Third Quarter Financial Results
Unless otherwise noted, results of continuing operations are presented excluding the results of the company's
Operating revenue from continuing operations for the three and nine months ended
Lease operating expense (LOE) from continuing operations was
Net income attributable to common shareholders for the three months ended
EBITDAX from continuing operations, a non-GAAP measure, was
Reconciliations of adjusted net income to GAAP net income, EBITDAX to GAAP net income and G&A to cash G&A for the three months and nine months ended
Production Results and Price Realizations
Third quarter 2016 production volumes from continuing operations were 197.8 MMcfe/d, an increase of 8% over the third quarter of 2015, consisting of 118.8 MMcf/d of natural gas and 13.2 Mboe/d of condensate and NGLs (including 6.6 Mboe/d of ethane). Condensate and NGLs (including ethane) accounted for 40% of net production for the third quarter of 2016.
Including the effects of cash-settled derivatives, realized prices for the three months ended
Including the effects of cash-settled derivatives, realized prices for the nine months ended
Third Quarter 2016 Capital Investments
For the third quarter of 2016, net operational capital investments were approximately
Third quarter investments for leasing and property acquisitions were
Operational Update
During the third quarter of 2016, the company placed into sales the two-well Geyer pad. The Geyer wells were drilled to an average lateral length of approximately 4,200 feet and were completed in an average of 24 stages. The wells produced at an average 5-day sales rate per well, assuming full ethane recovery, of 6.1 MMcfe/d, consisting of 3.8 MMcf/d of gas and 387 bbls/d of NGLs.
In the Moraine East Area,
During the third quarter of 2016, the company placed the four-well Fleeger II pad into sales, consisting of three Marcellus wells and one Upper Devonian well. The Fleeger II wells were drilled to an average lateral length of approximately 7,760 feet and completed in an average of 46 stages with average sand concentrations of 2,444 pounds per foot. The three Marcellus wells produced at an average 24-hour sales rate per well, assuming full ethane recovery, of 10.4 MMcfe/d, consisting of 4.3 MMcf/d of natural gas, 851 bbls/d of NGLs and 154 bbls/d of condensate. The Upper Devonian Burkett well, the Fleeger II 3H, produced at a 24-hour sales rate of 7.0 MMcfe/d, consisting of 2.9 MMcf/d of natural gas, 557 bbls/d of NGLs and 133 bbls/d of condensate. The Fleeger II 3H has not fully dewatered and is continuing to improve as it cleans up.
The company recently completed the two-well Klever pad, which was
drilled to an average lateral length of approximately 7,460 feet. The pad is expected to be placed into sales during the fourth quarter of 2016. The company also expects to complete the four-well Baird pad in the fourth quarter of 2016 and place the pad into sales in
In the Warrior North Area,
| Moraine East | Warrior North | ||||||||
| YE 2016E | YTD | YE 2016E | |||||||
| Total Acreage HBP | 22,000 | 6,700 | 11,800 | ||||||
| % Acreage HBP | 61 | % | 56 | % | 98 | % | |||
| Gross / Net Locations HBP | 217 / 184 | 40 / 32 | 54 / 46 | ||||||
