Press Release
Laredo Petroleum Announces First-Quarter 2022 Financial and Operating Results
First-Quarter 2022 Highlights
- Reported a net loss of
$86.8 million and cash flows from operating activities of$170.9 million , generating Adjusted EBITDA1 of$222.1 million and Free Cash Flow1 of$23.2 million - Reduced Net Debt1/Consolidated EBITDAX1 ratio to 1.9x
- Produced 40,295 barrels of oil per day ("BOPD") and 85,118 barrels of oil equivalent per day ("BOEPD"), in line with guidance and an increase of 66% and 8%, respectively, versus first-quarter 2021
- Incurred capital expenditures of
$171 million , excluding non-budgeted acquisitions and leasehold expenditures, in line with guidance
Subsequent Highlights
- Secured pricing and supply for majority of second-half 2022 expenditures, increasing 2022 capital budget by 6% to
~$550 million - Increased the borrowing base and elected commitment of the Company's senior secured credit facility to
$1.25 billion and$1.0 billion , respectively - Achieved Project Canary2 TrustWell™ Gold certification for approximately 31,500 BOEPD of gross operated production to become the first Permian producer to receive TrustWell™ certified responsibly sourced oil and natural gas production
"We have executed extremely well year-to-date, generating Free Cash Flow and further reducing our leverage ratio," commented
"Free Cash Flow during 2022 is still expected to exceed
First-Quarter 2022 Financial Results
For the first quarter of 2022, the Company reported a net loss attributable to common stockholders of
1Non-GAAP financial measure; please see supplemental reconciliations of GAAP to non-GAAP financial measures at the end of this release.
2Project Canary is a data analytics and environmental assessment company that Laredo has partnered with to provide industry-specific certification for portions of Laredo's operations through Project Canary's TrustWell™ certification and installation of a continuous monitoring system.
Operations Summary
In the first quarter of 2022, the Company's total and oil production averaged 85,118 BOEPD and 40,295 BOPD, respectively. Both metrics were in-line with guidance, driven by solid execution and well performance, including results from wells in the Middle Spraberry and Wolfcamp D formations.
Lease operating expenses ("LOE") in first-quarter 2022 were
Laredo is working to offset these cost pressures by reallocating power generation systems to high-line power as it becomes available in its operating areas, switching to liquefied natural gas generator systems and consolidating production in
During the first quarter of 2022, Laredo maintained its improved venting/flaring performance on its acquired properties in
In the first quarter of 2022, the Company completed and TIL'd 18 wells. Laredo released one drilling rig and one completions crew during the quarter. The Company is currently operating two drilling rigs and one completions crew and expects to complete 11 wells and TIL seven wells during the second quarter of 2022.
First-Quarter 2022 Incurred Capital Expenditures
During the first quarter of 2022, total incurred capital expenditures were
2022 Capital Investment Outlook
Laredo is working to mitigate the impact of inflationary and supply chain pressures impacting both the energy industry and global economy. The Company's initial capital budget anticipated approximately 15% inflation, with a significant portion of required goods and services contracted through the first half of 2022. Although first-quarter 2022 capital expenditures were in-line with the Company's guidance of
The Company recently contracted the majority of its services related to its capital program for the second half of 2022 and now has pricing and supply secured for approximately 85% of its required goods and services for the remainder of 2022. Incorporating inflation to date and the price increases associated with contracted second-half pricing, the Company adjusted its full-year 2022 capital budget to
In
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Second-Quarter and Full-Year 2022 Guidance
The table below reflects the Company's guidance for total and oil production and incurred capital expenditures for second-quarter and full-year 2022.
| 2Q-22E | FY-22E | |||
| Total production (MBOE per day) | 85.0 - 88.0 | 82.0 - 86.0 | ||
| Oil production (MBOPD) | 40.0 - 42.0 | 39.5 - 42.5 | ||
| Incurred capital expenditures, excluding non-budgeted acquisitions ($ MM) | ||||
The table below reflects the Company's guidance for select revenue and expense items for the second quarter of 2022.
