Connect with us

Energy

Buffalo Sewer Authority Issues Largest-Ever U.S. Environmental Impact Bond

Published

on

BUFFALO, N.Y., June 22, 2021 /PRNewswire/ — The Buffalo Sewer Authority closed on a $54 million Environmental Impact Bond (EIB) last week, the country’s largest to date, to finance green infrastructure and stormwater mitigation projects as part of its Rain Check 2.0 initiative. Buffalo Sewer will use the bond proceeds to design and implement green infrastructure to capture stormwater, reduce combined sewer overflows, and enhance community benefits including jobs.

The plans for the EIB came together after The Ralph C. Wilson, Jr. Foundation and the Community Foundation for Greater Buffalo funded Ann Arbor-based Environmental Consulting & Technology, Inc. (ECT) to bring newer models of delivery, including alternative financing options, to the Greater Buffalo region. Morgan Stanley and Quantified Ventures provided underwriting and outcomes-based financing advisory services, respectively, to ensure the issuance met the high standards of Environmental Impact Bonds.

The initiative will better manage stormwater from easements and public land in key CSO (combined sewer overflow) basins, provide impact investing opportunities for investors, reduce stormwater fees for rate payers, and triple the authority’s pace of green infrastructure projects.

Buffalo Sewer’s project goals include installing green stormwater infrastructure (GSI) to manage at least 200 acres of impervious surface through the EIB. Six priority combined sewer overflow basins that are home to 48 percent of Buffalo’s residents are the focus for the green infrastructure investments. The basins were selected based on social and economic equity considerations in addition to stormwater management needs. Green stormwater infrastructure – such as rain gardens, tree plantings, and permeable pavement – is designed to capture and divert stormwater to prevent it from entering the sewer system at peak times. GSI projects reduce the number of combined sewer overflow events, resulting in cleaner local waterways and Lake Erie. With the bond proceeds, Buffalo Sewer’s pace of infrastructure installation is expected to increase from approximately 9.5 acres per year during 2014-2020 to more than 28 acres per year from 2021-2027.

“The City of Buffalo is delighted to successfully bring the bond issuance to a close,” said Mayor Byron W. Brown. “Thus far, along with being the largest EIB in the country, it is also the largest investment any Great Lakes city has made in green stormwater infrastructure, which has proven to be an effective climate resilience measure. The investment also will lead to approximately 700 family-sustaining jobs in our community.”

“Our Rain Check 2.0 program will make Buffalo a greener, healthier, and more equitable city,” said Oluwole “O.J.” McFoy, CEO and General Manager of the Buffalo Sewer Authority. “Green infrastructure provides benefits beyond its ability to manage stormwater, from community beautification and public green space, to workforce development, to public health. This Environmental Impact Bond illustrates our commitment to being data-driven, equitable, forward-thinking, and transparent in how we address stormwater and community resilience.”

The EIB includes several specialty advisors and critical foundation support.

“As the nation’s largest Environmental Impact Bond comes online, we deeply appreciate project sponsors that include the Ralph C. Wilson, Jr. Foundation, Community Foundation for Greater Buffalo, and the Great Lakes Protection Fund, for their support. Their support was leveraged to enable a more than a hundred-fold investment in climate-resilient green stormwater infrastructure in the region which is very exciting,” says Sanjiv Sinha, PhD., Chief Sustainability Officer at ECT. “It also establishes Buffalo as the nation’s leader in gaining access to impact investors who seek not only financial returns, but also measurable environmental impact.”

Environmental Impact Bonds are characterized by a third-party evaluation of whether key environmental goals were achieved by financed projects, which may influence an issuer’s financing costs through outcomes-based mechanisms.

Through this EIB, Buffalo Sewer will be the first municipal issuer in the United States to link a positive incentive to performance. The EIB includes an option to refinance or retire the bond in year seven or later, should it meet or exceed the outcome threshold of 200 new acres of impervious surface area financed and implemented with bond proceeds. This gives Buffalo greater flexibility and potentially lower debt service on the EIB if it meets the 200-acre threshold. If Buffalo Sewer does not meet the threshold by 2028, it may still call the EIB but at a higher price through 2031.

The commitment to enhanced impact measurement and disclosure differentiates EIBs from traditional Green Bonds, which support specific environmental and climate-related projects, but do not require the same level of rigor in outcome prediction, measurement, and reporting. As a part of the innovative funding agreement, ECT worked with Quantified Ventures due to its national leadership on innovative outcome-based financing and EIBs. Quantified Ventures and DC Water pioneered the Environmental Impact Bond in 2016 to address stormwater challenges in the nation’s capital. The foundation support was an additional key element.

“In addition to supporting parks and trails throughout the City of Buffalo and western New York region, the Foundation’s strategic and leveraged investments in green design are also a critical piece in helping to build a healthier and more resilient region,” said Jim Boyle, vice president of programs & communications for the Ralph C. Wilson, Jr. Foundation. “Combined sewer overflow impacts quality of life for all residents in Buffalo, and solving this complex issue requires collaboration and an innovative financing solution. This Environmental Impact Bond brings key stakeholders together, from government to commercial property owners, to implement proven green infrastructure projects throughout the city that will have a wide range of economic, environmental and public health benefits.”

“In real time, the Buffalo Sewer Authority is writing the playbook for other cities to follow in financing and implementing nature-based solutions that effectively manage stormwater to further equity and the local economy,” said Eric Letsinger, CEO of Quantified Ventures. “By committing to the highest levels of transparency and accountability in issuing this Environmental Impact Bond, Buffalo Sewer engineered this novel outcomes-based call feature to incentivize all parties to significantly accelerate the production of green infrastructure in Buffalo.”

“The Buffalo Sewer Authority’s willingness to undertake resiliency projects and measure and report on the outcomes positions the Authority as a leader in the Green and Sustainability Bond marketplace,” said Joe Abramson, Vice President in Public Finance at Morgan Stanley. “Influenced by sustainability-linked bonds in the corporate bond market, this transaction innovatively ties the call date and price to the Authority’s ability to achieve an outcome threshold subject to external verification. The novel structure highlights the Authority’s commitment to a more sustainable and equitable community and helped reduce financing costs to historically favorable levels.”

The Buffalo Climate Vulnerability Assessment estimates that the city will face up to four inches of additional annual precipitation by mid-century, increasing the risk of flooding and putting additional strain on Buffalo’s current stormwater infrastructure. Green infrastructure can mitigate the impacts of heavy rainfall events while providing other resilience benefits, such as addressing urban heat island effects. This bond qualifies as both an EIB and a Green Bond under the International Capital Market Association Green Bond Principles.

For each of the designated basins included in the initiative, Buffalo Sewer conducted an environmental analysis, equity analysis, and site analysis, which is outlined in the Rain Check 2.0 Opportunity Report. A Great Lakes Protection Fund funded report Climate Risks and Opportunities Across the Great Lakes by Resilient Infrastructure Sustainable Communities (RISC) shows that sites of historical disinvestment and structural barriers to equitable economic growth, may be poised to derive some of the greatest benefits from investment in GSI guided with a justice-oriented approach.

The Buffalo Sewer Authority was advised by Capital Markets Advisors on the transaction. Barclay Damon LLP served as bond counsel. Arcadis N.V. will serve as the independent, third-party validator that will inspect each green infrastructure project site and perform measurements to determine the achievement of the primary outcome metric.

Additional partner/stakeholder information can be found at:
Buffalo Sewer Authority: www.buffalosewer.org 
Community Foundation for Greater Buffalo: https://www.cfgb.org/ 
ECT: https://www.ectinc.com/ 
Great Lakes Protection Fund: http://glpf.org/  
Morgan Stanley: www.morganstanley.com 
Quantified Ventures: https://www.quantifiedventures.com/  
Ralph C. Wilson, Jr. Foundation: https://www.ralphcwilsonjrfoundation.org/  
Resilient Infrastructure Sustainable Communities: http://www.risc.solutions

High-Resolution maps of the priority CSO basins are available for download at https://raincheckbuffalo.org/opportunityreport

Jennette Smith, Partner, Mort Crim Communications, Inc. [email protected], Cell: 586.292.2905 
Carolyn Artman, Account Director, MCCI, [email protected], Cell: 313.269.4729

SOURCE Buffalo Sewer Authority

Related Links

https://buffalosewer.org/

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.prnewswire.com:443/news-releases/buffalo-sewer-authority-issues-largest-ever-us-environmental-impact-bond-301317161.html

Energy

Weatherford Announces Second-Quarter 2021 Results

Published

on

HOUSTON, July 28, 2021 /PRNewswire/ — Weatherford International plc (NASDAQ: WFRD) (“Weatherford” or the “Company”) announced today its results for the second quarter of 2021.

Revenues for the second quarter of 2021 were $903 million, an increase of 9% sequentially and 10% year-on-year.  Reported operating income was $25 million in the second quarter of 2021, compared to an operating loss of $13 million in the first quarter of 2021 and an operating loss of $497 million in the second quarter of 2020. The Company’s second-quarter 2021 net loss was $78 million, compared to a net loss of $116 million in the first quarter of 2021 and a net loss of $581 million in the second quarter of 2020.

Second-quarter 2021 cash flows provided by operations were $46 million, compared to $74 million in the first quarter of 2021 and $31 million in the second quarter of 2020. Capital expenditures were $9 million in the second quarter of 2021, compared to $15 million in the first quarter of 2021 and $35 million in the second quarter of 2020.

  • Second-quarter 2021
    • Adjusted EBITDA[1] of $136 million, an increase of 33% sequentially and 72% year-over-year
    • Unlevered free cash flow[1] of $165 million, an increase of $71 million sequentially and $57 million year-over-year
    • Free cash flow of $48 million, a decline of only $22 million sequentially, despite $117 million in interest payments, representing an improvement of $50 million year-on-year

Girish Saligram, President and Chief Executive Officer, commented, “I am pleased with our second quarter results, as we delivered another quarter of positive operating performance. We made further progress on our strategic initiatives by driving improvements across all focus areas, including North American profitability and global inventory utilization.

“Our results from the second quarter of 2021 clearly demonstrate that efforts to streamline the business over the last several quarters have begun to take hold. We capitalized on activity improvements to grow revenue and capture significant fall-through from cost control, which led to expanded margins and positive free cash flow. We also saw increased traction of the commercialization of our field-proven technologies led by market-leading MPD and TRS as evidenced in the Middle East and Latin America, where we secured new contracts. These awards are a testament to our abilities in challenging environments and support our reputation as the preferred global provider within these product lines.

“Our most recent results also indicate growing momentum for two of our Company’s strategic vectors, digitalization and the energy transition, as we secured multiple contracts to supply production automation solutions for operators in Europe and the Middle East. Additionally, we added to our successful track record for the Firma™ plug & abandonment solution in Europe by replacing a competitor and delivering the entire scope of work early.

“We exited the second quarter of 2021 with a strong liquidity position by generating $48 million of positive free cash flow, despite $117 million in interest payments. This achievement resulted from improved operating performance, disciplined capital allocation and expenditures, and reduced working capital.

“Lastly, I am also pleased to share that we recently completed the listing of our shares on the NASDAQ stock exchange and the results from this quarter further validate our decision to relist. I am incredibly proud of our team’s efforts that build upon our history of innovation and customer focus. While we forge our path as the new Weatherford, I believe our best days are ahead.”

Notes:
[1] EBITDA represents income before income tax, depreciation and amortization expense. Adjusted EBITDA excludes, among other items, impairments of long-lived assets and goodwill, restructuring expense, share-based compensation expense, as well as write-offs of property plant and equipment, right-of-use assets, and inventory. Free cash flow is calculated as cash flows provided by (used in) operating activities, less capital expenditures plus proceeds from the disposition of assets. Unlevered free cash flow is calculated as free cash flow plus cash paid for interest. EBITDA, adjusted EBITDA, free cash flow and unlevered free cash flow are non-GAAP measures. Each measure is defined and reconciled to the most directly comparable GAAP measure in the tables below.

Operational Highlights

  • Weatherford received the Kuwait Oil Company (“KOC”) CEO HSSE Award for logging and perforation services. The award recognizes outstanding health, safety, security and environment achievements.
  • As a further testament of the Company’s digital capabilities, Weatherford officially launched the first phase of a contract for rigsite data management and visualization services with KOC and completed the implementation of the Centro™ drilling optimization software platform and helped to establish KOC’s real-time drilling decision center.
  • Weatherford signed a five-year well screens contract with bp in Azerbaijan. This agreement directly follows the safety-valve contract win during the prior quarter, which makes two concurrent, multiyear contracts with a major operator.
  • A major national oil company in the Middle East awarded Weatherford a five-year completion contract to provide OptiPkr™ production packers, completion accessories, and other items for 80 wells. Under a previous contract for the same scope of work, Weatherford delivered reliable products and excellent service quality in the field, which drove the current award with increased share.
  • In collaboration with a major drilling contractor, Weatherford secured a five-year contract to provide tubular running services that leverage digital capabilities for crew integration and personnel optimization in offshore Russia. This long-term, strategic contract displaces the incumbent and positions the Company for future expansion of the scope of work.
  • In Continental Europe, Weatherford provided an integrated drilling solution featuring the Magnus® rotary steerable system to finish a drilling campaign 70% faster than planned. This success enables the continued expansion of RSS technology in that market.
  • Operators in Continental Europe awarded Weatherford two contracts for de-liquification equipment and services in more than 100 wells and ForeSite® ecosystems in more than 200 gas wells. These awards are a continuation of previous de-liquification services that increased production, extended the productive life of wells, reduced operational costs, and minimized the carbon footprint.

Liquidity 

The Company maintained its disciplined focus on liquidity during the second quarter of 2021. Unlevered free cash flow of $165 million in the second quarter of 2021 improved by $57 million versus the second quarter of 2020, on a 72% increase in adjusted EBITDA. This improvement is a result of the Company’s efforts to control costs and optimize net working capital and capital expenditures. Second-quarter 2021 free cash flow of $48 million improved by $50 million year-on-year and was only down $22 million sequentially, despite $117 million in interest payments in the second quarter. Total cash of approximately $1.4 billion as of June 30, 2021, was up $44 million from the prior quarter.

Results by Operating Segment

Western Hemisphere



Quarter Ended


Variance

($ in Millions)


06/30/21


03/31/21


06/30/20


Seq.


YoY

Revenues:











North America


$

220



$

214



$

172



3

%


28

%

Latin America


205



176



138



16

%


49

%

  Total Revenues


$

425



$

390



$

310



9

%


37

%












Adjusted Segment EBITDA


$

58



52



$

6



12

%


867

%

% Margin


14

%


13

%


2

%


30

 bps


1,170

 bps

Second-quarter 2021 Western Hemisphere revenues of $425 million increased 9% sequentially and 37% year-on-year. North America revenues of $220 million increased by 3% sequentially primarily due to increased activity in the Drilling, Evaluation & Intervention (“DEI”) product line in the United States, partially offset by seasonally lower activity in Canada. Latin America revenues of $205 million increased 16% sequentially, driven by increased Integrated Service Project activity in Mexico.