| % Gross / Net Locations HBP | 56% / 56% | 68% / 63% | 92% / 90% | ||||||
| Gross Exit Rate Production | 69.1 MMcfe/d | -- | 67.6 MMcfe/d | ||||||
On
Earlier this year,
During the second half of 2016, the company renegotiated its condensate pricing agreements, resulting in over
Liquidity Update
During the third quarter,
Projections for Operations; Fourth Quarter and Full Year 2016 Guidance
The following table summarizes Rex Energy's operational activities for full-year 2016 and projected status at year-end in each of its core operating areas:
| Legacy Butler | Moraine East | Warrior North | |
| Wells Drilled Gross / Net | 2.0 / 1.4 | 10.0 / 3.5 | 7.0 / 2.5 |
| Wells Completed Gross / Net | 2.0 / 1.4 | 6.0 / 2.7 | 10.0 / 4.2 |
| Wells Placed Into Sales Gross / Net | 2.0 / 1.4 | 18.0 / 8.7 | 13.0 / 5.2 |
| Commenced Pad Operations (@ YE) | -- | 3.0 pads | -- |
In addition, the company is providing its guidance for the fourth quarter of 2016 and full-year 2016 ($ in millions):
| 4Q2016 | Full Year 2016 | |
| Production | 194.0 - 200.0 MMcfe/d | 7% YoY Growth |
| Lease Operating Expense | -- | |
| Cash G&A | -- | |
| Net Operational Capital Expenditures(1) | -- | |
| (1) Land acquisition expense and capitalized interest are not included in the operational capital expenditures budget | ||
Conference Call Information
Management will host a live conference call and webcast on
About
Headquartered in
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; projections of operations at year-end 2016; and our financial guidance for fourth quarter and full year 2016 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, and 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):
We undertake no obligation to publicly update or revise any forward-looking statements. Further information on the company's risks and uncertainties is available in our filings with the
| CONSOLIDATED BALANCE SHEETS | ||||||||
| ($ in Thousands, Except Share and Per Share Data) | ||||||||
| ASSETS | (Unaudited) | |||||||
| Current Assets | ||||||||
| Cash and Cash Equivalents | $ | 2,524 | $ | 1,091 | ||||
| Accounts Receivable | 21,655 | 17,274 | ||||||
| Taxes Receivable | 211 | 18 | ||||||
| Short-Term Derivative Instruments | 5,461 | 34,260 | ||||||
| Inventory, Prepaid Expenses and Other | 1,079 | 3,059 | ||||||
| Assets Held for Sale | -- | 60,451 | ||||||
| Total Current Assets | 30,930 | 116,153 | ||||||
| Property and Equipment (Successful Efforts Method) | ||||||||
| 1,020,993 | 943,092 | |||||||
| 223,791 | 262,992 | |||||||
| Other Property and Equipment | 21,449 | 20,363 | ||||||
| Wells and Facilities in Progress | 66,614 | 141,100 | ||||||
| Pipelines | 15,186 | 14,024 | ||||||
| Total Property and Equipment | 1,348,033 | 1,381,571 | ||||||
| Less: Accumulated Depreciation, Depletion and Amortization | (459,549 | ) | (437,828 | ) | ||||
| Net Property and Equipment | 888,484 | 943,743 | ||||||
| Other Assets | 2,492 | 2,501 | ||||||
| Long-Term Derivative Instruments | 3,367 | 9,534 | ||||||
| Total Assets | $ | 925,273 | $ | 1,071,931 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable | $ | 29,464 | $ | 36,785 | ||||
| Current Maturities of Long-Term Debt | 201 | 402 | ||||||
| Accrued Liabilities | 29,619 | 40,608 | ||||||