| 2Q-22E | ||||
| Average sales price realizations (excluding derivatives): | ||||
| Oil (% of WTI) | 100 | % | ||
| NGL (% of WTI) | 34 | % | ||
| Natural gas (% of |
68 | % | ||
| Net settlements received (paid) for matured commodity derivatives ($ MM): | ||||
| Oil | $ | (119 | ) | |
| NGL | $ | (16 | ) | |
| Natural gas | $ | (20 | ) | |
| Other ($ MM): | ||||
| Net income (expense) of purchased oil | $ | 0 | ||
| Selected average costs & expenses: | ||||
| Lease operating expenses ($/BOE) | $ | 5.35 | ||
| Production and ad valorem taxes (% of oil, NGL and natural gas sales revenues) | 6.50 | % | ||
| Transportation and marketing expenses ($/BOE) | $ | 1.65 | ||
| General and administrative expenses (excluding LTIP, $/BOE) | $ | 1.65 | ||
| General and administrative expenses (LTIP cash, $/BOE) | $ | 0.45 | ||
| General and administrative expenses (LTIP non-cash, $/BOE) | $ | 0.25 | ||
| Depletion, depreciation and amortization ($/BOE) | $ | 9.75 | ||
Conference Call Details
On
About Laredo
Additional information about Laredo may be found on its website at www.laredopetro.com.
Forward-Looking Statements
This press release and any oral statements made regarding the contents of this release, including in the conference call referenced herein, contain forward-looking statements as defined under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, that address activities that Laredo assumes, plans, expects, believes, intends, projects, indicates, enables, transforms, estimates or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. The forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events. Such statements are not guarantees of future performance and involve risks, assumptions and uncertainties.
General risks relating to Laredo include, but are not limited to, the decline in prices of oil, natural gas liquids and natural gas and the related impact to financial statements as a result of asset impairments and revisions to reserve estimates, the ability of the Company to execute its strategies, including its ability to successfully identify and consummate strategic acquisitions at purchase prices that are accretive to its financial results and to successfully integrate acquired businesses, assets and properties, oil production quotas or other actions that might be imposed by the
The
This press release and any accompanying disclosures include financial measures that are not in accordance with generally accepted accounting principles ("GAAP"), such as Adjusted EBITDA, Adjusted Net Income and Free Cash Flow. While management believes that such measures are useful for investors, they should not be used as a replacement for financial measures that are in accordance with GAAP. For a reconciliation of such non-GAAP financial measures to the nearest comparable measure in accordance with GAAP, please see the supplemental financial information at the end of this press release.
Unless otherwise specified, references to "average sales price" refer to average sales price excluding the effects of the Company's derivative transactions.
All amounts, dollars and percentages presented in this press release are rounded and therefore approximate.
Selected operating data
| Three months ended |
||||||||
| 2022 | 2021 | |||||||
| (unaudited) | ||||||||
| Sales volumes: | ||||||||
| Oil (MBbl) | 3,627 | 2,183 | ||||||
| NGL (MBbl) | 1,994 | 2,321 | ||||||
| Natural gas (MMcf) | 12,243 | 15,630 | ||||||
| Oil equivalents (MBOE)(1)(2) | 7,661 | 7,109 | ||||||
| Average daily oil equivalent sales volumes (BOE/D)(2) | 85,118 | 78,989 | ||||||
| Average daily oil sales volumes (Bbl/D)(2) | 40,295 | 24,261 | ||||||
| Average sales prices(2): | ||||||||
| Oil ($/Bbl)(3) | $ | 95.81 | $ | 58.48 | ||||
| NGL ($/Bbl)(3) | $ | 32.68 | $ | 17.96 | ||||
| Natural gas ($/Mcf)(3) | $ | 3.15 | $ | 2.12 | ||||
| Average sales price ($/BOE)(3) | $ | 58.90 | $ | 28.48 | ||||
| Oil, with commodity derivatives ($/Bbl)(4) | $ | 67.24 | $ | 45.03 | ||||
| NGL, with commodity derivatives ($/Bbl)(4) | $ | 26.04 | $ | 11.25 | ||||
| Natural gas, with commodity derivatives ($/Mcf)(4) | $ | 2.46 | $ | 1.66 | ||||
| Average sales price, with commodity derivatives ($/BOE)(4) | $ | 42.54 | $ | 21.15 | ||||
| Selected average costs and expenses per BOE sold(2): | ||||||||
| Lease operating expenses | $ | 5.34 | $ | 2.66 | ||||
| Production and ad valorem taxes | 3.59 | 1.87 | ||||||
| Transportation and marketing expenses | 1.92 | 1.71 | ||||||
| Midstream service expenses | 0.18 | 0.12 | ||||||
| General and administrative (excluding LTIP) | 1.75 | 1.36 | ||||||
| Total selected operating expenses | $ | 12.78 | $ | 7.72 | ||||
| General and administrative (LTIP): | ||||||||
| LTIP cash | $ | 0.85 | $ | 0.23 | ||||
| LTIP non-cash | $ | 0.27 | $ | 0.26 | ||||
| Depletion, depreciation and amortization | $ | 9.59 | $ | 5.36 | ||||
_______________________________________________________________________________
(1) BOE is calculated using a conversion rate of six Mcf per one Bbl.
