Bonanza Creek Energy Announces First Quarter 2021 Financial Results, Initiation of a Quarterly Dividend, and Formation of an ESG Committee of the Board of Directors

May 3, 2021

DENVER, May 03, 2021 (GLOBE NEWSWIRE) -- Bonanza Creek Energy, Inc. (NYSE: BCEI) (the “Company” or “Bonanza Creek”) today announced its first quarter 2021 financial results, announced a fixed per share dividend, and the formation of an ESG Committee of the Board. The Company has also posted an updated investor presentation to its website.

Highlights include:

  • Initiating an annual cash dividend of $1.40 per share to be payable quarterly beginning in the second quarter 2021
  • Closed merger with HighPoint Resources Corporation (“HighPoint”) on April 1, 2021
  • Average sales volumes for the first quarter 2021 of 20.9 thousand barrels of oil equivalent per day (“MBoe/d”) with oil representing 50% of total volumes
  • 2Q - 4Q 2021 production guidance of 40.0 to 44.0 MBoe/d with oil representing 48% to 52% of total volumes
  • First quarter 2021 total capital expenditures of $32.9 million
  • Total 2021 annual capital expenditures are expected to be between $150 and $170 million
  • Lease operating expense (“LOE”) of $3.05 per Boe for the first quarter 2021
  • 2Q - 4Q 2021 LOE guidance of $3.00 to $3.25 per Boe
  • GAAP net loss of $0.1 million
  • Adjusted EBITDAX(1) of $43.7 million, or $2.10 per diluted share
  • Formation of an ESG Committee of the Board of Directors to assist in fulfilling the Company’s responsibilities on a variety of ESG policies, programs, and initiatives

(1) Non-GAAP measure; see attached reconciliation schedules at the end of this release.

Quarterly Dividend & Capital Discipline Priorities

The Company expects its business plan to produce significant discretionary free cash flow over many years. The Company will pay a sustainable fixed dividend from its free cash flow that is resilient, even in stressed commodity price environments. Cash flow in excess of the fixed dividend will be used to fund a disciplined, returns-driven capital program targeting stable production, maintain the Company’s best-in-class balance sheet, and participate in other opportunities aimed at increasing shareholder value.

The Bonanza Creek Board of Directors has established an annual cash dividend of approximately $43 million, or $1.40 per share, to be declared and paid on a quarterly basis. The first fixed dividend is to be paid on June 30, 2021 to shareholders of record at the close of business on June 15, 2021.

Eric Greager, President and Chief Executive Officer of Bonanza Creek, commented, “The decision to initiate a dividend represents a significant milestone for Bonanza Creek. The dividend reinforces our commitment to delivering value to our shareholders. We tested our business at sustained low commodity prices, and the resilient free cash flow and strong balance sheet provide ample flexibility to support this meaningful dividend, while also pursuing other value-accretive opportunities. Free cash flow in excess of our base dividend will be used to maintain our low leverage, and pursue the highest returning opportunities for our shareholders.”

First Quarter 2021 Results

During the first quarter of 2021, the Company reported average daily sales of 20.9 MBoe/d. Product mix for the first quarter was 50% oil, 21% NGLs, and 29% residue natural gas. The Company’s oil mix fluctuates with the pace, schedule, and thermal maturity of wells that have been turned to sales in recent quarters. The Company had limited activity in 2020 and has seen its oil mix decline in recent quarters, but expects this decline to moderate in 2021 as activity resumes. The table below provides sales volumes, product mix, and average sales prices for the first quarter 2021 and 2020.

  Three Months Ended March 31,
  2021 2020 % Change
Avg. Daily Sales Volumes:      
Crude oil (Bbls/d) 10,474 13,510 (22)%
Natural gas (Mcf/d) 35,710 39,150 (9)%
Natural gas liquids (Bbls/d) 4,424 4,801 (8)%
Crude oil equivalent (Boe/d) 20,850 24,836 (16)%
       
Product Mix      
Crude oil 50% 54%  
Natural gas 29% 26%  
Natural gas liquids 21% 20%  
       
Average Sales Prices (before derivatives):      
Crude oil (per Bbl) $52.83 $41.15  
Natural gas (per Mcf) $3.82 $1.39  
Natural gas liquids (per Bbl) $27.54 $7.42  
Crude oil equivalent (per Boe) $38.93 $26.01  

Capital expenditures were $32.9 million for the first quarter of 2021. At the end of the quarter, the Company turned to sales 9 gross (8.6 net) wells, 6 of which were extended reach lateral (“XRL”) wells. Capital expenditures for the first quarter were below our guidance range of $35 to $40 million as a result of lower than budgeted costs on planned activity, and certain non-well activity that will be completed a few weeks later than planned. The Company expects its full-year capital expenditures to be in the range of $150 to $170 million.