| Short-Term Derivative Instruments | 9,294 | 2,486 | ||||||
| Liabilities Related to Assets Held for Sale | 631 | 36,320 | ||||||
| Total Current Liabilities | 69,209 | 116,601 | ||||||
| Long-Term Derivative Instruments | 3,354 | 5,556 | ||||||
| Senior Secured Line of Credit and Long-Term Debt, Net of Issuance Costs | 126,061 | 109,386 | ||||||
| Senior Notes, Net of Issuance Costs and Deferred Gain on Debt Exchanges | 633,322 | 663,089 | ||||||
| Premium on Senior Notes, Net | 134 | 2,344 | ||||||
| Other Deposits and Liabilities | 9,617 | 3,156 | ||||||
| Future Abandonment Cost | 7,438 | 11,568 | ||||||
| Total Liabilities | $ | 849,135 | $ | 911,700 | ||||
| Stockholder Equity | ||||||||
| Preferred Stock, | $ | 1 | $ | 1 | ||||
| Common Stock, | 94 | 54 | ||||||
| 649,103 | 623,863 | |||||||
| Accumulated Deficit | (573,060 | ) | (463,687 | ) | ||||
| Total Stockholders' Equity | 76,138 | 160,231 | ||||||
| Total Liabilities and Owners' Equity | $ | 925,273 | $ | 1,071,931 | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
| (Unaudited, in Thousands, Except per Share Data) | |||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| OPERATING REVENUE | |||||||||||||||||
| Natural Gas, Condensate and NGL Sales | $ | 34,034 | $ | 29,648 | $ | 90,978 | $ | 111,344 | |||||||||
| Other Revenue | 5 | 8 | 12 | 30 | |||||||||||||
| TOTAL OPERATING REVENUE | 34,039 | 29,656 | 90,990 | 111,374 | |||||||||||||
| OPERATING EXPENSES | |||||||||||||||||
| Production and Lease Operating Expense | 26,333 | 24,259 | 76,005 | 71,646 | |||||||||||||
| General and Administrative Expense | 5,116 | 4,507 | 15,237 | 20,253 | |||||||||||||
| (Gain) Loss on Disposal of Assets | 10 | (224 | ) | (4,285 | ) | (533 | ) | ||||||||||
| Impairment Expense | 9,563 | 85,193 | 45,344 | 209,880 | |||||||||||||
| Exploration Expense | 216 | 580 | 1,954 | 1,774 | |||||||||||||
| Depreciation, Depletion, Amortization and Accretion | 15,109 | 20,832 | 46,371 | 67,369 | |||||||||||||
| Other Operating Expense | 9,899 | 190 | 10,930 | 5,328 | |||||||||||||
| TOTAL OPERATING EXPENSES | 66,246 | 135,337 | 191,556 | 375,717 | |||||||||||||
| LOSS FROM OPERATIONS | (32,207 | ) | (105,681 | ) | (100,566 | ) | (264,343 | ) | |||||||||
| OTHER EXPENSE | |||||||||||||||||
| Interest Expense | (9,646 | ) | (11,884 | ) | (34,115 | ) | (36,077 | ) | |||||||||
| Gain (Loss) on Derivatives, Net | 16,866 | 28,649 | (8,254 | ) | 45,487 | ||||||||||||
| Other Income | 16 | 25 | 28 | 118 | |||||||||||||
| Debt Exchange Expense | (35 | ) | -- | (9,048 | ) | -- | |||||||||||
| Gain on Extinguishment of Debt | 423 | -- | 24,130 | -- | |||||||||||||
| Loss on Equity Method Investments | -- | -- | -- | (411 | ) | ||||||||||||
| TOTAL OTHER INCOME (EXPENSE) | 7,624 | 16,790 | (27,259 | ) | 9,117 | ||||||||||||
| LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX | (24,583 | ) | (88,891 | ) | (127,825 | ) | (255,226 | ) | |||||||||
| Income Tax Benefit | 8,106 | -- | 5,785 | -- | |||||||||||||
| NET LOSS FROM CONTINUING OPERATIONS | (16,477 | ) | (88,891 | ) | (122,040 | ) | (255,226 | ) | |||||||||
| Income (Loss) From Discontinued Operations, Net of Income Taxes | 21,892 | (5,785 | ) | 12,719 | (7,770 | ) | |||||||||||
