DALLAS, May 13, 2014 /PRNewswire/ -- RSP Permian,
Inc. ("RSP" or the "Company") (NYSE: RSPP) today announced
financial and operating results for the quarter ended March 31, 2014.
Unless otherwise indicated, information presented in this
release is on a pro forma basis, giving effect to the completion of
the corporate reorganization and acquisitions in connection with
the Company's initial public offering (the "IPO") and adjusted to
eliminate non-recurring items associated with the IPO. The
Company's Form 10-Q that will be filed with the Securities and
Exchange Commission (the "SEC") will include the combined results
of RSP Permian, L.L.C. and Rising Star Energy Development Co., the
Company's historical accounting predecessor, in addition to the
actual and pro forma results.
Highlights
- Successful completion of the Company's IPO, issuing 23 million
shares at $19.50 per share for gross
proceeds of $449 million.
- Average production of 9,339 Boe/d in the first quarter of 2014,
a 63% increase over the first quarter of 2013 average production of
5,713 Boe/d and a 19% increase over the fourth quarter of 2013
average production of 7,837 Boe/d.
- Net income of $14.7 million, or
$0.20 per diluted share. Net
income includes a $3.8 million
non-cash loss on derivatives and other income. Our adjusted net
income, which does not include these items, was $17.0 million, or $0.23 per diluted share.
- Adjusted EBITDAX of $48.7 million
in the first quarter of 2014; a 21% increase from $40.3 million in the fourth quarter of 2013.
- Added fourth operated horizontal rig and second operated
vertical rig; all operated horizontal rigs are drilling
stacked-laterals from multi-well pads.
- Drilled first operated Wolfcamp A well, Cross Bar Ranch 1717H
(WA), on a dual-well pad with another completion in the Wolfcamp B
without communication between the A and B zones. The wells
are in early flowback with the pad currently producing over 1,700
Boe/d.
- Drilled first operated long Middle Spraberry well, Johnson Ranch 912MS, RSP's third horizontal
Middle Spraberry well, producing at a peak 30-day IP rate of 751
Boe/d.
- As previously announced, acquired an additional 5,316 net acres
prospective for horizontal development located in Martin, Glasscock and Dawson counties for an aggregate purchase
price of approximately $79
million.
"Our strong operating performance and growth in the first
quarter was highlighted by putting on three dual well/dual zone
completions on production. Our horizontal drilling operations
have moved to full implementation of multi-well/multi-zone pad
development which we believe will lead to efficient development of
our oil and gas resource base. We are particularly encouraged
about the continued success of our Spraberry horizontal program
where our early results in the Lower Spraberry indicate economic
returns as strong as our Wolfcamp B wells," stated Steve Gray, Chief Executive Officer of RSP. "RSP
is off to a great start in 2014, and we continue to look at
acquisition opportunities where we can use our horizontal expertise
to generate attractive rates of returns."
Recent Horizontal Wells and Current Activity Update
During the first quarter of 2014, RSP drilled 16 horizontal
wells (seven operated) and completed 10 horizontal wells (six
operated). The Company is currently in the drilling or
completion phase on 10 operated horizontal wells in five different
horizontal zones: one Middle Spraberry, four Lower Spraberry, one
Wolfcamp A, three Wolfcamp B, and one Wolfcamp D. The
Company's operated horizontal rigs are operating in Midland County (two rigs), Andrews County (one rig), and Dawson County (one rig). The Company's
two operated vertical rigs are both operating in Midland
County. The Company expects to operate four horizontal rigs
and two vertical rigs for the remainder of 2014.
