STATE COLLEGE, Pa., March 15, 2016 (GLOBE NEWSWIRE) -- Rex Energy Corporation (Nasdaq:REXX) announced its fourth quarter and full year 2015 operational and financial results.
Fourth Quarter Financial Results
Operating revenues from continuing operations for the three months ended December 31, 2015 were $34.5 million, which represents a decrease of 51% as compared to the same period in 2014. Commodity revenues, including settlements from derivatives, were $50.2 million, a decrease of 38% as compared to the comparable period in 2014. Commodity revenues from oil and natural gas liquids (NGLs), including settlements from derivatives, represented 51% of total commodity revenues for the three months ended December 31, 2015.
Lease operating expense (LOE) from continuing operations was $28.7 million, or $1.68 per Mcfe for the quarter, a 2% decrease on per unit basis compared to the same period in 2014. Cash general and administrative (G&A) expenses from continuing operations, a non-GAAP measure, were $4.3 million, or $0.25 per Mcfe for the fourth quarter of 2015, a 40% decrease on a per unit basis as compared to the same period in 2015.
Net loss attributable to common shareholders for the three months ended December 31, 2015 was $100.5 million, or $1.85 per basic share. Adjusted net loss, a non-GAAP measure, for the three months ended December 31, 2015 was $10.7 million, or $0.20 per share.
EBITDAX from continuing operations, a non-GAAP measure, was $16.7 million for the fourth quarter of 2015.
Full Year 2015 Financial Results
Operating revenues from continuing operations for the full year 2015 were $172.0 million, which represents a decrease of 42% from 2014 operating revenues. Commodity revenues, including settlements from derivatives, were $226.8 million, a decrease of 25% from full year 2014. Commodity revenues from oil and natural gas liquids (NGLs), including settlements from derivatives, represented 49% of total commodity revenues for the full year 2015.
LOE from continuing operations was $119.0 million, or $1.66 per Mcfe for 2015. This represents a 7% decrease on a per unit basis as compared to the full year 2014.
Cash general and administrative (G&A) expenses from continuing operations, a non-GAAP measure, were $23.0 million, or $0.32 per Mcfe for the full year 2015, which represents a 41% decrease on a per unit basis as compared to full year 2014.
Net loss from continuing operations attributable to common shareholders for full year 2015 was $372.9 million, or $6.85 per basic share. Adjusted net loss, a non-GAAP measure, for full year 2015 was $42.5 million, or $0.78 per share.
EBITDAX from continuing operations, a non-GAAP measure, was $84.9 million for full year 2015, a decrease of 51% from full year 2014.
Reconciliations of adjusted net income to GAAP net income, EBITDAX to GAAP net income and G&A to cash G&A for the three and twelve months ended December 31, 2015, as well as a discussion of the uses of each measure, are presented in the appendix of this release.
Production Update
Fourth quarter 2015 production volumes were 186.1 MMcfe/d, a decrease of 4% from the third quarter of 2015 and 5% from the fourth quarter of 2014, consisting of 113.5 MMcf/d of natural gas and 12.1 Mboe/d of oil and NGLs (including 4.5 Mbbls/d of ethane). Oil and NGLs accounted for 39% of net production during the fourth quarter. For full year 2015, production volumes increased by 27% over 2014 to 195.8 MMcfe/d, consisting of 122.2 MMcf/d of natural gas and 12.3 Mboe/d of oil and NGLs (including 3.6 Mbbls/d of ethane). Oil and NGLs accounted for 38% of net production during 2015.
Full Year 2015 Capital Investments
For the full year 2015, the company made operational capital investments of approximately $184.0 million, of which $171.0 million was used to fund Marcellus and Ohio Utica operations and $13.0 million was used to fund conventional drilling, water flood enhancement and facility upgrades in the Illinois Basin. The Marcellus and Ohio Utica capital investments funded the drilling of 34.0 gross (16.9 net) wells, fracture stimulation of 39.0 gross (18.6 net) wells, placing 33.0 gross (17.6 net) wells into sales and other projects related to drilling and completing wells in the Appalachian Basin.
In the first half of 2016, pursuant to the terms of the respective joint development agreements, the company anticipates that it will receive approximately $18.5 million from ArcLight and approximately $20.0 million from Benefit Street Partners, L.L.C. related to reimbursements on capital investments made in 2015.
Investments for leasing and property acquisition were $20.7 million and capitalized interest was $7.7 million for full year 2015. Capital expenditures related to Keystone Clearwater Services, which was divested in the third quarter of 2015, were $8.6 million.
Operational Update
Note: Unless specifically stated otherwise in this operational update, all numbers are gross and all well results assume full ethane recovery.
Appalachian Basin – Legacy Butler Operated Area
In the Legacy Butler Operated Area, the company drilled 11.0 gross (5.6 net) wells in 2015, with 23.0 gross (10.5 net) wells fracture stimulated and 26.0 gross (12.6 net) wells placed into sales. The company had no wells drilled and awaiting completion as of December 31, 2015.
