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Bonanza Creek Energy Announces First Quarter 2017 Financial Results and Operating Outlook
  • First quarter production volumes averaged 17.6 MBoe per day
  • Quarterly GAAP net loss of  $1.91 per diluted share; adjusted net loss(1) of $0.00 per diluted share
  • Quarterly GAAP cash provided by operating activities of $15.7 million; adjusted EBITDAX(1) of $26.3 million
  • Expects to commence drilling and completion operations in the Wattenberg around June 1, 2017

(1) Non-GAAP measure, see attached Reconciliation Schedules.

DENVER, May 10, 2017 (GLOBE NEWSWIRE) -- Bonanza Creek Energy, Inc. (NYSE:BCEI) (the "Company") today announces its first quarter 2017 financial and operating outlook.

First Quarter 2017 Results

For the first quarter of 2017, the Company reported average daily production of 17.6 MBoe per day, a 28% decrease from the first quarter of 2016, and a 4% sequential decrease from the fourth quarter of 2016. The reduction in production volumes is a result of having no drilling and completion activity during the previous four quarters. Product mix for the first quarter of 2017 was 52% oil, 22% NGLs, and 26% natural gas. 

Net revenue for the first quarter of 2017 was $52.6 million, compared to $44.2 million for the first quarter of 2016. Crude oil accounted for approximately 76% of total revenue. Differentials for the Company's Rocky Mountain oil production during the quarter averaged approximately $4.47 per Bbl.  Corporate average realized prices for the first quarter of 2017 are presented below.

Average Realized Prices  
  Three Months Ended
March 31, 2017
Oil (per Bbl) 48.59  
Gas (per Mcf) 2.73  
NGL (per Bbl) 17.01  
Boe (Per Boe) 33.26  

LOE for the first quarter of 2017 was $9.9 million, or $6.28 per Boe, compared to $13.3 million or $6.01 per Boe in the first quarter of 2016. Throughout 2016 and into 2017, the Company has executed on multiple cost saving initiatives, which have resulted in an absolute LOE reduction of 25%.

Below is a breakout of the Company's regional LOE and gas plant and midstream operating expense for the first quarter of 2017.

Production Expense
  Three Months Ended March 31, 2017
  Rocky Mountain   Mid-Continent   Total Company
  ($M)   ($/Boe)   ($M)   ($/Boe)   ($M)   ($/Boe)
Lease operating expense $ 6,917     $ 5.47     $ 3,008     $ 9.56     $ 9,925     $ 6.28  
Gas plant and Midstream Operating Expense $ 1,281     $ 1.01     $ 1,424     $ 4.53     2,705     $ 1.71  
Total $ 8,198     $ 6.48     $ 4,432     $ 14.09     $ 12,630     $ 7.99  
   

The Company's general and administrative expense was $12.1 million for the first quarter of 2017, a 32% decrease from the first quarter of 2016. The decrease in expense from the prior year is due to a work-force reorganization in the first quarter of 2016 that resulted in reduced employee headcount.

As the Company emerged from Chapter 11 bankruptcy subsequent to the end of the quarter, Bonanza Creek's first quarter 2017 results will be the last full quarter of accounting reflecting the Company, pre-emergence. Fresh start accounting will begin on May 1, 2017 and will be reflected in the Company's second quarter results.

Operational Outlook

On April 28, 2017, the Company emerged from its Chapter 11 bankruptcy proceeding. As a part of the restructuring, the Company received $207.5 million in new capital from a rights offering and pursuant to a settlement agreement with certain equity holders. The new capital provided liquidity for the Company to resume its drilling and completion activities. The Company plans to commence drilling operations in June 2017. The Company also plans to begin completing four previously drilled, but uncompleted wells later this month. Upon approval of the 2017 capital program by the new Board of Directors, the Company will provide guidance for the remainder of 2017 and communicate additional details around its longer term development and strategy.

Regulatory Environment

As a result of a recent incident with a home explosion in Firestone, Colorado, the Colorado Oil and Gas Conservation Commission ("COGCC") issued additional regulations to document and inspect all flow lines and verify that all existing flow lines not in use are properly abandoned. In addition, flow lines within 1,000 feet of inhabited buildings must be pressure tested by the end of the second quarter of 2017. Due to the rural nature of the Company's acreage position, there are very few wells and flow lines that are proximate to inhabited structures. The Company's nearest well to an inhabited structure is approximately 400 feet and the Company has 44 wells within 1,000 feet of inhabited structures that would be affected by this new regulation. The Company confirmed that it has very few flow lines that have been abandoned and relocated on its acreage and does not have any subdivision development on or near any of its plugged and abandoned wells or flow lines. In addition, the Company annually tests its flow lines and successfully completed an audit of these results by the COGCC in 2016. The Company expects to meet or exceed all additional regulations to ensure the health and safety of the communities in which it operates.

