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Sundance Energy Australia Limited Reports First Quarter 2017 Results

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DENVER, May 15, 2017 (GLOBE NEWSWIRE) -- Sundance Energy Australia Limited (ASX:SEA) (NASDAQ:SNDE) ("Sundance" or the "Company"), a U.S. onshore oil and gas exploration and production company focused in the Eagle Ford in South Texas, reported its first quarter 2017 financial and operations results. 

First Quarter 2017 Financial Results

  • Adjusted EBITDAX of $13.8 million, or 59.4 percent of Adjusted EBITDAX Margin, and net income for the period of $2.5 million.
  • Total revenue of $23.2 million, more than doubled as compared to the same prior year period, primarily driven by higher product pricing, which increased 79%.   
  • Cash operating costs increased 22% to $14.93/Boe for the quarter, as compared to $12.25/Boe for the same prior year period. The increase was primarily caused by increased lease operating and workover expense incurred to resolve field operational issues from the fourth quarter of 2016 and increased production taxes due to higher product pricing.
  • Operating cash flow totaled $19.0 million for the first quarter.
  • As of March 31, 2017, the Company's oil hedges covered a total of 1.6 million bbls through 2019 with a weighted average floor of $49.88 and ceiling of $58.07.  
  • Cash on hand, pro forma for the sale of its Oklahoma assets, totaled $29.0 million as of March 31, 2017.
  • Borrowing base on its revolving credit facility was reaffirmed at $67 million. 

Operational Highlights

  • Resolved majority of field operational issues from the fourth quarter of 2016.
  • Net production for the quarter, including flared, gas was 6,685 Boe/d, in line with its expectations for the quarter.  The Company expects full year production of 7,700-8,500 Boe/d. 
  • The Company anticipates second quarter 2017 production to be 5,300-5,700 boe/d.  The expected decline is caused by approximately 1,000 boe/d of production declines from wells producing as of December 31, 2016 ("PDP Wells") and the sale of approximately 650 boe/d with the Oklahoma asset sale.  In the second half of 2017, the expected decline from PDP Wells drops to approximately 9.5% per quarter.
  • The Company has begun flow back on 4 gross (4 net) wells through the second quarter that will all produce for portions of the second quarter.  These new wells will partially offset the production declines.
  • An additional 8 gross (7.7 net) wells will begin production throughout the third quarter of 2017 and 3 gross (3.0 net) wells in the fourth quarter of 2017.  These wells will drive production growth for the Company in the second half of 2017.
  • Capital expenditures totaled $25.8 million for the first quarter which included drilling 6 wells, completing 3 wells and commencing drilling of 3 additional wells.    
  • The Company entered into an agreement to sell its Oklahoma assets during the first quarter, which closed on May 8, 2017 for net proceeds of $16.6 million. 
  • The Company has updated initial production rates on the two wells in the table below:
             
Well County  Oil
 Rate
bod
 Gas
 Rate
mcfd
Boe/d  Choke
1/64"
 Comments 

Woodward EFS 4H
 McMullen  566  2,188  931 12 24 hours

Peeler Ranch 11 HD  
Atascosa  1,010  420  1,080  16 24 hours
             

The following tables present certain production, per unit metrics and Adjusted EBITDAX that compare results of the corresponding quarterly reporting periods:

                   
  Three Months Ended   % Change  
Unaudited 31-Mar-17   31-Dec-16 31-Mar-16    Sequential
Quarter
  Qtr.-over-
Qtr
 
Net Sales Volumes                  
Oil (Bbls)     398,634       447,501     331,261   -11 %   20 %  
Natural gas (Mcf)     770,845       1,189,003     596,283   -35 %   29 %  
NGL (Bbls)     68,046       97,564     84,033              -30 %          -19 %  
Total Boe (1)     595,154       743,233     514,675   -20 %   16 %  
                   
Average Daily Volumes                  
Average daily production (Boe), including flared gas (2)     6,685       8,161     6,304   -18 %   6 %  
                   
Product Price Received                  
Total price received (per Boe) $   39.04   $   33.55 $   21.86   16 %   79 %  
Total realized price (per Boe)(3) $   38.11   $   33.44 $   31.31   14 %   22 %  
                   
(1)  The quarter ended March 31, 2017 includes 53,803 Boe (598 Boe/d)  from the Company's Oklahoma assets which were divested of on May 8, 2017.  
(2)  Includes flared gas of of 38,862 Mcf, 45,420 Mcf and 353,703 Mcf for the three months ended March 31, 2017, December 31, 2016 and March 31, 2016, respectively.  
(3) Includes realized gains/losses on hedging of $0.5 million loss, $0.1 million loss and $4.9 million gain for the three months ended March 31, 2017, December 31, 2016 and March 31, 2016, respectively. 
                   