Appalachian Basin – Moraine East Area
In the Moraine East Area, the company drilled 16.0 gross (8.0 net) wells in 2015, with 12.0 gross (7.8 net) wells fracture stimulated. The company had four gross (2.6 net) wells drilled and awaiting completion as of December 31, 2015. During the first quarter of 2016, the company placed 12.0 gross (7.8 net) wells into sales in conjunction with the commissioning of the Moraine East gathering and transportation system. The company continues to be encouraged by the preliminary results of the wells and will provide updated sales rates following the commissioning of the high pressure line in the second quarter of 2016.
Appalachian Basin – Warrior North Prospect – Carroll County, Ohio
In the Warrior North Prospect, the company drilled six gross (6.0 net) wells in 2015, with three gross (2.1 net) wells fracture stimulated. The company has three gross (1.1 net) wells drilled and awaiting completion and three gross (1.1 net) wells awaiting pipeline connection as of December 31, 2015. In addition, the company completed one gross (one net) well during the first quarter of 2016. The company placed the four completed wells into sales during the first quarter of 2016 and expects to provide an update with its first quarter 2016 earnings release.
First Quarter and Full Year 2016 Guidance
Rex Energy is providing its guidance for the first quarter of 2016 ($ in millions). For full year 2016, the company expects production growth of 5% - 10%.
| 1Q2016 | Full Year 2016 | |
| Production | ~ 200 MMcfe/d | -- |
| Lease Operating Expense | $29.0 - $31.0 million | -- |
| Cash G&A | $5.1 - $6.1 million | -- |
| Operational Capital Expenditures(1) | -- | $15.0 - $40.0 million |
| (1) Land acquisition expense and capitalized interest are not included in the operational capital expenditures budget | ||
Management will provided an update on its operations and financial initiatives on its first quarter 2016 conference call.
About Rex Energy Corporation
Headquartered in State College, Pennsylvania, Rex Energy is an independent oil and gas exploration and production company operating in the Appalachian and Illinois Basins within the United States. The company's strategy is to pursue its higher potential exploration drilling prospects while acquiring oil and natural gas properties complementary to its portfolio.
Forward-Looking Statements
Except for historical information, statements made in this release, including those relating to the timing and nature of development plans; drilling and completion schedules; anticipated fracture stimulation activities; expected dates for placement of wells into sales; timing of reimbursements from joint development parties; and our financial guidance for first quarter and full year 2016 plans are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may contain words such as "expected", "expects", "scheduled", "planned", "plans", "anticipates" or similar words. These statements are based on management's experience and perception of historical trends, current conditions, and anticipated future developments, as well as other factors believed to be appropriate. We believe these statements and the assumptions and estimates contained in this release are reasonable based on information that is currently available to us. However, management's assumptions and the company's future performance are subject to a wide range of business risks and uncertainties, both known and unknown, and we cannot assure that the company can or will meet the goals, expectations, and projections included in this release. Any number of factors could cause our actual results to be materially different from those expressed or implied in our forward looking statements, including (without limitation):
- economic conditions in the United States and globally;
- domestic and global demand for oil, NGLs and natural gas;
- volatility in oil, NGL, and natural gas pricing;
- new or changing government regulations, including those relating to environmental matters, permitting, or other aspects of our operations;
- the geologic quality of the company's properties with regard to, among other things, the existence of hydrocarbons in economic quantities;
- uncertainties inherent in the estimates of our oil and natural gas reserves;
- our ability to increase oil and natural gas production and income through exploration and development;
- drilling and operating risks;
- the success of our drilling techniques in both conventional and unconventional reservoirs;
- the success of the secondary and tertiary recovery methods we utilize or plan to employ in the future;
- the number of potential well locations to be drilled, the cost to drill them, and the time frame within which they will be drilled;
- the ability of contractors to timely and adequately perform their drilling, construction, well stimulation, completion and production services;
- the availability of equipment, such as drilling rigs, and infrastructure, such as transportation, pipelines, processing and midstream services;
- the effects of adverse weather or other natural disasters on our operations;
- competition in the oil and gas industry in general, and specifically in our areas of operations;
- changes in our drilling plans and related budgets;
- the success of prospect development and property acquisition;
- the success of our business and financial strategies, and hedging strategies;
- conditions in the domestic and global capital and credit markets and their effect on us;
- the adequacy and availability of capital resources, credit, and liquidity including, but not limited to, access to additional borrowing capacity; and
- uncertainties related to the legal and regulatory environment for our industry, and our own legal proceedings and their outcome.