The following table presents a summary of all recent operated
horizontal wells drilled with more than one month of production
history:
|
|
|
|
Lateral
|
|
|
|
|
Well
Name
|
|
County
|
|
Length
(ft)
|
|
Zone
|
|
30-Day IP
(Boe/d)
|
Kemmer
4210LS
|
|
Midland
|
|
5,247
|
|
Lower
Spraberry
|
|
979
|
Headlee
3911H
|
|
Midland
|
|
7,270
|
|
Lower
Spraberry
|
|
782
|
Johnson Ranch
912MS
|
|
Martin
|
|
7,848
|
|
Middle
Spraberry
|
|
751
|
Kemmer
4210WB
|
|
Midland
|
|
5,281
|
|
Wolfcamp B
|
|
742
|
Johnson Ranch
912WB
|
|
Martin
|
|
7,365
|
|
Wolfcamp B
|
|
685
|
Parks Bell
3909H
|
|
Midland
|
|
7,277
|
|
Lower
Spraberry
|
|
683
|
Fendley
404LS
|
|
Ector
|
|
4,462
|
|
Lower
Spraberry
|
|
552
|
Fendley
404MS
|
|
Ector
|
|
4,641
|
|
Middle
Spraberry
|
|
386
|
Quarterly Operational Results
|
RSP Permian, Inc.
Pro Forma
|
|
Three Months
Ended
|
|
March 31,
2014
|
|
December 31,
2013
|
|
March 31,
2013
|
Production
data:
|
|
|
|
|
|
Oil
(MBbls)
|
594
|
|
516
|
|
350
|
Natural gas
(MMcf)
|
621
|
|
574
|
|
495
|
NGLs
(MBbls)
|
143
|
|
109
|
|
82
|
Total
(MBoe)
|
841
|
|
721
|
|
514
|
Average Net Daily
Production (Boe/d)
|
9,339
|
|
7,837
|
|
5,713
|
Average prices
before effects of hedges(1)(2):
|
|
|
|
|
|
Oil (per
Bbl)
|
$94.21
|
|
$94.38
|
|
|
Natural gas (per
Mcf)
|
3.86
|
|
3.38
|
|
|
NGLs (per
Bbl)
|
30.82
|
|
28.94
|
|
|
Total (per
Boe)
|
$74.65
|
|
$74.64
|
|
|
Average realized
prices after effects of hedges(1)(2):
|
|
|
|
|
Oil (per
Bbl)
|
$93.57
|
|
$94.91
|
|
|
Natural gas (per
Mcf)
|
3.86
|
|
3.38
|
|
|
NGLs (per
Bbl)
|
30.82
|
|
28.94
|
|
|
Total (per
Boe)
|
$74.19
|
|
$75.02
|
|
|
Average costs (per
Boe):
|
|
|
|
|
|
Lease operating
expenses
|
$9.23
|
|
$8.74
|
|
|
Production and ad
valorem taxes
|
4.91
|
|
6.31
|
|
|
Depreciation,
depletion and amortization
|
23.79
|
|
17.96
|
|
|
General and
administrative expenses(3)
|
2.46
|
|
1.60
|
|
|
|
|
(1)
|
Average prices shown
in the table reflect prices both before and after the effects of
our realized commodity derivative transactions. Our calculation of
such effects includes realized gains or losses on cash settlements
for commodity derivative transactions and an adjustment to reflect
premiums incurred previously or upon settlement that are
attributable to instruments settled in the period.
|
|
|
(2)
|
Average realized
prices for oil are net of transportation costs. Average realized
prices for natural gas do not include transportation costs;
instead, transportation costs related to our gas production and
sales are included in our lease operating expenses. No
transportation costs are associated with NGL production and
sales.
|
|
|
(3)
|
Pro forma general and
administrative expenses for 4Q13 do not include additional expenses
we would have incurred as a result of being a public
company.
|
Production volumes for the quarter ended March 31, 2014 averaged 9,339 Boe/d or a total of
841 MBoe. Production for the first quarter of 2014 was
comprised of 71% crude oil, 17% NGLs, and 12% natural gas.
Our average realized oil, natural gas, and NGL prices were
$94.21/Bbl, $3.86/Mcf, and $30.82/Bbl, respectively. Per unit cash
expenses (including lease operating, production and ad valorem
taxes, and general and administrative) were $16.60 per Boe. For the quarter, Adjusted
EBITDAX was $48.7 million and
adjusted net income totaled $17.0
million or $0.23 per diluted
share.