Adjusted segment EBITDA of $58 million increased $6 million and associated margins of 14% improved 30 basis points, sequentially, and improved 1,170 basis points year-on-year. The growth in adjusted segment EBITDA was primarily driven by increased activity and sales in Latin America.

Eastern Hemisphere



Quarter Ended


Variance

($ in Millions)


06/30/21


03/31/21


06/30/20


Seq.


YoY

Revenues:











Middle East, North Africa & Asia


$

289



$

267



$

341



8

%


(15)

%

Europe, SSA & Russia


189



175



170



8

%


11

%

  Total Revenues


$

478



$

442



$

511



8

%


(6)

%












Adjusted Segment EBITDA


$

93



66



$

100



41

%


(7)

%

% Margin


20

%


15

%


20

%


460

 bps


(10)

bps

Second-quarter 2021 Eastern Hemisphere revenues of $478 million increased 8% sequentially and decreased 6% year-on-year. Middle East, North Africa, and Asia revenues of $289 million increased 8% sequentially, with increased sales in both the Completion and Production (“C&P”) and the DEI product lines. Europe, Sub Saharan Africa, and Russia revenues of $189 million increased 8% sequentially, primarily due to increased activity in both the C&P and DEI product lines.

Adjusted segment EBITDA of $93 million increased $27 million and associated margins of 20% improved 460 basis points, sequentially, and decreased 10 basis points year-on-year. The growth in adjusted segment EBITDA was primarily due to increased activity and sales in Middle East and Asia.

About Weatherford 

Weatherford is a leading global energy services company. Operating in approximately 75 countries, the Company answers the challenges of the energy industry with its global talent network of approximately 17,000 team members and approximately 365 operating locations, including manufacturing, research and development, service, and training facilities. Visit https://www.weatherford.com/ for more information or connect on LinkedIn, Facebook, Twitter, Instagram, or YouTube.

Conference Call Details

Weatherford will host a conference call on Thursday, July 29, 2021, to discuss the results for the second quarter ended June 30, 2021. The conference call will begin at 10:00 a.m. Eastern Time (9:00 a.m. Central Time).

Listeners are encouraged to download the accompanying presentation slides which will be available in the investor relations section of the Company’s website.

Listeners can participate in the conference call via a live webcast at https://www.weatherford.com/en/investor-relations/investor-news-and-events/events/, or by dialing +1 877-328-5344 (within the U.S.) or +1 412-902-6762 (outside of the U.S.) and asking for the Weatherford conference call. Listeners should log in or dial in approximately 10 minutes prior to the start of the call.

A telephonic replay of the conference call will be available until August 12, 2021, at 5:00 p.m. Eastern Time. To access the replay, please dial +1 877-344-7529 (within the U.S.) or +1 412-317-0088 (outside of the U.S.) and reference conference number 10157213. A replay and transcript of the earnings call will also be available in the investor relations section of the Company’s website.

Contacts
For Investors:
Mohammed Topiwala
Director, Investor Relations and M&A

+1 713-836-7777
[email protected]

For Media:
Kelley Hughes
Director, Global Communications

+1 713-836-4193
[email protected]

Forward-Looking Statements

This news release contains forward-looking statements concerning, among other things, the Company’s quarterly and full-year revenues, operating income and losses, adjusted EBITDA, unlevered free cash flow, forecasts or expectations regarding business outlook, cost savings plans, and capital expenditures, and are also generally identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “outlook,” “budget,” “intend,” “strategy,” “plan,” “guidance,” “may,” “should,” “could,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions, although not all forward-looking statements contain these identifying words. Such statements are based upon the current beliefs of Weatherford’s management and are subject to significant risks, assumptions, and uncertainties. Should one or more of these risks or uncertainties materialize, or underlying assumptions prove incorrect, actual results may vary materially from those indicated in our forward-looking statements. Readers are cautioned that forward-looking statements are only predictions and may differ materially from actual future events or results, including the price and price volatility of oil and natural gas; the extent or duration of business interruptions, demand for oil and gas and fluctuations in commodity prices associated with COVID-19 pandemic; general global economic repercussions related to COVID-19 pandemic; the macroeconomic outlook for the oil and gas industry; and operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the COVID-19 virus and COVID-19 variants, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions; our ability to generate cash flow from operations to fund our operations; and the realization of additional cost savings and operational efficiencies. Forward-looking statements are also affected by the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, and those set forth from time-to-time in the Company’s other filings with the Securities and Exchange Commission. We undertake no obligation to correct or update any forward-looking statement, whether as a result of new information, future events, or otherwise, except to the extent required under federal securities laws.

Weatherford International plc

Condensed Consolidated Statements of Operations (Unaudited)

($ in Millions, Except Per Share Amounts)














Quarter Ended


Six Months Ended



6/30/21


3/31/21


6/30/20


6/30/21


6/30/20

Revenues:











Western Hemisphere


$

425



$

390



$

310



$

815



$

898


Eastern Hemisphere


478



442



511



920



1,138


  Total Revenues


903



832



821



1,735



2,036


Operating Income (Loss):











Western Hemisphere


28



24



(23)



52



6


Eastern Hemisphere


6



(19)



15



(13)



33


  Segment Operating Income (Loss)


34



5



(8)



39



39


Corporate


(17)



(18)



(26)



(35)



(52)


Impairments and Other (Charges) Credits[1]


8





(406)



8



(1,223)


Restructuring Charges






(57)





(83)


  Total Operating Income (Loss)


25



(13)



(497)



12



(1,319)


Other Income (Expense):











Interest Expense, Net


(72)



(70)



(59)



(142)



(117)


Reorganization Items










(9)


Other Expense, Net


(11)



(4)



(11)



(15)



(36)


  Loss Before Income Taxes


(58)



(87)



(567)



(145)



(1,481)


Income Tax Provision


(15)



(23)



(12)



(38)



(56)


  Net Loss


(73)



(110)



(579)



(183)



(1,537)


Net Income Attributable to Noncontrolling Interests


5



6



2



11



10


Net Loss Attributable to Weatherford


$

(78)



$

(116)



$

(581)



$

(194)



$

(1,547)













Basic and Diluted Loss Per Share


$

(1.11)



$

(1.66)



$

(8.30)



$

(2.77)



$

(22.10)


Basic and Diluted Weighted Average Shares Outstanding


70



70



70



70



70




[1]

See Selected Statements of Operations Information Table for further details.

Weatherford International plc

Selected Balance Sheet Data (Unaudited)

($ in Millions)






6/30/2021


12/31/2020

Assets:




Cash and Cash Equivalents

$

1,217



$

1,118


Restricted Cash

170



167


Accounts Receivable, Net

782



826


Inventories, Net

662



717






Property, Plant and Equipment, Net

1,108



1,236


Intangibles, Net

734



810






Liabilities:




Accounts Payable

348



325


Accrued Salaries and Benefits

287



297


Short-term Borrowings and Current Portion of Long-term Debt

10



13


Long-term Debt

2,605



2,601






Shareholders’ Equity:




Total Shareholders’ Equity

759



937






Components of Net Debt[1]:




Short-term Borrowings and Current Portion of Long-term Debt

10



13


Long-term Debt

2,605



2,601


Less: Cash and Cash Equivalents

1,217



1,118


Less: Restricted Cash

170



167


  Net Debt[1]

$

1,228



$

1,329



 [1]

Net debt is a non-GAAP measure calculated as total short- and long-term debt less cash and cash equivalents and restricted cash.

Weatherford International plc

Selected Cash Flows Information (Unaudited)

($ in Millions)

























Quarter Ended


Six Months Ended



6/30/2021


3/31/2021


6/30/2020


6/30/21


6/30/20

Cash Flows From Operating Activities:











Net Loss


$

(73)



$

(110)



$

(579)



$

(183)



$

(1,537)


Adjustments to Reconcile Net Loss to Net Cash Provided By Operating Activities:











Depreciation and Amortization


114



111



113



225



270


Impairments of Long-Lived Assets and Goodwill






250





1,057


Inventory Charges


22



17



136



39



138


(Gain) Loss on Disposition of Assets


(8)



(5)



(1)



(13)



4


Deferred Income Tax Provision (Benefit)


4



2



(2)



6



21


Share-Based Compensation


5



4





9




Working Capital[1]


12



60



130



72



47


Other Operating Activities[2]


(30)



(5)



(16)



(35)



61


  Net Cash Provided By Operating Activities


46



74



31



120



61













Cash Flows From Investing Activities:











Capital Expenditures for Property, Plant and Equipment


(9)



(15)



(35)



(24)



(73)


Proceeds from Disposition of Assets


11



11



2



22



8


Proceeds (Payments) for Other Investing Activities


(1)



1



6





3


  Net Cash Used in Investing Activities


1



(3)



(27)



(2)



(62)













Cash Flows From Financing Activities:











Borrowings of Long-term Debt











Repayments of Long-term Debt


(2)



(3)



(3)



(5)



(5)


Borrowings (Repayments) of Short-term Debt, Net




(4)



10



(4)



7


Other Financing Activities


(4)



(2)



(23)



(6)



(38)


  Net Cash Used In Financing Activities


$

(6)



$

(9)



$

(16)



$

(15)



$

(36)













Free Cash Flow[3]:











Net Cash Provided by Operating Activities


46



74



31



120



61


Capital Expenditures for Property, Plant and Equipment


(9)



(15)



(35)



(24)



(73)


Proceeds from Disposition of Assets


11



11



2



22



8


  Free Cash Flow[3]


$

48



$

70



$

(2)



$

118



$

(4)























[1]

Working capital is defined as the cash changes in accounts receivable plus inventory less accounts payable.

[2]

Other operating activities is primarily accruals, net of cash payments for operational expenses, interest, taxes, employee costs and leases.

[3]

Free cash flow is a non-GAAP measure calculated as cash flows provided by (used in) operating activities, less capital expenditures for property, plant and equipment plus proceeds from the disposition of assets. Management believes free cash flow is useful to understand liquidity and should be considered in addition to but not substitute cash flows provided by (used in) operating activities.

Weatherford International plc

Selected Statements of Operations Information (Unaudited)

($ in Millions)












Quarter Ended


Six Months Ended


6/30/21


3/31/21


6/30/20


6/30/21


6/30/20

Operating Income (Loss)










Western Hemisphere

$

28



$

24



$

(23)



$

52



$

6


Eastern Hemisphere

6



(19)



15



(13)



33


   Segment Operating Income (Loss)

34



5



(8)



39



39


Corporate

(17)



(18)



(26)



(35)



(52)


Total Operating Income (Loss) Before Impairments and Other (Charges) Credits and Restructuring Charges

$

17



$

(13)



$

(34)



$

4



$

(13)












Depreciation and Amortization










Western Hemisphere

$

29



27



$

29



$

56



$

76


Eastern Hemisphere

85



84



85



169



194


Corporate





(1)






Total Depreciation and Amortization

$

114



111



$

113



$

225



$

270












Share-Based Compensation










Western Hemisphere

$

1



$

1



$



$

2



$


Eastern Hemisphere

2



1





3




Corporate

2



2





4




Total Share-Based Compensation

$

5



$

4



$



$

9



$












Adjusted EBITDA[1]










Western Hemisphere

$

58



$

52



$

6



$

110



$

82


Eastern Hemisphere

93



66



100



159



227


Corporate

(15)



(16)



(27)



(31)



(52)


Total Adjusted EBITDA[1]

$

136



$

102



$

79



$

238



$

257












Impairments and Other Charges (Credits)[2]










Long-lived Asset Impairments

$



$



$

(178)



$



$

(818)


Goodwill Impairment





(72)





(239)


Inventory Charges





(134)





(134)


Other Charges (Credits)

8





(22)



8



(32)


Total Impairments and Other Charges (Credits)[2]

$

8



$



$

(406)



$

8



$

(1,223)












[1]

Adjusted EBITDA is calculated as total operating income (loss) before impairments and other (charges) credits and restructuring charges plus depreciation and amortization plus share-based compensation.

[2]

Impairments and Other Charges (Credits) are excluded from segment operating results and primarily represent charges on long-lived assets and goodwill, restructuring expense, as well as write-offs of property plant and equipment, right-of-use assets, and inventory. 

Weatherford International plc

($ in Millions)

Selected Statements of Operations Information (Unaudited) – Product Line Revenues






















Quarter Ended


Six Months Ended


06/30/21


03/31/21


06/30/20


6/30/21


6/30/20

Product Line Revenue by Hemisphere:










  Completion and Production

$

231



$

225



$

165



$

456



$

462


  Drilling, Evaluation and Intervention

194



165



145



359



436


Western Hemisphere

425



390



310



$

815



$

898












  Completion and Production

214



198



240



$

412



$

542


  Drilling, Evaluation and Intervention

264



244



271



508



596


Eastern Hemisphere

478



442



511



$

920



$

1,138












Total Completion and Production

445



423



405



$

868



$

1,004


Total Drilling, Evaluation and Intervention

458



409



416



867



1,032


Total Product Line Revenues

$

903



$

832



$

821



$

1,735



$

2,036


We report our financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, Weatherford’s management believes that certain non-GAAP financial measures (as defined under the SEC’s Regulation G and Item 10(e) of Regulation S-K) may provide users of this financial information additional meaningful comparisons between current results and results of prior periods and comparisons with peer companies. The non-GAAP amounts shown in the following tables should not be considered as substitutes for operating income, provision for income taxes, net income or other data prepared and reported in accordance with GAAP, but should be viewed in addition to the Company’s reported results prepared in accordance with GAAP.

