HOUSTON, May 8, 2019 /PRNewswire/ -- EP Energy
Corporation (NYSE: EPE) today reported first quarter 2019 financial
and operational results.
1Q'19 Results:
- Equivalent production of 73.2 MBoe/d
- Oil production of 39.4 MBbls/d
- Net loss of $140 million,
including $95 million loss on
financial derivatives
- Adjusted EBITDAX of $148
million
- Oil and gas expenditures of $154
million, including $4 million
acquisition capital
- Adjusted oil and gas expenditures of $150 million
- Completed two horizontal wells in Northeastern Utah (NEU)
- Completed (based on wells fracture stimulated or frac'd) 17
gross wells (10 net)
- Increased Drilled but Uncompleted (DUC) wells to 46
- Lease operating expense of $5.55
per Boe
- G&A expense of $3.16 per Boe,
Adjusted G&A expense of $2.50 per
Boe
- Reaffirmed the RBL Facility borrowing base in April 2019 and ended the first quarter with
$440 million of liquidity, including
$10 million of cash
1Q'19 Operating and Financial Performance
Below is a summary of first quarter 2019 results compared to the
first quarter 2018:
|
1Q'19
|
1Q'18
|
1Q'19
vs.
1Q'18
|
Oil Production
(MBbls/d)
|
39.4
|
45.4
|
- 13%
|
Equivalent Production
(MBoe/d)
|
73.2
|
80.1
|
- 9%
|
Percent Oil
(%)
|
53.8
|
56.7
|
- 5%
|
LOE per Unit
($/Boe)
|
5.55
|
5.48
|
+ 1%
|
Lease Operating
Expense ($MM)
|
37
|
39
|
- 5%
|
G&A expense per
Unit ($/Boe)
|
3.16
|
2.58
|
+ 22%
|
Adjusted G&A
expense per Unit ($/Boe)1
|
2.50
|
2.31
|
+ 7%
|
Net Income (Loss)
($MM)
|
(140)
|
18
|
- 878%
|
Adjusted EBITDAX
($MM)1
|
148
|
189
|
- 22%
|
Oil and Gas
Expenditures ($MM)
|
154
|
456
|
- 66%
|
Adjusted Oil and Gas
Expenditures (excl. acquisition capital )
($MM)1
|
150
|
208
|
- 28%
|
Net completions
(frac'd)
|
10
|
35
|
- 71%
|
Change in DUC
inventory from prior quarter
|
17
|
(5)
|
+ 440 %
|
|
1 See Disclosure of Non-GAAP Financial Measures for
applicable definitions and reconciliations to GAAP
terms.
|
Financial Position and Liquidity
The company ended the quarter with $10
million in cash, $180 million
borrowings outstanding on the RBL Facility, and $19 million in letters of credit, resulting in
$440 million of available liquidity
and $4.5 billion of net debt. The
company repurchased $50 million in
principal amount of its unsecured notes at a discount in the
quarter. In April 2019, the banks
reaffirmed the current RBL Facility borrowing base of $1.36 billion and commitments of $629 million.
Operations Update
For the first quarter 2019, average daily production was 73.2
MBoe/d, including 39.4 MBbls/d of oil. During the first quarter
2019, the company completed (frac'd) 17 gross wells (10 net) and
incurred capital expenditures of $150
million, excluding acquisitions. The company had lower
production in the first quarter 2019 compared to the first quarter
2018 due to lower net completions during the first quarter 2019 and
fourth quarter 2018.
Northeastern Utah
(NEU)
In the first quarter 2019, the company's assets in NEU produced
15.5 MBoe/d, including 10.0 MBbls/d of oil, a 10% and 14% decrease,
respectively, from the first quarter 2018. EP Energy operated
one drilling rig and completed (frac'd) four gross (one net) wells,
of which two were vertical and two were horizontal, in the first
quarter 2019. Total capital invested in NEU in the first
quarter 2019 was $25 million
excluding acquisition capital.
In the second quarter 2019, the company expects to average one
drilling rig and complete and bring online three gross (three net)
horizontal wells in late June in NEU.
Eagle Ford
EP Energy's assets in Eagle Ford produced 33.0 MBoe/d, including
22.2 MBbls/d of oil in the first quarter 2019, both an 8% decrease
from the first quarter 2018. EP Energy averaged approximately three
drilling rigs, invested $125 million
excluding acquisition capital and completed (frac'd) 13 gross (nine
net) wells in the first quarter 2019. The majority of these wells
came online in March.
