-
Net production for the first quarter 2019 was approximately 5,782
barrels of oil equivalents per day (boe/d), an increase of 15% over
the first quarter 2018 (1) -
First quarter 2019 Net Income was $11.3 (2)
million, or $0.12 per Class A share -
Adjusted EBITDA was $16.9 million for the first quarter 2019, an
increase of 10% compared to the first quarter
2018 (3) -
First quarter 2019 dividend declared of $0.175 per share, to be
paid on May 29th to all shareholders of
record on May 17th -
Net debt-to-annualized EBITDA ratio was 0.38x for the first quarter
2019 -
Currently 10 rigs are operating on Falcon’s Eagle Ford position, an
increase from 5 active rigs earlier this year -
New permit just filed on Hooks Ranch, on which the Company has a
22.5% net revenue interest -
Falcon will host its first quarter 2019 conference call at 9:00 AM
ET on Tuesday, May 7, 2019
NEW YORK–(BUSINESS WIRE)–Falcon Minerals Corporation (“Falcon” or the “Company”) (NASDAQ: FLMN,
FLMNW) today announced its earnings results for the first quarter 2019.
“We are very pleased with Falcon’s continued progress,” stated Daniel
Herz, President and Chief Executive Officer. “Our first quarter results
demonstrate the value of our core asset position in the Eagle Ford,
yielding cash flow at high margins supported by a strong balance sheet.
Our premier producers in our region have recently reiterated their
positive outlook on future development including increased activity in
the Eagle Ford this year and beyond. We are also encouraged by
acquisition opportunities that can add valuable positions to our
royalties portfolio. We expect to grow meaningfully both through organic
development and accretive acquisitions, generating strong cash returns
for our shareholders.”
|
(1) |
Comparisons made to first quarter 2018 are based only on the |
|
|
(2) |
Net income shown includes amounts attributable to |
|
|
(3) |
Please refer to the disclosure on page 7-8 for the |
Financial and Operating Results
Earnings Results
-
On a GAAP basis, Net Income was $11.3 million, or $0.12 per Class A
common share, for the first quarter 2019. Falcon generated royalty
revenue of $21.3 million for the first quarter 2019. -
The Company reported Adjusted EBITDA (a non-GAAP measure as defined
and reconciled on pages 7-8) of $16.9 million for the first quarter
2019. -
Cash operating costs for the first quarter 2019 were $8.49 per barrel
of oil equivalent (“boe”), consistent with the prior quarter. General
and administrative expense included costs incurred during the quarter
related primarily to year-end audit, legal and associated expenses
that were approximately $600,000 higher this quarter than the expected
amount of such items during the remaining three quarters of the year.
Production Results
-
Falcon’s net production averaged 5,782 boe/d for the first
quarter 2019, an increase of approximately 15% compared to the first
quarter 2018. Net production for the first quarter 2019 was 78% oil by
revenue and 53% oil by volume. -
Falcon has recently averaged 150 line-of-sight wells in various stages
of development on its Eagle Ford minerals position, and 28 wells were
turned in line during the first quarter 2019. There are currently 10
active rigs operating on Falcon’s Eagle Ford position, which is an
increase from an average of 5 active rigs at the beginning of the year. -
Falcon’s net realized price for crude oil was $59.46 per barrel
(“bbl”) in the first quarter 2019. The Company receives revenue based
primarily on Louisiana Light Sweet crude (“LLS”) pricing on production
generated from the Eagle Ford Shale. LLS currently trades at a premium
to West Texas Intermediate crude (“WTI”) and averaged approximately
$7.25/bbl over WTI during the first quarter 2019. The Company’s
realized price for natural gas during the quarter was $3.29 per
thousand cubic feet (“mcf”) and $18.23/bbl for natural gas liquids.
Capitalization & Liquidity
As of March 31, 2019, the Company had $28.5 million of borrowings on its
revolving credit facility, and $3.1 million of cash. Falcon’s net
debt-to-annualized EBITDA ratio was 0.38x for the first quarter 2019.