Weatherford International plc

Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)

($ in Millions, Except Per Share Amounts)












Quarter Ended


Six Months Ended


6/30/21


3/31/21


6/30/20


6/30/21


6/30/20

Operating Income (Loss):










GAAP Operating Income (Loss)

$

25



$

(13)



$

(497)



$

12



$

(1,319)


Impairments and Other Charges (Credits)

(8)





406



(8)



1,223


Restructuring Charges





57





83


  Operating Non-GAAP Adjustments

(8)





463



(8)



1,306


Non-GAAP Adjusted Operating Income (Loss)

$

17



$

(13)



$

(34)



$

4



$

(13)












Income (Loss) Before Income Taxes:










GAAP Income (Loss) Before Income Taxes

$

(58)



$

(87)



$

(567)



$

(145)



$

(1,481)


Operating Non-GAAP Adjustments

(8)





463



(8)



1,306


Reorganization Items









9


Non-GAAP Adjustments Before Taxes

(8)





463



(8)



1,315


Non-GAAP Loss Before Income Taxes

$

(66)



$

(87)



$

(104)



$

(153)



$

(166)












Provision for Income Taxes:










GAAP Provision for Income Taxes

$

(15)



$

(23)



$

(12)



$

(38)



$

(56)


Tax Effect on Non-GAAP Adjustments





(2)





(9)


Non-GAAP Provision for Income Taxes

$

(15)



$

(23)



$

(14)



$

(38)



$

(65)












Net Loss Attributable to Weatherford:










GAAP Net Loss

$

(78)



$

(116)



$

(581)



$

(194)



$

(1,547)


Non-GAAP Adjustments, net of tax

(8)





461



(8)



1,306


Non-GAAP Net Loss

$

(86)



$

(116)



$

(120)



$

(202)



$

(241)












Diluted Loss Per Share Attributable to Weatherford:










GAAP Diluted Loss per Share

$

(1.11)



$

(1.66)



$

(8.30)



$

(2.77)



$

(22.10)


Non-GAAP Adjustments, net of tax

(0.12)





6.59



(0.12)



18.66


Non-GAAP Diluted Loss per Share

$

(1.23)



$

(1.66)



$

(1.71)



$

(2.89)



$

(3.44)












Weatherford International plc

($ in Millions)

Reconciliation of GAAP to Non-GAAP Financial Measures

 Net Loss to Adjusted EBITDA (Unaudited)












Quarter Ended


Six Months Ended


6/30/21


3/31/21


6/30/20


6/30/21


6/30/20

Net Loss Attributable to Weatherford

$

(78)



$

(116)



$

(581)



$

(194)



$

(1,547)


Net Income Attributable to Noncontrolling Interests

5



6



2



11



10


Net Loss

(73)



(110)



(579)



(183)



(1,537)


Interest Expense, Net

72



70



59



142



117


Income Tax Provision

15



23



12



38



56


Depreciation and Amortization

114



111



113



225



270


EBITDA

128



94



(395)



222



(1,094)












Other (Income) Expense Adjustments:










Reorganization Items









9


Impairments and Other (Charges) Credits

(8)





406



(8)



1,223


Restructuring Charges





57





83


Share-Based Compensation

5



4





9




Other Expense, Net

11



4



11



15



36


Adjusted EBITDA

$

136



$

102



$

79



$

238



$

257












Supplemental Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA to Free Cash Flow (Unaudited)
















Quarter Ended


Six Months Ended




6/30/21


3/31/21


6/30/20


6/30/21


6/30/20

Adjusted EBITDA


$

136



$

102



$

79



$

238



$

257



Cash From (Used) for Working Capital


12



60



130



72



47



Capital Expenditures for Property, Plant and Equipment


(9)



(15)



(35)



(24)



(73)



Cash Paid for Taxes


(17)



(15)



(19)



(32)



(40)



Cash Paid for Severance and Restructuring


(9)



(12)



(58)



(21)



(75)



Other [1]


52



(26)



11



26



(8)


Unlevered Free Cash Flow


$

165



$

94



$

108



$

259



$

108



Cash Paid for Interest


(117)



(24)



(110)



(141)



(112)


Free Cash Flow[2]


$

48



$

70



$

(2)



$

118



$

(4)














[1]

Other primarily includes accruals net of payments for certain operational expenses, employee costs (excluding restructuring and shared-based compensation) and leases, inventory charges, bad debt expense, proceeds from disposition of assets and foreign currency exchange impact.

[2]

Free cash flow is a non-GAAP measure calculated as cash flows provided by (used in) operating activities, less capital expenditures for property, plant and equipment plus proceeds from the disposition of assets. Management believes free cash flow is useful to understand liquidity and should be considered in addition to but not substitute cash flows provided by (used in) operating activities.

SOURCE Weatherford International plc

Related Links

http://www.weatherford.com

PlatoAi. Web3 Reimagined. Data Intelligence Amplified.
Click here to access.

Source: https://www.prnewswire.com:443/news-releases/weatherford-announces-second-quarter-2021-results-301343552.html

Continue Reading

Energy

Kraton Corporation Announces Second Quarter 2021 Results

Published

on

HOUSTON, July 28, 2021 /PRNewswire/ — Kraton Corporation (NYSE: KRA), a leading global sustainable producer of specialty polymers and high-value biobased products derived from pine wood pulping co-products, announces financial results for the quarter ended June 30, 2021.

SECOND QUARTER 2021 SUMMARY

  • Consolidated net income of $38.4 million, compared to consolidated net loss of $7.1 million in the second quarter of 2020.
  • Adjusted EBITDA(1) of $61.8 million, down $7.7 million or 11.1%, compared to the second quarter of 2020.
    • The $7.7 million decline in Adjusted EBITDA(1) reflects $16.9 million of costs associated with a significant turnaround at the Berre, France, site.
  • Polymer segment operating income of $42.0 million, compared to $16.8 million in the second quarter of 2020, and Adjusted EBITDA(1) of $26.3 million, down $27.5 million or 51.1% compared to $53.8 million in the second quarter of 2020.
    • The $27.5 million decline in Adjusted EBITDA(1) reflects $16.9 million of costs associated with the aforementioned turnaround, higher raw materials costs, and the benefit of favorable raw material trends in the year ago quarter, partially offset by improved demand fundamentals and higher sales volumes.
  • Chemical segment operating income of $22.0 million, compared to an operating loss of $3.9 million in the second quarter of 2020, and Adjusted EBITDA(1) of $35.5 million, up 126.2% compared to $15.7 million in the second quarter of 2020.
    • Adjusted EBITDA(1) increase reflects factors including higher sales volumes associated with improved demand and continued favorable market fundamentals resulting in higher average selling prices, partially offset by higher costs for raw materials.
  • Reduced consolidated debt during the quarter by $14.1 million and consolidated net debt(1) by $11.5 million, including the unfavorable effect of foreign currency(1) of $6.3 million.

Three Months Ended June 30,


Six Months Ended June 30,


2021


2020


2021


2020


(In thousands, except percentages and per share amounts)

Revenue

$

493,623



$

355,679



$

930,894



$

782,948


Polymer segment operating income

$

41,968



$

16,762



$

81,827



$

34,687


Chemical segment operating income (loss)

$

22,039



$

(3,931)



$

35,553



$

6,385


Consolidated net income (loss)

$

38,351



$

(7,081)



$

72,944



$

201,939


Adjusted EBITDA (non-GAAP)(1)(3)

$

61,820



$

69,536



$

129,539



$

147,415


Adjusted EBITDA margin (non-GAAP)(2)(3)

12.5

%


19.6

%


13.9

%


18.8

%

Diluted earnings (loss) per share

$

1.11



$

(0.25)



$

2.14



$

6.20


Adjusted diluted earnings per share (non-GAAP)(1)

$

0.32



$

0.30



$

0.86



$

0.57


____________________________________

(1)

See non-GAAP reconciliations included in the accompanying financial tables for the reconciliation of each non-GAAP measure to its most directly comparable GAAP measure.

(2)

Defined as Adjusted EBITDA as a percentage of revenue. Adjusted EBITDA margin reflects approximately 340 and 210 basis points reduction for costs associated with the Berre turnaround for the three and six months ended June 30, 2021, respectively.

(3)

Includes $10.3 million contribution from the Cariflex business prior to its sale in March 2020.

“We are pleased with our financial results for the second quarter of 2021, which were in line with our overall expectations. On a consolidated basis, second quarter Adjusted EBITDA was $61.8 million, and while this was down $7.7 million compared to the second quarter of 2020, during the quarter, we incurred costs of $16.9 million associated with a significant statutory turnaround at our Berre, France, site, that occurs approximately every six years. Excluding the $16.9 million of turnaround costs, Adjusted EBITDA would have been up compared to the year ago quarter. During the second quarter of 2021, continued favorability in global demand contributed to a strong rebound in sales volume in both our Polymer and Chemical segments, compared to the second quarter of 2020, in which demand was adversely impacted by COVID-19. Thus far in 2021, we have successfully implemented price increases intended to address inflation in raw materials and transportation and logistics costs. While inflation in raw material costs continued to be a factor in the second quarter of 2021, partially offsetting the benefit of higher sales volume and higher average selling prices achieved thus far, we continue to actively address inflationary pressures through price increases, consistent with our Price Right strategy. As such, we expect further price realization and margin improvement in the second half of this year,” said Kevin M. Fogarty, Kraton’s President and Chief Executive Officer.

Second quarter 2021 Adjusted EBITDA for the Polymer segment was $26.3 million, down $27.5 million compared to the second quarter of 2020. While second quarter 2021 sales volume for the Polymer segment was up 11% compared to the second quarter of 2020, reflecting strong post-COVID demand recovery, it is important to appreciate there were three major, but transitory, drivers that contributed to the decline in quarterly segment financial performance that we believe will not significantly impact results for the second half of 2021. Firstly, and as previously noted, $16.9 million of the $27.5 million decline in Adjusted EBITDA is associated with costs of the significant statutory turnaround at the Berre, France, site. Secondly, and in contrast to a deflationary raw material environment that contributed to margin favorability in the second quarter of 2020, second quarter 2021 margins reflect continued inflation in raw material and transportation and logistics costs, which we are addressing through increases in selling prices. Lastly, second quarter 2020 Adjusted EBITDA benefitted from favorable fixed cost absorption associated with a strategic inventory build to leverage historically low raw materials costs in the quarter. Specialty Polymer sales volume increased 15%, compared to the second quarter of 2020, with higher sales volume in all regions, particularly into consumer durable and automotive applications in North America and Europe. Sales volume for Performance Products was up 13% compared to the second quarter of 2020, primarily due to higher sales into paving and roofing applications in North America and continued demand growth globally within adhesives applications.

Chemical segment Adjusted EBITDA for the second quarter of 2021 was $35.5 million, up $19.8 million compared to the second quarter of 2020. The significant increase in Adjusted EBITDA was driven by a 32% increase in sales volume, compared to the second quarter of 2020, reflecting a continued improvement of the Chemical segment’s overall demand fundamentals, a healthy post-COVID demand recovery for TOFA and Rosin and Rosin derivatives and higher average selling prices, partially offset by higher raw materials and transportation and logistics costs. Performance Chemicals sales volume was up 37% compared to the second quarter of 2020, reflecting strong demand for TOFA and TOFA upgrades. Adhesive sales volume was up 17% compared to the second quarter of 2020 on strong global adhesive demand, and sales volume for Tires was up 108% compared to the year-ago quarter, in which sales of tread enhancement agents were significantly impacted as tire customers idled capacity due to COVID-19.

“As evidence of progress in continuing to promote responsible and sustainable business practices throughout our organization, we are proud to note that Kraton recently achieved a Platinum rating for our sustainability management system from EcoVadis. The Platinum rating is the highest distinction in the EcoVadis supplier sustainability rating structure, and the Platinum rating places Kraton in the top one percent of all companies evaluated in its sector,” said Fogarty. “In terms of innovation-based products that are facilitating the circular economy, during the second quarter, we continued to see favorable customer response and positive momentum for our REvolutionTM and CirKular+TM platforms that are addressing growing market needs for sustainable solutions. Moreover, Kraton’s CirKular+ additives recently received Critical Guidance Recognition from the Association of Plastics Recyclers in recognition of Kraton’s ongoing commitment to provide sustainable, high-performance solutions to address the plastics industry’s needs for design recyclability,” added Fogarty.

“Our expectations for the balance of 2021 remain positive. We currently expect demand trends to remain favorable, and with continued implementation of our Price Right strategy expected to address raw material and logistics price increases, we anticipate meaningful margin improvement over the course of the third and fourth quarters. As we have now successfully completed the Berre turnaround, with costs known, and with better visibility into activity levels in the important summer paving season as we move into the third quarter, we now expect Adjusted EBITDA for the full-year 2021 to fall within the range of $280$300 million,” said Fogarty.

Polymer Segment


Three Months Ended June 30,


Six Months Ended June 30,


2021


2020


2021


2020


(In thousands, except percentages)

Performance Products

$

177,154



$

118,339



$

305,099



$

237,099


Specialty Polymers

101,069



76,305



197,808



154,222


Cariflex(1)







36,930


Isoprene Rubber(1)

(26)



8,744



15,930



15,603


Other

249



464



759



378


Polymer Segment Revenue

$

278,446



$

203,852



$

519,596



$

444,232










Operating income

$

41,968



$

16,762



$

81,827



$

34,687


Adjusted EBITDA (non-GAAP)(1)(2)

$

26,321



$

53,845



$

63,786



$

105,014


Adjusted EBITDA margin (non-GAAP)(3)

9.5

%


26.4

%


12.3

%


23.6

%

________________________________________

(1)

Our Cariflex revenue includes sales through March 6, 2020. We continue to sell Isoprene Rubber to Daelim Industrial Co, Ltd. (“Daelim”) under the Isoprene Rubber Supply Agreement (“IRSA”). Sales under the IRSA are transacted at cost and include the amortization of non-cash deferred income of $3.9 million for the three months ended June 30 2020, and $7.6 million and $7.2 million for the six months ended June 30, 2021 and 2020, respectively, which represents revenue deferred until the products are sold under the IRSA.

(2)

See non-GAAP reconciliations included in the accompanying financial tables for the reconciliation of each non-GAAP measure to its most directly comparable GAAP measure.

(3)

Defined as Adjusted EBITDA as a percentage of revenue. Adjusted EBITDA margin reflects approximately 600 and 380 basis points reduction for costs associated with the Berre turnaround for the three and six months ended June 30, 2021, respectively.

Q2 2021 VERSUS Q2 2020 RESULTS

Revenue for the Polymer segment was $278.4 million for the three months ended June 30, 2021 compared to $203.9 million for the three months ended June 30, 2020. The increase was driven by higher average sales prices implemented in response to significantly higher raw material costs, as well as demand recovery versus the second quarter of 2020, which was impacted by COVID-19, driving higher sales volumes in our Specialty Polymers and Performance Products business lines. This was partially offset by a decrease in Isoprene Rubber sales volumes due to the timing of production, which will occur in the second half of 2021. The positive effect from changes in currency exchange rates between the periods was $14.0 million.

Polymer Segment Sales Volume % Change

Three Months Ended June 30, 2021

Performance Products

12.6

%

Specialty Polymers

14.6

%

Isoprene Rubber

(100.0)

%

Total

10.9

%

Sales volumes of 83.8 kilotons for the three months ended June 30, 2021 increased 10.9% compared to the three months ended June 30, 2020. Specialty Polymers sales volumes increased 14.6% driven by strong post-COVID-19 demand recovery across all regions, particularly in consumer durable and automotive applications in North America and Europe. Performance Products sales volumes increased 12.6%, primarily driven by improved sales into paving and roofing applications largely in North America, and higher sales into adhesive applications associated with continued demand strength.