The company expects to average three drilling rigs and complete
13 gross wells (10 net) over the second quarter 2019, focusing on
development in the southern and eastern portion of the La Salle acreage.
Permian
EP Energy's assets in the Permian basin produced 24.7 MBoe/d,
including 7.2 MBbls/d of oil in the first quarter 2019, a 9% and
27% decrease, respectively, from the first quarter 2018. In the
first quarter 2019, the company did not drill or complete any wells
in the basin.
Hedge Program Update
EP Energy maintains a solid hedge program which provides
continued commodity price protection. A summary of the
company's current open hedge positions is listed below:
|
|
|
|
2019
|
|
2020
|
|
|
Total Fixed Price
Hedges
|
|
|
|
|
|
|
Oil volumes
(MMBbls)1
|
|
10.2
|
|
|
11.7
|
|
|
|
Average ceiling price
($/Bbl)
|
|
$
|
66.41
|
|
|
$
|
65.11
|
|
|
|
Average floor price
($/Bbl)
|
|
$
|
55.95
|
|
|
$
|
55.90
|
|
|
|
|
|
|
|
|
|
|
Natural Gas volumes
(TBtu)
|
|
19.3
|
|
|
—
|
|
|
|
Average price
($/MMBtu)
|
|
$
|
3.72
|
|
|
$
|
—
|
|
|
|
Average floor price
($/MMBtu)
|
|
$
|
2.86
|
|
|
$
|
—
|
|
|
|
|
Note: Positions are as of May 1, 2019
(Contract months: April 1, 2019 - Forward)
|
|
|
|
1 The table includes WTI
three-way collars of 9.1 MMBbls and 11.7 MMBbls in 2019 and 2020,
respectively, and WTI collars of 1.1 MMBbls in 2019.
|
2019 Second Quarter Outlook Provided
The table below summarizes the company's current operational and
financial guidance for the second quarter 2019. The company plans
to maintain the activity levels from the end of the first quarter
through the second quarter 2019.
|
|
|
|
1Q'19
Actuals
|
|
2Q'19
Estimate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
Volumes
|
|
|
|
|
|
|
|
Oil production
(MBbls/d)
|
|
39.4
|
|
37 - 39
|
|
|
|
Total production
(MBoe/d)
|
|
73.2
|
|
70 - 73
|
|
|
|
|
|
|
|
|
|
|
|
Oil & Gas
Expenditures ($ million)1
|
|
$150
|
|
$140 -
$150
|
|
|
|
Eagle Ford
|
|
$125
|
|
~70%
|
|
|
|
NEU
|
|
$25
|
|
~30%
|
|
|
|
|
|
|
|
|
|
|
|
Average Gross
Drilling Rigs and
Completions Metrics
|
|
|
|
|
|
|
|
Eagle Ford
|
|
3
|
|
3
|
|
|
|
NEU
|
|
1
|
|
1
|
|
|
|
Gross completions
(frac'd)
|
|
17
|
|
16
|
|
|
|
Net Completions
(frac'd)
|
|
10
|
|
13
|
|
|
|
Ending DUC
inventory
|
|
46
|
|
65
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Costs
|
|
|
|
|
|
|
|
Lease operating
expense ($MM)
|
|
$37
|
|
$36 - $40
|
|
|
|
Lease operating
expense ($/Boe)
|
|
$5.55
|
|
$5.60 -
$6.10
|
|
|
|
Reported G&A
expense ($/Boe)
|
|
$3.16
|
|
$2.95 -
$3.50
|
|
|
|
Adjusted G&A
expense ($/Boe)2,4
|
|
$2.50
|
|
$2.35 -
$2.90
|
|
|
|
Transportation
($/Boe)
|
|
$3.74
|
|
$3.60 -
$3.90
|
|
|
|
Taxes, other than
income ($/Boe)3
|
|
$1.73
|
|
$2.50 -
$2.75
|
|
|
|
DD&A
($/Boe)
|
|
$14.34
|
|
$14.50 -
$15.50
|
|
|
|
|
1
Includes ~15% non-drill capital for general equipment, capitalized
G&A and interest, enhanced facility projects, enhanced oil
recovery projects, leasing and seismic, and excludes net
acquisition costs and divestiture proceeds of ~$4 million in
1Q'19.