(2) The numbers presented are calculated based on actual amounts that are not rounded.
(3) Price reflects the average of actual sales prices received when control passes to the purchaser/customer adjusted for quality, certain transportation fees, geographical differentials, marketing bonuses or deductions and other factors affecting the price received at the delivery point.
(4) Price reflects the after-effects of the Company's commodity derivative transactions on its average sales prices. The Company's calculation of such after-effects includes settlements of matured commodity derivatives during the respective periods in accordance with GAAP and an adjustment to reflect premiums incurred previously or upon settlement that are attributable to commodity derivatives that settled during the respective periods.
Consolidated balance sheets
| (in thousands, except share data) | ||||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 65,137 | $ | 56,798 | ||||
| Accounts receivable, net | 213,549 | 151,807 | ||||||
| Derivatives | 5,899 | 4,346 | ||||||
| Other current assets | 17,767 | 22,906 | ||||||
| Total current assets | 302,352 | 235,857 | ||||||
| Property and equipment: | ||||||||
| Oil and natural gas properties, full cost method: | ||||||||
| Evaluated properties | 9,149,982 | 8,968,668 | ||||||
| Unevaluated properties not being depleted | 156,899 | 170,033 | ||||||
| Less: accumulated depletion and impairment | (7,089,265 | ) | (7,019,670 | ) | ||||
| Oil and natural gas properties, net | 2,217,616 | 2,119,031 | ||||||
| Midstream service assets, net | 94,632 | 96,528 | ||||||
| Other fixed assets, net | 35,374 | 34,590 | ||||||
| Property and equipment, net | 2,347,622 | 2,250,149 | ||||||
| Derivatives | 33,862 | 32,963 | ||||||
| Other noncurrent assets, net | 42,494 | 32,855 | ||||||
| Total assets | $ | 2,726,330 | $ | 2,551,824 | ||||
| Liabilities and stockholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 73,228 | $ | 71,386 | ||||
| Accrued capital expenditures | 69,018 | 50,585 | ||||||
| Undistributed revenue and royalties | 162,233 | 117,920 | ||||||
| Derivatives | 365,256 | 179,809 | ||||||
| Other current liabilities | 105,767 | 107,213 | ||||||
| Total current liabilities | 775,502 | 526,913 | ||||||
| Long-term debt, net | 1,421,821 | 1,425,858 | ||||||
| Derivatives | 17,450 | — | ||||||
| Asset retirement obligations | 69,677 | 69,057 | ||||||
| Other noncurrent liabilities | 18,092 | 16,216 | ||||||
| Total liabilities | 2,302,542 | 2,038,044 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Preferred stock, |
— | — | ||||||
| Common stock, |
173 | 171 | ||||||
| Additional paid-in capital | 2,785,415 | 2,788,628 | ||||||
| Accumulated deficit | (2,361,800 | ) | (2,275,019 | ) | ||||
| Total stockholders' equity | 423,788 | 513,780 | ||||||
| Total liabilities and stockholders' equity | $ | 2,726,330 | $ | 2,551,824 | ||||
Consolidated statements of operations
| Three months ended |
||||||||
| (in thousands, except per share data) | 2022 | 2021 | ||||||
| (unaudited) | ||||||||
| Revenues: | ||||||||
| Oil sales | $ | 347,443 | $ | 127,701 | ||||
| NGL sales | 65,155 | 41,678 | ||||||
| Natural gas sales | 38,589 | 33,078 | ||||||
| Midstream service revenues | 2,344 | 1,296 | ||||||
| Sales of purchased oil | 78,864 | 46,477 | ||||||
| Total revenues | 532,395 | 250,230 | ||||||
| Costs and expenses: | ||||||||
| Lease operating expenses | 40,876 | 18,918 | ||||||
| Production and ad valorem taxes | 27,487 | 13,283 | ||||||
| Transportation and marketing expenses | 14,743 | 12,127 | ||||||
| Midstream service expenses | 1,414 | 858 | ||||||
