Falcon Minerals Corporation (“Falcon,” or the “Company,” “we,”
“our,”) (NASDAQ: FLMN, FLMNW), a leading oil and gas minerals
company, today announces financial and operating results for the
first quarter 2021 and declares its first quarter 2021
dividend.
Highlights
- Net production of 4,116 barrels of oil equivalent per day
(“boe/d”) for the first quarter 2021
- 60 gross, 1.23 net wells were turned in line during the first
quarter 2021
- Averaged 5 rigs running on Falcon’s Eagle Ford position during
the first quarter 2021
- 203 gross line-of-sight wells (2.04 net wells) permitted and in
active development as of April 19, 2021
- Line-of-sight inclusive of 109 gross and 0.94 net wells that
are DUCs or waiting to be connected
- First quarter 2021 net income of $0.5 million(1)
- Adjusted EBITDA of $9.5 million for the first quarter
2021(2)
- First quarter 2021 Pro-forma Free Cash Flow of $0.103 per
share(2)
- First quarter 2021 dividend declared of $0.10 per share;
dividend represents a 33% increase from fourth quarter 2020
- Dividend represents a payout ratio of 97% of Pro-forma Free
Cash Flow in the first quarter 2021
- Dividend will be paid on June 8, 2021 to all shareholders of
record on May 25, 2021
(1)
Net income shown above includes amounts
attributable to non-controlling interests.
(2)
Please refer to the disclosure on pages
7-8 for a reconciliation of the identified non-GAAP measures to net
income, the most comparable financial measure prepared in
accordance with GAAP.
Daniel Herz, President and Chief Executive Officer of Falcon
Minerals commented, “We are very satisfied with the first quarter
performance where Free Cash Flow per share grew 28% over the fourth
quarter 2020, despite the impacts of Winter Storm Uri.” Mr. Herz
continued, “Looking ahead, we expect the second quarter of 2021 to
benefit from a full quarter of production from our high NRI
locations, and substantial additional wells. These high NRI
locations, which have already been turned in line late in the first
quarter, will drive meaningful production growth and we continue to
see Free Cash Flow approximately doubling from fourth quarter 2020
levels in the second quarter 2021. Based on the current commodity
price environment and the uplift in production, we are expecting
$0.15 of Free Cash Flow per share, or $0.60 annualized, during the
second quarter.” Mr. Herz continued by saying, “Given the
performance in the first quarter, the growth in the second quarter,
and the robust line-of-sight wells that exist at Falcon, we
continue to be excited about Falcon’s ability to generate, and hand
back, substantial Free Cash Flow in the near, medium, and long
term.”
Financial Update
Falcon realized prices of $56.69 per barrel (“bbl”) for crude
oil, $3.24 per thousand cubic feet (“mcf”) for natural gas and
$23.70/bbl for natural gas liquids (“NGL”) during the first quarter
2021.
Falcon reported net income of $0.5 million, or $0.03 of net loss
per Class A common share, for the first quarter 2021, which
includes amounts attributable to non-controlling interests. Falcon
generated royalty revenue of $14.2 million (approximately 72% oil)
for the first quarter 2021. The Company reported Adjusted EBITDA (a
non-GAAP measure defined and reconciled on pages 7-8) of $9.5
million for the first quarter 2021.
Total cash operating costs for the first quarter 2021 were $3.6
million. General and administrative expense for the first quarter
2021, excluding non-cash stock-based compensation expense, was
approximately $2.4 million.
As of March 31, 2021, the Company had $40.5 million of
borrowings on its revolving credit facility, and $2.9 million of
cash on hand, resulting in a net debt of approximately $37.6
million at the end of the quarter. Falcon’s net debt / LTM EBITDA
ratio was 1.44x at March 31, 2021.(3)
(3)
Calculated by dividing the sum of total
debt outstanding less cash on hand as of March 31, 2021 by Adjusted
EBITDA for the trailing 12-month period. Please refer to the
disclosure on pages 7-8 for the Reconciliation of net income to
Non-GAAP Measures.
