DENVER, Nov. 18, 2019 (GLOBE NEWSWIRE) — Sundance Energy Australia Limited (ASX: SEA) (NASDAQ: SNDE) (the “Company” or “Sundance”) reported its third quarter 2019 financial and operations results today.
Third Quarter 2019 Financial Results Highlights
- Third quarter net sales volumes were 1,251,144 boe or 13,599 boe per day. This represents an increase of ~22% as compared to the same period for the prior year. Third quarter sales volumes were ~64% oil, ~20% gas and ~16% NGLs.
- Third quarter net oil sales volumes for the quarter of 8,677 Bopd were at the high end of guidance of 8,400 – 8,700 Bopd. Gas and NGL sales volumes of ~4,923 Boe/d for the quarter were below guidance of 5,600 – 5,800 Bopd largely due to the impact of short-term flaring.
- Total revenue for the quarter decreased 5% to US $51.1 million as compared to the same prior year period due to lower oil prices in the current year period.
- Net Income for the period was US $13.4 million, representing a 33% net income margin and compared to a loss of US $19.3 million for the prior year period. Adjusted EBITDAX1 for the period was US $35.8 million, representing a ~67% Adjusted EBITDAX margin1 and ~18% growth as compared to the same period for the prior year.
- Average third quarter realized prices excluding the impact of hedging were US $57.23 per barrel of oil, US $1.84 per mcf of gas, and US $13.18 per barrel of NGL. This represents a US $0.89 per barrel premium compared to an average WTI price of US $56.34 per barrel for the quarter. Average third quarter realized price per boe was US $40.84 excluding the impact of hedges and US $42.44 including their impact.
- Sundance continued to drive down cash operating costs during the third quarter. Total Cash Operating Costs2 of US $13.83 per boe improved ~24% as compared to the same prior year period and an ~8% improvement as compared to the Company’s second quarter 2019 Cash Operating Costs, primarily due to lower cash General and Administrative (“G&A”), Lease Operating Expense (“LOE”) and Workover expenses per boe.
- Most notably, LOE of US $5.05 per boe has decreased ~29% as compared to the same prior year period and ~7% as compared to the second quarter 2019.
- Cash operating costs for the quarter were below guidance of US $16.00 per boe by US $2.17 per boe, or ~14%.
- As of 1 November 2019, the Company’s oil hedges covered a total of 3,593,000 barrels through 2023. Hedging covered approximately ~8,000 barrels of oil per day for the remainder of 2019 with a weighted average floor of US $60.16 per barrel. These figures represent ~90% of the remainder of 2019 expected oil sales at the midpoint of fourth quarter guidance and exclude hedges which have rolled off during the first ten months of 2019.
- Third quarter development and production related capital expenditures totaled US $42.1 million, below the low end of capital expenditure guidance of US $50-60 million.
- Immediately subsequent to the end of the third quarter, the Company announced that it had closed the sale of its assets in Dimmit County, TX and received $17.8 million in cash proceeds. The Company expects to receive the remaining transaction proceeds at the end of the 120-day post-close period.
- While the Company drew incremental debt during the third quarter, pro forma for receipt of the Dimmit proceeds (which were scheduled to be received during the quarter) the Company successfully decreased its net debt position.
Third Quarter 2019 Operational Highlights
- The Company turned 12 gross (12.0 net) wells to sales in Live Oak County, including the four well Georgia Buck, HT Chapman, and H Harlan Bethune pads during the quarter.
- The Company finalized drilling the 4 gross (4.0 net) well H Harlan Bethune pad in Live Oak County and additionally drilled the 2 gross (2.0 net) well Justin Tom pad in Atascosa county.
- As of the date of this report, the Company had additionally completed the two well Justin Toms pad and was flowing back the wells. The laterals for each of the Justin Tom wells have gross perforated intervals exceeding 12,700 feet in length and are among the longest wells drilled in the county.
- During the third quarter the Company also spud the 2 gross (2.0 net) well Washburn Ranch pad in La Salle County, and had finished drilling these wells as of the date of this report. The Washburn Ranch pad represents the first development activity the Company has undertaken to date in La Salle County and an important step in further demonstrating the quality of the Company’s inventory.