| Costs of purchased oil | 82,964 | 49,916 | ||||||
| General and administrative | 21,944 | 13,073 | ||||||
| Depletion, depreciation and amortization | 73,492 | 38,109 | ||||||
| Other operating expenses | 1,019 | 1,143 | ||||||
| Total costs and expenses | 263,939 | 147,427 | ||||||
| Operating income | 268,456 | 102,803 | ||||||
| Non-operating income (expense): | ||||||||
| Loss on derivatives, net | (325,816 | ) | (154,365 | ) | ||||
| Interest expense | (32,477 | ) | (25,946 | ) | ||||
| Loss on disposal of assets, net | (260 | ) | (72 | ) | ||||
| Other income, net | 2,439 | 1,379 | ||||||
| Total non-operating expense, net | (356,114 | ) | (179,004 | ) | ||||
| Loss before income taxes | (87,658 | ) | (76,201 | ) | ||||
| Income tax (expense) benefit: | ||||||||
| Current | (1,218 | ) | — | |||||
| Deferred | 2,095 | 762 | ||||||
| Total income tax benefit | 877 | 762 | ||||||
| Net loss | $ | (86,781 | ) | $ | (75,439 | ) | ||
| Net loss per common share: | ||||||||
| Basic | $ | (5.18 | ) | $ | (6.33 | ) | ||
| Diluted | $ | (5.18 | ) | $ | (6.33 | ) | ||
| Weighted-average common shares outstanding: | ||||||||
| Basic | 16,767 | 11,918 | ||||||
| Diluted | 16,767 | 11,918 | ||||||
Consolidated statements of cash flows
| Three months ended |
||||||||
| (in thousands) | 2022 | 2021 | ||||||
| (unaudited) | ||||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (86,781 | ) | $ | (75,439 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Share-settled equity-based compensation, net | 2,053 | 2,068 | ||||||
| Depletion, depreciation and amortization | 73,492 | 38,109 | ||||||
| Mark-to-market on derivatives: | ||||||||
| Loss on derivatives, net | 325,816 | 154,365 | ||||||
| Settlements paid for matured derivatives, net | (125,370 | ) | (41,174 | ) | ||||
| Premiums received for commodity derivatives | — | 9,041 | ||||||
| Amortization of debt issuance costs | 1,541 | 989 | ||||||
| Amortization of operating lease right-of-use assets | 5,025 | 2,997 | ||||||
| Deferred income tax benefit | (2,095 | ) | (762 | ) | ||||
| Other, net | 425 | 1,491 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | (61,742 | ) | (3,728 | ) | ||||
| Other current assets | 5,092 | (10,264 | ) | |||||
| Other noncurrent assets, net | (15,227 | ) | (1,636 | ) | ||||
| Accounts payable and accrued liabilities | 1,842 | 9,065 | ||||||
| Undistributed revenue and royalties | 44,294 | 7,290 | ||||||
| Other current liabilities | (1,471 | ) | (19,622 | ) | ||||
| Other noncurrent liabilities | 3,988 | (1,639 | ) | |||||
| Net cash provided by operating activities | 170,882 | 71,151 | ||||||
| Cash flows from investing activities: | ||||||||
| Acquisitions of oil and natural gas properties, net | (7,870 | ) | — | |||||
| Capital expenditures: | ||||||||
| Oil and natural gas properties | (143,500 | ) | (68,329 | ) | ||||
| Midstream service assets | (293 | ) | (329 | ) | ||||
| Other fixed assets | (2,052 | ) | (551 | ) | ||||
| Proceeds from dispositions of capital assets, net of selling costs | 2,019 | 189 | ||||||
| Net cash used in investing activities | (151,696 | ) | (69,020 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Borrowings on Senior Secured Credit Facility | 50,000 | 15,000 | ||||||
| Payments on Senior Secured Credit Facility | (55,000 | ) | (50,000 | ) | ||||
| Proceeds from issuance of common stock, net of offering costs | — | 26,866 | ||||||
| Stock exchanged for tax withholding | (5,847 | ) | (1,290 | ) | ||||
| Other | — | 2,798 | ||||||
| Net cash used in financing activities | (10,847 | ) | (6,626 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | 8,339 | (4,495 | ) | |||||