Bonanza Creek has consistently been regarded as a best-in-class operator by the COGCC with regard to health and safety and was awarded an "outstanding operations" award by the Commission in both 2015 and 2016.

About Bonanza Creek Energy, Inc.

Bonanza Creek Energy, Inc. is an independent oil and natural gas company engaged in the acquisition, exploration, development and production of onshore oil and associated liquids-rich natural gas in the United States. The Company’s assets and operations are concentrated primarily in the Rocky Mountain region in the Wattenberg Field, focused on the Niobrara and Codell formations, and in southern Arkansas, focused on oily Cotton Valley sands. The Company’s common shares are listed for trading on the NYSE under the symbol: “BCEI.” For more information about the Company, please visit www.bonanzacrk.com. Please note that the Company routinely posts important information about the Company under the Investor Relations section of its website.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by the Company based on management’s experience, perception of historical trends and technical analyses, current conditions, anticipated future developments and other factors believed to be appropriate and reasonable by management. When used in this press release, the words “will,” “potential,” “believe,” “estimate,” “intend,” “expect,” “may,” “should,” “anticipate,” “could,” “plan,” “predict,” “project,” “profile,” “model” or their negatives, other similar expressions or the statements that include those words, are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These statements include statements regarding development and completion expectations and strategy; decreasing operating and capital costs; impact of the Company's reorganization; and updated 2017 guidance. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, that may cause actual results to differ materially from those implied or expressed by the forward-looking statements, including the following: changes in natural gas, oil and NGL prices; general economic conditions, including the performance of financial markets and interest rates; drilling results; shortages of oilfield equipment, services and personnel; operating risks such as unexpected drilling conditions; ability to acquire adequate supplies of water; risks related to derivative instruments; access to adequate gathering systems and pipeline take-away capacity; and pipeline and refining capacity constraints. Further information on such assumptions, risks and uncertainties is available in the Company’s SEC filings. We refer you to the discussion of risk factors in our Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 16, 2017, and other filings submitted by us to the Securities Exchange Commission. The Company’s SEC filings are available on the Company’s website at www.bonanzacrk.com and on the SEC’s website at www.sec.gov. All of the forward-looking statements made in this press release are qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, including guidance, and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.


Schedule 1: Statement of Operations
(in thousands, expect for per share amounts, unaudited)

  Three Months Ended
March 31,
  2017   2016
Operating net revenues:
Oil and gas sales $ 52,559     $ 44,174  
Operating expenses:      
Lease operating expense 9,925     13,298  
Gas plan and midstream operating expense 2,705     3,789  
Severance and ad valorem taxes 4,319     3,154  
Exploration 3,407     266  
Depreciation, depletion and amortization 21,212     26,379  
Impairment of oil and gas properties     10,000  
Abandonment and impairment of unproved properties     6,906  
Unused commitments 993      
General and administrative (including $1,725 and $3,004, respectively, of stock-based compensation) 12,094     17,685  
Total operating expenses 54,655     81,477  
Loss from operations (2,096 )   (37,303 )
Other income (expense):      
Derivative loss     (1,007 )
Interest expense (4,568 )   (14,547 )
Reorganization items, net (89,003 )    
Gain on termination fee     6,000  
Other income (loss) 1,391     (380 )
Total other expense (92,180 )   (9,934 )
Net Loss $ (94,276 )   $ (47,237 )
       
Basic net loss per common share $ (1.91 )   $ (0.96 )
       
Diluted net loss per common share $ (1.91 )   $ (0.96 )
       
Basic weighted-average common shares outstanding 49,452     49,131  
       
Diluted weighted-average common shares outstanding 49,452     49,131  
           
• The Company follows the two-class method when computing the basic and diluted loss per share, which allocates earnings between common shareholders and participating securities. Please refer to Note 10 – Earnings per Share in the Form 10-Q, for a detailed calculation.