| NET INCOME (LOSS) | 5,415 | (94,676 | ) | (109,321 | ) | (262,996 | ) | ||||||||||
| Net Income (Loss) Attributable to Noncontrolling Interests | -- | (1 | ) | -- | 2,245 | ||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO REX ENERGY | 5,415 | (94,675 | ) | (109,321 | ) | (265,241 | ) | ||||||||||
| Preferred Stock Dividends | (613 | ) | (2,415 | ) | (4,441 | ) | (7,245 | ) | |||||||||
| Effect of Preferred Stock Conversion | -- | -- | 72,316 | -- | |||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 4,802 | $ | (97,090 | ) | $ | (41,446 | ) | $ | (272,486 | ) | ||||||
| Earnings per common share: | |||||||||||||||||
| Basic - Net Loss From Continuing Operations Attributable to Rex Energy Common Shareholders | $ | (0.19 | ) | $ | (1.69 | ) | $ | (0.74 | ) | $ | (4.88 | ) | |||||
| Basic - Net Income (Loss) From Discontinued Operations Attributable to Rex Energy Common Shareholders | 0.24 | (0.11 | ) | 0.17 | (0.19 | ) | |||||||||||
| Basic - Net Income (Loss) Attributable to Rex Energy Common Shareholders | $ | 0.05 | $ | (1.80 | ) | $ | (0.57 | ) | $ | (5.07 | ) | ||||||
| Basic - Weighted Average Shares of Common Stock Outstanding | 90,803 | 53,936 | 73,098 | 53,748 | |||||||||||||
| Diluted - Net Loss From Continuing Operations Attributable to Rex Energy Common Shareholders | $ | (0.19 | ) | $ | (1.69 | ) | $ | (0.74 | ) | $ | (4.88 | ) | |||||
| Diluted - Net Income (Loss) From Discontinued Operations Attributable to Rex Energy Common Shareholders | 0.24 | (0.11 | ) | 0.17 | (0.19 | ) | |||||||||||
| Diluted - Net Income (Loss) Attributable to Rex Energy Common Shareholders | $ | 0.05 | $ | (1.80 | ) | $ | (0.57 | ) | $ | (5.07 | ) | ||||||
| Diluted - Weighted Average Shares of Common Stock Outstanding | 90,803 | 53,936 | 73,098 | 53,748 | |||||||||||||
| CONSOLIDATED OPERATIONAL HIGHLIGHTS | |||||||||||||
| UNAUDITED | |||||||||||||
| Three Months Ending | Nine Months Ending | ||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||
| Oil, Natural Gas, NGL and Ethane sales (in thousands): | |||||||||||||
| Natural gas sales | $ | 16,871 | $ | 18,684 | $ | 48,431 | $ | 68,057 | |||||
| Condensate sales | 4,096 | 2,837 | 8,998 | 12,257 | |||||||||
| Natural gas liquids (C3+) sales | 8,211 | 5,069 | 22,053 | 24,872 | |||||||||
| Ethane sales | 4,855 | 3,058 | 11,495 | 6,158 | |||||||||
| Cash-settled derivatives: | |||||||||||||
| Natural gas | 1,200 | 8,911 | 24,280 | 23,250 | |||||||||
| Condensate | 93 | 2,694 | 2,191 | 8,807 | |||||||||
| Natural gas liquids (C3+) | 830 | 3,446 | 6,040 | 7,111 | |||||||||
| Ethane | 97 | -- | 241 | -- | |||||||||
| Total oil, gas, NGL and Ethane sales including cash settled derivatives | $ | 36,253 | $ | 44,699 | $ | 123,729 | $ | 150,512 | |||||
| Production during the period: | |||||||||||||
| Natural gas (Mcf) | 10,927,477 | 10,731,248 | 33,559,096 | 34,160,329 | |||||||||
| Condensate (Bbls) | 105,517 | 85,988 | 259,145 | 345,726 | |||||||||
| Natural gas liquids (C3+) (Bbls) | 498,217 | 498,256 | 1,495,961 | 1,571,358 | |||||||||
| Ethane (Bbls) | 607,340 | 423,479 | 1,578,480 | 903,086 | |||||||||
| Total (Mcfe)1 | 18,193,921 | 16,777,586 | 53,560,612 | 51,081,349 | |||||||||
| Production - average per day: | |||||||||||||