For the three months ended June 30, 2021, the Polymer segment generated Adjusted EBITDA (non-GAAP) of $26.3 million compared to $53.8 million for the three months ended June 30, 2020. The lower Adjusted EBITDA is a result of $16.9 million associated with a significant statutory turnaround at our Berre, France, location, lower relative fixed cost absorption compared to the second quarter of 2020 associated with a strategic inventory build, and timing associated with Isoprene Rubber production. The inflation in raw material and transportation costs, which we continue to address through increases in selling prices consistent with our Price Right strategy, is partially offset by the contribution from higher sales volumes. The negative effect from changes in currency exchange rates between the periods was $0.1 million. See a reconciliation of GAAP operating income to non-GAAP Adjusted EBITDA below.

Chemical Segment


Three Months Ended June 30,


Six Months Ended June 30,


2021


2020


2021


2020


(In thousands, except percentages)

Adhesives

$

74,330



$

60,993



$

146,056



$

125,888


Performance Chemicals

126,164



84,848



237,339



195,590


Tires

14,683



5,986



27,903



17,238


Chemical Segment Revenue

$

215,177



$

151,827



$

411,298



$

338,716










Operating income (loss)

$

22,039



$

(3,931)



$

35,553



$

6,385


Adjusted EBITDA (non-GAAP)(1)

$

35,499



$

15,691



$

65,753



$

42,401


Adjusted EBITDA margin (non-GAAP)(2)

16.5

%


10.3

%


16.0

%


12.5

%

____________________________________

(1)

See non-GAAP reconciliations included in the accompanying financial tables for the reconciliation of each non-GAAP measure to its most directly comparable GAAP measure.

(2)

Defined as Adjusted EBITDA as a percentage of revenue.

Q2 2021 VERSUS Q2 2020 RESULTS

Revenue for the Chemical segment was $215.2 million for the three months ended June 30, 2021 compared to $151.8 million for the three months ended June 30, 2020. The increase in revenue was attributable to higher sales volume driven by the demand recovery from COVID-19 and higher average sales prices from continued favorable market fundamentals. The positive effect from changes in currency exchange rates between the periods was $9.6 million.

Chemical Segment Sales Volume % Change

Three Months Ended June 30, 2021

Adhesives

17.4

%

Performance Chemicals

37.5

%

Tires(1)

108.0

%

Total

32.3

%

____________________________________

(1)

Tires volumes are less than 5% of total Chemical segment volumes.

Sales volumes were 115.3 kilotons for the three months ended June 30, 2021, an increase of 28.1 kilotons, or 32.3%, related to higher TOFA and TOR and related derivatives sales, due to a significant recovery of demand across most end use markets compared to the second quarter of 2020, which was adversely affected by COVID-19, as well as increases in raw material sales volume.

For the three months ended June 30, 2021, the Chemical segment generated $35.5 million of Adjusted EBITDA (non-GAAP) compared to $15.7 million for the three months ended June 30, 2020. The increase in Adjusted EBITDA was primarily driven by the significant recovery in demand compared to the second quarter of 2020, which was adversely affected by COVID-19, and favorable market fundamentals, resulting in higher sales volumes and expanded unit margins across all product groups, partially offset by higher average raw material and logistics costs. The negative effect from changes in currency exchange rates between the periods was $0.1 million. See a reconciliation of GAAP operating income to non-GAAP Adjusted EBITDA below.

CASH FLOW AND CAPITAL STRUCTURE

During the second quarter of 2021, we reduced consolidated debt by $14.1 million and consolidated net debt by $11.5 million, including the unfavorable effect of foreign currency of $6.3 million. For the first half of 2021, we reduced our consolidated debt by $21.1 million and increased our consolidated net debt by $6.6 million, including the favorable effect of foreign currency of $13.9 million. The first half of 2021 increase in our consolidated net debt was driven primarily by increases in working capital, including the seasonal inventory build for the paving and roofing season and the impacts of higher raw material costs. Further, we had approximately $291.2 million of available liquidity, comprised of $58.1 million of cash on hand and a remaining available borrowing base of $233.1 million on our ABL Facility as of June 30, 2021.

Summary of principal amounts for indebtedness and a reconciliation of Kraton debt to consolidated net debt (non-GAAP) and consolidated net debt, excluding the effect of foreign currency (non-GAAP):


June 30, 2021


March 31, 2021


December 31, 2020


(In thousands)

Kraton debt

$

848,704



$

859,334



$

860,360


KFPC loans(1)(2)

80,255



83,771



89,733


Consolidated debt

928,959



943,105



950,093








Kraton cash

56,371



59,220



82,804


KFPC cash(1)(3)

1,761



1,561



3,097


Consolidated cash

58,132



60,781



85,901








Consolidated net debt

$

870,827



$

882,324



$

864,192








Effect of foreign currency on consolidated net debt

13,918



20,186




Consolidated net debt, excluding effect of foreign currency

$

884,745



$

902,510




_____________________________________

(1)

Kraton Formosa Polymers Corporation (“KFPC”) joint venture, located in Mailiao, Taiwan, which we own a 50% stake in and consolidate within our financial statements.

(2)

KFPC executed the KFPC Revolving Facilities to provide funding for working capital requirements and/or general corporate purposes. These are in addition to the 5.5 billion NTD KFPC Loan Agreement.

(3)

Cash at our KFPC joint venture.

OUTLOOK

During the second quarter of 2021, we saw a continuation of favorable global demand fundamentals across the majority of our end markets. While we remain mindful of the potential for COVID-19 to adversely impact global demand in the second half of 2021, we currently expect demand trends to remain positive. We expect further realization of price increases over the course of the third and fourth quarters, and therefore, we expect these price increases to contribute to unit margin improvement for both our Polymer and Chemical segments, compared to the first half of 2021.

As a result of the successful completion of the significant statutory turnaround at our Berre, France, site, during the second quarter, with costs known, and given our current expectations for the 2021 paving and roofing season, as well as for overall demand trends as we move into the third quarter of the year, we now expect Adjusted EBITDA for the full year to fall in the range of $280$300 million, inclusive of the $19.7 million of full year costs associated with the Berre, France, turnaround.

We have not reconciled Adjusted EBITDA guidance to net income (loss) because we do not provide guidance for net income (loss) or for items that we do not consider indicative of our on-going performance, including, but not limited to, transaction and restructuring costs, costs associated with extinguishment of debt, and the spread between FIFO and ECRC, as certain of these items are out of our control and/or cannot be reasonably predicted. Accordingly, a reconciliation of the Adjusted EBITDA guidance to the corresponding U.S. GAAP measure is not available without unreasonable effort.

USE OF NON-GAAP FINANCIAL MEASURES

This press release includes the use of both GAAP and non-GAAP financial measures. The non-GAAP financial measures used are EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Diluted Earnings per Share, Consolidated Net Debt (including as adjusted to exclude the effect of foreign currency), Adjusted Gross Profit, and Adjusted Gross Profit Per Ton. Tables included in this earnings release reconcile each of these non-GAAP financial measures with the most directly comparable U.S. GAAP financial measure. For additional information on the impact of the spread between first-in-first-out (“FIFO”) and Estimated Current Replacement Cost (“ECRC”), see Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

We consider these non-GAAP financial measures to be important supplemental measures of our performance and believe they are frequently used by investors, securities analysts, and other interested parties in the evaluation of our performance including period-to-period comparisons and/or that of other companies in our industry. Further, management uses these measures to evaluate operating performance, and our incentive compensation plan based incentive compensation payments on our Adjusted EBITDA performance and attainment of net debt reduction, along with other factors. These non-GAAP financial measures have limitations as analytical tools and in some cases can vary substantially from other measures of our performance. You should not consider them in isolation, or as a substitute for analysis of our results under U.S. GAAP in the United States.

EBITDA, Adjusted EBITDA, Adjusted EBITDA excluding Cariflex, and Adjusted EBITDA Margin: For our consolidated results, EBITDA represents net income (loss) before interest, taxes, depreciation, and amortization. For each reporting segment, EBITDA represents operating income (loss) before depreciation and amortization, and earnings of unconsolidated joint ventures. Among other limitations EBITDA does not: reflect the significant interest expense on our debt or reflect the significant depreciation and amortization expense associated with our long-lived assets; and EBITDA included herein should not be used for purposes of assessing compliance or non-compliance with financial covenants under our debt agreements, which can vary from the terms used herein. The calculation of EBITDA in our debt agreements includes adjustments, such as extraordinary, non-recurring or one-time charges, proforma cost savings, certain non-cash items, turnaround costs, and other items included in the definition of EBITDA in the debt agreements. Other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure. As an analytical tool, Adjusted EBITDA is subject to all the limitations applicable to EBITDA. We prepare Adjusted EBITDA by eliminating from EBITDA the impact of a number of items we do not consider indicative of our on-going performance, including the spread between FIFO and ECRC, but you should be aware that in the future we may incur expenses similar to the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. In addition, due to volatility in raw material prices, Adjusted EBITDA may, and often does, vary substantially from EBITDA and other performance measures, including net income calculated in accordance with U.S. GAAP. We prepare Adjusted EBITDA excluding Cariflex by eliminating from Adjusted EBITDA Cariflex sales, cost of sales, and direct specific fixed costs incurred from January 1, 2020 through March 6, 2020. We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of revenue (for each reporting segment or on a consolidated basis, if applicable). Because of these and other limitations, EBITDA and Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business.

Adjusted Gross Profit, Adjusted Gross Profit Per Ton, and Adjusted Gross Profit Per Ton, excluding the Berre turnaround: We define Adjusted Gross Profit Per Ton as Adjusted Gross Profit divided by total sales volume (for each reporting segment or on a consolidated basis, as applicable). We further calculate Adjusted Gross Profit Per Ton, excluding the Berre turnaround, by deducting out of gross profit costs associated with the Berre turnaround. We define Adjusted Gross Profit as gross profit excluding certain charges and expenses. Adjusted Gross Profit is limited because it often varies substantially from gross profit calculated in accordance with U.S. GAAP due to volatility in raw material prices.

Adjusted Diluted Earnings Per Share: We prepare Adjusted Diluted Earnings per Share by eliminating from Diluted Earnings per Share the impact of a number of non-recurring items we do not consider indicative of our on-going performance, including the spread between FIFO and ECRC.

Consolidated Net Debt and Consolidated Net Debt, excluding the effect of foreign currency: We define Consolidated Net Debt as total consolidated debt (including debt of KFPC) less consolidated cash and cash equivalents. Management uses Consolidated Net Debt to determine our outstanding debt obligations that would not readily be satisfied by its cash and cash equivalents on hand. Management believes that using Consolidated Net Debt is useful to investors in determining our leverage since we could choose to use cash and cash equivalents to retire debt. We also present Consolidated Net Debt, as adjusted for foreign exchange impact accounts for the foreign exchange effect on our foreign currency denominated debt agreements.

CONFERENCE CALL AND WEBCAST INFORMATION

Kraton has scheduled a conference call on Thursday, July 29, 2021 at 9:00 a.m. (Eastern Time) to discuss second quarter 2021 financial results. Kraton invites you to listen to the conference call, which will be broadcast live over the internet and will be available at www.kraton.com, by selecting the “Investor Relations” link at the top of the home page and then selecting “Events” from the Investor Relations menu on the Investor Relations page.

You may also listen to the conference call by telephone by contacting the conference call operator 5 to 10 minutes prior to the scheduled start time and asking for the Kraton Conference Call – Passcode: 8680118. U.S./Canada dial-in 800-857-6511. International dial-in #: 210-839-8886.

For those unable to listen to the live call, a replay will be available beginning at approximately 11:00 a.m. (Eastern Time) on July 29, 2021 through 1:59 a.m. (Eastern Time) on August 12, 2021. To hear a replay of the call over the Internet, access Kraton’s Website at www.kraton.com by selecting the “Investor Relations” link at the top of the home page and then selecting “Events” from the Investor Relations menu on the Investor Relations page. To hear a telephonic replay of the call, dial 800-391-9846 (toll free).

ABOUT KRATON CORPORATION

Kraton Corporation (NYSE: KRA) is a leading global sustainable producer of specialty polymers and high-value biobased products derived from pine wood pulping co-products. Kraton’s polymers are used in a wide range of applications, including adhesives, coatings, consumer and personal care products, sealants and lubricants, and medical, packaging, automotive, paving and roofing applications. As the largest global provider in the pine chemicals industry, the company’s pine-based specialty products are sold into adhesives, roads and construction, and tire markets, and it produces and sells a broad range of performance chemicals into markets that include fuel additives, oilfield chemicals, coatings, metalworking fluids and lubricants, inks, flavors and fragrances, and mining. Kraton offers its products to a diverse customer base in numerous countries worldwide.

Kraton, the Kraton logo and design, REvolution, and CirKular+ are all trademarks of Kraton Polymers LLC or its affiliates.

FORWARD LOOKING STATEMENTS

This press release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that reflect our plans, beliefs, expectations, and current views with respect to, among other things, future events and financial performance. Forward-looking statements are often characterized by the use of words such as “outlook,” “believes,” “target,” “estimates,” “reflect,” “remain,” “expects,” “projects,” “may,” “intends,” “plans,” “on track”, “forsees”, “future,” or “anticipates,” or by discussions of strategy, plans, or intentions. The statements in this press release that are not historical statements, including, but not limited to, statements regarding our expectations as to the continued impact of the COVID-19 pandemic (including governmental and regulatory actions) on demand for our products, on the national and global economy and on our customers, suppliers, employees, business and results of operations, our expectations for our business demand, margin improvements, and growth in 2021, market factors and transportation and logistics trends, our 2021 Adjusted EBITDA, the timing of the incurrence of costs associated with our Berre, France, turnaround, the impact of our diversified portfolio and broad geographic exposure, the impact of and expected realization of announced and future price increases, continued momentum for our REvolution and CirKular+ platforms, and the information and the matters described under the caption “Outlook,” are forward-looking statements.

All forward-looking statements in this press release are made based on management’s current expectations and estimates, which involve known and unknown risks, uncertainties, assumptions and other important factors that could cause actual results to differ materially from those expressed in forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those expressed in forward-looking statements is contained in our most recently filed Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and in other filings made by us with the U.S. Securities and Exchange Commission (the “SEC”), and include, but are not limited to, risks related to: our ability to repay or re-finance indebtedness and risk associated with incurring additional indebtedness; our reliance on third parties for the provision of significant operating and other services; the impact of extraordinary events, including health epidemics or pandemics such as COVID-19 (including governmental and regulatory actions relating thereto), natural disasters and other weather conditions and terrorist attacks; conditions in the global economy and capital markets; fluctuations in raw material costs; limitations in the availability of raw materials; competition in our end-use markets; fluctuations in global tariffs and energy, transportation, and logistics costs; the potential for charges related to our goodwill or other assets; and other factors of which we are currently unaware or deem immaterial. Many of these risks and uncertainties are currently amplified by and will continue to be amplified by, or in the future may be amplified by, the COVID-19 pandemic. To the extent any inconsistency or conflict exists between the information included in this press release and the information included in our prior reports and other filings with the SEC, the information contained in this press release updates and supersede such information. Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements contained herein speak only as of the date of this press release, and we assume no obligation to publicly update or revise such forward-looking statements in light of new information or future events.