First Quarter 2021 Dividend
Falcon’s Board of Directors declared a dividend of $0.10 per
Class A share for the first quarter 2021. During the first quarter
2021, the Company generated Pro-forma Free Cash Flow per share of
$0.103(4) (as described and reconciled on page 7-8). The dividend
for the first quarter 2021 will be paid on June 8, 2021 to all
Class A shareholders of record on May 25, 2021. The first quarter
2021 dividend does not have any effect on the current $11.34
exercise price of the Company’s outstanding warrants.
The Company expects that greater than 50% of its 2021 dividends
will not constitute taxable dividend income and instead will result
in a non-taxable reduction to the tax basis of the shareholders’
common stock. The reduced tax basis will increase a shareholders’
capital gain (or decrease shareholders’ capital loss) when
shareholders’ sell their common stock.
(4)
The pro-forma adjustments assume that the
non-controlling interests are converted to Class A common shares,
such that approximately 86.8 million Class A shares would be
outstanding. The pro-forma Class A shares reflects the dilution
from 0.6 million unvested restricted stock awards which receive
dividend equivalent rights (“DER”) on a quarterly basis.
Operational Results
Falcon’s production averaged 4,116 boe/d during the first
quarter 2021, of which approximately 49% was oil. Eagle Ford
production was approximately 60% oil during the first quarter 2021.
Falcon had 60 gross wells turned in line (1.23 net wells) with an
average net royalty interest (“NRI”) of approximately 2.04% during
the first quarter 2021.
Falcon currently has 2,132 gross producing Eagle Ford wells, and
the Company’s average NRI for all producing wells is approximately
1.27%.
As of April 19, 2021, the Company had 203 line-of-sight wells
(2.04 net wells) with an average NRI of 1.01% in various stages of
development on Falcon’s Eagle Ford minerals position. These wells
are comprised of the following:
Line-of-Sight
Wells (As of April 19, 2021)
Stage of Activity
Gross Wells
Net Wells
NRI %
Permitted
94
1.10
1.17%
Waiting on completion
71
0.68
0.96%
Waiting on connection
38
0.26
0.69%
Total line-of-sight
203
2.04
1.01%
Conference Call Details
Falcon management invites investors and interested parties to
listen to the conference call to discuss first quarter 2021 results
on Thursday, May 6, 2021 at 9:00 am ET. Participants for the
conference call should dial (888) 567-1602 (International: (862)
298-0702). A replay of the Falcon earnings call will be available
starting at 2:00 pm ET on May 6, 2021. Investors and interested
parties can listen to the replay on www.falconminerals.com in the
Events page of the Investor Relations section or call (888)
539-4649 (International: (754) 333-7735). At the system prompt,
dial your replay code (155506#); playback will automatically
begin.
About Falcon Minerals
Falcon Minerals Corporation (NASDAQ: FLMN, FLMNW) is a
C-Corporation formed to own and acquire high growth oil-weighted
mineral rights. Falcon Minerals owns mineral, royalty, and
over-riding royalty interests covering approximately 256,000 gross
unit acres in the Eagle Ford Shale and Austin Chalk in Karnes,
DeWitt, and Gonzales Counties in Texas. The Company also owns
approximately 80,000 gross unit acres in the Marcellus Shale across
Pennsylvania, Ohio, and West Virginia. For more information, visit
our website at www.falconminerals.com.
Cautionary Note Regarding Forward-Looking Statements
This document contains forward-looking statements that involve a
number of assumptions, risks and uncertainties that could cause
actual results to differ materially from those contained in the
forward-looking statements. Falcon cautions readers not to place
any undue reliance on these forward-looking statements as
forward-looking information is not a guarantee of future
performance. Such forward-looking statements include, but are not
limited to, statements about future financial and operating
results, future dividends paid, the tax treatment of dividends
paid, Falcon’s plans, initiatives, objectives, expectations and
intentions and other statements that are not historical facts.