Capital Expenditures
1st Quarter 2014
Capital Expenditures
|
|
(in
millions)
|
Drilling, completion
and workovers
|
|
$
64
|
Infrastructure
|
|
2
|
Acquisitions and
additions to leasehold
|
|
84
|
Contributed Working
Interests (1)
|
|
32
|
Total Capital Expenditures
|
|
$
183
|
|
|
(1)
|
In connection with
the IPO, certain working interests were contributed to RSP Permian,
Inc. in exchange for cash. RSP sold shares of common stock in the
IPO and remitted a portion of the cash proceeds thereof to the
contributors.
|
Liquidity Update
The Company retired all of its outstanding debt with a portion
of its proceeds from the IPO. Since the IPO, the Company has drawn
on its revolving credit facility to fund its drilling and for
acquisitions. As of March 31,
2014, the Company had borrowed $110
million on its revolving credit facility which has a
$300 million borrowing base, and had
$99 million of debt, net of cash,
outstanding, leaving the Company approximately $200 million of liquidity under its revolving
credit facility.
Hedging Update
The Company hedged approximately 60% of remaining 2014 expected
oil production at an average floor of approximately $88 / bbl and approximately 60% of remaining 2014
natural gas production at a floor of $4.00/MMBtu.
Our open positions as of March 31,
2014 were as follows:
Description &
Production Period
|
Volume
(Bbls)
|
Weighted
Average
Floor
price
($/Bbl)(1)
|
Weighted
Average
Ceiling
price
($/Bbl)(1)
|
Weighted
Average
Swap
price
($/Bbl)(1)
|
Crude Oil
Swaps:
|
|
|
|
|
April 2014 – December
2014
|
90,000
|
$
—
|
$
—
|
$
96.40
|
April 2014 – December
2015
|
210,000
|
—
|
—
|
92.60
|
|
|
|
|
|
Crude Oil
Collars:
|
|
|
|
|
April 2014 –
September 2014
|
6,000
|
$
85.00
|
$
113.04
|
—
|
April 2014 – December
2014
|
738,000
|
85.79
|
102.11
|
$
—
|
April 2014 – December
2015
|
525,000
|
85.00
|
95.00
|
—
|
January 2015 –
December 2015
|
72,000
|
80.00
|
93.25
|
—
|
July 2014 – September
2014
|
90,000
|
90.00
|
101.50
|
—
|
October 2014 –
December 2014
|
90,000
|
90.00
|
97.33
|
—
|
January 2015 – March
2015
|
120,000
|
90.00
|
92.53
|
—
|
________________
|
(1)
|
The crude oil
derivative contracts are settled based on the month's average daily
NYMEX price of West Texas Intermediate Light Sweet
Crude.
|
Description &
Production Period
|
Volume
(MMBtu)
|
Weighted
Average
Floor
price
($/MMBtu)(1)
|
Weighted
Average
Ceiling
price
($/MMBtu)(1)
|
Weighted
Average
Swap
price
($/MMBtu)(1)
|
Natural Gas
Collars:
|
|
|
|
|
April 2014 – December
2014
|
1,350,000
|
$
4.00
|
$
4.78
|
$
—
|
________________
|
(1)
|
The natural gas
derivative contracts are settled based on the NYMEX closing
settlement price.
|
Subsequent to March 31, 2014 we
entered into the following oil and natural gas commodity
hedges:
Description &
Production Period
|
Volume
(Bbls)
|
Weighted
Average
Floor
price
($/Bbl)(1)
|
Weighted
Average
Ceiling
price
($/Bbl)(1)
|
Weighted
Average
Swap
price
($/Bbl)(1)
|
Crude Oil
Collars:
|
|
|
|
|
January 2015 –
December 2015
|
960,000
|
$
85.00
|
$
95.00
|
$
—
|
January 2015 – June
2015
|
240,000
|
90.00
|
96.00
|
$
—
|
________________
|
(1)
|
The crude oil
derivative contracts are settled based on the month's average daily
NYMEX price of West Texas Intermediate Light Sweet
Crude.
|
Earnings Conference Call
On May
13, 2014, at 10:00 a.m. Central
Time, RSP will discuss its first quarter 2014 results.
Hosting the call will be Steven
Gray, Chief Executive Officer, Zane
Arrott, Chief Operating Officer, and Scott McNeill, Chief Financial Officer.
The call can be accessed live over the telephone by dialing
(877) 705-6003, or for international callers, (201) 493-6725.