- At this time the Company has completed its 2019 drilling plan early through achievement of significant drilling efficiencies and reduction of average drilling days per well. The rig has been laid down and is expected to be picked back up in January to commence the 2020 drilling program.
- During the third quarter the Company and its midstream partner continued expansion of CGP-41 to increase gas processing capacity from 18 mmcfpd to 28 mmcfpd. The Company anticipates that this expansion, which is expected to be completed in the fourth quarter, will accommodate future planned production growth from the Live Oak and Atascosa Counties assets. Similar to the initial expansion, the Company’s midstream partner will fund this and future capital projects up to $10 million in cumulative capital costs.
Update Regarding Process to Redomicile to the United States
- On 8th November, the Company’s shareholders voted in favor of the scheme of arrangement in relation to Company’s proposed re-domiciliation from Australia to the United States. ~95% of the total number of votes cast were in favor, and ~68% of the shareholders present and voting were in favor.
- On 14th November, Sundance received final legal approval via a second court hearing and lodged the court orders with the Australian Securities and Investment Commission (ASIC), rendering the Scheme legally effective.
- On 14th November, trading of the Company’s shares on the ASX was suspended. However, Sundance has been advised by NASDAQ that Sundance’s ADRs will continue trading on Nasdaq until the implementation date (Tuesday, November 26, 2019).
- On the implementation date for the Scheme, one share in the new Sundance Energy Inc. (US HoldCo parent) will be issued in exchange for every 100 Sundance shares held by Sundance Shareholders as of the Scheme Record Date (currently proposed as 7:00 pm Sydney time on 19th November 2019).
- Sundance Energy Inc. shares are expected to commence trading on Nasdaq under the ticker “SNDE” promptly following the Implementation Date.
Fourth Quarter and Full Year 2019 Guidance Highlights
- Sundance expects to be free cash flow positive during the fourth quarter.
- During the fourth quarter, the Company anticipates average sales volumes of 13,500 to 14,000 boe per day driven by the 12 wells brought online in the third quarter as well as the two extended reach lateral Justin Toms wells which were brought online in early November.
- The Company has revised its full year average sales volumes estimates to 13,300 to 13,500 boe per day, reflecting capacity constraints and high back pressure related to the second phase expansion of the CGP-41 gas processing facility which resulted in flaring and curtailment.
- The Company anticipates that this expansion, which is expected to be completed in the fourth quarter, will accommodate future planned production growth from the Live Oak and Atascosa County assets. Similar to the initial expansion, the Company’s midstream partner will fund this and future capital projects up to $10 million in cumulative capital costs.
- The Company anticipates an oil cut during the fourth quarter of ~65% by sales volume.
- As of the date of this report, the Company has turned to sales all 20 wells planned for full year 2019 including the two wells in its fourth quarter guidance.3
- The Company has additionally already completed its two well drilling program for the fourth quarter and laid down its rig for the remainder of the year. These La Salle County Washburn Ranch wells will be held as drilled but uncompleted (“DUC”) wells at year-end.
- Second half of 2019 capital spending guidance remains US $60 to 65 million. Fourth quarter capital spending is anticipated to be US ~$20 million. Full year Capital cost guidance remains unchanged at US $135 to $155 million.