| Cash and cash equivalents, beginning of period | 56,798 | 48,757 | ||||||
| Cash and cash equivalents, end of period | $ | 65,137 | $ | 44,262 | ||||
Total incurred capital expenditures
The following table presents the components of the Company's incurred capital expenditures, excluding non-budgeted acquisition costs, for the periods presented:
| Three months ended |
||||||||
| (in thousands) | 2022 | 2021 | ||||||
| (unaudited) | ||||||||
| Oil and natural gas properties | $ | 168,368 | $ | 68,449 | ||||
| Midstream service assets | 459 | 876 | ||||||
| Other fixed assets | 2,072 | 600 | ||||||
| Total incurred capital expenditures, excluding non-budgeted acquisition costs | $ | 170,899 | $ | 69,925 | ||||
Supplemental reconciliations of GAAP to non-GAAP financial measures
Non-GAAP financial measures
The non-GAAP financial measures of Free Cash Flow, Adjusted Net Income, Adjusted EBITDA, Consolidated EBITDAX, Net Debt and Net Debt to Consolidated EBITDAX, as defined by the Company, may not be comparable to similarly titled measures used by other companies. Furthermore, these non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP measures of liquidity or financial performance, but rather should be considered in conjunction with GAAP measures, such as net income or loss, operating income or loss or cash flows from operating activities.
Free Cash Flow (Unaudited)
Free Cash Flow is a non-GAAP financial measure that the Company defines as net cash provided by operating activities (GAAP) before changes in operating assets and liabilities, net, less incurred capital expenditures, excluding non-budgeted acquisition costs. Free Cash Flow does not represent funds available for future discretionary use because it excludes funds required for future debt service, capital expenditures, acquisitions, working capital, income taxes, franchise taxes and other commitments and obligations. However, management believes Free Cash Flow is useful to management and investors in evaluating operating trends in its business that are affected by production, commodity prices, operating costs and other related factors. There are significant limitations to the use of Free Cash Flow as a measure of performance, including the lack of comparability due to the different methods of calculating Free Cash Flow reported by different companies.
The following table presents a reconciliation of net cash provided by operating activities (GAAP) to Free Cash Flow (non-GAAP) for the periods presented:
| Three months ended |
||||||||
| (in thousands) | 2022 | 2021 | ||||||
| (unaudited) | ||||||||
| Net cash provided by operating activities | $ | 170,882 | $ | 71,151 | ||||
| Less: | ||||||||
| Change in current assets and liabilities, net | (11,985 | ) | (17,259 | ) | ||||
| Change in noncurrent assets and liabilities, net | (11,239 | ) | (3,275 | ) | ||||
| Cash flows from operating activities before changes in operating assets and liabilities, net | 194,106 | 91,685 | ||||||
| Less incurred capital expenditures, excluding non-budgeted acquisition costs: | ||||||||
| Oil and natural gas properties(1) | 168,368 | 68,449 | ||||||
| Midstream service assets(1) | 459 | 876 | ||||||
| Other fixed assets | 2,072 | 600 | ||||||
| Total incurred capital expenditures, excluding non-budgeted acquisition costs | 170,899 | 69,925 | ||||||
| Free Cash Flow (non-GAAP) | $ | 23,207 | $ | 21,760 | ||||
_____________________________________________________________________________
(1) Includes capitalized share-settled equity-based compensation and asset retirement costs.