|
2 Adjusted G&A represents G&A
expense less approximately $0.60 - $0.60 per Boe of non-cash
compensation expense in 2Q'19 Estimate.
|
3 Severance taxes estimates are based
on current WTI prices.
|
4 See
Disclosure of Non-GAAP Financial Measures for applicable
definitions and reconciliations to GAAP terms.
|
Webcast Information
EP Energy has scheduled a webcast at 10:00 a.m. Eastern Time, 9:00 a.m. Central
Time, on May 9, 2019, to discuss its
first quarter financial and operational results. The webcast
may be accessed online through the company's website at
epenergy.com in the Investor Center. Materials relating to
the webcast will be available in the Investor Center. A
limited number of telephone lines will be available to participants
by dialing 888-317-6003 (conference ID#1090228) 10 minutes prior to
the start of the webcast. A replay of the webcast will be
available through June 11, 2019 on
the company's website in the Investor Center or by dialing
877-344-7529 (conference ID#10131317).
About EP Energy
The company focuses on enhancing the value of its high quality
asset portfolio, increasing capital efficiency, maintaining
financial flexibility, and pursuing accretive acquisitions and
divestitures. EP Energy is working to set the standard for
efficient development of hydrocarbons in the U.S. Learn more at
epenergy.com.
The following table provides the company's production results,
average realized prices, results of operations and certain non-GAAP
financial measures for the periods presented. See Disclosure
of Non-GAAP Financial Measures for applicable definitions and
reconciliations to GAAP terms.
|
|
|
Quarter ended
March 31,
|
|
|
|
2019
|
|
2018
|
|
|
Oil Sales Volumes
(MBbls/d)
|
|
|
|
|
|
Eagle Ford
|
22.2
|
|
|
24.0
|
|
|
|
NEU
|
10.0
|
|
|
11.6
|
|
|
|
Permian
|
7.2
|
|
|
9.8
|
|
|
|
Total Oil Sales
Volumes
|
39.4
|
|
|
45.4
|
|
|
|
Natural Gas Sales
Volumes (MMcf/d)
|
|
|
|
|
|
Eagle Ford
|
33
|
|
|
36
|
|
|
|
NEU
|
33
|
|
|
34
|
|
|
|
Permian
|
58
|
|
|
56
|
|
|
|
Total Natural Gas
Sales Volumes
|
124
|
|
|
126
|
|
|
|
NGLs Sales Volumes
(MBbls/d)
|
|
|
|
|
|
Eagle Ford
|
5.3
|
|
|
5.9
|
|
|
|
NEU
|
—
|
|
|
—
|
|
|
|
Permian
|
7.8
|
|
|
7.8
|
|
|
|
Total NGLs Sales
Volumes
|
13.1
|
|
|
13.7
|
|
|
|
Equivalent Sales
Volumes (MBoe/d)
|
|
|
|
|
|
Eagle Ford
|
33.0
|
|
|
35.9
|
|
|
|
NEU
|
15.5
|
|
|
17.2
|
|
|
|
Permian
|
24.7
|
|
|
27.0
|
|
|
|
Total Equivalent Sales
Volumes
|
73.2
|
|
|
80.1
|
|
|
|
|
|
|
|
|
|
Net (loss) income ($
in millions)
|
(140)
|
|
|
18
|
|
|
|
Adjusted EBITDAX ($
in millions)
|
148
|
|
|
189
|
|
|
|
Basic and diluted net
(loss) income per common share ($)
|
(0.56)
|
|
|
0.07
|
|
|
|
Adjusted EPS
($)
|
(0.15)
|
|
|
(0.07)
|
|
|
|
Capital Expenditures
($ in millions)(1)
|
154
|
|
|
456
|
|
|
|
Adjusted Capital
Expenditures ($ in millions)
|
150
|
|
|
208
|
|
|
|
Total Operating
Expenses ($/Boe)
|
28.60
|
|
|
31.11
|
|
|
|
Adjusted Cash
Operating Costs ($/Boe)
|
13.52
|
|
|
13.97
|
|
|
|
Depreciation,
depletion and amortization rate ($/Boe)
|
14.34
|
|
|
16.69
|
|
|
|
Average realized
prices(2)
|
|
|
|
|
|
Oil price on physical
sales ($/Bbl)
|
54.32
|
|
|
61.56
|
|
|
|
Oil, including
financial derivatives ($/Bbl)(3)
|
56.01
|
|
|
58.86
|
|
|
|
Natural gas price on
physical sales ($/Mcf)
|
1.58
|
|
|
1.94
|
|
|
|
Natural gas, including
financial derivatives ($/Mcf)(3)
|
1.76
|
|
|
2.03
|
|
|
|
NGLs price on physical
sales ($/Bbl)
|
15.64
|
|
|
20.93
|
|
|
|
NGLs, including
financial derivatives ($/Bbl)(3)
|
15.64
|
|
|
20.91
|
|
_________________________
|
|
|
(1)
|
The quarters ended
March 31, 2019 and 2018 include $4 million and $248 million of
acquisition capital, respectively.