The company undertakes no obligation to publicly update or revise any forward-looking statements. Further information on the company's risks and uncertainties is available in the company's filings with the Securities and Exchange Commission.
| REX ENERGY CORPORATION | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| ($ in Thousands, Except Share and Per Share Data) | ||||||||
| ASSETS | December 31, 2015 | December 31, 2014 | ||||||
| Current Assets | ||||||||
| Cash and Cash Equivalents | $ | 1,091 | $ | 17,978 | ||||
| Accounts Receivable | 19,483 | 43,936 | ||||||
| Taxes Receivable | 18 | 504 | ||||||
| Short-Term Derivative Instruments | 34,260 | 29,265 | ||||||
| Inventory, Prepaid Expenses and Other | 3,829 | 3,403 | ||||||
| Assets Held for Sale | -- | 34,257 | ||||||
| Total Current Assets | 58,681 | 129,343 | ||||||
| Property and Equipment (Successful Efforts Method) | ||||||||
| Evaluated Oil and Gas Properties | 1,239,430 | 1,079,039 | ||||||
| Unevaluated Oil and Gas Properties | 262,992 | 322,413 | ||||||
| Other Property and Equipment | 40,112 | 46,361 | ||||||
| Wells and Facilities in Progress | 144,556 | 127,655 | ||||||
| Pipelines | 14,024 | 15,657 | ||||||
| Total Property and Equipment | 1,701,114 | 1,591,125 | ||||||
| Less: Accumulated Depreciation, Depletion and Amortization | (699,899 | ) | (366,917 | ) | ||||
| Net Property and Equipment | 1,001,215 | 1,224,208 | ||||||
| Deferred Financing Costs and Other Assets - Net | 16,544 | 17,070 | ||||||
| Equity Method Investments | -- | 17,895 | ||||||
| Long-Term Derivative Instruments | 9,534 | 4,904 | ||||||
| Long-Term Deferred Tax Asset | 12,532 | 8,301 | ||||||
| Total Assets | $ | 1,098,506 | $ | 1,401,721 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable | $ | 37,874 | $ | 53,340 | ||||
| Current Maturities of Long-Term Debt | 590 | 1,176 | ||||||
| Accrued Liabilities | 44,326 | 59,478 | ||||||
| Short-Term Derivative Instruments | 2,486 | 421 | ||||||
| Current Deferred Tax Liability | 12,532 | 8,301 | ||||||
| Liabilities Related to Assets Held for Sale | -- | 25,115 | ||||||
| Total Current Liabilities | 97,808 | 147,831 | ||||||
| 8.875% Senior Notes Due 2020 | 350,000 | 350,000 | ||||||
| 6.25% Senior Notes Due 2022 | 325,000 | 325,000 | ||||||
| Premium on Senior Notes, Net | 2,344 | 2,725 | ||||||
| Senior Secured Line of Credit and Long-Term Debt | 111,528 | 251 | ||||||
| Long-Term Derivative Instruments | 5,556 | 2,377 | ||||||
| Other Deposits and Liabilities | 3,156 | 4,018 | ||||||
| Future Abandonment Cost | 42,883 | 38,146 | ||||||
| Total Liabilities | $ | 938,275 | $ | 870,348 | ||||
| Stockholders’ Equity | ||||||||
| Preferred Stock, $.001 par value per share, 100,000 shares authorized and 16,100 issued and outstanding on December 31, 2015 and 2014. | $ | 1 | $ | 1 | ||||
| Common Stock, $.001 par value per share, 100,000,000 shares authorized and 55,741,229 shares issued and outstanding on December 31, 2015 and 54,174,763 shares issued and outstanding on December 31, 2014 | 54 | 54 | ||||||
| Additional Paid-In Capital | 623,863 | 617,826 | ||||||
| Accumulated Deficit | (463,687 | ) | (90,749 | ) | ||||
| Rex Energy Stockholders’ Equity | 160,231 | 527,132 | ||||||
| Noncontrolling Interests of Discontinued Operations | -- | 4,241 | ||||||
| Total Stockholders’ Equity | 160,231 | 531,373 | ||||||
| Total Liabilities and Owners’ Equity | $ | 1,098,506 | $ | 1,401,721 | ||||
| REX ENERGY CORPORATION | |||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
| (In Thousands, Except per Share Data) | |||||||||||||||
| For the Three Months Ended December 31, | For the Year Ended December 31, | ||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||
| OPERATING REVENUE | |||||||||||||||