Adjusted Net Income (Unaudited)
Adjusted Net Income is a non-GAAP financial measure that the Company defines as net income or loss (GAAP) plus adjustments for mark-to-market on derivatives, premiums paid or received for commodity derivatives that matured during the period, impairment expense, gains or losses on disposal of assets, income taxes, other non-recurring income and expenses and adjusted income tax expense. Management believes Adjusted Net Income helps investors in the oil and natural gas industry to measure and compare the Company's performance to other oil and natural gas companies by excluding from the calculation items that can vary significantly from company to company depending upon accounting methods, the book value of assets and other non-operational factors.
The following table presents a reconciliation of net loss (GAAP) to Adjusted Net Income (non-GAAP) for the periods presented:
| Three months ended |
||||||||
| (in thousands, except per share data) | 2022 | 2021 | ||||||
| (unaudited) | ||||||||
| Net loss | $ | (86,781 | ) | $ | (75,439 | ) | ||
| Plus: | ||||||||
| Mark-to-market on derivatives: | ||||||||
| Loss on derivatives, net | 325,816 | 154,365 | ||||||
| Settlements paid for matured derivatives, net | (125,370 | ) | (41,174 | ) | ||||
| Net premiums paid for commodity derivatives that matured during the period(1) | — | (11,005 | ) | |||||
| Loss on disposal of assets, net | 260 | 72 | ||||||
| Income tax benefit | (877 | ) | (762 | ) | ||||
| Adjusted income before adjusted income tax expense | 113,048 | 26,057 | ||||||
| Adjusted income tax expense(2) | (24,871 | ) | (5,733 | ) | ||||
| Adjusted Net Income (non-GAAP) | $ | 88,177 | $ | 20,324 | ||||
| Net loss per common share: | ||||||||
| Basic | $ | (5.18 | ) | $ | (6.33 | ) | ||
| Diluted | $ | (5.18 | ) | $ | (6.33 | ) | ||
| Adjusted Net Income per common share: | ||||||||
| Basic | $ | 5.26 | $ | 1.71 | ||||
| Diluted | $ | 5.26 | $ | 1.71 | ||||
| Adjusted diluted | $ | 5.17 | $ | 1.69 | ||||
| Weighted-average common shares outstanding: | ||||||||
| Basic | 16,767 | 11,918 | ||||||
| Diluted | 16,767 | 11,918 | ||||||
| Adjusted diluted | 17,040 | 12,040 | ||||||
_______________________________________________________________________________
(1) Reflects net premiums paid previously or upon settlement that are attributable to derivatives settled in the respective periods presented.
(2) Adjusted income tax expense is calculated by applying a statutory tax rate of 22% for each of the periods ended
Adjusted EBITDA (Unaudited)
Adjusted EBITDA is a non-GAAP financial measure that the Company defines as net income or loss (GAAP) plus adjustments for share-settled equity-based compensation, depletion, depreciation and amortization, impairment expense, mark-to-market on derivatives, premiums paid or received for commodity derivatives that matured during the period, accretion expense, gains or losses on disposal of assets, interest expense, income taxes and other non-recurring income and expenses. Adjusted EBITDA provides no information regarding a company's capital structure, borrowings, interest costs, capital expenditures, working capital movement or tax position. Adjusted EBITDA does not represent funds available for future discretionary use because it excludes funds required for debt service, capital expenditures, working capital, income taxes, franchise taxes and other commitments and obligations. However, management believes Adjusted EBITDA is useful to an investor in evaluating the Company's operating performance because this measure:
- is widely used by investors in the oil and natural gas industry to measure a company's operating performance without regard to items that can vary substantially from company to company depending upon accounting methods, the book value of assets, capital structure and the method by which assets were acquired, among other factors;
- helps investors to more meaningfully evaluate and compare the results of the Company's operations from period to period by removing the effect of its capital structure from its operating structure; and
- is used by management for various purposes, including as a measure of operating performance, in presentations to the Company's board of directors and as a basis for strategic planning and forecasting.
There are significant limitations to the use of Adjusted EBITDA as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect the Company's net income or loss and the lack of comparability of results of operations to different companies due to the different methods of calculating Adjusted EBITDA reported by different companies. The Company's measurements of Adjusted EBITDA for financial reporting as compared to compliance under its debt agreements differ.