 

                 
UNIT COST ANALYSIS Three Months Ended   % Change
Unaudited 31-Mar-17   31-Dec-16   31-Mar-16    Sequential
Quarter
Qtr.-over-
Qtr
Revenue/Boe $   39.04     $   33.55     $   21.86     16 % 79 %
Lease operating expenses/Boe     (7.16 )       (6.19 )       (5.79 )   16 % 24 %
Production taxes/Boe     (2.36 )       (1.75 )       (1.48 )   35 % 59 %
Cash G&A/Boe(1)     (5.41 )       (3.90 )       (4.98 )   39 % 9 %
Net per Boe     24.11         21.71         9.61     11 %     151 %
                 
Adjusted EBITDAX(2)     13,804         15,867         9,841               -13 % 40 %
Adjusted EBITDAX Margin (3)   59.4 %     63.6 %     87.5 %   -7 % -32 %
                 
(1)  Cash G&A represents general and administrative expenses incurred less equity-settled share based compensation expense, which  
totaled $0.6 million, $0.7 million and $0.6 million for the three months ended March 31, 2017, December 31, 2016 and March 31, 2016, respectively. 
(2) See reconciliation of income attributable to owners of the Company to Adjusted EBITDAX included at end of release.   
(3) Adjusted EBITDAX Margin represents Adjusted EBITDAX as a percentage of revenue during the period.      
                 

Condensed Consolidated Financial Statements

The Company's condensed consolidated financial statements are included below.

     
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
     
  Three Months Ended 
Unaudited (US$000s)  March 31, 2017
Revenue $   23,233    
Lease operating and production tax expense     (5,664 )  
Depreciation and amortisation expense     (14,159 )  
General and administrative expenses     (3,771 )  
Gain on commodity hedging, net     6,580    
Finance costs, net of amounts capitalized     (3,107 )  
Other income, net     6    
     
Income before income tax      3,118    
     
Income tax expense      (651 )  
     
Income attributable to owners of the Company   $    2,467    
     

 

   
CONDENSED CONSOLIDATED BALANCE SHEETS  
         
(US$000s) March 31, 2017   December 31, 2016  
  (Unaudited)   (Audited)  
Cash $   12,381   $   17,463  
Trade and other receivables     6,803       14,990  
Other current assets     4,238       4,078  
Assets held for sale(1)     18,242       18,309  
Total current assets     41,664       54,840  
         
Oil and gas properties     387,670       374,286  
Other assets     2,974       2,962  
Total assets $    432,308   $    432,088  
         
Current liabilities $   32,019   $   30,879  
Liabilities held for sale1     941       941  
Total current liabilities     32,960       31,820  
Total current liabilities        
Credit facilities, net of financing fees     187,496       188,249  
Other non current liabilities     10,995       14,196  
Total liabilities $   231,451   $   234,265  
         
Net Assets $   200,857   $   197,823  
Equity $   200,857   $   197,823  
   
(1) The Company's Oklahoma assets (and related liabilities) were classified as held for sale as of March 31, 2017 and December 31, 2016.  The sale of these assets closed on May 8, 2017 for net proceeds of $16.6 million.  
             
             
         

 

         
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS    
             
  Three Months Ended      
Unaudited (US$000s) March 31, 2017 
     
Operating        
Receipts from sales $   25,525        
Payments for operating and administrative expenses     (9,503 )      
Payments for commodity derivative settlements     (839 )      
Other, net (1)     3,850        
Net cash provided by operating activities (2)     19,033        
         
Investing        
Payments for development expenditures     (16,073 )      
Payments for exploration expenditures     (1,409 )      
Other     (100 )      
Net cash used in investing activities     (17,582 )      
         
Financing        
Interest paid, net of capitalized portion     (5,595 )      
Repayments for borrowings     (949 )      
Net cash used in financing activities     (6,544 )      
         
Cash beginning of quarter     17,463        
FX effect      10        
Cash at end of quarter $   12,380        
         
(1)  Includes income tax refund (net) of $3.9 million.        
(2) Net cash provided by operating activities exceeded Adjusted EBITDAX during the quarter primarily due to the collection of the income tax refund noted above, and timing of revenue collection from non-operated properties.    
       