|
(2)
|
Oil and natural gas
prices on physical sales reflect operating revenues for oil and
natural gas reduced by oil and natural gas purchases associated
with managing our physical sales.
|
(3)
|
Prices per unit are
calculated using total financial derivative cash
settlements.
|
EP ENERGY
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(In
millions)
(Unaudited)
|
|
|
Quarter ended
March 31,
|
|
2019
|
|
2018
|
Operating
revenues
|
|
|
|
Oil
|
$
|
193
|
|
|
$
|
252
|
|
Natural
gas
|
18
|
|
|
22
|
|
NGLs
|
18
|
|
|
26
|
|
Financial
derivatives
|
(95)
|
|
|
(14)
|
|
Total operating
revenues
|
134
|
|
|
286
|
|
|
|
|
|
Operating
expenses
|
|
|
|
Transportation
costs
|
25
|
|
|
25
|
|
Lease operating
expense
|
37
|
|
|
39
|
|
General and
administrative
|
21
|
|
|
19
|
|
Depreciation,
depletion and amortization
|
94
|
|
|
120
|
|
Exploration and other
expense
|
1
|
|
|
1
|
|
Taxes, other than
income taxes
|
11
|
|
|
20
|
|
Total operating
expenses
|
189
|
|
|
224
|
|
|
|
|
|
Operating (loss)
income
|
(55)
|
|
|
62
|
|
|
|
|
|
Gain on
extinguishment/modification of debt
|
10
|
|
|
41
|
|
Interest
expense
|
(95)
|
|
|
(85)
|
|
(Loss) income before
income taxes
|
(140)
|
|
|
18
|
|
Income tax
expense
|
—
|
|
|
—
|
|
Net (loss)
income
|
$
|
(140)
|
|
|
$
|
18
|
|
|
|
EP ENERGY
CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In
millions)
(Unaudited)
|
|
|
|
|
|
|
March 31,
2019
|
|
December 31,
2018
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets
|
$
|
234
|
|
$
|
385
|
|
|
Property, plant and
equipment, net(1)
|
3,834
|
|
3,774
|
|
|
Other non-current
assets
|
33
|
|
22
|
|
|
Total assets
|
$
|
4,101
|
|
$
|
4,181
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND EQUITY
|
|
|
|
|
|
|
|
Current
liabilities
|
$
|
403
|
|
$
|
440
|
|
|
Long-term debt, net
of debt issue
costs
|
4,368
|
|
4,285
|
|
|
Other non-current
liabilities
|
66
|
|
55
|
|
|
Total stockholders'
equity
|
(736)
|
|
(599)
|
|
|
Total liabilities and equity
|
$
|
4,101
|
|
$
|
4,181
|
________________________
|
|
|
(1)
|
Balance is net of
accumulated depreciation, depletion and amortization of $3,722
million and $3,651 million as of March 31, 2019 and
December 31, 2018, respectively.
|
EP ENERGY
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In
millions)
(Unaudited)
|
|
|
Three months
ended March 31,
|
|
2019
|
|
2018
|
Net (loss)
income
|
$
|
(140)
|
|
|
$
|
18
|
|
Adjustments to
reconcile net (loss) income to net cash provided
by operating activities
|
|
|
|
Non-cash
expenses
|
92
|
|
|
84
|
|
Asset and liability
changes
|
120
|
|
|
(15)
|
|
Net cash provided by
operating activities
|
72
|
|
|
87
|
|
Net cash used in
investing activities
|
(128)
|
|
|
(229)
|
|
Net cash provided by
financing activities
|
39
|
|
|
117
|
|
|
|
|
|
Change in cash, cash
equivalents and restricted cash
|
(17)
|
|
|
(25)
|
|
|
|
|
|
Cash, cash
equivalents and restricted cash - beginning of period
|
27
|
|
|
45
|
|
Cash, cash
equivalents and restricted cash - end of period
|
$
|
10
|
|
|
$
|
20
|
|
Disclosure of Non-GAAP Financial Measures
The Securities and Exchange Commission's Regulation G applies to
any public disclosure or release of material information that
includes a non-GAAP financial measure. In the event of such a
disclosure or release, Regulation G requires (i) the
presentation of the most directly comparable financial measure
calculated and presented in accordance with GAAP and (ii) a
reconciliation of the differences between the non-GAAP financial
measure presented and the most directly comparable financial
measure calculated and presented in accordance with GAAP.