Risks, assumptions and uncertainties that could cause actual
results to materially differ from the forward-looking statements
include, but are not limited to, those associated with general
economic and business conditions; the COVID-19 pandemic and its
impact on Falcon and on the oil and gas industry as a whole;
Falcon’s ability to realize the anticipated benefits of its
acquisitions; changes in commodity prices; uncertainties about
estimates of reserves and resource potential; inability to obtain
capital needed for operations; Falcon’s ability to meet financial
covenants under its credit agreement or its ability to obtain
amendments or waivers to effect such compliance; changes in
government environmental policies and other environmental risks;
the availability of drilling equipment and the timing of production
in Falcon’s regions; tax consequences of business transactions; and
other risks, assumptions and uncertainties detailed from time to
time in Falcon’s reports filed with the U.S. Securities and
Exchange Commission, including under the heading “Risk Factors” in
Falcon’s most recent annual report on Form 10-K as well as any
subsequently filed quarterly reports on Form 10-Q and current
reports on Form 8-K. Forward-looking statements speak only as of
the date hereof, and Falcon assumes no obligation to update such
statements, except as may be required by applicable law.
FALCON MINERALS CORPORATION CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per
share amounts) (Unaudited)
Three Months Ended
March 31,
2021
2020
Revenues: Oil and gas sales
$
14,216
$
13,600
Gain (loss) on hedging activities
(1,712
)
-
Total revenue
12,504
13,600
Expenses: Production and ad valorem taxes
810
854
Marketing and transportation
391
397
Amortization of royalty interests in oil & gas properties
3,187
3,674
General, administrative and other
3,436
3,073
Total expenses
7,824
7,998
Operating income
4,680
5,602
Other income (expense): Change in fair value of
warrant liability
(3,202
)
5,678
Other income
13
31
Interest expense
(487
)
(680
)
Total other income (expense)
(3,676
)
5,029
Income before income taxes
1,004
10,631
Provision for income taxes
459
444
Net income
545
10,187
Net income attributable to non-controlling interests
(1,952
)
(2,304
)
Net income (loss) attributable to shareholders
$
(1,407
)
$
7,883
Class A common shares - basic
$
(0.03
)
$
0.17
Class A common shares - diluted
$
(0.03
)
$
0.11
FALCON MINERALS CORPORATION
CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
March 31,
December 31,
ASSETS
2021
2020
Current assets: Cash and cash equivalents
$
2,927
$
2,724
Accounts receivable
8,249
5,419
Prepaid expenses
742
766
Total current assets
11,918
8,909
Royalty interests in oil & gas properties, net of
accumulated amortization
204,318
207,505
Property and equipment, net of accumulated depreciation
400
427
Deferred tax asset, net
55,314
55,773
Other assets
2,719
3,015
Total assets
$
274,669
$
275,629
LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable and accrued expenses
$
1,236
$
1,540
Other current liabilities
2,077
1,557
Total current liabilities
3,313
3,097
Credit facility
40,500
39,800
Warrant liability
6,706
3,503
Other non-current liabilities
740
828
Total liabilities
51,259
47,228
Shareholders' equity: Class A common stock
5
5
Class C common stock
4
4
Additional paid in capital
121,975
121,053
Non-controlling interests
87,589
88,637
Retained earnings
13,837
18,702
Total shareholders' equity
223,410
228,401
Total liabilities and shareholders' equity
$
274,669
$
275,629
Non-GAAP Financial Measures
Adjusted EBITDA and Pro-forma Free Cash Flow are supplemental
non-GAAP financial measures used by management and external users
of our financial statements, such as industry analysts, investors,
lenders, and rating agencies. We believe Adjusted EBITDA and
Pro-forma Free Cash Flow are useful because they allow us to
evaluate our performance and compare the results of our operations
period to period without regard to our financing methods or capital
structure. In addition, management uses Adjusted EBITDA and
Pro-forma Free Cash Flow to evaluate cash flow available to pay
dividends to our common shareholders.
