, 2021, raising net proceeds of approximately $322 million
  • Issued $950 million of 8-year, 6.75% senior unsecured notes to retire predecessor company notes; projected to save nearly $20 million per year in cash interest expense
  • Closed on a new reserves-based lending facility ("RBL") with an initial borrowing base of $350 million

The highlights presented below reflect select financial metrics from the unaudited financial statements for the three months ended March 31, 2021 and 2020, and include the results of the predecessor Vine Oil & Gas LP for the entire period and the results of Brix Oil & Gas Holdings LP and Harvest Royalties Holdings LP from March 17, 2021, the effective date of the combination resulting from the corporate reorganization in connection with the initial public offering.

First-Quarter 2021 Select Financial Highlights

   

Q1 2021

 

Q1 2020

 

Change

($ millions, except per share metrics)

           

Production (MMcfd)

     

724

       

622

       

102

 

Revenue, w/derivatives

 

$

 

118

   

$

 

130

   

$

 

(12

)

Operating Income

 

$

 

(23

)  

$

 

3

   

$

 

(26

)

Operating Cash Flow

 

$

 

105

   

$

 

100

   

$

 

5

 

Net Income

 

$

 

(58

)  

$

 

(27

)  

$

 

(31

)

Net Income attributable to Vine

 

$

 

(16

)        

Earnings per share

 

$

 

(3.95

)        

To facilitate a clearer representation of first-quarter 2021 performance, all results presented hereinafter are pro forma for the combination resulting from the corporate reorganization and initial public offering as if the transactions occurred on January 1, 2020.

Financial and Operational Highlights:
  • Generated $145 million of adjusted EBITDAX and $20 million of Adjusted Free Cash Flow
  • Incurred capital of $98 million, or 68% of adjusted EBITDAX
  • Announced 2021 capital guidance, which is projected to yield average annual production of approximately 1 Bcf per day (net) while generating substantial Adjusted Free Cash Flow
  • Continued to demonstrate progress toward the Company's objective to reduce methane and greenhouse gas intensity

Reflecting on the quarter, Eric Marsh, Chairman, President and Chief Executive Officer, commented, "Our initial public offering begins a sequel in Vine's short but exciting history, and it was undoubtedly the most transformational quarter since 2014 when the company was created by the acquisition of our Haynesville asset. Following the combination of three successful companies, Vine today holds a strategic position in the Haynesville Basin and we have the size, scale and balance sheet to generate significant levered free cash flow and return capital to our shareholders, while concurrently upholding our longstanding commitment to safety and environmental stewardship."

Mr. Marsh continued, "Though there are many new things about us, our core identity hasn't changed. Most notably, we have about 25 years of high-quality inventory that supports our ability to create free cash flow longevity, and our operating team is one of the most highly skilled, technical collection of professionals in the industry. We harbor the institutional knowledge and technology which allows us to drill some of the most economic natural gas wells in North America. We believe we can eclipse past milestones as we reach new drilling and completion efficiencies, drive down capital intensity and operating expenses, and deliver on our expectations. Along the way, I believe improving natural gas fundamentals will hasten our bid to substantially increase the value of the company while holding production steady."

Q1 Summary

Production increased 86 MMcfd compared to the prior year quarter due to new wells brought online, improved operational efficiencies and exceptional PDP performance. However, production was negatively impacted by 28 MMcfd averaged over the first quarter due to winter storm Uri in February 2021 that forced temporary well curtailments.

Average realized price, including realized gain/loss on derivatives, was $2.34 per Mcf, $0.05 per Mcf lower compared to the prior year quarter, as follows:

   

Q1 2021

 

Q1 2020

 

Change

NYMEX settlement price (MMBtu) (1)

 

$

2.69

   

$

1.95

   

$

0.74

 

Basis differential, including firm sales

   

(0.13

)

   

(0.18

)

   

0.05

 

Fuel component of gathering

   

(0.07

)

   

(0.05

)

   

(0.02

)

BTU factor

   

(0.09

)

   

(0.07

)

   

(0.02

)

Prior-period adjustments and non-operated sales

   

(0.04

)

   

(0.01

)

   

(0.03

)

Average realized price, excluding derivatives (Mcf)

 

$

2.36

   

$

1.64

   

$

0.72

 

Realized gain/(loss) on derivatives

   

(0.02

)

   

0.75

     

(0.77

)

Average realized price, including derivatives (Mcf)

 

$

2.34

   

$

2.39

   

($

0.05

)

(1)

 

Based on posted futures settlement

Total operating expense, excluding DD&A, strategic and exploration expense, and the non-cash gain on the gathering liability, decreased $0.03 per Mcf compared to the prior year quarter. Lease operating expense was impacted by costs related to winter storm Uri and higher produced water volume, while cash gathering expense benefited from a step down in the contractual rate in September 2020. G&A expense was lower by $0.02 due to the June 2020 reduction in force and operating leverage on higher production volume.

per Mcf

 

Q1 2021

 

Q1 2020

 

Change

Lease operating

 