Non-GAAP Terms
Adjusted EPS is defined as diluted earnings per share adjusted
for certain items that EP Energy considers to be significant to
understanding our underlying performance for a given period.
Adjusted EPS is useful in analyzing the company's ongoing earnings
potential and understanding certain significant items impacting the
comparability of EP Energy's results. Adjusted EPS is
calculated as net income (loss) per common share adjusted for the
impact of financial derivatives (mark-to-market effects of
financial derivatives, net of cash settlements and cash premiums
related to these derivatives), gains and losses on
extinguishment/modification of debt, other costs that affect
comparability, including transition, severance and other costs and
changes in the valuation allowance on deferred tax assets.
Below is a reconciliation of consolidated diluted net income
(loss) per share to Adjusted EPS:
|
|
|
Quarter ended
March 31, 2019
|
|
|
|
Pre
Tax
|
|
After
Tax
|
|
Diluted
EPS(1)
|
|
|
|
($ in millions,
except earnings per share amounts)
|
|
|
Net loss
|
|
|
$
|
(140)
|
|
|
$
|
(0.56)
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments(2)
|
|
|
|
|
|
|
|
Impact of financial
derivatives(3)
|
$
|
103
|
|
|
$
|
80
|
|
|
$
|
0.32
|
|
|
|
Transition, severance
and other costs
|
1
|
|
|
—
|
|
|
—
|
|
|
|
Gain on
extinguishment of debt
|
(10)
|
|
|
(8)
|
|
|
(0.03)
|
|
|
|
Valuation allowance
on deferred tax assets
|
|
|
31
|
|
|
0.12
|
|
|
|
Total
adjustments
|
$
|
94
|
|
|
$
|
103
|
|
|
$
|
0.41
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EPS
|
|
|
|
|
$
|
(0.15)
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares
|
|
|
|
|
249
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
March 31, 2018
|
|
|
|
Pre
Tax
|
|
After
Tax
|
|
Diluted
EPS(1)
|
|
|
|
($ in millions,
except earnings per share amounts)
|
|
|
Net income
|
|
|
$
|
18
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments(2)
|
|
|
|
|
|
|
|
Impact of financial
derivatives(3)
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
0.01
|
|
|
|
Gain on
extinguishment of debt
|
(41)
|
|
|
(32)
|
|
|
(0.13)
|
|
|
|
Valuation allowance
on deferred tax assets
|
|
|
(5)
|
|
|
(0.02)
|
|
|
|
Total
adjustments
|
$
|
(37)
|
|
|
$
|
(34)
|
|
|
$
|
(0.14)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EPS
|
|
|
|
|
$
|
(0.07)
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares
|
|
|
|
|
247
|
|
_________________________
|
|
|
(1)
|
Diluted per share
amounts are based on actual amounts rather than the rounded totals
presented.
|
(2)
|
All individual
adjustments for all periods presented assume a statutory federal
and blended state tax rate, as well as any other income tax effects
specifically attributable to that item.
|
(3)
|
Represents
mark-to-market impact net of cash settlements and cash premiums
related to financial derivatives. There were no cash premiums
received or paid for the periods presented.
|
EBITDAX is defined as net income (loss) plus interest and debt
expense, income taxes, depreciation, depletion and amortization and
exploration expense. Adjusted EBITDAX is defined as EBITDAX,
adjusted as applicable in the relevant period for the net change in
the fair value of derivatives (mark-to-market effects of financial
derivatives, net of cash settlements and cash premiums related to
these derivatives), the non-cash portion of compensation expense
(which represents non-cash compensation expense under our long-term
incentive programs adjusted for cash payments made under these
plans), transition, severance and other costs that affect
comparability, and gains and losses on extinguishment/modification
of debt.