Guidance Summary
The Company has provided forward six-month guidance based upon
expectations for producer activity on Falcon’s net royalty positions.
|
Forecast for Q2 2019 – Q3 2019 |
Guidance Range |
|
| Net production per barrel of oil equivalent per day (boe/d) (1) | 5,100 – 5,600 | |
| % Oil of net production | 53% – 55% | |
| Operating costs: | ||
| Production and ad valorem taxes (% of revenue) | 4.0% – 5.0% | |
| Marketing and transportation ($/boe) | $1.00 – $1.50 | |
| General and administrative (2) ($/boe) | $4.00 – $4.50 | |
|
Depletion expense (3) ($/boe) |
$6.50 – $7.50 |
|
(1) |
The forecasted six-month net production range does not |
|
|
(2) |
General and administrative expense above excludes non-cash |
|
|
(3) |
The depletion expense forecast range above is shown on a book |
First Quarter 2019 Dividend
Earlier today, on May 6, 2019, Falcon’s Board of Directors declared
Falcon’s dividend of $0.175 per Class A share for the first quarter
2019. During the first quarter 2019, the Company generated Pro-forma
Free Cash Flow per share of $0.18 (as described and reconciled on page
7). The pro-forma adjustments assume that the non-controlling interests
are converted to Class A common shares, such that 85.9 million Class A
shares would be outstanding. The dividend for the first quarter 2019
will be paid on May 29, 2019 to all Class A shareholders of record on
May 17, 2019.
Conference Call Details
Falcon management invites investors and interested parties to listen to
the conference call to discuss first quarter 2019 results on Tuesday,
May 7, 2019 at 9:00 am EDT. Participants for the conference call should
dial (877) 876-9174 (International: (785) 424-1669) and use the
confirmation code FLMNQ119. The Falcon earnings call is also accessible
via webcast on the company’s website on www.falconminerals.com
in the Events page of the Investor Relations section. A replay of the
call will be available starting at 12:00 pm ET on May 7, 2019. To access
the replay, investors and interested parties can call 800-839-5246
(International: (402) 220-2702).
About Falcon Minerals
Falcon Minerals Corporation (NASDAQ: FLMN, FLMNW) is a C-Corporation
formed to own and acquire high growth oil-weighted minerals rights.
Falcon Minerals owns mineral, royalty, and over-riding royalty interests
covering approximately 256,000 gross unit acres in the Eagle Ford Shale
and Austin Chalk in Karnes, DeWitt and Gonzales Counties in Texas. The
Company also owns additional assets of approximately 68,000 gross unit
acres in Pennsylvania, Ohio and West Virginia prospective for the
Marcellus Shale. For more information, visit our website at www.falconminerals.com.
Cautionary Note Regarding Forward-Looking Statements
This document contains forward-looking statements that involve a
number of assumptions, risks and uncertainties that could cause actual
results to differ materially from those contained in the forward-looking
statements. Falcon cautions readers that any forward-looking information
is not a guarantee of future performance. Such forward-looking
statements include, but are not limited to, statements about future
financial and operating results, future dividends paid, resource and
production potential, Falcon’s plans, objectives, expectations and
intentions and other statements that are not historical facts. Risks,
assumptions and uncertainties that could cause actual results to
materially differ from the forward-looking statements include, but are
not limited to, those associated with general economic and business
conditions; Falcon’s ability to realize the anticipated benefits of its
acquisitions; changes in commodity prices; uncertainties about estimates
of reserves and resource potential; inability to obtain capital needed
for operations; changes in government environmental policies and other
environmental risks; the availability of drilling equipment and the
timing of production in Falcon’s regions; tax consequences of business
transactions; and other risks, assumptions and uncertainties detailed
from time to time in Falcon’s reports filed with the U.S. Securities and
Exchange Commission, including under the heading “Risk Factors” in
Falcon’s definitive proxy statement filed with the SEC on August 3,
2018, as well as Falcon’s most recent annual report on Form 10-K and any
subsequently filed quarterly reports on Form 10-Q and current reports on
Form 8-K. Forward-looking statements speak only as of the date hereof,
and Falcon assumes no obligation to update such statements, except as
may be required by applicable law.