Net oil and gas revenue for the first quarter of 2021 was $74.2 million compared to $62.6 million for the fourth quarter of 2020. The increase was a result of higher oil, natural gas, and NGL realized prices, partially offset by a decline in sales volumes. Crude oil accounted for approximately 67% of total revenue for the quarter. Differentials for the Company’s oil production increased slightly during the quarter to approximately $4.75 per barrel off NYMEX WTI versus approximately $4.53 per barrel during the fourth quarter of 2020, due to strengthening oil prices. The Company expects its full-year 2021 oil differential to average between $4.00 and $5.00 per barrel.

LOE for the first quarter of 2021 on a per unit basis increased 39% to $3.05 per Boe from $2.20 per Boe in the fourth quarter of 2020. LOE on a per unit basis increased during the first quarter due to declining volumes, and increased expenses related to severe storms during the quarter. The Company’s combined LOE guidance for Q2 through Q4 2021 remains at a range of $3.00 to $3.25 per Boe.

RMI net effective cost for the first quarter 2021 was $1.49 per Boe, which consists of $2.08 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. The Company’s RMI operating expense guidance for Q2 through Q4 2021 remains at a range of $0.85 to $1.15 per Boe.

The Company’s general and administrative (“G&A”) expenses were $9.2 million for the first quarter of 2021, which included $1.6 million in non-cash stock-based compensation. Recurring cash G&A, which excludes non-recurring and non-cash items, of $7.6 million for the first quarter of 2020 increased slightly compared to fourth quarter 2020. On a per-unit basis, the Company’s recurring cash G&A increased 27% to $4.07 per Boe in the first quarter of 2021 from $3.20 per Boe in the fourth quarter of 2020. The Company reiterates its recurring cash G&A guidance of $21.4 million to $23.9 million as a combined company in Q2 through Q4 2021.

RMI net effective cost and recurring cash G&A are non-GAAP measures. Please see Schedule 7 and Schedule 8 at the end of this release for a reconciliation to the most comparable GAAP measure.

Guidance Summary

The table below outlines the Company’s guidance for the remainder of 2021.

 Actuals Guidance
Guidance1Q 2021 2Q - 4Q 2021
Production (MBoe/d)20.9 40.0 - 44.0
% Oil50% 48% - 52%
Lease operating expense ($/Boe)$3.05 $3.00 - $3.25
RMI operating expense ($/Boe)$2.08 $0.85 - $1.15
Recurring cash general and administrative ($MM)$7.6 $21.4 - $23.9
Severance and ad valorem taxes (% of revenue)6.2% 5.0% - 6.0%
Oil differential ($/bbl)$4.75 $4.00 - $5.00
Total capital expenditures ($MM)$32.9 $117.1 - $137.1

Conference Call Information

The Company will host a conference call to discuss these results on May 4, 2021 at 9:00 a.m. Mountain Time (11:00 a.m. Eastern Time). A live webcast and replay of this event will be available on the Investor Relations section of the Company’s website at www.bonanzacrk.com. Dial-in information for the conference call is included below.

TypePhone NumberPasscode
Live participant877-793-4362968 4591
Replay855-859-2056968 4591

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 oil and associated liquids-rich natural gas in the Rocky Mountain region of the United States. The Company’s assets and operations are concentrated in rural, unincorporated Weld County, Colorado, within the DJ Basin, focused on the Niobrara and Codell formations. 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 and Cautionary Statements

Certain statements in this document, including any statements regarding financial performance and condition, guidance and any other statements regarding Bonanza Creek’s future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts are “forward-looking” statements based on assumptions currently believed to be valid. Forward-looking statements are all statements other than statements of historical facts. The words “anticipate,” “believe,” “ensure,” “expect,” “if,” “intend,” “estimate,” “probable,” “project,” “forecasts,” “predict,” “outlook,” “aim,” “will,” “could,” “should,” “would,” “potential,” “may,” “might,” “anticipate,” “likely” “plan,” “positioned,” “strategy,” and similar expressions or other words of similar meaning, and the negatives thereof, are intended to identify forward-looking statements. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995.