Below is a reconciliation of our consolidated net income (loss)
to EBITDAX and Adjusted EBITDAX:
|
|
Quarter ended
March 31,
|
|
|
2019
|
|
2018
|
|
|
($ in millions)
|
Net (loss)
income
|
|
$
|
(140)
|
|
|
$
|
18
|
|
Income tax
expense
|
|
—
|
|
|
—
|
|
Interest expense, net
of capitalized interest
|
|
95
|
|
|
85
|
|
Depreciation,
depletion and amortization
|
|
94
|
|
|
120
|
|
Exploration
expense
|
|
1
|
|
|
1
|
|
EBITDAX
|
|
50
|
|
|
224
|
|
Mark-to-market on
financial derivatives(1)
|
|
95
|
|
|
14
|
|
Cash settlements and
cash premiums on financial
derivatives(2)
|
|
8
|
|
|
(10)
|
|
Non-cash portion of
compensation expense(3)
|
|
4
|
|
|
2
|
|
Transition, severance
and other costs(4)
|
|
1
|
|
|
—
|
|
Gain on
extinguishment/modification of debt
|
|
(10)
|
|
|
(41)
|
|
Adjusted
EBITDAX
|
|
$
|
148
|
|
|
$
|
189
|
|
_________________________
|
|
|
(1)
|
Represents the income
statement impact of financial derivatives.
|
(2)
|
Represents actual
cash settlements related to financial derivatives. There were no
cash premiums received or paid for the periods
presented.
|
(3)
|
Non-cash portion of
compensation expense represents compensation expense (net of
forfeitures) under long-term incentive programs adjusted for cash
payments made under these plans.
|
(4)
|
Reflects transition
and severance costs related to workforce reductions.
|
Adjusted cash operating costs is a non-GAAP measure that is
defined as total operating expenses, excluding depreciation,
depletion and amortization expense, exploration expense, the
non-cash portion of compensation expense (which represents
compensation expense under our long-term incentive programs
adjusted for cash payments made under these plans) and transition,
severance and other costs that affect comparability. We use
this measure to describe the costs required to directly or
indirectly operate our existing assets and produce and sell our oil
and natural gas, including the costs associated with the delivery
and purchases and sales of produced commodities. Accordingly, we
exclude depreciation, depletion, and amortization as such costs are
non-cash in nature. We exclude exploration expense from our measure
as it is substantially non-cash in nature and is not related to the
costs to operate our existing assets. We exclude the non-cash
portion of compensation expense as well as transition, severance
and other costs that affect comparability, as we believe such
adjustments allow investors to evaluate our costs against others in
our industry and this item can vary across companies due to
different ownership structures, compensation objectives or the
occurrence of transactions.
Below is a reconciliation of our GAAP operating expenses to
non-GAAP adjusted cash operating costs:
|
|
Quarter ended
March 31,
|
|
|
2019
|
|
2018
|
|
|
Total
|
|
Per-Unit(1)
|
|
Total
|
|
Per-Unit(1)
|
|
|
($ in millions,
except per unit costs)
|
Transportation
costs
|
|
25
|
|
|
3.74
|
|
|
25
|
|
|
3.43
|
|
Lease operating
expense
|
|
37
|
|
|
5.55
|
|
|
39
|
|
|
5.48
|
|
General and
administrative
|
|
21
|
|
|
3.16
|
|
|
19
|
|
|
2.58
|
|
Depreciation,
depletion and amortization
|
|
94
|
|
|
14.34
|
|
|
120
|
|
|
16.69
|
|
Exploration
and other expense
|
|
1
|
|
|
0.08
|
|
|
1
|
|
|
0.18
|
|
Taxes, other
than income taxes
|
|
11
|
|
|
1.73
|
|
|
20
|
|
|
2.75
|
|
Total operating
expenses
|
|
$
|
189
|
|
|
$
|
28.60
|
|
|
$
|
224
|
|
|
$
|
31.11
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
$
|
(94)
|
|
|
$
|
(14.34)
|
|
|
$
|
(120)
|
|
|
$
|
(16.69)
|
|
Exploration
expense
|
|
(1)
|
|
|
(0.08)
|
|
|
(1)
|
|
|
(0.18)
|
|
Non-cash portion of
compensation expense(2)
|
|
(4)
|
|
|
(0.57)
|
|
|
(2)
|
|
|
(0.27)
|
|
Transition, severance
and other costs(2)
|
|
(1)
|
|
|
(0.09)
|
|
|
—
|
|
|
—
|
|
Adjusted cash
operating costs and per-unit adjusted
cash costs
|
|
$
|
89
|
|
|
$
|
13.52
|
|
|
$
|
101
|
|
|
$
|
13.97
|
|
|
|
|
|
|
|
|
|
|
Total consolidated
equivalent volumes (MBoe)
|
|
|
|
6,588
|
|
|
|
|
7,208
|
|
_________________________
|
|
(1) Per unit costs are based
on actual total amounts rather than the rounded totals
presented.