| Natural gas (Mcf) | 118,777 | 116,644 | 122,478 | 125,129 | |||||||||
| Condensate (Bbls) | 1,147 | 935 | 946 | 1,266 | |||||||||
| Natural gas liquids (C3+) (Bbls) | 5,415 | 5,416 | 5,460 | 5,756 | |||||||||
| Ethane (Bbls) | 6,602 | 4,603 | 5,761 | 3,308 | |||||||||
| Total (Mcfe)1 | 197,760 | 182,365 | 195,477 | 187,111 | |||||||||
| Average price per unit: | |||||||||||||
| Realized natural gas price per Mcf - as reported | $ | 1.54 | $ | 1.74 | $ | 1.44 | $ | 1.99 | |||||
| Realized impact from cash settled derivatives per Mcf | 0.11 | 0.83 | 0.73 | 0.68 | |||||||||
| Net realized price per Mcf | $ | 1.65 | $ | 2.57 | $ | 2.17 | $ | 2.67 | |||||
| Realized condensate price per Bbl - as reported | $ | 38.82 | $ | 32.99 | $ | 34.72 | $ | 35.45 | |||||
| Realized impact from cash settled derivatives per Bbl2 | 0.88 | 31.33 | 8.46 | 25.48 | |||||||||
| Net realized price per Bbl | $ | 39.70 | $ | 64.32 | $ | 43.18 | $ | 60.93 | |||||
| Realized natural gas liquids (C3+) price per Bbl - as reported | $ | 16.48 | $ | 10.17 | $ | 14.74 | $ | 15.83 | |||||
| Realized impact from cash settled derivatives per Bbl | 1.67 | 6.82 | 4.04 | 4.42 | |||||||||
| Net realized price per Bbl | $ | 18.15 | $ | 16.99 | $ | 18.78 | $ | 20.25 | |||||
| Realized ethane price per Bbl - as reported | $ | 7.99 | $ | 7.22 | $ | 7.28 | $ | 6.82 | |||||
| Realized impact from cash settled derivatives per Bbl | 0.16 | 0.11 | 0.15 | 0.19 | |||||||||
| Net realized price per Bbl | $ | 8.15 | $ | 7.33 | $ | 7.43 | $ | 7.01 | |||||
| LOE/Mcfe | $ | 1.45 | $ | 1.45 | $ | 1.42 | $ | 1.40 | |||||
| Cash G&A/Mcfe | $ | 0.23 | $ | 0.28 | $ | 0.25 | $ | 0.31 | |||||
| 1 Oil and natural gas liquids are converted at the rate of one barrel of oil equivalent to six Mcfe. | |||||||||||||
| 2
Includes the effect of derivatives not classified as discontinued operations. When including the effect of | |||||||||||||
| COMMODITY DERIVATIVES - HEDGE POSITION AS OF | ||||||||
| 2016 | 2017 | |||||||
| Oil Derivatives (Bbls) | ||||||||
| Swap Contracts | ||||||||
| Volume | 20,000(1) | 21,000 | ||||||
| Price | $ | 44.00 | $ | 51.30 | ||||
| Collar Contracts | ||||||||
| Volume | 40,000 | 48,000 | ||||||
| Ceiling | $ | 49.05 | $ | 57.20 | ||||
| Floor | $ | 37.50 | $ | 45.00 | ||||
| Collar Contracts with | ||||||||
| Volume | 40,000 | 48,000 | ||||||
| Ceiling | $ | 44.50 | $ | 60.75 | ||||
| Floor | $ | 35.50 | $ | 47.50 | ||||
| $ | 26.50 | $ | 37.50 | |||||
| Natural Gas Derivatives (Mcf) | ||||||||
| Swap Contracts | ||||||||
| Volume | 1,590,000(2) | 11,540,000(3) | ||||||
| Price | $ | 2.64 | $ | 3.00 | ||||
| Swaption Contracts | ||||||||
| Volume | 100,000 | -- | ||||||
| Price | $ | 3.15 | $ | -- | ||||
| Put Spread Contracts | ||||||||
| Volume | 700,000 | -- | ||||||
| Floor | $ | 3.39 | $ | -- | ||||
| $ | 2.61 | $ | -- | |||||
| Collar Contracts with | ||||||||
| Volume | 355,000 | 17,510,000 | ||||||
| Ceiling | $ | 3.50 | $ | 3.87 | ||||
| Floor | $ | 2.77 | $ | 3.01 | ||||
| $ | 2.18 | $ | 2.33 | |||||
| Call Contracts | ||||||||
| Volume | -- | 8,380,100 | ||||||
| Ceiling | $ | -- | $ | 4.51 | ||||
| Collar Contracts | ||||||||
| Volume | 560,000 | 1,700,000 | ||||||
| Ceiling | $ | 2.96 | $ | 3.20 | ||||
| Floor | $ | 2.56 | $ | 2.54 | ||||