Conference Call
The Company will host a conference call for investors on Monday, May 15, 2017, at 4:00 p.m. Mountain Time (Tuesday 8:00 a.m. AEDT).  Interested investors can listen to the call via webcast at http://www.sundanceenergy.net/events.cfm.  The webcast will also be available for replay on the Company's website. 

Additional Information

We define "Adjusted EBITDAX" as earnings before interest expense, income taxes, depreciation, depletion and amortization, property impairments, gain/(loss) on sale of non-current assets, exploration expense, share based compensation and income, gains and losses on commodity hedging, net of settlements of commodity hedging and items that the Company believes affect the comparability of operating results such as items whose timing and/or amount cannot be reasonably estimated or items that are non-recurring.

Below is a reconciliation from the net income attributable to owners of the Company to Adjusted EBITDAX:

Unaudited (US$000s)  Three Months Ended
March 31, 2017
 
 
Income attributable to owners of Sundance $   2,467    
Income tax expense     651    
Finance costs, net of amounts capitalized     3,107    
Gain on derivative financial instruments, net       (6,580 )  
Settlement of commodity hedging      (552 )  
Depreciation and amortization     14,159    
Noncash share-based compensation     552    
Adjusted EBITDAX $   13,804    
     

The Company reports under International Financial Reporting Standards (IFRS).   All amounts are reported in US dollars unless otherwise noted. 

The Company's full Unaudited Activities Report as filed with the Australian Securities Exchange (ASX) and Securities and Exchange Commission on Form 6-K for the Quarter Ended March 31, 2017 can be found at www.sundanceenergy.net

The Company's 2016 Annual Report as filed with the ASX and Form 20-F as filed with the SEC can be found at www.sundanceenergy.net.

About Sundance Energy Australia Limited

Sundance Energy Australia Limited ("Sundance" or the "Company") is an Australian-based, independent energy exploration company, with a wholly owned US subsidiary, Sundance Energy Inc., located in Denver, Colorado, USA.

The Company is focused on the acquisition and development of large, repeatable oil and natural gas resource plays in North America. Current activities are focused in the Eagle Ford.  A comprehensive overview of the Company can be found on Sundance's website at www.sundanceenergy.net

Summary Information

The following disclaimer applies to this document and any information contained in it. The information in this release is of general background and does not purport to be complete. It should be read in conjunction with Sundance's periodic and continuous disclosure announcements lodged with ASX Limited that are available at www.asx.com.au and Sundance's filings with the Securities and Exchange Commission available at www.sec.gov

Forward Looking Statements

This release may contain forward-looking statements. These statements relate to the Company's expectations, beliefs, intentions or strategies regarding the future. These statements can be identified by the use of words like "anticipate", "believe", "intend", "estimate", "expect", "may", "plan", "project", "will", "should", "seek" and similar words or expressions containing same.

These forward-looking statements reflect the Company's views and assumptions with respect to future events as of the date of this release and are subject to a variety of unpredictable risks, uncertainties, and other unknowns. Actual and future results and trends could differ materially from those set forth in such statements due to various factors, many of which are beyond our ability to control or predict. These include, but are not limited to, risks or uncertainties associated with the discovery and development of oil and natural gas reserves, cash flows and liquidity, business and financial strategy, budget, projections and operating results, oil and natural gas prices, amount, nature and timing of capital expenditures, including future development costs, availability and terms of capital and general economic and business conditions. Given these uncertainties, no one should place undue reliance on any forward looking statements attributable to Sundance, or any of its affiliates or persons acting on its behalf.  Although every effort has been made to ensure this release sets forth a fair and accurate view, we do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise

For more information, please contact:

United States
Eric McCrady, Managing Director 
Tel: +1 (303) 543 5703

Australia
Mike Hannell, Chairman
Tel: +61 8 8363 0388
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