Earthstone Energy (ESTE) Q2 Results - Aug 6
Posted: Thu Aug 06, 2020 8:57 am
Second Quarter 2020 Highlights
Average daily production of 13,555 Boepd < My forecast was 13,600 Boepd.
Adjusted EBITDAX of $39.8 million ($32.30 per Boe) < Beat my forecast of $29.5 million.
All-in cash costs of $10.11 per Boe
Operating Margin of $11.83 per Boe ($35.64 including realized hedge settlements)
Free Cash Flow of $35.3 million < WAY OVER my forecast of ~$20 million.
Capital expenditures of $3.2 million
Net loss of $(35.9) million, or $(0.55) per Adjusted Diluted Share
Adjusted net income of $12.8 million, or $0.20 per Adjusted Diluted Share < Compares to my net income forecast of $4.4 million.
Management Comments
Mr. Robert J. Anderson, President and CEO of Earthstone, commented, "We had a good quarter against a difficult backdrop that was unprecedented in our industry with the second quarter of 2020 being hit with low commodity prices, reduced demand due to COVID-19 and threats of forced curtailments. Due to our strong hedge position and continued focus on reducing cash costs, we achieved both significant Adjusted EBITDAX of almost $40 million, and generated $35 million of Free Cash Flow. We expect to continue to generate Free Cash Flow for the remainder of the year which will be used to reduce our borrowings and, additionally, we expect this reduction to assist us in achieving our target of being below 1x net debt to Adjusted EBITDAX at year-end."
Mr. Anderson continued, "We executed our voluntary shut-in / curtailment program successfully in the second quarter without production complications or additional expense. Our continued focus on operating expense reduction was evident during the quarter as expenses were reduced by 40% compared to the first quarter, which was partially driven by shut-ins during May. All of our wells have been returned to full production and based on our recently announced updated production guidance, we expect to average 13,000 - 14,000 Boepd for the full year and therefore have relatively flat production from 2019 to 2020 with our previously guided capital expenditures of $50-60 million. With the vast majority of our capital program for 2020 completed in the first half of the year, we now have 11 wells drilled but uncompleted. Depending on completion timing, these 11 wells should allow us to maintain production relatively flat in 2021 with net capital expenditures presently estimated at $30 million. For the remainder of 2020 we will continue to focus on cost control and generating Free Cash Flow while considering various consolidation opportunities that are a direct result of the current environment."
Average daily production of 13,555 Boepd < My forecast was 13,600 Boepd.
Adjusted EBITDAX of $39.8 million ($32.30 per Boe) < Beat my forecast of $29.5 million.
All-in cash costs of $10.11 per Boe
Operating Margin of $11.83 per Boe ($35.64 including realized hedge settlements)
Free Cash Flow of $35.3 million < WAY OVER my forecast of ~$20 million.
Capital expenditures of $3.2 million
Net loss of $(35.9) million, or $(0.55) per Adjusted Diluted Share
Adjusted net income of $12.8 million, or $0.20 per Adjusted Diluted Share < Compares to my net income forecast of $4.4 million.
Management Comments
Mr. Robert J. Anderson, President and CEO of Earthstone, commented, "We had a good quarter against a difficult backdrop that was unprecedented in our industry with the second quarter of 2020 being hit with low commodity prices, reduced demand due to COVID-19 and threats of forced curtailments. Due to our strong hedge position and continued focus on reducing cash costs, we achieved both significant Adjusted EBITDAX of almost $40 million, and generated $35 million of Free Cash Flow. We expect to continue to generate Free Cash Flow for the remainder of the year which will be used to reduce our borrowings and, additionally, we expect this reduction to assist us in achieving our target of being below 1x net debt to Adjusted EBITDAX at year-end."
Mr. Anderson continued, "We executed our voluntary shut-in / curtailment program successfully in the second quarter without production complications or additional expense. Our continued focus on operating expense reduction was evident during the quarter as expenses were reduced by 40% compared to the first quarter, which was partially driven by shut-ins during May. All of our wells have been returned to full production and based on our recently announced updated production guidance, we expect to average 13,000 - 14,000 Boepd for the full year and therefore have relatively flat production from 2019 to 2020 with our previously guided capital expenditures of $50-60 million. With the vast majority of our capital program for 2020 completed in the first half of the year, we now have 11 wells drilled but uncompleted. Depending on completion timing, these 11 wells should allow us to maintain production relatively flat in 2021 with net capital expenditures presently estimated at $30 million. For the remainder of 2020 we will continue to focus on cost control and generating Free Cash Flow while considering various consolidation opportunities that are a direct result of the current environment."