These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those anticipated, including, but not limited to, potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the merger; the diversion of management time on merger-related issues; the ultimate timing, outcome and results of integrating the operations of Bonanza Creek and HighPoint; the effects of the business combination of Bonanza Creek and HighPoint, including the combined company’s future financial condition, results of operations, strategy and plans; the ability of the combined company to realize anticipated synergies in the timeframe expected or at all; changes in capital markets and the ability of the combined company to finance operations in the manner expected; the effects of commodity prices; the risks of oil and gas activities; and the fact that operating costs and business disruption may be greater than expected following the consummation of the merger. Expectations regarding business outlook, including changes in revenue, pricing, capital expenditures, cash flow generation, strategies for our operations, oil and natural gas market conditions, legal, economic and regulatory conditions, and environmental matters are only forecasts regarding these matters.

Additional factors that could cause results to differ materially can be found in (i) the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, which are on file with the SEC and available from the Company’s website at www.bonanzacrk.com under the “For Investors” tab, (ii) in other documents the Company files with the SEC and (iii) HighPoint’s Annual Report on Form 10-K for the year ended December 31, 2020 attached to the Company’s report on Form 8-K filed on March 1, 2021.

All forward-looking statements speak only as of the date they are made and are based on information available at that time. Bonanza Creek does not assume any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

For further information, please contact:
Scott Landreth
Senior Director, Finance & Investor Relations and Treasurer
720-225-6679
slandreth@bonanzacrk.com



Schedule 1: Condensed Consolidated Statements of Operations and Comprehensive Income
(in thousands, expect for per share amounts, unaudited)

 Three Months Ended March 31,
 2021 2020
Operating net revenues:   
Oil and gas sales$74,159  $60,405 
Operating expenses:   
Lease operating expense5,731  5,699 
Midstream operating expense3,905  4,014 
Gathering, transportation, and processing4,967  3,481 
Severance and ad valorem taxes4,604  5,173 
Exploration96  373 
Depreciation, depletion, and amortization18,823  21,584 
Abandonment and impairment of unproved properties  30,057 
Bad debt expense  576 
Merger transaction costs3,295   
General and administrative expense (including $1,612 and $1,239, respectively, of stock-based compensation)9,251  9,429 
Total operating expenses50,672  80,386 
Other income (expense):   
Derivative gain (loss)(23,419) 100,419 
Interest expense, net(419  (217)
Other income (expense)188  (1,670)
Total other income (expense)(23,650) 98,532 
Income (loss) from operations before taxes(163) 78,551 
Income tax benefit44   
Net income (loss)$(119) $78,551 
    
Comprehensive income (loss)$(119) $78,551 
    
Net income (loss) per common share:   
Basic$(0.01) $3.80 
Diluted$(0.01) $3.80 
Weighted-average common shares outstanding:   
Basic20,839  20,649 
Diluted20,839  20,684 



Schedule 2: Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)

 Three Months Ended March 31,
 2021 2020
Cash flows from operating activities:   
Net income (loss)$(119) $78,551 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:   
Depreciation, depletion, and amortization18,823  21,584 
Deferred income tax benefit(44)  
Abandonment and impairment of unproved properties  30,057 
Well abandonment costs and dry hole expense  (8)
Stock-based compensation1,612  1,239 
Non-cash lease component(84) (51)
Amortization of deferred financing costs93  123 
Derivative (gain) loss23,419  (100,419)
Derivative cash settlement gain (loss)(3,791) 11,254 
Other  (4,240)
Changes in current assets and liabilities:   
Accounts receivable, net(5,718) 19,182 
Prepaid expenses and other assets106  1,100 
Accounts payable and accrued liabilities9,073  (9,768)
Settlement of asset retirement obligations(406) (610)
Net cash provided by operating activities42,964  47,994 
Cash flows from investing activities:   
Acquisition of oil and gas properties(180) (284)
Exploration and development of oil and gas properties(28,730) (26,225)
Additions to property and equipment - non oil and gas(38) (362)
Net cash used in investing activities(28,948) (26,871)
Cash flows from financing activities:   
Proceeds from credit facility  15,000 
Payments to credit facility  (36,000)
Proceeds from exercise of stock options15   
Payment of employee tax withholdings in exchange for the return of common stock  (61)
Deferred financing costs(58)  
Principal payments on finance lease obligations(21) (10)
Net cash used in financing activities(64) (21,071)
Net change in cash, cash equivalents, and restricted cash13,952  52 
Cash, cash equivalents, and restricted cash:   
Beginning of period24,845  11,095 
End of period$38,797  $11,147 