$

0.22

 

$

0.20

 

$

0.02

 

Gathering & treating, excluding non-cash gain

   

0.31

   

0.32

   

(0.01

)

Prod & ad-valorem taxes

   

0.06

   

0.06

   

0.00

 

General & administrative

   

0.05

   

0.07

   

(0.02

)

Total (may not foot due to rounding)

 

$

0.63

 

$

0.66

 

$

(0.03

)

Adjusted EBITDAX in the first-quarter 2021 was $145 million compared to $136 million in the prior year quarter, or approximately 73% of revenue, excluding unrealized derivative losses, in both periods. The increase was largely due to higher production volume, partially offset by lower average realized prices. With the sum of capital incurred and cash interest essentially flat year-over-year, Adjusted Free Cash Flow was $20 million compared to $12 million in the prior year quarter.

Operating Results

Development and completion capital incurred in the first-quarter 2021 was $92 million to drill 7 gross (6.2 net) wells and complete 11 gross (10.4) net wells, while other field capital was $6 million related to the buildout of the Company's water gathering and disposal infrastructure, midstream, leasing and other miscellaneous investments.

Q1 2021

 

Haynesville

 

Mid-Bossier

 

Total

   

Gross

 

Net

 

Gross

 

Net

 

Gross

 

Net

Wells Drilled

 

3

 

2.9

 

4

 

3.3

 

7

 

6.2

Wells Turned-In-Line (TIL)

 

9

 

8.4

 

2

 

2.0

 

11

 

10.4

Completed Lateral (ft)

                 

87,993

 

83,010

2021 Guidance

Vine's 2021 guidance was developed to prioritize free cash flow generation and debt reduction. Average annual production is expected to be 10 - 12% higher compared to 2020 as the Company targets a one-time step-up to its optimal, long-term production goal of 1 Bcf per day.

Approximately 60% of expenditures associated with the 2021 capital program are expected to be incurred in the first six months of 2021. The program is expected to target 250,000 to 260,000 net feet of completed lateral while drilling and completion costs are expected in the range of $1,180 to $1,210 per lateral foot.

   

2021 (1)

 

2nd quarter 2021

Average Production

 

985 - 1,005 MMcfd

 

1,050 - 1,060 MMcfd

Adjusted Free Cash Flow (2)

 

$145 - $155 million

   

Capital Spending (incurred)

 

$340 - $350 million

   

Lease operating expense, per Mcf

 

$0.19 - $0.20

   

Gathering & treating, per Mcf

 

$0.29 - $0.30

   

Production & ad-valorem taxes, per Mcf

 

$0.06 - $0.07

   

General & administrative, per Mcf (3)

 

$0.06 - $0.07

   

Cash interest (4)

 

$88 - $90 million

 

$20 - $22 million

Cash income taxes (5)

 

$22 - $24 million

 

$5.0 - $5.5 million

(1)

 

Includes 1st quarter 2021 pro forma results for combined entity

(2)

 

Based on NYMEX futures on April 30, 2021; refer to the appendix for Vine's definition of Adjusted Free Cash Flow

(3)

 

Excludes non-cash stock compensation

(4)

 

Excludes call premiums on retirement of Vine Oil & Gas LP unsecured notes

(5)

 

Includes tax distributions to original owners (financing cash flow)

Financial Position and Liquidity

As of March 31, 2021, total debt outstanding was $1.1 billion, consisting of $28 million outstanding under the 1st lien RBL, $150 million outstanding under the 2nd lien term loan, and $910 million of legacy unsecured notes issued by Vine Oil & Gas LP as the predecessor entity. Settlement of the newly issued $950 million, 6.75% 2029 senior unsecured notes did not occur until April 7, 2021. Liquidity was $389 million, in the form of cash on hand and availability under the Company's $350 million RBL, less a $26 million letter of credit.

As of April 30, 2021, total debt outstanding was $1.2 billion, consisting of $73 million outstanding under the 1st lien RBL, $150 million outstanding under the 2nd lien term loan, and $950 million of 6.75% senior unsecured notes due 2029. Liquidity was $334 million.

In early May 2021, liquidity was enhanced by $13 million following the partial release (50%) of an outstanding letter of credit.

Hedging Update

Vine routinely utilizes commodity swaps and options to protect its development program and increase the predictability of future cash flows. As of March 31, 2021, approximately 90% of forecasted average production for April to December 2021 is hedged at a weighted average price of $2.53 per MMBtu.

The Company also engages in firm sales agreements with high-quality counterparties to effectively hedge the price received for natural gas sales at local gathering hubs. Approximately 55% of forecasted average production for April to December 2021 is presold, as follows: 30% at a weighted average price of $0.16 per MMBtu under NYMEX and 25% at $0.01 per MMBtu over Columbia Mainline.

Refer to appendix of this release for a quarterly schedule of the Company's commodity derivative and firm sales portfolios.

 


Related Categories :

First Quarter (1Q) Update   

More    First Quarter (1Q) Update News

Ark-La-Tex News >>>