| Oil, Natural Gas and NGL Sales | $ | 34,514 | $ | 70,219 | $ | 171,951 | $ | 297,869 | |||||||
| Other Revenue | 12 | 26 | 42 | 118 | |||||||||||
| TOTAL OPERATING REVENUE | 34,526 | 70,245 | 171,993 | 297,987 | |||||||||||
| OPERATING EXPENSES | |||||||||||||||
| Production and Lease Operating Expense | 28,689 | 30,945 | 118,999 | 100,282 | |||||||||||
| General and Administrative Expense | 5,928 | 8,958 | 29,435 | 36,137 | |||||||||||
| (Gain) Loss on Disposal of Assets | (12 | ) | 176 | (477 | ) | 644 | |||||||||
| Impairment Expense | 81,098 | 132,577 | 345,775 | 132,618 | |||||||||||
| Exploration Expense | 769 | 4,556 | 3,011 | 9,446 | |||||||||||
| Depreciation, Depletion, Amortization and Accretion | 21,956 | 28,016 | 104,744 | 94,467 | |||||||||||
| Other Operating Expense (Income) | 291 | 131 | 5,595 | 134 | |||||||||||
| TOTAL OPERATING EXPENSES | 138,719 | 205,359 | 607,082 | 373,728 | |||||||||||
| LOSS FROM OPERATIONS | (104,193 | ) | (135,114 | ) | (435,089 | ) | (75,741 | ) | |||||||
| OTHER EXPENSE | |||||||||||||||
| Interest Expense | (11,709 | ) | (11,741 | ) | (47,806 | ) | (36,977 | ) | |||||||
| Gain on Derivatives, Net | 14,689 | 36,561 | 60,176 | 38,876 | |||||||||||
| Other Income (Expense) | (234 | ) | 74 | (115 | ) | 90 | |||||||||
| Loss on Equity Method Investments | -- | (203 | ) | (411 | ) | (813 | ) | ||||||||
| TOTAL OTHER INCOME (EXPENSE) | 2,746 | 24,691 | 11,844 | 1,176 | |||||||||||
| LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX | (101,447 | ) | (110,423 | ) | (423,245 | ) | (74,565 | ) | |||||||
| Income Tax Benefit | 3,574 | 41,026 | 24,227 | 26,915 | |||||||||||
| NET LOSS FROM CONTINUING OPERATIONS | (97,873 | ) | (69,397 | ) | (399,018 | ) | (47,650 | ) | |||||||
| Income (Loss) From Discontinued Operations, Net of Income Taxes | (164 | ) | 767 | 37,985 | 5,000 | ||||||||||
| NET LOSS | (98,037 | ) | (68,630 | ) | (361,033 | ) | (42,650 | ) | |||||||
| Net Income Attributable to Noncontrolling Interests | -- | 699 | 2,245 | 4,039 | |||||||||||
| NET LOSS ATTRIBUTABLE TO REX ENERGY | (98,037 | ) | (69,329 | ) | (363,278 | ) | (46,689 | ) | |||||||
| Preferred Stock Dividends | 2,415 | 2,335 | 9,660 | 2,335 | |||||||||||
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | (100,452 | ) | $ | (71,664 | ) | $ | (372,938 | ) | $ | (49,024 | ) | |||
| Earnings per common share: | |||||||||||||||
| Basic – Net Loss From Continuing Operations Attributable to Rex Energy Common Shareholders | $ | (1.85 | ) | $ | (1.35 | ) | $ | (7.51 | ) | $ | (0.94 | ) | |||
| Basic – Net Income From Discontinued Operations Attributable to Rex Energy Common Shareholders | 0.00 | 0.00 | 0.66 | 0.02 | |||||||||||
| Basic – Net Loss Attributable to Rex Energy Common Shareholders | $ | (1.85 | ) | $ | (1.35 | ) | $ | (6.85 | ) | $ | (0.92 | ) | |||
| Basic – Weighted Average Shares of Common Stock Outstanding | 54,342 | 53,261 | 54,392 | 53,150 | |||||||||||
| Diluted – Net Loss From Continuing Operations Attributable to Rex Energy Common Shareholders | $ | (1.85 | ) | $ | (1.35 | ) | $ | (7.51 | ) | $ | (0.94 | ) | |||
| Diluted – Net Income From Discontinued Operations Attributable to Rex Energy Common Shareholders | 0.00 | 0.00 | 0.66 | 0.02 | |||||||||||
| Diluted – Net Loss Attributable to Rex Energy Common Shareholders | $ | (1.85 | ) | $ | (1.35 | ) | $ | (6.85 | ) | $ | (0.92 | ) | |||
| Diluted – Weighted Average Shares of Common Stock Outstanding | 54,342 | 53,261 | 54,392 | 53,150 | |||||||||||
| REX ENERGY CORPORATION | |||||||||||||
| CONSOLIDATED OPERATIONAL HIGHLIGHTS | |||||||||||||
| Three Months Ending | Year Ending | ||||||||||||
| December 31, | December 31, | ||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||