KRATON CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)



Three Months Ended June 30,


Six Months Ended June 30,


2021


2020


2021


2020

Revenue

$

493,623



$

355,679



$

930,894



$

782,948


Cost of goods sold

354,098



262,635



655,336



570,704


Gross profit

139,525



93,044



275,558



212,244


Operating expenses:








Research and development

9,723



9,912



19,243



20,704


Selling, general, and administrative

34,037



38,402



75,316



87,460


Depreciation and amortization

31,716



31,342



63,273



62,515


Loss on disposal of fixed assets

42



557



346



493


Operating income

64,007



12,831



117,380



41,072


Other income (expense)

(2,493)



251



(1,685)



578


Disposition and exit of business activities



(25)





175,189


Loss on extinguishment of debt



(141)





(14,095)


Earnings of unconsolidated joint venture

135



128



255



229


Interest expense, net

(10,417)



(13,466)



(21,364)



(30,927)


Income (loss) before income taxes

51,232



(422)



94,586



172,046


Income tax benefit (expense)

(12,881)



(6,659)



(21,642)



29,893


Consolidated net income (loss)

38,351



(7,081)



72,944



201,939


Net income attributable to noncontrolling interest

(1,940)



(887)



(3,304)



(1,821)


Net income (loss) attributable to Kraton

$

36,411



$

(7,968)



$

69,640



$

200,118


Earnings (loss) per common share:








Basic

$

1.13



$

(0.25)



$

2.17



$

6.29


Diluted

$

1.11



$

(0.25)



$

2.14



$

6.20


Weighted average common shares outstanding:








Basic

32,146



31,782



32,037



31,698


Diluted

32,679



31,782



32,569



32,133


KRATON CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value) 



June 30, 2021


December 31, 2020


(unaudited)



ASSETS




Current assets:




Cash and cash equivalents

$

58,132



$

85,901


Receivables, net of allowance for doubtful accounts of $765 and $598

257,567



180,258


Inventories of products, net

364,329



318,885


Inventories of materials and supplies, net

34,658



34,164


Prepaid expenses

16,202



11,844


Other current assets

17,150



15,338


Total current assets

748,038



646,390


Property, plant, and equipment, net of accumulated depreciation of $763,649 and $732,279

937,544



942,703


Goodwill

374,089



375,061


Intangible assets, net of accumulated amortization of $350,031 and $330,070

276,166



294,734


Investment in unconsolidated joint venture

12,201



12,723


Deferred income taxes

79,531



83,534


Long-term operating lease assets, net

86,274



84,042


Other long-term assets

21,019



21,770


Total assets

$

2,534,862



$

2,460,957


LIABILITIES AND EQUITY




Current liabilities:




Current portion of long-term debt

$

80,974



$

72,347


Accounts payable-trade

211,571



176,229


Other payables and accruals

166,981



167,364


Due to related party

16,086



17,147


Total current liabilities

475,612



433,087


Long-term debt, net of current portion

836,804



865,516


Deferred income taxes

128,191



125,559


Long-term operating lease liabilities

70,748



67,898


Deferred income

140,375



151,329


Other long-term liabilities

157,217



168,566


Total liabilities

1,808,947



1,811,955






Equity:




Kraton stockholders’ equity:




Preferred stock, $0.01 par value; 100,000 shares authorized; none issued




Common stock, $0.01 par value; 500,000 shares authorized; 32,148 shares issued
and outstanding at June 30, 2021; 31,873 shares issued and outstanding at December
31, 2020

321



319


Additional paid in capital

407,189



401,445


Retained earnings

309,038



240,464


Accumulated other comprehensive loss

(38,947)



(37,865)


Total Kraton stockholders’ equity

677,601



604,363


Noncontrolling interest

48,314



44,639


Total equity

725,915



649,002


Total liabilities and equity

$

2,534,862



$

2,460,957


KRATON CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


Six Months Ended June 30,


2021


2020

CASH FLOWS FROM OPERATING ACTIVITIES




Consolidated net income

$

72,944



$

201,939


Adjustments to reconcile consolidated net income to net cash provided by operating activities:




Depreciation and amortization

63,273



62,515


Lease amortization

12,082



12,428


Amortization of debt original issue discount



148


Amortization of debt issuance costs

1,240



1,724


Amortization of deferred income

(8,103)



(7,799)


Loss on disposal of property, plant, and equipment

346



108


Loss on extinguishment of debt



14,095


Earnings from unconsolidated joint venture, net of dividends received

211



279


Deferred income tax (benefit) provision

2,693



(66,441)


Release of uncertain tax positions



(3,316)


Gain on disposition and exit of business activities



(175,189)


Share-based compensation

5,519



4,745


Decrease (increase) in:




Accounts receivable

(77,466)



1,859


Inventories of products, materials, and supplies

(50,008)



(36,024)


Other assets

(6,092)



(4,366)


Increase (decrease) in:




Accounts payable-trade

40,609



(14,765)


Other payables and accruals

(14,703)



30,767


Other long-term liabilities

(9,589)



(2,824)


Due to related party

143



(888)


Net cash provided by operating activities

33,099



18,995


CASH FLOWS FROM INVESTING ACTIVITIES




Kraton purchase of property, plant, and equipment

(43,012)



(39,122)


KFPC purchase of property, plant, and equipment

(345)



(3,224)


Purchase of software and other intangibles

(3,938)



(3,456)


Cash proceeds (payments) from disposition and exit of business activities

(876)



510,500


Net cash provided by (used in) investing activities

(48,171)



464,698


CASH FLOWS FROM FINANCING ACTIVITIES




Proceeds from debt

43,000



77,000


Repayments of debt

(43,000)



(437,174)


KFPC proceeds from debt

32,004



49,967


KFPC repayments of debt

(42,157)



(59,769)


Finance lease payments

(616)



(88)


Purchase of treasury stock

(4,931)



(744)


Proceeds from the exercise of stock options

4,092




Settlement of interest rate swap



(1,295)


Debt issuance costs



(1,234)


Net cash used in financing activities

(11,608)



(373,337)


Effect of exchange rate differences on cash

(1,089)



(8,024)


Net increase (decrease) in cash and cash equivalents

(27,769)



102,332


Cash and cash equivalents, beginning of period

85,901



35,033


Cash and cash equivalents, end of period

$

58,132



$

137,365


KRATON CORPORATION

RECONCILIATION OF NET INCOME ATTRIBUTABLE TO KRATON AND OPERATING INCOME TO NON-
GAAP FINANCIAL MEASURES

(Unaudited)

(In thousands)



Three Months Ended June 30, 2021


Three Months Ended June 30, 2020


Polymer


Chemical


Total


Polymer


Chemical


Total

Net income (loss) attributable to Kraton





$

36,411







$

(7,968)


Net income attributable to noncontrolling interest





1,940







887


Consolidated net income (loss)





38,351







(7,081)


Add (deduct):












Income tax expense





12,881







6,659


Interest expense, net





10,417







13,466


Earnings of unconsolidated joint venture





(135)







(128)


Loss on extinguishment of debt











141


Other (income) expense





2,493







(251)


Disposition and exit of business activities











25


Operating income (loss)

$

41,968



$

22,039



64,007



$

16,762



$

(3,931)



12,831


Add (deduct):












Depreciation and amortization

12,776



18,940



31,716



12,948



18,394



31,342


Disposition and exit of business activities







(25)





(25)


Other income (expense)

(3,015)



522



(2,493)



(16)



267



251


Loss on extinguishment of debt







(141)





(141)


Earnings of unconsolidated joint venture

135





135



128





128


EBITDA (a)

51,864



41,501



93,365



29,656



14,730



44,386


Add (deduct):












Transaction, acquisition related costs,
restructuring, and other costs (b)

(103)



780



677



1,551



468



2,019


Disposition and exit of business activities (c)







25





25


Loss on extinguishment of debt







141





141


Non-cash compensation expense

2,595





2,595



1,897





1,897


Spread between FIFO and ECRC

(28,035)



(6,782)



(34,817)



20,575



493



21,068


Adjusted EBITDA

$

26,321



$

35,499



$

61,820



$

53,845



$

15,691



$

69,536


_____________________________________________

(a) 

Included in EBITDA are Isoprene Rubber sales to Daelim under the IRSA. Sales under the IRSA are transacted at cost and include the amortization of non-cash deferred income of $3.9 million for the three months ended June 30, 2020, which represents revenue deferred until the products are sold under the IRSA.

(b) 

Charges related to the evaluation of acquisition transactions, severance expenses, and other restructuring related charges.

(c) 

Reflects adjustment to assets disposed of in the Cariflex transaction.


Six Months Ended June 30, 2021


Six Months Ended June 30, 2020


Polymer


Chemical


Total


Polymer


Chemical


Total

Net income attributable to Kraton





$

69,640







$

200,118


Net income attributable to noncontrolling interest





3,304







1,821


Consolidated net income





72,944







201,939


Add (deduct):












Income tax (benefit) expense





21,642







(29,893)


Interest expense, net





21,364







30,927


Earnings of unconsolidated joint venture





(255)







(229)


Loss on extinguishment of debt











14,095


Other (income) expense





1,685







(578)


Disposition and exit of business activities











(175,189)


Operating income

$

81,827



$

35,553



117,380



$

34,687



$

6,385



41,072


Add (deduct):












Depreciation and amortization

25,600



37,673



63,273



26,295



36,220



62,515


Disposition and exit of business activities







175,189





175,189


Other income (expense)

(2,733)



1,048



(1,685)



39



539



578


Loss on extinguishment of debt







(14,095)





(14,095)


Earnings of unconsolidated joint venture

255





255



229





229


EBITDA (a)

104,949



74,274



179,223



222,344



43,144



265,488


Add (deduct):












Transaction, acquisition related costs,
restructuring, and other costs (b)

2,228



2,752



4,980



11,699



1,230



12,929


Disposition and exit of business activities







(175,189)





(175,189)


Loss on extinguishment of debt







14,095





14,095


Non-cash compensation expense

5,519





5,519



4,745





4,745


Spread between FIFO and ECRC

(48,910)



(11,273)



(60,183)



27,320



(1,973)



25,347


Adjusted EBITDA

$

63,786



$

65,753



$

129,539



$

105,014



$

42,401



$

147,415


Adjusted EBITDA excluding Cariflex

$

63,786



$

65,753



$

129,539



$

94,670



$

42,401



$

137,071


______________________________________

(a)

Included in EBITDA are Isoprene Rubber sales to Daelim under the IRSA. Sales under the IRSA are transacted at cost and include the amortization of non-cash deferred income of $7.6 million and $7.2 million for the six months ended June 30, 2021 and 2020, respectively, which represents revenue deferred until the products are sold under the IRSA.

(b)

Charges related to the evaluation of acquisition transactions, severance expenses, and other restructuring related charges.

KRATON CORPORATION

RECONCILIATION OF DILUTED EARNINGS PER SHARE TO ADJUSTED DILUTED EARNINGS PER SHARE

(Unaudited)



Three Months Ended June 30,


Six Months Ended June 30,


2021


2020


2021


2020

Diluted Earnings (Loss) Per Share

$

1.11



$

(0.25)



$

2.14



$

6.20


Transaction, acquisition related costs, restructuring, and
other costs (a)

0.02



0.05



0.12



0.31


Disposition and exit of business activities



0.02





(4.94)


Loss on extinguishment of debt







0.34


Tax restructuring



(0.09)





(2.03)


Spread between FIFO and ECRC

(0.81)



0.57



(1.40)



0.69


Adjusted Diluted Earnings Per Share (non-GAAP)

$

0.32



$

0.30



$

0.86



$

0.57


____________________________________________

(a)

Charges related to the evaluation of acquisition transactions, severance expenses, and other restructuring related charges.

POLYMER SEGMENT RECONCILIATION OF GROSS PROFIT TO NON-GAAP FINANCIAL MEASURES

(Unaudited)

(In thousands)



Three Months Ended June 30,


Six Months Ended June 30,


2021


2020


2021


2020

Gross profit

$

79,436



$

57,845



$

161,421



$

126,576










Add (deduct):








Transaction, acquisition related costs, restructuring, and
other costs







387


Non-cash compensation expense

130



114



276



285


Spread between FIFO and ECRC

(28,035)



20,575



(48,910)



27,320


Adjusted gross profit (non-GAAP)

$

51,531



$

78,534



$

112,787



$

154,568










Sales volume (kilotons)

83.8



75.5



158.5



146.3


Adjusted gross profit per ton (non-GAAP)(a)

$

615



$

1,040



$

711



$

1,056


______________________________________

(a)

Adjusted gross profit per ton for the three months ended June 30, 2021, excluding $16.9 million of costs associated with the Berre turnaround ($202), would have been $817 and for the six months ended June 30, 2021, excluding $19.7 million of costs associated with the Berre turnaround ($125), would have been $836.

For further information:
H. Gene Shiels
Director of Investor Relations
281 504-4886

SOURCE Kraton Corporation

Related Links

http://www.kraton.com

PlatoAi. Web3 Reimagined. Data Intelligence Amplified.
Click here to access.

Source: https://www.prnewswire.com:443/news-releases/kraton-corporation-announces-second-quarter-2021-results-301343584.html

Continue Reading

Energy

Earthstone Energy, Inc. Announces Second Quarter 2021 Conference Call for Thursday, August 5, 2021 at 12:00 p.m. Eastern

Published

on

THE WOODLANDS, Texas, July 28, 2021 /PRNewswire/ — Earthstone Energy, Inc. (NYSE: ESTE) (“Earthstone” or the “Company”), announced today that its management team will host a conference call on Thursday, August 5, 2021 at 12:00 p.m. Eastern (11:00 a.m. Central) to discuss the Company’s financial results for the second quarter 2021 and its outlook for the remainder of 2021.  Prepared remarks by Robert J. Anderson, President and Chief Executive Officer, Mark Lumpkin, Jr., Executive Vice President and Chief Financial Officer and Steven C. Collins, Executive Vice President of Operations, will be followed by a question and answer session.  The Company intends to file its earnings press release for the period ended June 30, 2021, prior to the conference call.