| Natural Gas Liquids (Bbls) | ||||||||
| Swap Contracts | ||||||||
| Propane (C3) | ||||||||
| Volume | 156,000 | 312,000 | ||||||
| Price | $ | 21.56 | $ | 18.04 | ||||
| Butane (C4) | ||||||||
| Volume | 38,000 | 108,000 | ||||||
| Price | $ | 27.10 | $ | 23.80 | ||||
| Isobutane (IC4) | ||||||||
| Volume | 16,000 | 48,000 | ||||||
| Price | $ | 27.93 | $ | 24.00 | ||||
| Natural Gasoline (C5+) | ||||||||
| Volume | 28,000 | 100,000 | ||||||
| Price | $ | 50.00 | $ | 44.52 | ||||
| Ethane | ||||||||
| Volume | 110,000 | 540,000 | ||||||
| Price | $ | 8.49 | $ | 10.13 | ||||
| Natural Gas Basis (Mcf) | ||||||||
| Swap Contracts | ||||||||
| Dominion Appalachia | ||||||||
| Volume | 1,147,000 | 10,755,000 | ||||||
| Price | $ | (0.80 | ) | $ | (0.79 | ) | ||
| Volume | -- | 14,600,000 | ||||||
| Price | $ | -- | $ | (0.13 | ) | |||
| NYMEX Heating Oil (Gallon) | ||||||||
| Swap Contracts | ||||||||
| Volume | 2,000 | -- | ||||||
| Price | $ | 2.00 | $ | -- | ||||
| (1) Includes 20,000 Bbls of enhanced swaps | ||||||||
| (2) Includes 0.4 Bcf of enhanced swaps | ||||||||
| (3) Includes 3.9 Bcf of enhanced swaps | ||||||||
APPENDIX
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:
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.
| Three Months Ended | Nine Months Ended | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net Loss From Continuing Operations | $ | (16,477 | ) | $ | (88,891 | ) | $ | (122,040 | ) | $ | (255,226 | ) | ||||
| Add Back (Less) Non-Recurring Costs (Income)1 | 8,306 | -- | (6,388 | ) | 4,774 | |||||||||||
| Add Back Depletion, Depreciation, Amortization and Accretion | 15,109 | 20,832 | 46,371 | 67,369 | ||||||||||||
| Add Back (Less) Non-Cash Compensation Expense (Income) | 990 | (222 | ) | 2,006 | 4,413 | |||||||||||
| Add Back Interest Expense | 9,646 | 11,884 | 34,115 | 36,077 | ||||||||||||
| Add Back Impairment Expense | 9,563 | 85,193 | 45,344 | 209,880 | ||||||||||||
| Add Back Exploration Expenses | 216 | 580 | 1,954 | 1,774 | ||||||||||||
| Add Back (Less) (Gain) Loss on Disposal of Assets | 10 | (224 | ) | (4,285 | ) | (533 | ) | |||||||||
| Add Back (Less) (Gain) Loss on Financial Derivatives | (16,866 | ) | (28,649 | ) | 8,254 | (45,487 | ) | |||||||||
| Add Back Cash Settlement of Derivatives | 2,145 | 15,082 | 32,485 | 40,102 | ||||||||||||
| Less Income Tax Benefit | (8,106 | ) | -- | (5,785 | ) | -- | ||||||||||
| Add Back Non-Cash Portion of Equity Method Investments | -- | -- | -- | 406 | ||||||||||||
| EBITDAX From Continuing Operations | $ | 4,536 | $ | 15,585 | $ | 32,031 | $ | 63,549 | ||||||||
| Net Income (Loss) From Discontinued Operations, Net of Income Taxes | $ | 21,892 | $ | (5,785 | ) | $ | 12,719 | $ | (7,770 | ) | ||||||
| Income Attributable to Noncontrolling Interests | -- | 1 | -- | (2,245 | ) | |||||||||||
| Income (Loss) From Discontinued Operations Attributable to | 21,892 | (5,784 | ) | 12,719 | (10,015 | ) | ||||||||||
| Add Back Depletion, Depreciation, Amortization and Accretion | 18 | 6,294 | 5,100 | 15,497 | ||||||||||||
| Add Back (Less) Non-Cash Compensation Expense (Income) | (366 | ) | 140 | (107 | ) | 421 | ||||||||||
| Add Back Interest Expense | 1 | 59 | 4 | 507 | ||||||||||||
| Add Back Impairment Expense | -- | 54,619 | 3,543 | 54,797 | ||||||||||||