|
(2) Amounts are excluded in
the calculation of adjusted general and administrative
expense.
|
Adjusted general and administrative expenses are defined as
general and administrative expenses excluding the non-cash portion
of compensation expense which represents compensation expense (net
of forfeitures) under our long-term incentive programs adjusted for
cash payments under these plans and transition, severance and other
costs. Adjusted cash general and administrative expenses are
defined as adjusted general and administrative expenses including
capitalized labor.
Below is a reconciliation of our GAAP general and administrative
expense to non-GAAP adjusted general and administrative expense and
non-GAAP adjusted cash general and administrative expense:
|
Actuals
|
|
|
|
Quarter ended
March 31,
|
|
2Q'19
Estimate
|
|
2019
|
|
2018
|
|
Low
|
|
High
|
|
Total
|
|
($/Boe)1
|
|
Total
|
|
($/Boe)1
|
|
($/Boe)
|
|
($/Boe)
|
|
($ in millions,
except per Boe costs)
|
GAAP general and
administrative expense
|
$
|
21
|
|
|
$
|
3.16
|
|
|
$
|
19
|
|
|
$
|
2.58
|
|
|
$
|
2.95
|
|
|
$
|
3.50
|
|
Less non-cash
compensation expense
|
4
|
|
|
0.57
|
|
|
2
|
|
|
0.27
|
|
|
0.60
|
|
|
0.60
|
|
Less transition,
severance and other costs
|
1
|
|
|
0.09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Adjusted general and
administrative expense
|
$
|
16
|
|
|
$
|
2.50
|
|
|
$
|
17
|
|
|
$
|
2.31
|
|
|
$
|
2.35
|
|
|
$
|
2.90
|
|
Capitalized
labor
|
3
|
|
|
0.39
|
|
|
4
|
|
|
0.59
|
|
|
|
|
|
Adjusted cash general
and administrative expense
|
$
|
19
|
|
|
$
|
2.89
|
|
|
$
|
21
|
|
|
$
|
2.90
|
|
|
|
|
|
_________________________
|
|
(1) Per
unit costs are based on actual total amounts rather than the
rounded totals presented.
|
Net Debt is a non-GAAP measure defined as long-term debt less
cash and cash equivalents. At March 31,
2019, the Company's net debt was approximately $4.5 billion (total debt $4,468 million less cash and cash equivalents of
approximately $10 million).
EBITDAX and Adjusted EBITDAX are used by management and we
believe provide investors with additional information (i) to
evaluate our ability to service debt adjusting for items required
or permitted in calculating covenant compliance under our debt
agreements, (ii) to provide an important supplemental
indicator of the operational performance of our business without
regard to financing methods and capital structure, (iii) for
evaluating our performance relative to our peers, (iv) to
measure our liquidity (before cash capital requirements and working
capital needs) and (v) to provide supplemental information
about certain material non-cash and/or other items that may not
continue at the same level in the future. Adjusted Cash Operating
Costs ($ and per unit) are used by management as a performance
measure, and we believe provides investors valuable information
related to our operating performance and our operating efficiency
relative to other industry participants and comparatively over time
across our historical results. Adjusted General and
Administrative expense, Adjusted Cash General and Administrative
expense and related per unit measures as well as Adjusted Oil and
Gas Expenditures are used by management and investors as additional
information as noted above. Net Debt is used by management for
analysis of the company's financial position and/or liquidity. In
addition, the company believes that these measures are widely used
by professional research analysts and others in the valuation,
comparison and investment recommendations of companies in the oil
and gas exploration and production industry.