| Oil, Natural Gas, NGL and Ethane sales (in thousands): | |||||||||||||
| Oil and condensate sales | $ | 8,962 | $ | 22,019 | $ | 47,312 | $ | 97,426 | |||||
| Natural gas sales | 15,083 | 29,119 | 83,140 | 126,500 | |||||||||
| Natural gas liquid sales (C3+) | 7,917 | 16,731 | 32,789 | 69,626 | |||||||||
| Ethane sales | 2,552 | 2,350 | 8,710 | 4,317 | |||||||||
| Cash-settled derivatives: | |||||||||||||
| Crude oil | 3,054 | 2,707 | 11,860 | 1,085 | |||||||||
| Natural gas | 9,323 | 3,181 | 32,573 | 1,637 | |||||||||
| Natural gas liquids (C3+) | 3,204 | 4,291 | 10,143 | 3,247 | |||||||||
| Ethane | 110 | -- | 283 | -- | |||||||||
| Total oil, gas, NGL and Ethane sales including cash settled derivatives | $ | 50,205 | $ | 80,398 | $ | 226,810 | $ | 303,838 | |||||
| Production during the period: | |||||||||||||
| Oil and condensate (Bbls) | 241,063 | 332,749 | 1,132,118 | 1,141,106 | |||||||||
| Natural gas (Mcf) | 10,446,423 | 11,329,490 | 44,606,753 | 37,011,177 | |||||||||
| Natural gas liquids (C3+) (Bbls) | 454,963 | 488,753 | 2,026,321 | 1,531,131 | |||||||||
| Ethane (Bbls) | 416,496 | 294,810 | 1,319,582 | 551,315 | |||||||||
| Total (Mcfe)1 | 17,121,555 | 18,027,362 | 71,474,879 | 56,352,489 | |||||||||
| Production – average per day: | |||||||||||||
| Oil and condensate (Bbls) | 2,620 | 3,617 | 3,102 | 3,126 | |||||||||
| Natural gas (Mcf) | 113,548 | 123,147 | 122,210 | 101,400 | |||||||||
| Natural gas liquids (C3+) (Bbls) | 4,945 | 5,313 | 5,552 | 4,195 | |||||||||
| Ethane (Bbls) | 4,527 | 3,204 | 3,615 | 1,510 | |||||||||
| Total (Mcfe)a | 186,104 | 195,951 | 195,822 | 154,386 | |||||||||
| Average price per unit: | |||||||||||||
| Realized crude oil price per Bbl – as reported | $ | 37.18 | $ | 66.17 | $ | 41.79 | $ | 85.38 | |||||
| Realized impact from cash settled derivatives per Bbl | 12.67 | 8.14 | 10.48 | 0.95 | |||||||||
| Net realized price per Bbl | $ | 49.85 | $ | 74.31 | $ | 52.27 | $ | 86.33 | |||||
| Realized natural gas price per Mcf – as reported | $ | 1.44 | $ | 2.57 | $ | 1.86 | $ | 3.42 | |||||
| Realized impact from cash settled derivatives per Mcf | 0.89 | 0.28 | 0.73 | 0.04 | |||||||||
| Net realized price per Mcf | $ | 2.33 | $ | 2.85 | $ | 2.59 | $ | 3.46 | |||||
| Realized natural gas liquids (C3+) price per Bbl – as reported | $ | 17.40 | $ | 34.23 | $ | 16.18 | $ | 45.47 | |||||
| Realized impact from cash settled derivatives per Bbl | 7.04 | 8.78 | 5.12 | 2.12 | |||||||||
| Net realized price per Bbl | $ | 24.44 | $ | 43.01 | $ | 21.30 | $ | 47.59 | |||||
| Realized ethane price per Bbl – as reported | $ | 6.13 | $ | 7.97 | $ | 6.60 | $ | 7.83 | |||||
| Realized impact from cash settled derivatives per Bbl | 0.26 | -- | 0.03 | -- | |||||||||
| Net realized price per Bbl | $ | 6.39 | $ | 7.97 | $ | 6.63 | $ | 7.83 | |||||
| LOE/Mcfe | $ | 1.68 | $ | 1.72 | $ | 1.66 | $ | 1.78 | |||||
| Cash G&A/Mcfe | $ | 0.25 | $ | 0.42 | $ | 0.32 | $ | 0.54 | |||||
| 1 Oil and natural gas liquids are converted at the rate of one barrel of oil equivalent to six Mcfe. | |||||||||||||
| REX ENERGY CORPORATION | ||||||||
| COMMODITY DERIVATIVES – HEDGE POSITION AS OF 3/14/2016 | ||||||||
| 2016 | 2017 | |||||||
| Oil Derivatives (Bbls) | ||||||||
| Swap Contracts | ||||||||
| Volume | 60,000(1) | -- | ||||||
| Price | $ | 44.00 | $ | -- | ||||
| Collar Contracts | ||||||||
| Volume | 499,500 | -- | ||||||
| Ceiling | $ | 51.80 | $ | -- | ||||
| Floor | $ | 38.77 | $ | -- | ||||
| Collar Contracts with Short Puts | ||||||||
| Volume | 245,000 | -- | ||||||
| Ceiling | $ | 49.18 | $ | -- | ||||
| Floor | $ | 40.92 | $ | -- | ||||
| Short Put | $ | 30.82 | $ | -- | ||||
| Put Spread Contracts | ||||||||
| Volume | 120,000 | -- | ||||||
| Floor | $ | 65.00 | $ | -- | ||||
| Short Put | $ | 50.00 | $ | -- | ||||