| Add Back Exploration Expense | -- | 227 | 143 | 468 | ||||||||||||
| Less Gain on Disposal of Assets | (30,491 | ) | (57,024 | ) | (30,535 | ) | (56,988 | ) | ||||||||
| Less Non-Cash Portion of Noncontrolling Interests | -- | (23 | ) | -- | (209 | ) | ||||||||||
| Add Back Income Tax Expense | 8,354 | 2,416 | 7,852 | 2,658 | ||||||||||||
| Add EBITDAX From Discontinued Operations | $ | (592 | ) | $ | 924 | $ | (1,281 | ) | $ | 7,136 | ||||||
| EBITDAX (Non-GAAP) | $ | 3,944 | $ | 16,509 | $ | 30,750 | $ | 70,685 | ||||||||
| 1 For the three and nine months ended | ||||||||||||||||
Adjusted Net Income
"Adjusted Net Income" means, for any period, the sum of net income (loss) from continuing operations before income taxes for the period plus the following expenses, charges or income, in each case, to the extent deducted from or added to net income 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 is used as a financial measure by
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 from continuing operations to its adjusted net income for each of the periods presented ($ in thousands):
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||
| Loss From Continuing Operations Before Income Taxes, as reported | $ | (24,583 | ) | $ | (88,891 | ) | $ | (127,825 | ) | $ | (255,226 | ) | ||
| Gain (Loss) on Derivatives, Net | (16,866 | ) | (28,649 | ) | 8,254 | (45,487 | ) | |||||||
| Cash Settlement of Derivatives | 2,145 | 15,082 | 32,485 | 40,102 | ||||||||||
| Add Back (Less) Losses (Gains) from Financial Derivatives | (14,721 | ) | (13,564 | ) | 40,739 | (5,385 | ) | |||||||
| Add Back Non-Recurring Costs1 | 8,306 | -- | (6,388 | ) | 4,774 | |||||||||
| Add Back Impairment Expense | 9,563 | 85,193 | 45,344 | 209,880 | ||||||||||
| Add Back Dry Hole Expense | 2 | -- | 848 | 191 | ||||||||||
| Add Back (Less) Non-Cash Compensation Expense (Income) | 990 | (222 | ) | 2,006 | 4,413 | |||||||||
| Add Back (Less) (Gain) Loss on Disposal of Assets | 10 | (224 | ) | (4,285 | ) | (533 | ) | |||||||
| Loss From Continuing Operations Before Income Taxes, adjusted | $ | (20,433 | ) | $ | (17,708 | ) | $ | (49,561 | ) | $ | (41,886 | ) | ||
| Less Income Tax Benefit, adjusted2 | 8,173 | 7,083 | 19,824 | 16,754 | ||||||||||
| Adjusted Net Loss From Continuing Operations | $ | (12,260 | ) | $ | (10,625 | ) | $ | (29,737 | ) | $ | (25,132 | ) | ||
| Basic - Adjusted Net Loss Per Share | $ | (0.14 | ) | $ | (0.20 | ) | $ | (0.41 | ) | $ | (0.47 | ) | ||
| Basic - Weighted Average Shares of Common Stock Outstanding | 90,803 | 53,936 | 73,098 | 53,748 | ||||||||||
| 1 For the three and nine months ended | ||||||||||||||
| 2Assumes 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.
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 | Nine Months Ended | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||
| GAAP G&A | $ | 5,116 | $ | 4,507 | $ | 15,237 | $ | 20,253 | ||||||
| Non-Cash Compensation Expense | 990 | (222 | ) | 2,006 | 4,413 | |||||||||
| Cash G&A | $ | 4,126 | $ | 4,729 | $ | 13,231 | $ | 15,840 | ||||||
For more information contact: Investor Relations (814) 278-7130 InvestorRelations@rexenergycorp.com
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