|
FALCON MINERALS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) |
||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Revenues: | ||||||||
| Oil and gas sales | $ | 21,258 | $ | 20,394 | ||||
| Loss on hedging activities | – | (91 | ) | |||||
| Total revenues | 21,258 | 20,303 | ||||||
| Expenses: | ||||||||
| Production and ad valorem taxes | 1,128 | 1,017 | ||||||
| Marketing and transportation | 784 | 531 | ||||||
| Amortization of royalty interests in oil & gas properties | 3,511 | 4,068 | ||||||
| General, administrative and other | 2,504 | 2,457 | ||||||
| Total expenses | 7,927 | 8,073 | ||||||
| Operating income | 13,331 | 12,230 | ||||||
| Other income (expense): | ||||||||
| Gain on the sale of assets | – | 41,724 | ||||||
| Other income | 31 | – | ||||||
| Interest expense | (654 | ) | (623 | ) | ||||
| Total other income (expense) | (623 | ) | 40,651 | |||||
| Income before income taxes | 12,708 | 52,881 | ||||||
| Provision for income taxes | 1,405 | – | ||||||
| Income from continuing operations | 11,303 | 52,881 | ||||||
| Income from discontinued operations | – | 1,033 | ||||||
| Net income | 11,303 | 53,914 | ||||||
| Net income attributable to non-controlling interests | (5,921 | ) | (48 | ) | ||||
| Net income attributable to shareholders/unitholders | $ | 5,382 | $ | 53,866 | ||||
| Class A common shares (basic and diluted) | $ | 0.12 | ||||||
|
FALCON MINERALS CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) |
||||||
|
March 31, |
December 31, |
|||||
|
ASSETS |
2019 |
2018 |
||||
|
Current assets: |
||||||
|
Cash and cash equivalents |
$ |
3,088 |
$ |
7,317 |
||
|
Accounts receivable |
12,664 |
11,271 |
||||
|
Prepaid expenses |
1,354 |
1,524 |
||||
|
Total current assets |
17,106 |
20,112 |
||||
|
Royalty interests in oil & gas properties, net of accumulated |
215,362 |
209,168 |
||||
|
Property and equipment, net |
542 |
– |
||||
|
Deferred tax asset, net |
57,807 |
58,773 |
||||
|
Other assets |
3,022 |
3,182 |
||||
|
Total assets |
$ |
293,839 |
$ |
291,235 |
||
|
LIABILITIES AND SHAREHOLDER’S EQUITY |
||||||
|
Current liabilities: |
||||||
|
Accounts payable and accrued expenses |
$ |
1,539 |
$ |
521 |
||
|
Credit facility |
28,500 |
21,000 |
||||
|
Other non-current liabilities |
429 |
– |
||||
|
Total liabilities |
30,468 |
21,521 |
||||
|
Shareholder’s equity: |
||||||
|
Class A common stock |
5 |
5 |
||||
|
Class C common stock |
4 |
4 |
||||
|
Additional paid in capital |
128,779 |
137,866 |
||||
|
Non-controlling interests |
124,391 |
127,029 |
||||
|
Retained earnings |
10,192 |
4,810 |
||||
|
Total shareholder’s equity |
263,371 |
269,714 |
||||
|
Total liabilities and shareholder’s equity |
$ |
293,839 |
$ |
291,235 |
||
|
Reconciliation of Adjusted EBITDA and Pro-forma Free Cash Flow |
||||||||
|
Three Months |
Fully Converted |
|||||||
| Net Income | $ | 11,303 | $ | 0.13 | ||||
| Interest expense (2) | 654 | 0.01 | ||||||
| Depletion | 3,511 | 0.04 | ||||||
| Share-based compensation | 17 | 0.00 | ||||||
| Income taxes | 1,405 | 0.02 | ||||||
| Adjusted EBITDA | $ | 16,890 | $ | 0.20 | ||||
| Interest expense (2) | (654 | ) | (0.01 | ) | ||||
| Pro-forma cash income taxes (3) | (627 | ) | (0.01 | ) | ||||
| Pro-forma Free Cash Flow | $ | 15,609 | $ | 0.18 | ||||
|
(1) |
Per share information is presented on a fully-converted basis |
|
|
(2) |
Interest expense includes amortization of deferred financing |
|
|
(3) |
Pro-forma cash income taxes are estimated on a fully |
|
Calculation of cash available for dividends for the first quarter 2019 (in thousands $): |
||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2019 | ||||||||||
| Adjusted EBITDA |
$ |
16,890 |
||||||||