Investors and analysts are invited to participate in the call by dialing 877-407-6184 for domestic calls or 201-389-0877 for international calls, in both cases asking for the Earthstone conference call.  A webcast will also be available through the Company website (www.earthstoneenergy.com).  Please select “Events & Presentations” under the “Investors” section of the Company’s website and log on at least 10 minutes in advance to register.

A replay of the call and webcast will be available on the Company’s website and by telephone until 12:00 p.m. Eastern (11:00 a.m. Central), Thursday, August 19, 2021.  The number for the replay is 877-660-6853 for domestic calls or 201-612-7415 for international calls, using Replay ID: 13722095.

About Earthstone Energy, Inc.

Earthstone Energy, Inc. is a growth-oriented independent oil and gas company engaged in the acquisition, development and operation of oil and natural gas properties.  The Company’s primary assets are located in the Midland Basin of west Texas and the Eagle Ford Trend of south Texas.  Earthstone is traded on NYSE under the symbol “ESTE.”  For more information, visit the Company’s website at www.earthstoneenergy.com.

Contact

Mark Lumpkin, Jr.
Executive Vice President – Chief Financial Officer
Earthstone Energy, Inc.
1400 Woodloch Forest Drive, Suite 300
The Woodlands, TX 77380
281-298-4246
[email protected]

Scott Thelander
Vice President of Finance
Earthstone Energy, Inc.
1400 Woodloch Forest Drive, Suite 300
The Woodlands, TX 77380
281-298-4246
[email protected]

SOURCE Earthstone Energy, Inc.

Related Links

http://www.earthstoneenergy.com

PlatoAi. Web3 Reimagined. Data Intelligence Amplified.
Click here to access.

Source: https://www.prnewswire.com:443/news-releases/earthstone-energy-inc-announces-second-quarter-2021-conference-call-for-thursday-august-5-2021-at-1200-pm-eastern-301343636.html

Continue Reading

Energy

Antero Resources Reports Second Quarter 2021 Financial and Operational Results

Published

on

DENVER, July 28, 2021 /PRNewswire/ — Antero Resources Corporation (NYSE: AR) (“Antero Resources”, “Antero”, or the “Company”) today announced its second quarter 2021 financial and operational results.  The relevant consolidated financial statements are included in Antero Resource’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021. 

Second Quarter 2021 Highlights Include:

  • Net production averaged 3,324 MMcfe/d, including 173,000 Bbl/d of liquids
  • Realized natural gas equivalent price averaged $3.78 per Mcfe, a $0.95 per Mcfe premium to NYMEX pricing
    • Realized C3+ NGL prices averaged $40.32 per barrel, or 61% of WTI, a 159% increase from the year ago period
  • Net loss was $523 million, which included a $757 million unrealized hedging loss; Adjusted Net Income was $42 million (Non-GAAP)
  • Adjusted EBITDAX was $319 million (Non-GAAP); net cash provided by operating activities was $309 million
  • Free Cash Flow was $105 million (Non-GAAP)
  • Net Debt at quarter end was $2.4 billion, a $158 million reduction from March 31, 2021 and a $591 million reduction from year end 2020 (Non-GAAP)
  • Net Debt to last twelve months Adjusted EBITDAX declined to 1.7x
  • Credit facility was undrawn and liquidity was $1.9 billion as of June 30, 2021
  • Increased full year 2021 natural gas realization guidance by $0.05 per Mcf to a premium to NYMEX of $0.15 to $0.25 per Mcf
  • Reduced full year 2021 net marketing expense guidance by 22% to a range of $0.06 to $0.08 per Mcfe
  • Announced pilot with Project Canary to certify the Company’s Responsibly Sourced Gas (RSG)
  • Established company records for completion stages per day for the quarter and on a pad at 9.8 and 10.8 stages per day, respectively
  • Drilled the Company’s longest lateral to date in the Marcellus with a lateral length of 18,858 feet

Paul Rady, Chairman, President and Chief Executive Officer of Antero Resources commented, “Today’s macro backdrop highlights Antero’s core strengths, which include liquids rich development and a firm transportation portfolio that delivers natural gas and NGL realizations at a premium to benchmark prices.  Driven by strong international demand and flat U.S. supply, C3+ NGL prices during the quarter were nearly triple the year ago period.  In addition, at a time when tight takeaway capacity in the Appalachian Basin is resulting in wider differentials, our firm transportation enabled us to realize a pre-hedge natural gas price at an $0.18 per Mcf premium to NYMEX.  The result of these competitive advantages was Free Cash Flow of $105 million during the quarter.  Based on today’s strip prices, we are targeting over $750 million in Free Cash Flow in 2021, which we intend to use for additional debt reduction.”

Mr. Rady continued, “We are committed to maintaining our leadership position in ESG.  Our pilot with Project Canary is expected to certify a portion of the Company’s assets on the quality of the engineering design we utilize and the operational practices that we employ, while underscoring the high environmental standards by which Antero’s natural gas is produced.  Natural gas is key to the energy transition and will be critical in delivering a low carbon, affordable fuel to an expanding global economy.”

Michael Kennedy, Chief Financial Officer and Senior Vice President of Finance of Antero Resources said, “Since the end of 2020, we have reduced absolute debt by nearly $600 million, resulting in a leverage profile of 1.7x.  Based on today’s NGL and natural gas future strips, we expect to achieve our goal of absolute debt under $2 billion in early 2022.  Further, based on today’s strip prices, we expect Free Cash Flow in 2022 to be higher than in 2021, driving leverage toward 1.0x by year end 2022.   As we approach our balance sheet objectives, we will be opportunistic in further debt pay down and returning capital to our shareholders.”

For a discussion of the non-GAAP financial measures including Adjusted Net Income, Adjusted EBITDAX, Free Cash Flow and Net Debt please see “Non-GAAP Financial Measures.”

Guidance Update  

Antero increased guidance for its realized natural gas price to a premium to NYMEX of $0.15 to $0.25 per Mcf from a range of $0.10 to $0.20 per Mcf previously, reflecting a 33% increase at the midpoint. The increase was driven primarily by tighter differentials in the NYMEX related markets where Antero’s gas is sold. 

Net marketing expense guidance was reduced by 22% at the midpoint, reflecting higher third party marketing volumes and the mitigation of excess firm transportation expense year-to-date.

Cash production expense guidance was increased by 2% to a range of $2.23 to $2.28 per Mcfe reflecting higher fuel and ad valorem costs due to the increase in commodity prices. 

Antero increased its land capital budget by $22.5 million at the midpoint to reflect accelerated leasehold spend as the company continues to focus on organically expanding its core liquids rich inventory. 

An outage at the Sherwood processing facility occurred on June 30, 2021 and lasted four days, resulting in 10 Bcfe of deferred production.  The outage primarily impacted third quarter 2021 production volumes as the facility ramped back up over several days in early July.  This downtime is expected to result in full year 2021 production at the lower end of the 3.3 to 3.4 Bcfe guidance range.


Full Year 2021 –

Initial


Full Year 2021 –

Revised


Midpoint


Low


High


Low


High


Variance











Natural Gas Realized Price vs. NYMEX Henry Hub ($/Mcf)

$0.10


$0.20


$0.15


$0.25


33%

Net Marketing Expense ($/Mcfe)

$0.08


$0.10


$0.06


$0.08


(22%)

Cash Production Expense ($/Mcfe)

$2.18


$2.23


$2.23


$2.28


2%

Land Capital ($MM)

$45


$45


$65


$70


50%











Net impact from guidance changes (1)

 ($/Mcfe)


Cash Production Expense

($0.05)


Net Marketing Expense

$0.02


Natural Gas Realized Prices vs. NYMEX Henry Hub

$0.05


Net Impact 

$0.02




(1)

Assumes midpoint of revised guidance


Any 2021 projections not discussed in this release are unchanged from previously stated guidance.

Project Canary

Antero has entered into a pilot to certify multiple pads utilizing Project Canary’s TrustWell certification process.  Antero’s certification process is set to begin in the fourth quarter of 2021 and to be completed in the first quarter of 2022.  The TrustWell certification also aligns with Antero’s long-term goals to reduce methane leak loss rate by 50% to under 0.025%, reduce GHG intensity by 10% and to achieve Net Zero Scope 1 emissions by 2025.  

Debt Reduction

Antero reduced net debt by $158 million during the second quarter utilizing Free Cash Flow and the $51 million contingency earnout received from achieving volume thresholds related to the ORRI transaction.  In May, Antero used proceeds from a $600 million offering of senior notes due 2030 to redeem all of its senior notes due in 2023.  Following the offering, Antero’s nearest maturity is 2025.  Further, as of June 30, 2021, Antero has an undrawn credit facility. The company plans to continue to utilize Free Cash Flow to reduce debt, with the near-term goal of reducing debt to under $2.0 billion

Second Quarter 2021 Free Cash Flow

During the second quarter, Antero generated $105 million in Free Cash Flow.  Free Cash Flow before Changes in Working Capital was $77 million during the second quarter. 



Three Months Ended

June 30,




2020


2021


Net cash provided by operating activities


$

115,963



308,541


Less: Net cash used in investing activities



(262,927)



(179,903)


Less: Proceeds from asset sales





(2,351)


Less: Distributions to non-controlling interests in Martica





(21,329)


Free Cash Flow


$

(146,964)



104,958


Changes in Working Capital



78,382



(28,077)


Free Cash Flow before Changes in Working Capital


$

(68,582)



76,881




(1)

Working capital adjustments in 2021 include $21.4 million in changes in current assets and liabilities and $6.7 million in accounts payable and accrued liabilities for additions to property and equipment. See the cash flow statement in this release for details.

Second Quarter 2021 Financial Results

Net loss was $523 million, or $1.70 per diluted share, compared to a net loss of $463 million, or $1.73 per diluted share, in the prior year period.  The net loss was driven by a $757 million unrealized commodity derivative fair value loss primarily as a result of the rise in the natural gas futures strip prices during the quarter.  Adjusted Net Income (non-GAAP measure) was $42 million, or $0.13 per diluted share, compared to Adjusted Net Loss of $99 million, or $0.37 per diluted share, in the prior year period.

Adjusted EBITDAX was $319 million, a 71% increase compared to the prior year quarter, driven by higher realized natural gas and NGL prices. 

Net daily natural gas equivalent production in the second quarter averaged 3.3 Bcfe/d, including 173,000 Bbl/d of liquids, as detailed in the table below. 

Antero’s average realized natural gas price before hedging was $3.01 per Mcf, representing a 76% increase compared to the prior year period.  Despite Appalachian Basin differentials that widened significantly during the quarter, Antero realized an $0.18 per Mcf premium to the average NYMEX Henry Hub price by capitalizing on its premium firm transportation.  Widening differentials that were experienced by others were driven by increasing supply and insufficient spare pipeline capacity that Antero expects to continue into the future. 

The following table details the components of average net production and average realized prices for the three months ended June 30, 2021:



Three Months Ended June 30, 2021












Combined












Natural




Natural

Gas


Oil


C3+ NGLs


Ethane


Gas

Equivalent




(MMcf/d)


(Bbl/d)


(Bbl/d)


(Bbl/d)


(MMcfe/d)


Average Net Production



2,287



10,330



114,725



47,868



3,324


















































Combined
















Natural




Natural

Gas


Oil


C3+ NGLs


Ethane


Gas

Equivalent


Average Realized Prices


($/Mcf)


($/Bbl)


($/Bbl)


($/Bbl)


($/Mcfe)


Average realized prices before settled derivatives


$

3.01


$

55.22


$

40.32


$

9.97


$

3.78


NYMEX average price


$

2.83


$

66.09








$

2.83


Premium / (Differential) to NYMEX before settled derivatives


$

0.18


$

(10.87)








$

0.95



















Settled commodity derivatives


$

(0.10)


$

(3.17)


$

(4.37)


$


$

(0.23)


Average realized prices after settled derivatives


$

2.91


$

52.05


$

35.95


$

9.97


$

3.55


Premium/(Differential) to NYMEX after settled derivatives


$

0.08


$

(14.04)








$

0.72


Antero’s average realized C3+ NGL price before hedging was $40.32 per barrel, a 159% increase versus the prior year period.  Antero shipped 55% of its total C3+ NGL net production on Mariner East 2 for export and realized a $0.07 per gallon premium to Mont Belvieu pricing on these volumes at Marcus Hook, PA.  Antero sold the remaining 45% of C3+ NGL net production at a $0.10 per gallon discount to Mont Belvieu pricing at Hopedale, OH.  The resulting blended price on 114,725 Bbl/d of net C3+ NGL production was $40.32 per barrel, which was a $0.01 per gallon discount to Mont Belvieu pricing.  Antero expects to sell at least 50% of its C3+ NGL production in 2021 at Marcus Hook for export at a premium to Mont Belvieu.  The average realized price for C3+ NGLs is forecasted to be in the range of $0.00 to a $0.05 per gallon premium relative to Mont Belvieu pricing in 2021, unchanged from prior guidance.



Three Months Ended June 30, 2021












Pricing Point


Net C3+ NGL

Production

(Bbl/d)


% by

Destination


Premium (Discount)

To Mont Belvieu

($/Gal)

Propane / Butane exported on ME2

Marcus Hook, PA


63,089


55%


$0.07

Remaining C3+ NGL volume

Hopedale, OH


51,636


45%


($0.10)

Total C3+ NGLs/Blended Premium  




114,725


100%


($0.01)

All-in cash expense, which includes lease operating, gathering, compression, processing and transportation, production and ad valorem taxes was $2.30 per Mcfe in the second quarter, a 9% increase compared to $2.11 per Mcfe average during the second quarter of 2020.  The increase from a year ago was due primarily to an increase in gathering, processing and transportation expense driven by higher fuel costs as a result of higher natural gas prices and $12 million in incentive fee rebates earned in the second quarter of 2020 that were not earned in the second quarter of 2021.  Transportation expense increased $0.06 per Mcfe due to increased utilization on higher tariff pipelines into the Midwest and Gulf Coast, which in turn led to higher natural gas price realizations.  Lease operating expense was $0.07 per Mcfe in the second quarter, a decrease of $0.01 per Mcfe from the year ago period.  Production and ad valorem expense increased $0.05 per Mcfe from the year ago period due to higher commodity prices.

G&A expense was $0.09 per Mcfe, flat from the second quarter of 2020.  G&A expense is expected to be in the range of $0.08 to $0.10 per Mcfe for the remainder of 2021.

Net marketing loss was $0.11 per Mcfe in the second quarter, compared to a loss of $0.15 per Mcfe reported in the prior year period.  The improvement was due to higher third party marketing volumes. 

Second Quarter 2021 Operating Update

Antero placed 22 horizontal Marcellus wells to sales during the second quarter with an average lateral length of 11,740 feet. Nine of the 22 new wells have been on line for at least 60 days and the average 60-day rate per well was 23.2 MMcfe/d, including approximately 922 Bbl/d of liquids assuming 25% ethane recovery. 