Schedule 3: Condensed Consolidated Balance Sheets
(in thousands, unaudited)

 March 31, 2021 December 31, 2020
ASSETS   
Current assets:   
Cash and cash equivalents$38,695  $24,743 
Accounts receivable, net:   
Oil and gas sales37,644  32,673 
Joint interest and other15,495  14,748 
Prepaid expenses and other3,468  3,574 
Inventory of oilfield equipment9,601  9,185 
Derivative assets  7,482 
Total current assets104,903  92,405 
Property and equipment (successful efforts method):   
Proved properties1,096,588  1,056,773 
Less: accumulated depreciation, depletion, and amortization(229,877) (211,432)
Total proved properties, net866,711  845,341 
Unproved properties98,194  98,122 
Wells in progress43,664  50,609 
Other property and equipment, net of accumulated depreciation of $3,871 in 2021 and $3,737 in 20203,143  3,239 
Total property and equipment, net1,011,712  997,311 
Long-term derivative assets92   
Right-of-use assets28,127  29,705 
Deferred income tax assets60,564  60,520 
Other noncurrent assets2,888  2,871 
Total assets$1,208,286  $1,182,812 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable and accrued expenses$39,607  $37,425 
Oil and gas revenue distribution payable23,720  18,613 
Lease liability12,400  12,044 
Derivative liability18,549  6,402 
Total current liabilities94,276  74,484 
Long-term liabilities:   
Credit facility   
Lease liability15,939  17,978 
Ad valorem taxes21,226  15,069 
Derivative liability1,421  1,330 
Asset retirement obligations for oil and gas properties28,664  28,699 
Total liabilities161,526  137,560 
Commitments and contingencies   
Stockholders’ equity:   
Preferred stock, $0.01 par value, 25,000,000 shares authorized, none outstanding   
Common stock, $0.01 par value, 225,000,000 shares authorized, 20,839,727 and 20,839,227 issued and outstanding as of March 31, 2021 and December 31, 2020, respectively4,282  4,282 
Additional paid-in capital708,836  707,209 
Retained earnings333,642  333,761 
Total stockholders’ equity1,046,760  1,045,252 
Total liabilities and stockholders’ equity$1,208,286  $1,182,812 



Schedule 4: Per unit cash cost margins
(unaudited)

 Three Months Ended March 31,
 2021 2020 Percent Change
Crude Oil Equivalent Sales Volumes (MBoe)1,876  2,260  (17)%
      
Realized pricing (before derivatives)(1)$38.93  $26.01  50%
      
Per Unit Costs ($/Boe)     
Lease operating expense3.05  2.52  21%
RMI net effective cost (1)1.49  1.07  39%
Gathering, transportation, and processing2.65  1.54  72%
Severance and ad valorem taxes2.45  2.29  7%
Recurring cash general and administrative (2)4.07  3.44  18%
Interest, net0.22  0.10  120%
Total cash costs$13.93  $10.96  27%
Cash cost margin (before derivatives)$25.00  $15.05  66%
Derivative cash settlements(2.02) 4.98  (141)%
Cash cost margin (after derivatives)$22.98  $20.03  15%
      
Non-cash and non-recurring items     
Depreciation, depletion, and amortization$10.03  $9.55  5%
Non-cash and non-recurring general and administrative$0.86  $0.73  18%

(1) Crude oil and natural gas sales excludes $1.1 million and $1.6 million of oil transportation and gas gathering revenues from third parties, which do not have associated sales volumes for the three months ended March 31, 2021 and 2020, respectively. Alternatively, the aforementioned oil transportation and gas gathering revenues from third parties have been netted against the midstream operating expense to arrive at the RMI net effective cost. See Schedule 8 for a reconciliation from GAAP midstream operating expense to RMI net effective cost.
(2) Recurring cash general and administrative expense excludes stock-based compensation, cash severance costs, and other non-recurring advisor fees. Please see Schedule 7 for a reconciliation from GAAP G&A to recurring cash G&A.


Schedule 5: Adjusted Net Income
(in thousands, except per share amounts, unaudited)

Adjusted net income is a supplemental non-GAAP financial measure that is used by management to present a more comparable, recurring profitability between periods. The Company defines adjusted net income as net income after adjusting for (1) the impact of certain non-cash items and one-time transactions and correspondingly (2) the related tax effect in each period. Adjusted net income is not a measure of net income as determined by GAAP.