| Interest expense | (654 | ) | ||||||||
|
Net cash available for distribution |
16,236 | |||||||||
| Cash to be distributed to non-controlling interests | $ | 7,397 | ||||||||
|
Cash to be distributed to Falcon Minerals Corp.(4) (5) |
$ | 8,528 | ||||||||
| Dividends to be paid to Class A shareholders | $ | 8,025 | ||||||||
|
(4) |
Includes cash of approximately $48,000 used to pay dividend |
|
|
(5) |
Includes approximately $455,000 of cash for current income |
Non-GAAP Financial Measures
Adjusted EBITDA and Pro-forma Free Cash Flow are supplemental non-GAAP
financial measures used by management and external users of our
financial statements, such as industry analysts, investors, lenders and
rating agencies. We believe Adjusted EBITDA and Pro-forma Free Cash Flow
are useful because they allow us to evaluate our performance and compare
the results of our operations period to period without regard to our
financing methods or capital structure. In addition, management uses
Adjusted EBITDA and Pro-forma Free Cash Flow to evaluate cash flow
available to pay dividends to our common shareholders.
We define Adjusted EBITDA as Net Income plus interest expense, net,
depletion expense, provision for income taxes and share-based
compensation. We define Pro forma Free Cash Flow as Net Income plus
depletion expense, provision for income taxes and share-based
compensation less cash income taxes. Adjusted EBITDA and Pro-forma Free
Cash Flow are not measures of Net Income as determined by GAAP. We
exclude the items listed above from Net Income in calculating Adjusted
EBITDA and Pro-forma Free Cash Flow because these amounts can vary
substantially from company to company within our industry depending upon
accounting methods and book values of assets, capital structures and the
method by which the assets were acquired. Certain items excluded from
Adjusted EBITDA and Pro-forma Free Cash Flow are significant components
in understanding and assessing a company’s financial performance, such
as a company’s cost of capital and tax structure, as well as historic
costs of depreciable assets, none of which are components of Adjusted
EBITDA and Pro-forma Free Cash Flow.
Adjusted EBITDA and Pro-forma Free Cash Flow should not be considered an
alternative to, or more meaningful than, Net Income, royalty income,
cash flow from operating activities or any other measure of financial
performance presented in accordance with GAAP. Our computations of
Adjusted EBITDA and Pro-forma Free Cash Flow may not be comparable to
other similarly titled measures of other companies.
|
FALCON MINERALS CORPORATION SELECTED OPERATING DATA (Unaudited) |
|||||||
| Three Months Ended | |||||||
| March 31, | |||||||
| 2019 |
2018(1) |
||||||
| Production Data: | |||||||
| Oil (bbls) | 274,978 | 290,811 | |||||
| Natural gas (boe) | 172,687 | 138,025 | |||||
| Natural gas liquids (bbls) | 72,891 | 72,011 | |||||
| Combined volumes (boe) | 520,556 | 500,847 | |||||
| Average daily combined volume (boe/d) | 5,782 | 5,565 | |||||
| Average sales prices: | |||||||
| Oil (bbls) | $ | 59.46 | $ | 64.08 | |||
| Natural gas (mcf) | $ | 3.29 | $ | 2.92 | |||
| Natural gas liquids (bbls) | $ | 18.23 | $ | 23.52 | |||
| Combined per boe | $ | 40.49 | $ | 45.42 | |||
| Average costs ($/boe): | |||||||
| Production and ad valorem taxes | $ | 2.17 | $ | 2.03 | |||
| Gathering and transportation expense | $ | 1.51 | $ | 1.06 | |||
| General and administrative | $ | 4.81 | $ | 4.91 | |||
| Interest expense, net | $ | 1.26 | $ | 1.24 | |||
| Depletion | $ | 6.74 | $ | 8.12 | |||
|
(1) |
The production data for Q1 2018 shown contains certain |
Contacts
Falcon Minerals:
Brian Begley
[email protected]