The following table presents a reconciliation of net loss (GAAP) to Adjusted EBITDA (non-GAAP) for the periods presented:
| Three months ended |
||||||||
| (in thousands) | 2022 | 2021 | ||||||
| (unaudited) | ||||||||
| Net loss | $ | (86,781 | ) | $ | (75,439 | ) | ||
| Plus: | ||||||||
| Share-settled equity-based compensation, net | 2,053 | 2,068 | ||||||
| Depletion, depreciation and amortization | 73,492 | 38,109 | ||||||
| Mark-to-market on derivatives: | ||||||||
| Loss on derivatives, net | 325,816 | 154,365 | ||||||
| Settlements paid for matured derivatives, net | (125,370 | ) | (41,174 | ) | ||||
| Net premiums paid for commodity derivatives that matured during the period(1) | — | (11,005 | ) | |||||
| Accretion expense | 1,019 | 1,143 | ||||||
| Loss on disposal of assets, net | 260 | 72 | ||||||
| Interest expense | 32,477 | 25,946 | ||||||
| Income tax benefit | (877 | ) | (762 | ) | ||||
| Adjusted EBITDA (non-GAAP) | $ | 222,089 | $ | 93,323 | ||||
_____________________________________________________________________________
(1) Reflects net premiums paid previously or upon settlement that are attributable to derivatives settled in the respective periods presented.
Consolidated EBITDAX (Unaudited)
Consolidated EBITDAX is a non-GAAP financial measure defined in the Company's Senior Secured Credit Facility as net income or loss (GAAP) plus adjustments for extraordinary gains (or losses), non-cash recurring gains (or losses), depletion, depreciation and amortization expense, interest expense, any provisions for (or benefit from) income or franchise taxes, exploration expenses and other non-cash charges. Consolidated EBITDAX is used by the Company’s management for various purposes, including as a measure of operating performance and compliance under the Company's Senior Secured Credit Facility. Additional information on the calculation of Consolidated EBITDAX can be found in the Company's Eighth Amendment to the Senior Secured Credit Facility as filed with the
The following table presents a reconciliation of net income (loss) (GAAP) to Consolidated EBITDAX (non-GAAP) for the periods presented:
| Three months ended | ||||||||||||
| (in thousands) | 2022 |
2021 |
2021 |
|||||||||
| (unaudited) | ||||||||||||
| Net income (loss) | $ | (86,781 | ) | $ | 216,276 | $ | 136,832 | |||||
| Plus: | ||||||||||||
| Share-settled equity-based compensation, net | 2,053 | 2,066 | 1,811 | |||||||||
| Depletion, depreciation and amortization | 73,492 | 74,592 | 62,678 | |||||||||
| Mark-to-market on derivatives: | ||||||||||||
| (Gain) loss on derivatives, net | 325,816 | (15,372 | ) | 96,240 | ||||||||
| Settlements paid for matured derivatives, net | (125,370 | ) | (129,361 | ) | (92,726 | ) | ||||||
| Accretion expense | 1,019 | 1,026 | 906 | |||||||||
| Gain on sale of oil and natural gas properties, net | — | — | (95,223 | ) | ||||||||
| Loss on disposal of assets, net | 260 | 8,903 | 22 | |||||||||
| Interest expense | 32,477 | 31,163 | 30,406 | |||||||||
| Income tax (benefit) expense | (877 | ) | 3,052 | 2,677 | ||||||||
| Consolidated EBITDAX (non-GAAP) | $ | 222,089 | $ | 192,345 | $ | 143,623 | ||||||
Net Debt (Unaudited)
Net Debt, a non-GAAP financial measure, is calculated as the face value of long-term debt plus any outstanding letters of credit, less cash and cash equivalents. Management believes Net Debt is useful to management and investors in determining the Company's leverage position since the Company has the ability, and may decide, to use a portion of its cash and cash equivalents to reduce debt. Net Debt as of
Net Debt to Consolidated EBITDAX (Unaudited)
Net Debt to Consolidated EBITDAX, a non-GAAP financial measure, is calculated as Net Debt, including letters of credit, divided by Consolidated EBITDAX, as defined in the Company's Senior Secured Credit Facility. For the purposes of calculating Consolidated EBITDAX for the period ended
Investor Contact:
918.858.5504
rhagood@laredopetro.com
Source: Laredo Petroleum, Inc.