Antero set a company record for completion stages per day for a quarter at 9.8 stages per day, a 23% increase from the 8.0 stages per day average in 2020, as well as a new monthly record at 10.7 stages per day. Antero is currently operating three drilling rigs and two completion crews.

Second Quarter 2021 Capital Investment

Antero’s accrued drilling and completion capital expenditures for the three months ended June 30, 2021 were $167 million.  In addition to capital invested in drilling and completion costs, the Company invested $16 million in land during the second quarter.  For a reconciliation of accrued capital expenditures to cash capital expenditures see the table in the Non-GAAP Financial Measures section.

Balance Sheet and Liquidity

As of June 30, 2021, Antero’s total debt was $2.4 billion with no borrowings outstanding under the Company’s revolving credit facility.  After deducting letters of credit outstanding, the Company had approximately $1.9 billion in available liquidity at June 30, 2021.  Net debt to trailing twelve month Adjusted EBITDA ratio (non-GAAP) was 1.7x as of June 30, 2021.  

Commodity Derivative Positions

As of June 30, 2021, the Company has hedged 835 Bcf of natural gas at a weighted average index price of $2.62 per MMBtu through 2023 with fixed price swap positions.  Antero also has oil and NGL fixed price swap positions, as detailed in the below table. 

Please see Antero’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, for more information on all commodity derivative positions.  For detail on current commodity positions, please see the Hedge Profile presentations at www.anteroresources.com.

The following tables summarize Antero’s natural gas and NGL hedge position as of June 30, 2021:

Fixed price natural gas positions from July 1, 2021 through December 31, 2023 were as follows:



Natural gas

MMBtu/day


Weighted

average index

price


Year ending December 31, 2021:







NYMEX ($/MMBtu)


2,160,000



$2.77


Year ending December 31, 2022:







NYMEX ($/MMBtu)


1,155,486



$2.50


Year ending December 31, 2023:







NYMEX ($/MMBtu)


43,000



$2.37


NGL and oil derivative contract positions from July 1, 2021 through December 31, 2021 were as follows:


Derivative

Contract Type

Liquids Hedges

(Bbl/d)



Weighted

average index

price ($/Bbl)

Third Quarter 2021:






C3+ NGL Composite Barrel

Fixed swap 

75,950



$34.47

Fourth Quarter 2021:






C3+ NGL Composite Barrel

Fixed swap 

15,200



$42.68







Year ending December 31, 2021:






Total NYMEX Crude Oil


3,000



$55.16

Conference Call

A conference call is scheduled on Thursday, July 29, 2021 at 9:00 am MT to discuss the financial and operational results.  A brief Q&A session for security analysts will immediately follow the discussion of the results.  To participate in the call, dial in at 877-407-9079 (U.S.), or 201-493-6746 (International) and reference “Antero Resources.”  A telephone replay of the call will be available until Thursday, August 5, 2021 at 9:00 am MT at 877-660-6853 (U.S.) or 201-612-7415 (International) using the conference ID: 13720339.

A simultaneous webcast of the call may be accessed over the internet at www.anteroresources.com.  The webcast will be archived for replay on the Company’s website until Thursday, August 5, 2021 at 9:00 am MT.

Presentation

An updated presentation will be posted to the Company’s website before the conference call. The presentation can be found at www.anteroresources.com on the homepage. Information on the Company’s website does not constitute a portion of, and is not incorporated by reference into this press release.

Non-GAAP Financial Measures

Adjusted Net Income (Loss)

Adjusted Net Income (Loss) as set forth in this release represents net loss, adjusted for certain items.  Antero believes that Adjusted Net Income (Loss) is useful to investors in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies.  Adjusted Net Income (Loss) is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net loss as an indicator of financial performance.  The following tables reconcile net loss to Adjusted Net Income (Loss) (in thousands):



Three Months Ended June 30,




2020


2021


Net loss attributable to Antero Resources Corp


$

(463,304)



(523,467)


Net income (loss) and comprehensive income (loss) attributable to noncontrolling interests



236



(10,984)


Unrealized commodity derivative losses



481,927



756,998


Payments for derivative monetizations





4,569


Amortization of deferred revenue, VPP





(11,279)


Gain on sale of assets





(2,288)


Impairment of oil and gas properties



37,350



9,303


Equity-based compensation



7,973



4,249


(Gain) loss on early extinguishment of debt



(39,171)



23,065


Loss on convertible note equitization





11,731


Equity in earnings of unconsolidated affiliate



(20,228)



(17,477)


Contract termination and rig stacking



11,071



844


Tax effect of reconciling items (1)



(115,047)



(187,629)





(99,193)



57,635


Martica adjustments (2)





(16,097)


Adjusted Net Income (Loss)


$

(99,193)



41,538










Fully Diluted Shares Outstanding



268,386



307,879




(1)

Deferred taxes were 24% for 2020 and 2021.

(2)

Adjustments reflect noncontrolling interest in Martica not otherwise adjusted in amounts above.

Net Debt

Net Debt is calculated as total debt less cash and cash equivalents.  Management uses Net Debt to evaluate the Company’s financial position, including its ability to service its debt obligations.

The following table reconciles consolidated total debt to Net Debt as used in this release (in thousands):



December 31,


June 30,




2020


2021


Bank credit facility


$

1,017,000




5.125% senior notes due 2022



660,516




5.625% senior notes due 2023



574,182




5.000% senior notes due 2025



590,000



590,000


8.375% senior notes due 2026





500,000


7.625% senior notes due 2029





700,000


5.375% senior notes due 2030





600,000


4.250% convertible senior notes due 2026



287,500



81,570


Net unamortized discount



(111,886)



(29,782)


Net unamortized debt issuance costs



(15,719)



(26,625)


Consolidated total debt


$

3,001,593



2,415,163


Less: cash and cash equivalents





(4,541)


Net Debt


$

3,001,593



2,410,622


Free Cash Flow

Free Cash Flow is a measure of financial performance not calculated under GAAP and should not be considered in isolation or as a substitute for cash flow from operating, investing, or financing activities, as an indicator of cash flow, or as a measure of liquidity.  The Company defines Free Cash Flow as net cash provided by operating activities, less net cash used in investing activities, which includes drilling and completion capital and leasehold capital, less proceeds from asset sales and less distributions to non-controlling interests in Martica.

The Company has not provided projected net cash provided by operating activities or a reconciliation of Free Cash Flow to projected net cash provided by operating activities, the most comparable financial measure calculated in accordance with GAAP.  The Company is unable to project net cash provided by operating activities for any future period because this metric includes the impact of changes in operating assets and liabilities related to the timing of cash receipts and disbursements that may not relate to the period in which the operating activities occurred.  The Company is unable to project these timing differences with any reasonable degree of accuracy without unreasonable efforts.

Free Cash Flow is a useful indicator of the Company’s ability to internally fund its activities and to service or incur additional debt. There are significant limitations to using Free Cash Flow 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, the lack of comparability of results of operations of different companies and the different methods of calculating Free Cash Flow reported by different companies. Free Cash Flow does not represent funds available for discretionary use because those funds may be required for debt service, land acquisitions and lease renewals, other capital expenditures, working capital, income taxes, exploration expenses, and other commitments and obligations.

Adjusted EBITDAX

Adjusted EBITDAX is a non-GAAP financial measure that we define as net loss, adjusted for certain items detailed below. 

Adjusted EBITDAX as used and defined by us, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP.  Adjusted EBITDAX should not be considered in isolation or as a substitute for operating income or loss, net income or loss, cash flows provided by operating, investing, and financing activities, or other income or cash flow statement data prepared in accordance with GAAP.  Adjusted EBITDAX provides no information regarding our capital structure, borrowings, interest costs, capital expenditures, working capital movement, or tax position.  Adjusted EBITDAX does not represent funds available for discretionary use because those funds may be required for debt service, capital expenditures, working capital, income taxes, exploration expenses, and other commitments and obligations.  However, our management team believes Adjusted EBITDAX is useful to an investor in evaluating our financial performance because this measure:

  • is widely used by investors in the oil and natural gas industry to measure operating performance without regard to items excluded from the calculation of such term, which may vary substantially from company to company depending upon accounting methods and 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 our operations from period to period by removing the effect of our capital and legal structure from our operating structure;
  • is used by our management team for various purposes, including as a measure of our operating performance, in presentations to our Board of Directors, and as a basis for strategic planning and forecasting: and
  • is used by our Board of Directors as a performance measure in determining executive compensation.

There are significant limitations to using Adjusted EBITDAX as a measure of performance, including the inability to analyze the effects of certain recurring and non-recurring items that materially affect our net income or loss, the lack of comparability of results of operations of different companies, and the different methods of calculating Adjusted EBITDAX reported by different companies.

The following table represents a reconciliation of Antero’s net loss, including noncontrolling interest, to Adjusted EBITDAX and a reconciliation of Antero’s Adjusted EBITDAX to net cash provided by operating activities per our consolidated statements of cash flows, in each case, for the three months ended June 30, 2020 and 2021.  Adjusted EBITDAX also excludes the noncontrolling interests in Martica and these adjustments are disclosed in the table below as Martica related adjustments.



Three Months Ended June 30,




2020


2021


Reconciliation of net loss to Adjusted EBITDAX:








Net loss and comprehensive loss attributable to Antero Resources Corporation


$

(463,304)



(523,467)


Net income (loss) and comprehensive income (loss) attributable to noncontrolling interests



236



(10,984)


Unrealized commodity derivative losses



481,927



756,998


Payments for derivative monetizations





4,569


Amortization of deferred revenue, VPP





(11,279)


Gain on sale of assets





(2,288)


Interest expense, net



51,811



49,963


Loss (gain) on early extinguishment of debt



(39,171)



23,065


Loss on convertible note equitization





11,731


Provision for income tax benefit



(142,404)



(175,966)


Depletion, depreciation, amortization, and accretion



215,146



188,661


Impairment of oil and gas properties



37,350



9,303


Exploration expense



231



5,638


Equity-based compensation expense



7,973



4,249


Equity in earnings of unconsolidated affiliate



(20,228)



(17,477)


Dividends from unconsolidated affiliate



42,755



31,284


Contract termination and rig stacking



11,071



844


Transaction expense



6,138



185





189,531



345,029


Martica related adjustments (1)



(3,100)



(25,677)


Adjusted EBITDAX


$

186,431



319,352










Reconciliation of our Adjusted EBITDAX to net cash provided by operating activities:








Adjusted EBITDAX


$

186,431



319,352


Martica related adjustments (1)



3,100



25,677


Interest expense, net



(51,811)



(49,963)


Exploration expense



(231)



(5,638)


Changes in current assets and liabilities



(6,310)



21,370


Transaction expense



(6,138)



(185)


Payments for derivative monetizations





(4,569)


Other items



(9,078)



2,497


Net cash provided by operating activities


$

115,963



308,541




(1)

Adjustments reflect noncontrolling interests in Martica not otherwise adjusted in amounts above. 







Twelve




Months Ended




June 30,




2021


Reconciliation of net loss to Adjusted EBITDAX:





Net loss and comprehensive loss attributable to Antero Resources Corporation


$

(1,004,749)


Net income and comprehensive income attributable to noncontrolling interests



661


Unrealized commodity derivative losses



1,538,067


Payments for derivative monetizations



(4,438)


Amortization of deferred revenue, VPP



(36,936)


Gain on sale of assets



(1,909)


Interest expense, net



187,665


Loss on early extinguishment of debt



10,039


Loss on convertible note equitizations



50,777


Provision for income tax benefit



(324,005)


Depletion, depreciation, amortization, and accretion



832,839


Impairment of oil and gas properties



140,565


Exploration expense



6,499


Equity-based compensation expense



21,906


Equity in earnings of unconsolidated affiliate



(81,338)


Dividends from unconsolidated affiliates



159,551


Contract termination and rig stacking



4,154


Transaction expense



3,582





1,502,930


Martica related adjustments (1)



(92,294)


Adjusted EBITDAX


$

1,410,636




(1)

Adjustments reflect noncontrolling interests in Martica not otherwise adjusted in amounts above. 

Drilling and Completion Capital Expenditures

For a reconciliation between cash paid for drilling and completion capital expenditures and drilling and completion accrued capital expenditures during the period, please see the capital expenditures section below (in thousands):



Three Months Ended

June 30,




2020


2021


Drilling and completion costs (as reported; cash basis)


$

251,744



168,825


Change in accrued capital costs



(71,793)



(2,041)


Adjusted drilling and completion costs (accrual basis)


$

179,951



166,784


Notwithstanding their use for comparative purposes, the Company’s non-GAAP financial measures may not be comparable to similarly titled measures employed by other companies.

Antero Resources is an independent natural gas and natural gas liquids company engaged in the acquisition, development and production of unconventional properties located in the Appalachian Basin in West Virginia and Ohio. In conjunction with its affiliate, Antero Midstream (NYSE: AM), Antero is one of the most integrated natural gas producers in the U.S.  The Company’s website is located at www.anteroresources.com.

This release includes “forward-looking statements.” Such forward-looking statements are subject to a number of risks and uncertainties, many of which are not under Antero Resources’ control. All statements, except for statements of historical fact, made in this release regarding activities, events or developments Antero Resources expects, believes or anticipates will or may occur in the future, such as those regarding expected results, future commodity prices, future production targets, realizing potential future fee rebates or reductions, including those related to certain levels of production, future earnings, leverage targets and debt repayment, future capital spending plans, improved and/or increasing capital efficiency, estimated realized natural gas, NGL and oil prices, expected drilling and development plans, projected well costs and cost savings initiatives, future financial position, the participation level of our drilling partner and the financial and production results to be achieved as a result of that drilling partnership, the other key assumptions underlying our projections, and future marketing opportunities, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All forward-looking statements speak only as of the date of this release. Although Antero Resources believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Except as required by law, Antero Resources expressly disclaims any obligation to and does not intend to publicly update or revise any forward-looking statements.

Antero Resources cautions you that these forward-looking statements are subject to all of the risks and uncertainties, incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil most of which are difficult to predict and many of which are beyond the Antero Resources’ control. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, impacts of world health event, including the COVID-19 pandemic, cybersecurity risks and the other risks described under the heading “Item 1A. Risk Factors” in Antero Resources’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.