Schedule 2: Statement of Cash Flows
(in thousands, unaudited)

  Three Months Ended
March 31,
  2017   2016
Cash flows from operating activities:      
Net loss $ (94,276 )   $ (47,237 )
Adjustments to reconcile net loss to net cash provided by operating activities:      
Depreciation, depletion and amortization 21,212     26,379  
Non-cash reorganization items 57,341      
Impairment of oil and gas properties     10,000  
Abandonment and impairment of unproved properties     6,906  
Well abandonment costs and dry hole expense 2,701     232  
Stock-based compensation 1,725     3,004  
Amortization of deferred financing costs and debt premium     608  
Derivative loss     1,007  
Derivative cash settlements     7,508  
Other 383     (116 )
Changes in current assets and liabilities:      
Accounts receivable (3,814 )   23,044  
Prepaid expenses and other assets (536 )   (1,622 )
Accounts payable and accrued liabilities 31,092     (3,141 )
Settlement of asset retirement obligations (176 )   (41 )
Net cash provided by operating activities 15,652     26,531  
Cash flows from investing activities:      
Acquisition of oil and gas properties (439 )   (532 )
Exploration and development of oil and gas properties (3,425 )   (34,872 )
(Increase) decrease in restricted cash 118     (2,533 )
(Additions) deletions to property and equipment - non oil and gas (201 )   47  
Net cash used in investing activities (3,947 )   (37,890 )
Cash flows from financing activities:      
Proceeds from credit facility     209,000  
Payment of employee tax withholdings in exchange for the return of common stock (335 )   (229 )
Deferred financing costs     (154 )
Net cash (used in) provided by financing activities (335 )   208,617  
Net change in cash and cash equivalents 11,370     197,258  
Cash and cash equivalents:      
Beginning of period 80,565     21,341  
End of period $ 91,935     $ 218,599  

Schedule 3: Condensed Balance Sheet
(in thousands, unaudited)

  March 31,   December 31,
  2017   2016
ASSETS              
Current assets $ 127,513     $ 112,428  
Total property and equipment, net 1,004,915     1,018,968  
Other noncurrent assets 2,737     3,082  
Total Assets $ 1,135,165     $ 1,134,478  
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities 287,566     1,070,466  
Liabilities subject to compromise 873,292      
Other long-term liabilities 48,132     44,951  
Total Liabilities 1,208,990     1,115,417  
       
Stockholders’ Equity (Deficit) (73,825 )   19,061  
Total Liabilities and Stockholders’ Equity $ 1,135,165     $ 1,134,478  

Schedule 4: Volumes and Realized Prices (Before and After the Effect of Commodity Hedges)
(unaudited)

  Three Months Ended
March 31,

  2017   2016
Wellhead Volumes and Prices      
Crude Oil and Condensate Sales Volumes (Bbl/d)      
Rocky Mountains 7,197     11,665  
Mid-Continent 1,934     2,437  
Total 9,131     14,102  
       
Crude Oil and Condensate Realized Prices ($/Bbl)      
Rocky Mountains $ 47.80     $ 25.15  
Mid-Continent $ 51.55     $ 35.95  
Composite $ 48.59     $ 27.02  
       
Natural Gas Liquids Sales Volumes (Bbl/d)      
Rocky Mountains 3,290     3,416  
Mid-Continent 490     720  
Total 3,780     4,136  
       
Natural Gas Liquids Realized Prices ($/Bbl)      
Rocky Mountains $ 15.72     $ 13.12  
Mid-Continent $ 25.65     $ 12.33  
Composite $ 17.01     $ 12.98  
       
Natural Gas Sales Volumes (Mcf/d)      
Rocky Mountains 21,435     28,638  
Mid-Continent 6,433     7,853  
Total 27,868     36,491  
       
Natural Gas Realized Prices ($/Mcf)      
Rocky Mountains $ 2.57     $ 1.20  
Mid-Continent $ 3.24     $ 2.09  
Composite $ 2.73     $ 1.39  
       
Crude Oil Equivalent Sales Volumes (Boe/d)      
Rocky Mountains 14,060     19,854  
Mid-Continent 3,496     4,466  
Total 17,556     24,320  
       
Crude Oil Equivalent Sales Prices ($/Boe)      
Rocky Mountains $ 32.07     $ 18.77  
Mid-Continent $ 38.07     $ 25.27  
Composite $ 33.26     $ 19.96  
       
Total Sales Volumes (MBoe) 1,580,011     2,213,109  

Schedule 5: Per unit operating margins
(unaudited)

  Three Months Ended March 31,
  2017   2016   Percent Change
Production          
Oil (MBbl) 822     1,283     (36 )%
Gas (MMcf) 2,508     3,321     (24 )%
NGL (MBbl) 340     376     (10 )%
Equivalent (MBoe) 1,580     2,213     (29 )%
           