| Natural Gas Derivatives (Mcf) | ||||||||
| Swap Contracts | ||||||||
| Volume | 18,170,000(2) | 3,060,000(3) | ||||||
| Price | $ | 3.30 | $ | 3.92 | ||||
| Swaption Contracts | ||||||||
| Volume | 1,200,000 | -- | ||||||
| Price | $ | 3.15 | $ | -- | ||||
| Put Spread | ||||||||
| Volume | 5,570,000 | -- | ||||||
| Floor | $ | 3.47 | $ | -- | ||||
| Short Put | $ | 2.82 | $ | -- | ||||
| Collar Contracts with Short Puts | ||||||||
| Volume | 17,500,000 | 16,300,000 | ||||||
| Ceiling | $ | 3.85 | $ | 3.89 | ||||
| Floor | $ | 3.05 | $ | 3.02 | ||||
| Short Put | $ | 2.34 | $ | 2.33 | ||||
| Call Contracts | ||||||||
| Volume | -- | 13,679,900 | ||||||
| Ceiling | $ | -- | $ | 4.70 | ||||
| Call Contracts | ||||||||
| Volume | 3,900,000 | -- | ||||||
| Ceiling | $ | 3.32 | $ | -- | ||||
| Floor | $ | 2.82 | $ | -- | ||||
| Natural Gas Liquids (Bbls) | ||||||||
| Swap Contracts | ||||||||
| Propane (C3) | ||||||||
| Volume | 759,000 | 312,000 | ||||||
| Price | $ | 21.84 | $ | 18.06 | ||||
| Butane (C4) | ||||||||
| Volume | 156,000 | 108,000 | ||||||
| Price | $ | 28.31 | $ | 23.94 | ||||
| Isobutane (IC4) | ||||||||
| Volume | 84,000 | 48,000 | ||||||
| Price | $ | 28.60 | $ | 24.02 | ||||
| Natural Gasoline (C5+) | ||||||||
| Volume | 324,000 | -- | ||||||
| Price | $ | 52.79 | $ | -- | ||||
| Ethane | ||||||||
| Volume | 240,000 | -- | ||||||
| Price | $ | 8.82 | $ | -- | ||||
| Natural Gas Basis (Mcf) | ||||||||
| Swap Contracts | ||||||||
| Dominion Appalachia | ||||||||
| Volume | 22,852,000 | 10,755,000 | ||||||
| Price | $ | (0.89 | ) | $ | (0.79 | ) | ||
| Texas Gas Zone 1 | ||||||||
| Volume | -- | 14,600,000 | ||||||
| Price | $ | -- | $ | (0.13 | ) | |||
| NYMEX Heating Oil (Gallon) | ||||||||
| Swap Contracts | ||||||||
| Volume | 12,000 | -- | ||||||
| Price | $ | 2.00 | $ | -- | ||||
| (1) Includes 60,000 Bbls of enhanced swaps | ||||||||
| (2) Includes 3.6 Bcf of enhanced swaps | ||||||||
| (3) Includes 2.1 Bcf of enhanced swaps | ||||||||
APPENDIX
REX ENERGY CORPORATION
NON-GAAP MEASURES
EBITDAX
“EBITDAX” means, for any period, the sum of net income for such period plus the following expenses, charges or income to the extent deducted from or added to net income in such period: interest, income taxes, DD&A, unrealized losses from financial derivatives, non-recurring gains and losses, exploration expenses and other similar non-cash charges, minus all non-cash income, including but not limited to, income from unrealized financial derivatives and gains on asset dispositions, added to net income. EBITDAX, as defined above, is used as a financial measure by our management team and by other users of its financial statements, such as our commercial bank lenders to analyze such things as:
- Our operating performance and return on capital in comparison to those of other companies in our industry, without regard to financial or capital structure;
- The financial performance of our assets and valuation of the entity without regard to financing methods, capital structure or historical cost basis;
- Our ability to generate cash sufficient to pay interest costs, support our indebtedness and make cash distributions to our stockholders; and
- The viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.
EBITDAX is not a calculation based on GAAP financial measures and should not be considered as an alternative to net income (loss) (the most directly comparable GAAP financial measure) in measuring our performance, nor should it be used as an exclusive measure of cash flows, because it does not consider the impact of working capital growth, capital expenditures, debt principal reductions, and other sources and uses of cash, which are disclosed in our consolidated statements of cash flows.