We define Adjusted EBITDA as net income before interest expense,
net, depletion expense, provision for income taxes, change in fair
value of warrant liability, unrealized gains and losses on
commodity derivative instruments and non-cash equity-based
compensation. We define Pro-forma Free Cash Flow as net income
before depletion and depreciation expense, provision for income
taxes, change in fair value of warrant liability, unrealized gains
and losses on commodity derivative instruments and non-cash
equity-based compensation less cash income taxes. Adjusted EBITDA
and Pro-forma Free Cash Flow are not measures of net income as
determined by GAAP. We exclude the items listed above from net
income in calculating Adjusted EBITDA and Pro-forma Free Cash Flow
because these amounts can vary substantially from company to
company within our industry depending upon accounting methods and
book values of assets, capital structures and the method by which
the assets were acquired. Certain items excluded from Adjusted
EBITDA and Pro-forma Free Cash Flow are significant components in
understanding and assessing a company’s financial performance, such
as a company’s cost of capital and tax structure, as well as
historic costs of depreciable assets, none of which are components
of Adjusted EBITDA and Pro-forma Free Cash Flow.
Adjusted EBITDA and Pro-forma Free Cash Flow should not be
considered an alternative to, or more meaningful than, net income,
royalty income, cash flow from operating activities or any other
measure of financial performance presented in accordance with GAAP.
Our computations of Adjusted EBITDA and Pro-forma Free Cash Flow
may not be comparable to other similarly titled measures of other
companies.
Reconciliation of Adjusted EBITDA and Pro-forma Free Cash
Flow from Net Income (in thousands, except per share amounts):
Fully Converted
Three Months
Per Share Basis
Ended
Three Months Ended
March 31, 2021
March 31, 2021 (1)
Net income
$
545
$
0.01
Interest expense (2)
487
0.01
Depletion and depreciation
3,213
0.04
Share-based compensation
972
0.01
Unrealized loss on commodity derivatives
583
0.01
Change in fair value of warrant liability
3,202
0.03
Income tax expense
459
-
Adjusted EBITDA
$
9,461
$
0.11
Interest expense (2)
(487
)
(0.01
)
Pro-forma Free Cash Flow
$
8,974
$
0.10
(1)
Per share information is presented on a
fully converted basis and includes both the 46.8 million Class A
common shares (inclusive of 0.6 million unvested restricted stock
awards which receive DERs) and the 40.0 million Class C common
shares that are outstanding as of March 31, 2021. As such, net
income per fully converted share in this schedule is not comparable
to loss per share of $0.03 for the period ended March 31, 2021 as
shown on the Statement of Operations.
(2)
Interest expense includes amortization of
deferred financing costs.
Calculation of cash available for dividends for the first
quarter 2021 (in thousands):
Three Months Ended
March 31,
2021
Adjusted EBITDA
$
9,461
Interest expense (2)
(487
)
Net cash available for distribution
$
8,974
Cash to be distributed to non-controlling interests
$
4,000
Cash to be distributed to Falcon Minerals Corp.
$
4,619
Dividends to be paid to Class A shareholders
$
4,619
(2)
Interest expense includes amortization of
deferred financing costs.
FALCON MINERALS CORPORATION SELECTED
OPERATING DATA (Unaudited)
Three Months Ended
March 31,
2021
2020
Production Data: Oil (bbls)
181,553
253,528
Natural gas (boe)
141,568
144,835
Natural gas liquids (bbls)
47,308
70,474
Combined volumes (boe)
370,429
468,837
Average daily combined volume (boe/d)
4,116
5,152
Average sales prices: Oil (bbls)
$
56.69
$
43.10
Natural gas (mcf)
$
3.24
$
1.94
Natural gas liquids (bbls)
$
23.70
$
14.05
Combined per boe
$
38.24
$
28.70
Average costs ($/boe): Production and ad valorem
taxes
$
2.19
$
1.82
Marketing and transportation expense
$
1.06
$
0.85
Cash general and administrative expense
$
6.58
$
4.96
Interest expense, net
$
1.31
$
1.45
Depletion
$
8.60
$
7.84
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210505006175/en/
Bryan C. Gunderson Chief Financial Officer
bgunderson@falconminerals.com
Falcon Minerals (NASDAQ:FLMNW)
Historical Stock Chart
From May 2024 to Jun 2024
Falcon Minerals (NASDAQ:FLMNW)
Historical Stock Chart
From Jun 2023 to Jun 2024