The table below provides an overview of the Company’s operational activity for year-to-date 20194:
|Well Name||County||Spud Date||IP Date||Lateral Length||Peak 24-Hr IP||30-Day Avg (boepd)||30-Day / 1,000′ ft||60-Day Avg (boepd)||60-Day / 1,000′ ft||% Oil|
|Roy Esse 15H||Live Oak||1-Dec-18||5-May-19||4,756||1,222||864||182||848||178||72||%|
|Roy Esse 16H||Live Oak||28-Nov-18||5-May-19||4,823||1,371||988||205||912||189||75||%|
|Roy Esse 17H||Live Oak||26-Nov-18||5-May-19||4,691||1,077||785||167||743||158||76||%|
|Roy Esse 18H||Live Oak||24-Nov-18||5-May-19||4,656||1,099||805||173||753||162||73||%|
|Georgia Buck 01H||Live Oak||21-Feb-19||24-Jul-19||3,791||1,817||921||243||854||225||86||%|
|Georgia Buck 02H||Live Oak||23-Feb-19||24-Jul-19||3,814||1,079||802||210||709||186||85||%|
|Georgia Buck 03H||Live Oak||25-Feb-19||24-Jul-19||3,792||1,133||792||209||669||176||83||%|
|Georgia Buck 10H||Live Oak||26-Feb-19||24-Jul-19||3,917||1,359||880||225||856||219||85||%|
|HT Chapman 11H||Live Oak||16-Apr-19||16-Aug-19||5,287||850||530||100||520||98||79||%|
|HT Chapman 12H||Live Oak||14-Apr-19||16-Aug-19||5,943||927||566||95||511||86||74||%|
|HT Chapman 13H||Live Oak||12-Apr-19||16-Aug-19||5,894||1,148||805||137||768||130||76||%|
|HT Chapman 14H||Live Oak||10-Apr-19||17-Aug-19||5,763||1,271||910||158||817||142||76||%|
|H Harlan Bethune 15H||Live Oak||31-May-19||28-Aug-19||5,220||2,059||1,372||263||1,104||211||75||%|
|H Harlan Bethune 16H||Live Oak||2-Jun-19||28-Aug-19||5,180||1,862||1,382||267||1,143||221||77||%|
|H Harlan Bethune 17H||Live Oak||4-Jun-19||28-Aug-19||5,240||1,578||1,205||230||985||188||77||%|
|H Harlan Bethune 18H||Live Oak||6-Jun-19||28-Aug-19||5,280||1,624||1,237||234||1,090||206||76||%|
|Justin Tom 08H||Atascosa||30-Jul-19||5-Nov-19||12,715||–||–||–||–||–||–|
|Justin Tom 09H||Atascosa||25-Jul-19||5-Nov-19||12,955||–||–||–||–||–||–|
The tables below set forth the Company’s commodity hedge position as of 18th November 20195:
|HEDGE POSITION OVERVIEW|
|Total Oil Derivative Contracts||Gas Derivative Contracts|
|Weighted Average||Weighted Average|
|Year||Units (Bbls)||Floor||Ceiling||Units (Mcf)||Floor||Ceiling|
|CRUDE OIL HEDGE POSITION BY BASIS|
|LLS Derivative Contracts||Brent Derivative Contracts||WTI Derivative Contracts|
|Weighted Average||Weighted Average||Weighted Average|
|Year||Units (Bbls)||Floor||Ceiling||Units (Bbls)||Floor||Ceiling||Units (Bbls)||Floor||Ceiling|
The following unaudited tables present certain production, per unit metrics as well as Net Income and Adjusted EBITDAX that compare results of the corresponding quarterly reporting periods:
|UNIT COST ANALYSIS||Three Months Ended September 30,||Nine Months Ended September 30,|
|Revenue/Boe (Inclusive of Realized Hedge Gains)||$||42.44||$||47.85||-11||%||$||43.42||$||42.15||3||%|
|Lease operating expense/Boe||(5.05||)||(7.08||)||(29||%)||(6.01||)||(9.43||)||(36||%)|
|Gathering, processing & transportation/Boe||(2.67||)||(1.94||)||38||%||(2.73||)||(0.44||)||525||%|
|Adjusted EBITDAX per Boe(2)||$||28.61||$||29.71||(4||%)||$||27.96||$||22.33||25||%|
|(1) Cash G&A is a non-IFRS figure representing general and administrative expenses (non transaction-related) incurred less equity-settled share based compensation expense, which totaled $0.1 million and $0.2 million for the three months ended September 30, 2019 and 2018, respectively, and $0.3 million and $0.3 million for the nine months ended September 30, 2019 and 2018, respectively.|
|(2) See reconciliation of income (loss) attributable to owners of the Company to Adjusted EBITDAX included at end of release.|
|Three Months Ended September 30,||Nine Months Ended September 30,|
|Net Sales Volumes|
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