We have reported EBITDAX because it is a financial measure used by our existing commercial lenders, and because this measure is commonly reported and widely used by investors as an indicator of a company’s operating performance and ability to incur and service debt. You should carefully consider the specific items included in our computations of EBITDAX. While we have disclosed EBITDAX to permit a more complete comparative analysis of our operating performance and debt servicing ability relative to other companies, you are cautioned that EBITDAX as reported by us may not be comparable in all instances to EBITDAX as reported by other companies. EBITDAX amounts may not be fully available for management’s discretionary use, due to requirements to conserve funds for capital expenditures, debt service and other commitments.
We believe that EBITDAX assists our lenders and investors in comparing our performance on a consistent basis without regard to certain expenses, which can vary significantly depending upon accounting methods. Because we may borrow money to finance our operations, interest expense is a necessary element of our costs. In addition, because we use capital assets, DD&A are also necessary elements of our costs. Finally, we are required to pay federal and state taxes, which are necessary elements of our costs. Therefore, any measures that exclude these elements have material limitations.
To compensate for these limitations, we believe it is important to consider both net income determined under GAAP and EBITDAX to evaluate our performance.
For purposes of consistency with current calculations, we have revised certain amounts relating to prior period EBITDAX. The following table presents a reconciliation of our net income to EBITDAX for each of the periods presented ($ in thousands):
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Loss From Continuing Operations | $ | (97,873 | ) | $ | (69,397 | ) | $ | (399,018 | ) | $ | (47,650 | ) | ||||
| Add Back Non-Recurring Costs1 | -- | -- | 4,774 | -- | ||||||||||||
| Add Back Depletion, Depreciation, Amortization and Accretion | 21,956 | 28,016 | 104,744 | 94,467 | ||||||||||||
| Add Back Non-Cash Compensation Expense | 1,616 | 1,427 | 6,450 | 5,672 | ||||||||||||
| Add Back Interest Expense | 11,709 | 11,741 | 47,806 | 36,977 | ||||||||||||
| Add Back Impairment Expense | 81,098 | 132,577 | 345,775 | 132,618 | ||||||||||||
| Add Back Exploration Expenses | 769 | 4,556 | 3,011 | 9,446 | ||||||||||||
| Add Back (Less) Loss (Gain) on Disposal of Assets | (12 | ) | 176 | (477 | ) | 644 | ||||||||||
| Less Gain on Financial Derivatives | (14,689 | ) | (36,561 | ) | (60,176 | ) | (38,876 | ) | ||||||||
| Add Back Cash Settlement of Derivatives | 15,691 | 10,612 | 55,793 | 7,281 | ||||||||||||
| Add Back Non-Cash Portion of Equity Method Investments | -- | 202 | 406 | 805 | ||||||||||||
| Less Income Tax Benefit | (3,574 | ) | (41,026 | ) | (24,227 | ) | (26,915 | ) | ||||||||
| EBITDAX From Continuing Operations | $ | 16,691 | $ | 42,323 | $ | 84,861 | $ | 174,469 | ||||||||
| Income (Loss) From Discontinued Operations, Net of Income Taxes | (164 | ) | 767 | 37,985 | 5,000 | |||||||||||
| Net (Income) Loss Attributable to Noncontrolling Interests | -- | (699 | ) | (2,245 | ) | (4,039 | ) | |||||||||
| Income (Loss) From Discontinued Operations Attributable to Rex Energy | (164 | ) | 68 | 35,740 | 961 | |||||||||||
| Add Back Depletion, Depreciation, Amortization and Accretion | -- | 1,141 | 78 | 3,703 | ||||||||||||
| Add Back Interest Expense | -- | 147 | 487 | 629 | ||||||||||||
| Add Back Impairment Expense | -- | 67 | -- | 67 | ||||||||||||
| Add (Less) Back (Gain) Loss on Disposal of Assets2 | (753 | ) | 29 | (57,808 | ) | (55 | ) | |||||||||
| Less Non-Cash Portion of Noncontrolling Interests | 1 | (554 | ) | (208 | ) | (1,738 | ) | |||||||||
| Add Back Income Tax Expense | 917 | 287 | 24,227 | 768 | ||||||||||||
| EBITDAX from Discontinued Operations | $ | 1 | $ | 1,185 | $ | 2,516 | $ | 4,335 | ||||||||
| EBITDAX (Non-GAAP) | $ | 16,692 | $ | 43,508 | $ | 87,377 | $ | 178,804 | ||||||||
| 1 Non-Recurring Costs for the year ended December 31, 2015 are due to net fees incurred to terminate two drilling rig contracts earlier than their original term. | ||||||||||||||||
| 2 Includes gain on sale of Water Solutions Holdings, LLC of approximately $0.8 and $57.8 million for the quarter and year ended December 31, 2015, respectively | ||||||||||||||||
Adjusted Net Income (Loss)
“Adjusted Net Income (Loss)” means, for any period, the sum of net income (loss) for the period plus or minus the following expenses, charges or income, in each case, to the extent deducted from or added to net income (loss) in the period: unrealized losses from financial derivatives, non-cash compensation expense, dry hole expenses, disposals of assets, impairment and other one-time or non-recurring charges, minus all gains from unrealized financial derivatives, disposal of assets and deferred income tax benefits, added to net income. Adjusted Net Income (Loss) is used as a financial measure by Rex Energy's management team and by other users of its financial statements, to analyze its financial performance without regard to non-cash deferred taxes and non-cash unrealized losses or gains from oil and gas derivatives. Adjusted Net Income (Loss) is not a calculation based on GAAP financial measures and should not be considered as an alternative to net income (loss) in measuring the company's performance.