A replay will be available shortly after the call and can be
accessed by dialing (877) 870-5176, or for international callers
(858) 384-5517. The passcode for the replay is 13581256. The
replay will be available until May
27, 2014. Interested parties may also listen to a
simultaneous webcast of the conference call by logging onto RSP's
website at www.rsppermian.com in the Investor Relations section. A
replay of the webcast will also be available for approximately 30
days following the call.
About RSP Permian, Inc.
RSP is an independent oil and
natural gas company focused on the acquisition, exploration,
development and production of unconventional oil and associated
liquids-rich natural gas reserves in the Permian Basin of
West Texas. The vast majority of
our acreage is located on large, contiguous acreage blocks in the
core of the Midland Basin, a
sub-basin of the Permian Basin, primarily in the adjacent counties
of Midland, Martin, Andrews, Dawson, and Ector. The Company's common
stock is traded on the NYSE under the ticker symbol "RSPP".
For more information, visit www.rsppermian.com.
Forward-Looking Statements
This news release contains
forward-looking statements within the meaning of the federal
securities laws. All statements, other than historical facts, that
address activities that RSP assumes, plans, expects, believes,
intends or anticipates (and other similar expressions) will, should
or may occur in the future are forward-looking statements.
Forward-looking statements are based on management's current
beliefs, based on currently available information, as to the
outcome and timing of future events. These forward-looking
statements involve certain risks and uncertainties that could cause
the results to differ materially from those expected by the
management of RSP. Information concerning these risks and other
factors can be found in RSP's filings with the SEC, including its
Form 10-K, which can be obtained free of charge on the SEC's web
site located at http://www.sec.gov. RSP undertakes no obligation to
update or revise any forward-looking statement.
RSP PERMIAN,
LLC
|
PROFORMA
STATEMENTS OF OPERATIONS
|
(In thousands,
except for unit and per unit data)
|
|
|
|
Pro Forma
(1)
|
|
Actual &
Predecessor
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
|
March 31,
2014
|
|
December 31,
2013
|
|
March 31,
2014
|
|
March 31,
2013
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Oil
sales
|
|
$55,930
|
|
$48,733
|
|
$51,471
|
|
$21,923
|
Natural gas
sales
|
|
$2,397
|
|
$1,937
|
|
$2,206
|
|
$1,165
|
NGL
sales
|
|
$4,417
|
|
$3,145
|
|
$4,081
|
|
$1,567
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
$62,744
|
|
$53,815
|
|
$57,758
|
|
$24,655
|
|
|
|
|
|
|
|
|
|
Net cash from
derivative instruments
|
|
(380)
|
|
(1,468)
|
|
(380)
|
|
(736)
|
|
|
|
|
|
|
|
|
|
Adjusted Total
Revenues
|
|
$62,364
|
|
$52,347
|
|
$57,378
|
|
$23,919
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
Lease
operating expenses
|
|
$7,757
|
|
$6,298
|
|
$7,063
|
|
$3,355
|
Production and
ad valorem taxes
|
|
4,127
|
|
4,546
|
|
3,876
|
|
1,636
|
General and
administrative expenses
|
|
1,771
|
|
1,157
|
|
5,001
|
|
555
|
|
|
|
|
|
|
|
|
|
Total operating costs
and expenses
|
|
$13,654
|
|
$12,001
|
|
$15,940
|
|
$5,546
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDAX,
as defined (2)
|
|
$48,709
|
|
$40,346
|
|
$41,438
|
|
$18,373
|
|
|
|
|
|
|
|
|
|
Depreciation,
depletion, and amortization
|
|
$19,994
|
|
$12,940
|
|
$16,361
|
|
$10,202
|
Asset
retirement obligation accretion
|
|
38
|
|
53
|
|
29
|
|
25
|
Exploration
|
|
756
|
|
74
|
|
756
|
|
63
|
Interest
expense
|
|
1,131
|
|
4,865
|
|
1,131
|
|
624
|
Stock-based
compensation, net
|
|
294
|
|
–
|
|
12,015
|
|
–
|
|
|
|
|
|
|
|
|
|
Adjusted income
before income taxes
|
|
$26,497
|
|
$22,414
|
|
$11,146
|
|
$7,459
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense
|
|
9,539
|
|
8,069
|
|
4,733
|
|
–
|
|
|
|
|
|
|
|