Realized pricing (before derivatives)        
Oil ($/Bbl) $ 48.59     $ 27.02     80 %
Gas ($/Mcf) $ 2.73     $ 1.39     96 %
NGL ($/Bbl) $ 17.01     $ 12.98     31 %
Equivalent ($/Boe) $ 33.26     $ 19.96     67 %
           
Per Unit Costs ($/Boe)          
Realized price (before derivatives) $ 33.26     $ 19.96     67 %
Lease operating expense 6.28     6.01     4 %
Gas plant and midstream operating expense 1.71     1.71     %
Severance and ad valorem 2.73     1.43     91 %
Cash general and administrative 6.56     6.63     (1 )%
Total cash operating costs $ 17.28     $ 15.78     10 %
Cash operating margin (before derivatives) $ 15.98     $ 4.18     282 %
Derivative cash settlements     3.39     (100 )%
Cash operating margin (after derivatives) $ 15.98     $ 7.57     111 %
           
Non-cash items          
Depreciation, depletion and amortization $ 13.43     $ 11.92     13 %
Non-cash general and administrative $ 1.09     $ 1.36     (20 )%
           

Schedule 6: Adjusted Net Loss
(in thousands, except per share amounts, unaudited)

Adjusted net loss is a supplemental non-GAAP financial measure that is used by management and external users of the Company’s consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines adjusted net loss as net loss after adjusting first for (1) the impact of certain non-cash items, including unrealized gains and losses on unsettled derivative instruments, impairment of oil and gas properties, other similar non-cash charges and one-time transactions and then (2) the non-cash and one time items’ impact on taxes based on a tax rate that approximates the Company's effective tax rate in each period. Adjusted net loss is not a measure of net income as determined by GAAP.

The following table presents a reconciliation of the GAAP financial measure of net loss to the non-GAAP financial measure of adjusted net loss.

    Three Months Ended
March 31,
    2017   2016
Net loss   $ (94,276 )   $ (47,237 )
Adjustments to net loss:                
Derivative loss       1,007  
Derivative cash settlements       7,508  
Impairment of oil and gas properties       10,000  
Abandonment and impairment of unproved properties       6,906  
Well abandonment costs and dry hole expense   2,701     232  
Gain on termination fee       (6,000 )
Stock-based compensation   1,725     3,004  
Cash severance costs (1)       2,162  
Pre-petition advisor fees (1)   683      
Reorganization items, net   89,003      
Total adjustments before taxes   94,112     24,819  
Income tax effect        
Total adjustments after taxes   $ 94,112     $ 24,819  
         
Adjusted net loss   $ (164 )   $ (22,418 )
Adjusted net loss per diluted share   $     $ (0.46 )
         
Diluted weighted-average common shares outstanding   49,452     49,131  
         
(1) Included as a portion of general and administrative expense on the consolidated statement of operations.

Schedule 7: Adjusted EBITDAX
(in thousands, unaudited)

Adjusted EBITDAX is a supplemental non-GAAP financial measure that is used by management and external users of the Company’s consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted EBITDAX as earnings before interest expense, income taxes, depreciation, depletion, amortization, impairment, exploration expenses and other similar non-cash and non-recurring charges. Adjusted EBITDAX is not a measure of net income or cash flows as determined by GAAP.

The following table presents a reconciliation of the GAAP financial measure of net loss to the non-GAAP financial measure of Adjusted EBITDAX.

    Three Months Ended March 31,
    2017   2016
Net Loss
  $ (94,276 )   $ (47,237 )
Exploration   3,407     266  
Depreciation, depletion and amortization   21,212     26,379  
Impairment of oil and gas properties       10,000  
Abandonment and impairment of unproved properties       6,906  
Stock-based compensation   1,725     3,004  
Cash severance costs (1)       2,162  
Gain on termination fee       (6,000 )
Interest expense   4,568     14,547  
Derivative loss       1,007  
Derivative cash settlements       7,508  
Pre-petition advisory fees (1)   683      
Reorganization items, net   89,003      
Income tax benefit (expense)        
Adjusted EBITDAX   $ 26,322     $ 18,542  
         
(1) Included as a portion of general and administrative expense on the consolidated statement of operations.

 

For further information, please contact:
James R. Edwards
Director - Investor Relations
720-440-6136
jedwards@bonanzacrk.com

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Bonanza Creek Energy, Inc.



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