Rex Energy reports Adjusted Net Income (Loss) because it believes that this measure is commonly reported and widely used by investors as an indicator of a company's operating performance. You should carefully consider the specific items included in the company's computation of this measure. You are cautioned that Adjusted Net Income (Loss) as reported by Rex Energy may not be comparable in all instances to that reported by other companies.
To compensate for these limitations, the company believes it is important to consider both net income determined under GAAP and Adjusted Net Income.
The following table presents a reconciliation of Rex Energy’s net income (loss) from continuing operations to its adjusted net income for each of the periods presented ($ in thousands):
| For the Three Months Ended | For the Year Ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||
| Loss From Continuing Operations Before Income Taxes, as reported | $ | (101,447 | ) | $ | (110,423 | ) | $ | (423,245 | ) | $ | (74,565 | ) | |
| (Gain) on Derivatives, Net | (14,689 | ) | (36,561 | ) | (60,176 | ) | (38,876 | ) | |||||
| Cash Settlement of Derivatives | 15,691 | 10,612 | 55,793 | 7,281 | |||||||||
| Add Back (Less) (Gains) Losses from Financial Derivatives | 1,002 | (25,949 | ) | (4,383 | ) | (31,595 | ) | ||||||
| Add Back Non-Recurring Costs1 | -- | -- | 4,774 | -- | |||||||||
| Add Back Impairment Expense | 81,098 | 132,577 | 345,775 | 132,618 | |||||||||
| Add Back Dry Hole Expense | (139 | ) | 3,827 | 330 | 4,138 | ||||||||
| Add Back Non-Cash Compensation Expense | 1,616 | 1,427 | 6,450 | 5,672 | |||||||||
| Add Back (Less) Loss (Gain) Loss on Disposal of Assets | (12 | ) | 176 | (477 | ) | 644 | |||||||
| Income (Loss) Before Income Taxes, adjusted | $ | (17,882 | ) | $ | 1,635 | $ | (70,776 | ) | $ | 36,912 | |||
| Less Income Tax (Expense) Benefit, adjusted2 | 7,153 | (654 | ) | 28,310 | (14,765 | ) | |||||||
| Adjusted Net Income (Loss) | $ | (10,729 | ) | $ | 981 | $ | (42,466 | ) | $ | 22,147 | |||
| Basic – Adjusted Net Income (Loss) Per Share | $ | (0.20 | ) | $ | 0.02 | $ | (0.78 | ) | $ | 0.42 | |||
| Basic – Weighted Average Shares of Common Stock Outstanding | 54,342 | 53,261 | 54,392 | 53,150 | |||||||||
| 1 Non-Recurring costs for the year ended December 31, 2015 are due to net fees incurred to terminate to drilling rig contracts earlier than their original term | |||||||||||||
| 2 Assumes an effective tax rate of 40% | |||||||||||||
Cash General and Administrative Expenses
Cash General and Administrative Expenses (Cash G&A) is the difference between GAAP G&A and non-Cash G&A, which is primarily comprised of non-cash compensation expense. Rex Energy has reported Cash G&A because it believes that this measure is commonly reported and widely used by management and investors as an indicator of overhead efficiency without regard to non-cash expenditures, such as stock compensation. Cash G&A is not a calculation based on GAAP financial measures and should not be considered as an alternative to GAAP G&A in measuring the company’s performance. You should carefully consider the specific items included in the company’s computation of this measure. You are cautioned that Cash G&A as reported by Rex Energy may not be comparable in all instances to that reported by other companies.
To compensate for these limitations, the company believes it is important to consider both Cash G&A and GAAP G&A. The following table presents a reconciliation of Rex Energy’s GAAP G&A to its Cash G&A for each of the periods presented (in thousands):
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
| GAAP G&A | $ | 5,928 | $ | 8,958 | $ | 29,435 | $ | 36,137 | |||||||||||
| Non-Cash Compensation Expense | (1,616 | ) | (1,427 | ) | (6,450 | ) | (5,672 | ) | |||||||||||
| Cash G&A | $ | 4,312 | $ | 7,531 | $ | 22,985 | $ | 30,465 | |||||||||||