|
|
Adjusted net
income, as defined (2)
|
|
$16,958
|
|
$14,345
|
|
$6,413
|
|
$7,459
|
Adjusted net
income per common share - Basic
|
|
$
0.23
|
|
$
0.20
|
|
$
0.10
|
|
N/A
|
Adjusted net
income per common share - Diluted
|
|
$
0.23
|
|
$
0.20
|
|
$
0.10
|
|
N/A
|
|
|
|
|
|
|
|
|
|
Other items
included in income before taxes:
|
|
|
|
|
|
|
|
|
Non-cash loss
(gain) on derivatives, net
|
|
3,773
|
|
(2,226)
|
|
3,773
|
|
921
|
Gain on asset
sale
|
|
–
|
|
–
|
|
–
|
|
(6,129)
|
Other
income
|
|
(309)
|
|
(339)
|
|
(310)
|
|
(199)
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
$13,494
|
|
$16,910
|
|
$2,950
|
|
$12,866
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
(1,247)
|
|
923
|
|
130,480
|
|
–
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
$14,741
|
|
$15,987
|
|
($127,530)
|
|
$12,866
|
Net income per
common share - Basic
|
|
$
0.20
|
|
$
0.22
|
|
$
(2.03)
|
|
N/A
|
Net income per
common share - Diluted
|
|
$
0.20
|
|
$
0.22
|
|
$
(2.03)
|
|
N/A
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Shares Outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
72,500
|
|
72,500
|
|
62,955
|
|
N/A
|
Diluted
|
|
72,500
|
|
72,500
|
|
62,955
|
|
N/A
|
|
|
(1)
|
RSP Permian, Inc. is
a C-Corp. under the Internal Revenue Code of 1986, as amended, and
is subject to income taxes. The Company computed a pro forma income
tax provision for 4Q13 as if RSP Permian, L.L.C. and Rising Star
Energy Development Co. ("Rising Star") were subject to federal
income taxes in 2013. For 4Q13 comparative purposes, we have
included pro forma financial data to give effect to income taxes
assuming the earnings of the RSP Permian, L.L.C. and Rising Star
had been subject to federal income tax as a C-Corp. since
inception. The unaudited pro forma data is presented for
informational purposes only and does not purport to project our
results of operations for any future period or our financial
position as of any future date. The pro forma tax provision has
been calculated at a rate based upon a federal corporate level tax
rate and a state tax rate, net of federal benefit, incorporating
permanent differences.
|
|
|
(2)
|
Adjusted EBITDAX and
adjusted net income are non-GAAP financial measures. For a
definition of Adjusted EBITDAX and adjusted net income, see "Use of
Non-GAAP Financial Measures" below.
|
Use of Non-GAAP Financial Measures
We define Adjusted EBITDAX as oil and gas revenues including net
cash receipts (payments) on settled derivative instruments and
premiums paid on put options that settled during the period, less
lease operating expenses, production and ad valorem taxes, and
general and administrative expenses excluding stock based
compensation. Adjusted net income deducts from Adjusted
EBITDAX depreciation, depletion, and amortization, accretion on
asset retirement obligations, exploration expenses, interest
expense, stock-based compensation and adjusted income tax
expense.
Management believes Adjusted EBITDAX and adjusted net income are
useful because it allows us to more effectively evaluate our
operating performance and compare the results of our operations
from period to period without regard to our financing methods or
capital structure. We exclude the items listed above in arriving at
Adjusted EBITDAX and adjusted net income 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. Adjusted EBITDAX and adjusted net income should not be
considered as an alternative to, or more meaningful than, net
income as determined in accordance with GAAP or as an indicator of
our operating performance or liquidity. Certain items excluded from
Adjusted EBITDAX and adjusted net income 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
the historic costs of depreciable assets, none of which are
components of Adjusted EBITDAX. Our computations of Adjusted
EBITDAX and adjusted net income may not be comparable to other
similarly titled measures of other companies.
SOURCE RSP Permian, Inc.