Adjusted EPS, EBITDAX, Adjusted EBITDAX, Adjusted Cash Operating
Costs, Adjusted Oil and Gas Expenditures, Adjusted General and
Administrative expense, Adjusted Cash General and Administrative
expense and Net Debt have limitations as analytical tools and
should not be considered in isolation or as a substitute for
analysis of our results as reported under U.S. GAAP. Adjusted
EPS should not be used as an alternative to earnings (loss) per
share or other measure of financial performance presented in
accordance with GAAP. EBITDAX and Adjusted EBITDAX should not be
used as an alternative to net income (loss), operating income
(loss), operating cash flows or other measures of financial
performance or liquidity presented in accordance with GAAP.
Adjusted Cash Operating Costs should not be used as an alternative
to operating expenses, operating cash flows or other measures of
financial performance or liquidity presented in accordance with
GAAP. Adjusted General and Administrative expense and Adjusted Cash
General and Administrative expense should not be used as an
alternative to GAAP general and administrative expense. Adjusted
Oil and Gas Expenditures should not be used as an alternative to
oil and gas capital expenditures or other measures of liquidity
presented in accordance with GAAP. Our presentation of Adjusted
EPS, EBITDAX, Adjusted EBITDAX, Adjusted Cash Operating Costs,
Adjusted Oil and Gas Expenditures, Adjusted General and
Administrative expense, Adjusted Cash General and Administrative
expense and Net Debt may not be comparable to similarly titled
measures used by other companies in our industry. Furthermore, our
presentation of Adjusted EPS, EBITDAX, Adjusted EBITDAX, Adjusted
Cash Operating Costs, Adjusted Oil and Gas Expenditures, Adjusted
General and Administrative expense, Adjusted Cash General and
Administrative expense and Net Debt should not be construed as an
inference that our future results will be unaffected by the items
noted above or what we believe to be other unusual items, or that
in the future we may not incur expenses that are the same as or
similar to some of the adjustments in this presentation.
Cautionary Statement Regarding Forward-Looking
Statements
This release includes certain forward-looking statements and
projections of EP Energy. We have made every reasonable effort to
ensure that the information and assumptions on which these
statements and projections are based are current, reasonable, and
complete. However, a variety of factors could cause actual results
to differ materially from the projections, anticipated results or
other expectations expressed, including, without limitation, the
volatility of and potential for sustained low oil, natural gas and
NGL prices; the supply and demand for oil, natural gas and
NGLs; the company's ability to meet production volume
targets; changes in commodity prices and basis differentials for
oil and natural gas; the uncertainty of estimating proved reserves
and unproved resources; the ability to develop proved undeveloped
reserves; the future level of operating and capital costs; the
availability and cost of financing to fund future exploration and
production operations; the success of drilling programs with regard
to proved undeveloped reserves and unproved resources; the
company's ability to comply with the covenants in various financing
documents; the company's ability to generate sufficient cash flow
to meet its debt obligations and commitments; the possibility that
the company may not be able to continue as a going concern
beginning in May 2020 if it is not
successful in obtaining the necessary additional liquidity and/or
if commodity prices do not appreciably increase; the company's
limited ability to borrow under existing debt agreements to fund
its operations; the company's ability to generate sufficient cash
flow to meet its debt obligations and commitments; the company's
ability to obtain necessary governmental approvals for proposed
E&P projects and to successfully construct and operate such
projects; actions by the credit rating agencies, including
potential downgrades; credit and performance risk of our lenders,
trading counterparties, customers, vendors, suppliers and third
party operators; general economic and weather conditions in
geographic regions or markets served by the company, or where
operations of the company are located, including the risk of a
global recession and negative impact on oil and natural gas demand;
the uncertainties associated with governmental regulation,
including any potential changes in federal and state tax laws and
regulations; competition; and other factors described in the
company's Securities and Exchange Commission filings. While the
company makes these statements and projections in good faith,
neither the company nor its management can guarantee that
anticipated future results will be achieved. Reference must be made
to those filings for additional important factors that may affect
actual results. EP Energy assumes no obligation to publicly update
or revise any forward-looking statements made herein or any other
forward-looking statements made by EP Energy, whether as a result
of new information, future events, or otherwise.
Contact
Investor and Media
Relations
Jordan Strauss
713-997-6791
jordan.strauss@epenergy.com
View original content to download
multimedia:http://www.prnewswire.com/news-releases/ep-energy-reports-1q19-results-300846816.html
SOURCE EP Energy Corporation