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

 Three Months Ended March 31,
 2021 2020
Net income (loss)$(119) $78,551 
Adjustments to net income (loss):   
Abandonment and impairment of unproved properties  30,057 
Stock-based compensation(1)1,612  1,239 
Severance costs(1)  413 
Merger transaction costs3,295   
Derivative (gain) loss23,419  (100,419)
Derivative cash settlements gain (loss)(3,791) 11,254 
Non-cash lease component(84) (51)
Well abandonment and exploratory dry hole expense  (8)
Total adjustments before taxes24,451  (57,515)
Tax effect of adjustments(2)(6,015) 14,149 
Total adjustments after taxes18,436  (43,366)
    
Adjusted net income$18,317  $35,185 
    
Adjusted net income per diluted share$0.88  $1.70 
    
Diluted weighted-average common shares outstanding20,839  20,684 
    
(1) Included as a portion of general and administrative expense in the condensed consolidated statements of operations and comprehensive income.
(2) Estimated using the federal and state effective tax rate of 24.6%.



Schedule 6: Adjusted EBITDAX
(in thousands, unaudited)

Adjusted EBITDAX is a supplemental non-GAAP financial measure that is used by management to provide a metric of the Company’s ability to internally generate funds for exploration and development of oil and gas properties. The metric excludes items which are non-recurring in nature. Management believes adjusted EBITDAX provides external users of the Company’s consolidated financial statements such as industry analysts, investors, lenders, and rating agencies with additional information to assist in their analysis of the Company. The Company defines Adjusted EBITDAX as earnings before interest, income taxes, depreciation, depletion, and 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 income to the non-GAAP financial measure of Adjusted EBITDAX.

  Three Months Ended March 31,
  2021 2020
Net income (loss) $(119) $78,551 
Exploration 96  373 
Depreciation, depletion, and amortization 18,823  21,584 
Abandonment and impairment of unproved properties   30,057 
Stock-based compensation (1) 1,612  1,239 
Severance costs (1)   413 
Merger transaction costs 3,295   
Interest expense, net 419  217 
Derivative (gain) loss 23,419  (100,419)
Derivative cash settlements gain (loss) (3,791) 11,254 
Income tax expense (44)  
Adjusted EBITDAX $43,710  $43,269 
     
(1) Included as a portion of general and administrative expense in the condensed consolidated statements of operations and comprehensive income.



Schedule 7: Recurring Cash G&A
(in thousands, unaudited)

Recurring cash G&A is a supplemental non-GAAP financial measure that is used by management to provide only the cash portion of its G&A expense, which can be used to evaluate cost management and operating efficiency on a comparable basis from period to period. Management believes recurring cash G&A provides external users of the Company’s consolidated financial statements such as industry analysts, investors, lenders, and rating agencies with additional information to assist in their analysis of the Company. The Company defines recurring cash G&A as GAAP general and administrative expense exclusive of the Company’s stock-based compensation and one-time charges. The Company refers to recurring cash G&A to provide typical recurring cash G&A costs that are planned for in a given period. Recurring cash G&A is not a fully inclusive measure of general and administrative expense as determined by GAAP.

The following table presents a reconciliation of the GAAP financial measure of general and administrative expense to the non-GAAP financial measure of recurring cash G&A.

  Three Months Ended March 31,
  2021 2020
General and administrative expense $9,251  $9,429 
Stock-based compensation (1,612) (1,239)
Cash severance costs   (413)
Recurring cash G&A $7,639  $7,777 



Schedule 8: Rocky Mountain Infrastructure (“RMI”) Net Effective Cost
(in thousands, unaudited)

RMI net effective cost is a supplemental non-GAAP financial measure that is used by management to assess only the net cash impact the Company’s wholly owned subsidiary, Rocky Mountain Infrastructure, LLC, has on the Company’s consolidated financials. Management believes the net effective cost provides external users of the Company’s consolidated financial statements, such as industry analysts, investors, lenders, and rating agencies, with additional information to assist in their analysis of the Company. The Company defines the RMI net effective cost as GAAP midstream operating expense less revenue generated from working interest partners utilizing the RMI assets.

The following table presents a reconciliation of the GAAP financial measures of midstream operating expense and RMI working interest partner revenue to the non-GAAP financial measure of RMI net effective cost.

  Three Months Ended March 31,
  2021 2020
Midstream operating expense $3,905  $4,014 
RMI working interest partner revenue (1,109) (1,613)
RMI net effective cost $2,796  $2,401 

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