ANTERO RESOURCES CORPORATION

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)






(Unaudited)



December 31,


June 30,



2020


2021

Assets

Current assets:







Cash and cash equivalents


$



4,541

Accounts receivable



28,457



36,145

Accrued revenue



425,314



493,740

Derivative instruments



105,130



1,056

Other current assets



15,238



14,958

Total current assets



574,139



550,440

Property and equipment:







Oil and gas properties, at cost (successful efforts method):







Unproved properties



1,175,178



1,076,562

Proved properties



12,260,713



12,479,785

Gathering systems and facilities



5,802



5,802

Other property and equipment



74,361



77,231




13,516,054



13,639,380

Less accumulated depletion, depreciation, and amortization



(3,869,116)



(4,095,539)

Property and equipment, net



9,646,938



9,543,841

Operating leases right-of-use assets



2,613,603



2,486,044

Derivative instruments



47,293



19,396

Investment in unconsolidated affiliate



255,082



237,668

Other assets



13,790



10,944

Total assets


$

13,150,845



12,848,333








Liabilities and Equity

Current liabilities:







Accounts payable


$

26,728



39,612

Accounts payable, related parties



69,860



85,471

Accrued liabilities



343,524



433,050

Revenue distributions payable



198,117



267,926

Derivative instruments



31,242



733,994

Short-term lease liabilities



266,024



269,611

Deferred revenue, VPP



45,257



41,453

Other current liabilities



2,302



11,980

Total current liabilities



983,054



1,883,097

Long-term liabilities:







Long-term debt



3,001,593



2,415,163

Deferred income tax liability



412,252



214,292

Derivative instruments



99,172



204,525

Long-term lease liabilities



2,348,785



2,217,336

Deferred revenue, VPP



156,024



137,322

Other liabilities



59,694



58,184

Total liabilities



7,060,574



7,129,919

Commitments and contingencies (Notes 13 and 14)







Equity:







Stockholders’ equity:







Preferred stock, $0.01 par value; authorized – 50,000 shares; none issued





Common stock, $0.01 par value; authorized – 1,000,000 shares; 268,672 shares and 313,527 shares issued and outstanding as of December 31, 2020 and June 30, 2021, respectively



2,686



3,135

Additional paid-in capital



6,195,497



6,363,774

Accumulated deficit



(430,478)



(969,444)

Total stockholders’ equity



5,767,705



5,397,465

Noncontrolling interests



322,566



320,949

Total equity



6,090,271



5,718,414

Total liabilities and equity


$

13,150,845



12,848,333

ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except per share amounts)




Three Months Ended June 30,




2020


2021


Revenue and other:








Natural gas sales


$

367,415



626,520


Natural gas liquids sales



212,197



464,381


Oil sales



8,322



51,906


Commodity derivative fair value losses



(168,015)



(831,840)


Marketing



64,285



165,453


Amortization of deferred revenue, VPP





11,279


Gain on sale of assets





2,288


Other income (loss)



707



(619)


Total revenue



484,911



489,368


Operating expenses:








Lease operating



24,742



21,645


Gathering, compression, processing, and transportation



631,845



641,362


Production and ad valorem taxes



19,992



33,694


Marketing



113,053



198,994


Exploration



231



5,638


Impairment of oil and gas properties



37,350



9,303


Depletion, depreciation, and amortization



214,035



187,330


Accretion of asset retirement obligations



1,111



1,331


General and administrative (including equity-based compensation expense of $7,973 and $4,249 in 2020 and 2021, respectively)



38,403



32,177


Contract termination and rig stacking



11,071



844


Total operating expenses



1,091,833



1,132,318


Operating loss



(606,922)



(642,950)


Other income (expense):








Equity in earnings of unconsolidated affiliate



20,228



17,477


Transaction expense



(6,138)



(185)


Interest expense, net



(51,811)



(49,963)


Gain (loss) on early extinguishment of debt



39,171



(23,065)


Loss on convertible note equitization





(11,731)


Total other income (expense)



1,450



(67,467)


Loss before income taxes



(605,472)



(710,417)


Provision for income tax benefit



142,404



175,966


Net loss and comprehensive loss including noncontrolling interests



(463,068)



(534,451)


Less: net income (loss) and comprehensive income (loss) attributable to noncontrolling interests



236



(10,984)


Net loss and comprehensive loss attributable to Antero Resources Corporation


$

(463,304)



(523,467)










Loss per share—basic


$

(1.73)



(1.70)


Loss per share—diluted


$

(1.73)



(1.70)










Weighted average number of shares outstanding:








Basic



268,386



307,879


Diluted



268,386



307,879


ANTERO RESOURCES CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)




Six Months Ended June 30,




2020


2021


Cash flows provided by (used in) operating activities:








Net loss including noncontrolling interests


$

(801,878)



(545,555)


Adjustments to reconcile net loss to net cash provided by operating activities:








Depletion, depreciation, amortization, and accretion



415,927



383,475


Impairments



737,202



43,365


Commodity derivative fair value losses (gains)



(397,818)



1,009,596


Gains (losses) on settled commodity derivatives



524,838



(64,951)


Payments for derivative monetizations





(4,569)


Gain on sale of assets





(2,288)


Equity-based compensation expense



11,302



9,891


Deferred income tax benefit



(252,389)



(178,912)


Equity in (earnings) loss of unconsolidated affiliate



107,827



(36,171)


Dividends of earnings from unconsolidated affiliate



85,511



74,040


Amortization of deferred revenue





(22,429)


Amortization of debt issuance costs, debt discount, debt premium and other



4,433



7,877


(Gain) loss on early extinguishment of debt



(119,732)



66,269


Loss on convertible note equitizations





50,777


Changes in current assets and liabilities:








Accounts receivable



(27,329)



(7,687)


Accrued revenue



63,023



(68,425)


Other current assets



789



631


Accounts payable including related parties



(21,182)



6,681


Accrued liabilities



15,722



64,499


Revenue distributions payable



(29,560)



69,809


Other current liabilities



(46)



16,349


Net cash provided by operating activities



316,640



872,272


Cash flows provided by (used in) investing activities:








Additions to unproved properties



(21,672)



(29,473)


Drilling and completion costs



(552,227)



(273,956)


Additions to other property and equipment



(1,234)



(2,320)


Settlement of water earnout



125,000




Proceeds from asset sales





2,351


Change in other liabilities





(77)


Change in other assets



525



597


Net cash used in investing activities



(449,608)



(302,878)


Cash flows provided by (used in) financing activities:








Repurchases of common stock



(43,443)




Issuance of senior notes





1,800,000


Repayment of senior notes



(496,541)



(1,234,698)


Borrowings (repayments) on bank credit facilities, net



374,000



(1,017,000)


Payment of debt issuance costs





(22,440)


Sale of noncontrolling interest



300,000



51,000


Distributions to noncontrolling interests in Martica Holdings LLC





(46,028)


Employee tax withholding for settlement of equity compensation awards



(331)



(9,530)


Convertible note equitizations





(85,648)


Other



(717)



(509)


Net cash provided by (used in) financing activities



132,968



(564,853)


Net increase in cash and cash equivalents





4,541


Cash and cash equivalents, beginning of period






Cash and cash equivalents, end of period


$



4,541










Supplemental disclosure of cash flow information:








Cash paid during the period for interest


$

101,885



58,126


Increase (decrease) in accounts payable and accrued liabilities for additions to property and equipment


$

(61,305)



42,589


The following table set forth selected financial data for the three months ended June 30, 2020 and 2021:



Three Months Ended


Amount of






June 30,


Increase


Percent


(in thousands)


2020


2021


(Decrease)


Change


Revenue:













Natural gas sales


$

367,415



626,520



259,105


71

%

Natural gas liquids sales



212,197



464,381



252,184


119

%

Oil sales



8,322



51,906



43,584


524

%

Commodity derivative fair value losses



(168,015)



(831,840)



(663,825)


395

%

Marketing



64,285



165,453



101,168


157

%

Amortization of deferred revenue, VPP





11,279



11,279


*


Gain on sale of assets





2,288



2,288


*


Other income (loss)



707



(619)



(1,326)


(188)

%

Total revenue



484,911



489,368



4,457


1

%

Operating expenses:













Lease operating



24,742



21,645



(3,097)


(13)

%

Gathering and compression



202,773



224,073



21,300


11

%

Processing



242,592



209,627



(32,965)


(14)

%

Transportation



186,480



207,662



21,182


11

%

Production and ad valorem taxes



19,992



33,694



13,702


69

%

Marketing



113,053



198,994



85,941


76

%

Exploration



231



5,638



5,407


*


Impairment of oil and gas properties



37,350



9,303



(28,047)


(75)

%

Depletion, depreciation, and amortization



214,035



187,330



(26,705)


(12)

%

Accretion of asset retirement obligations



1,111



1,331



220


20

%

General and administrative (excluding equity-based compensation)



30,430



27,928



(2,502)


(8)

%

Equity-based compensation



7,973



4,249



(3,724)


(47)

%

Contract termination and rig stacking



11,071



844



(10,227)


*


Total operating expenses



1,091,833



1,132,318



40,485


4

%

Operating loss



(606,922)



(642,950)



(36,028)


6

%

Other earnings (expenses):













Equity in earnings of unconsolidated affiliate



20,228



17,477



(2,751)


(14)

%

Transaction expense



(6,138)



(185)



5,953


(97)

%

Interest expense, net



(51,811)



(49,963)



1,848


(4)

%

Gain (loss) on early extinguishment of debt



39,171



(23,065)



(62,236)


(159)

%

Loss on convertible note equitization





(11,731)



(11,731)


*


Total other income (expense)



1,450



(67,467)



(68,917)


*


Loss before income taxes



(605,472)



(710,417)



(104,945)


17

%

Provision for income tax benefit



142,404



175,966



33,562


24

%

Net loss and comprehensive loss including noncontrolling interests



(463,068)



(534,451)



(71,383)


15

%

Less: net income (loss) and comprehensive income (loss) attributable to noncontrolling interests



236



(10,984)



(11,220)


*


Net loss and comprehensive loss attributable to Antero Resources Corporation


$

(463,304)



(523,467)



(60,163)


13

%














Adjusted EBITDAX


$

186,431



319,352



132,921


71

%


* Not meaningful

The following table set forth selected operating data for the three months ended June, 2020 and 2021:



Three Months Ended


Amount of






June 30,


Increase


Percent




2020


2021


(Decrease)


Change


Production data (1):













Natural gas (Bcf)



215



208



(7)


(3)

%

C2 Ethane (MBbl)



4,622



4,356



(266)


(6)

%

C3+ NGLs (MBbl)



11,935



10,440



(1,495)


(13)

%

Oil (MBbl)



1,004



940



(64)


(6)

%

Combined (Bcfe)



320



303



(17)


(5)

%

Daily combined production (MMcfe/d)



3,521



3,324



(197)


(6)

%

Average prices before effects of derivative settlements (2):













Natural gas (per Mcf)


$

1.71



3.01



1.30


76

%

C2 Ethane (per Bbl)


$

5.76



9.97



4.21


73

%

C3+ NGLs (per Bbl)


$

15.55



40.32



24.77


159

%

Oil (per Bbl)


$

8.29



55.22



46.93


566

%

Weighted Average Combined (per Mcfe)


$

1.83



3.78



1.95


107

%

Average realized prices after effects of derivative settlements (2):













Natural gas (per Mcf)


$

2.79



2.91



0.12


4

%

C2 Ethane (per Bbl)


$

5.66



9.97



4.31


76

%

C3+ NGLs (per Bbl)


$

20.23



35.95



15.72


78

%

Oil (per Bbl)


$

33.47



52.05



18.58


56

%

Weighted Average Combined (per Mcfe)


$

2.81



3.55



0.74


26

%

Average costs (per Mcfe):













Lease operating


$

0.08



0.07



(0.01)


(13)

%

Gathering and compression


$

0.63



0.74



0.11


17

%

Processing


$

0.76



0.69



(0.07)


(9)

%

Transportation


$

0.58



0.69



0.11


19

%

Production taxes


$

0.06



0.11



0.05


83

%

Marketing, net


$

0.15



0.11



(0.04)


(27)

%

Depletion, depreciation, amortization and accretion


$

0.67



0.62



(0.05)


(7)

%

General and administrative (excluding equity-based compensation)


$

0.09



0.09




%



(1)

Production volumes exclude volumes related to VPP transaction.

(2)

Average sales prices shown in the table reflect both the before and after effects of the Company’s settled commodity derivatives.  The calculation of such after effects includes gains on settlements of commodity derivatives, which do not qualify for hedge accounting because the Company does not designate or document them as hedges for accounting purposes.  Oil and NGLs production was converted at 6 Mcf per Bbl to calculate total Bcfe production and per Mcfe amounts.  This ratio is an estimate of the equivalent energy content of the products and does not necessarily reflect their relative economic value.

SOURCE Antero Resources Corporation

Related Links

http://www.anteroresources.com

PlatoAi. Web3 Reimagined. Data Intelligence Amplified.
Click here to access.

Source: https://www.prnewswire.com:443/news-releases/antero-resources-reports-second-quarter-2021-financial-and-operational-results-301343634.html

Continue Reading
Esports4 days ago

Teppei Genshin Impact Voice Actor: Who is it?

Esports4 days ago

Who won Minecraft Championships (MCC) 15? | Final Standings and Scores

Esports4 days ago

All ranked mode rewards for Pokémon UNITE: Season 1

Aviation3 days ago

Legendary F-14 Pilot Dale ‘Snort’ Snodgrass Dies In A Tragic Plane Crash

Cleantech4 days ago

Form Energy Reveals Iron-Air 100 Hour Storage Battery

Esports4 days ago

Sakura Arborism Genshin Impact: How to Complete

Esports5 days ago

Here are the results for the PUBG Mobile World Invitational (PMWI) West 2021

watch-live-russias-pirs-module-set-to-depart-space-station-today.jpg
Aerospace2 days ago

Watch live: Russia’s Pirs module set to depart space station today

Esports5 days ago

Here are the results for the PUBG Mobile World Invitational (PMWI) East 2021

Techcrunch4 days ago

This Week in Apps: Clubhouse opens up, Twitter talks bitcoin, Snap sees record quarter

best-gengar-build-in-pokemon-unite.png
Esports4 days ago

Best Gengar build in Pokémon UNITE

Cyber Security5 days ago

Threat Actors are Abusing Argo Workflows to Target Kubernetes

Esports5 days ago

Are there ranked rewards in Pokémon UNITE?

Esports4 days ago

Best Garchomp build in Pokémon UNITE

Cyber Security5 days ago

What Programming Language Should I Learn for CyberSecurity?

Esports4 days ago

How to unlock Pokémon in Pokémon UNITE, all Unite License costs

Blockchain4 days ago

Canadian Border Town Halts Crypto Mining to Draw Up Regulations

AR/VR4 days ago

Warplanes: WW1 Fighters to See Official Oculus Quest Store Launch This Week

AI4 days ago

What is the Freedom Phone and Should You Buy It?

Crowdfunding4 days ago

Calgary, Alberta’s Allied Venture Partners Confirms they’ve Invested $1M+ into Early-Stage Tech Firms

Trending