UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 13, 2014
RSP PERMIAN, INC.
(Exact name of registrant as specified in its charter)
Delaware |
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001-36264 |
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90-1022997 |
(State or Other Jurisdiction of Incorporation) |
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(Commission File Number) |
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(I.R.S. Employer Identification No.) |
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3141 Hood Street, Suite 500 Dallas, Texas 75219 |
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(Address of Principal Executive Offices) (Zip Code) |
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(214) 252-2700 |
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(Registrants Telephone Number, Including Area Code) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On May 13, 2014, RSP Permian, Inc. (the Company) issued the news release that is attached hereto as Exhibit 99.1 (the News Release). In the news release, the Company announced its financial and operating results for the quarter ended March 31, 2014, on a pro forma basis, giving effect to the completion of the corporate reorganization and acquisitions in connection with the Companys initial public offering.
Also on May 13, 2014, the Company posted the presentation that is attached hereto as Exhibit 99.2 (the Presentation) on its website, www.rsppermian.com. The Company hereby furnishes the portions, if any, of the Presentation that constitute material non-public information regarding the Companys results of operations or financial condition for a completed quarterly period.
The information furnished in this Item 2.02 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
Item 7.01 Regulation FD Disclosure.
On May 13, 2014, the Company posted the Presentation on its website, www.rsppermian.com. The Presentation, which is attached to this Form 8-K as Exhibit 99.2, is incorporated herein by reference.
The information furnished in this Item 7.01 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
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Description |
99.1 |
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News Release, dated May 13, 2014, titled RSP Permian, Inc. Announces First Quarter 2014 Financial and Operating Results |
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99.2 |
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Q1 2014 Earnings Presentation, May 13, 2014 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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RSP PERMIAN, INC. |
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By: |
/s/ Scott McNeill |
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Scott McNeill |
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Chief Financial Officer and Director |
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Dated: May 13, 2014 |
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3
EXHIBIT INDEX
Exhibit No. |
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Description |
99.1 |
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News Release, dated May 13, 2014, titled RSP Permian, Inc. Announces First Quarter 2014 Financial and Operating Results |
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99.2 |
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Q1 2014 Earnings Presentation, May 13, 2014 |
4
Exhibit 99.1
News Release
RSP Permian, Inc. Announces First Quarter 2014 Financial and Operating Results
Dallas, Texas May 13, 2014 RSP Permian, Inc. (RSP or the Company) (NYSE: RSPP) today announced financial and operating results for the quarter ended March 31, 2014.
Unless otherwise indicated, information presented in this release is on a pro forma basis, giving effect to the completion of the corporate reorganization and acquisitions in connection with the Companys initial public offering (the IPO) and adjusted to eliminate non-recurring items associated with the IPO. The Companys Form 10-Q that will be filed with the Securities and Exchange Commission (the SEC) will include the combined results of RSP Permian, L.L.C. and Rising Star Energy Development Co., the Companys historical accounting predecessor, in addition to the actual and pro forma results.
Highlights
· Successful completion of the Companys IPO, issuing 23 million shares at $19.50 per share for gross proceeds of $449 million.
· Average production of 9,339 Boe/d in the first quarter of 2014, a 63% increase over the first quarter of 2013 average production of 5,713 Boe/d and a 19% increase over the fourth quarter of 2013 average production of 7,837 Boe/d.
· Net income of $14.7 million, or $0.20 per diluted share. Net income includes a $3.8 million non-cash loss on derivatives and other income. Our adjusted net income, which does not include these items, was $17.0 million, or $0.23 per diluted share.
· Adjusted EBITDAX of $48.7 million in the first quarter of 2014; a 21% increase from $40.3 million in the fourth quarter of 2013.
· Added fourth operated horizontal rig and second operated vertical rig; all operated horizontal rigs are drilling stacked-laterals from multi-well pads.
· Drilled first operated Wolfcamp A well, Cross Bar Ranch 1717H (WA), on a dual-well pad with another completion in the Wolfcamp B without communication between the A and B zones. The wells are in early flowback with the pad currently producing over 1,700 Boe/d.
· Drilled first operated long Middle Spraberry well, Johnson Ranch 912MS, RSPs third horizontal Middle Spraberry well, producing at a peak 30-day IP rate of 751 Boe/d.
· As previously announced, acquired an additional 5,316 net acres prospective for horizontal development located in Martin, Glasscock and Dawson counties for an aggregate purchase price of approximately $79 million.
Our strong operating performance and growth in the first quarter was highlighted by putting on three dual well/dual zone completions on production. Our horizontal drilling operations have moved to full implementation of multi-well/multi-zone pad development which we believe will lead to efficient development of our oil and gas resource base. We are particularly encouraged about the continued success of our Spraberry horizontal program where our early results in the Lower Spraberry indicate economic returns as strong as our Wolfcamp B wells, stated Steve Gray, Chief Executive Officer of RSP.
1
RSP is off to a great start in 2014, and we continue to look at acquisition opportunities where we can use our horizontal expertise to generate attractive rates of returns.
Recent Horizontal Wells and Current Activity Update
During the first quarter of 2014, RSP drilled 16 horizontal wells (seven operated) and completed 10 horizontal wells (six operated). The Company is currently in the drilling or completion phase on 10 operated horizontal wells in five different horizontal zones: one Middle Spraberry, four Lower Spraberry, one Wolfcamp A, three Wolfcamp B, and one Wolfcamp D. The Companys operated horizontal rigs are operating in Midland County (two rigs), Andrews County (one rig), and Dawson County (one rig). The Companys two operated vertical rigs are both operating in Midland County. The Company expects to operate four horizontal rigs and two vertical rigs for the remainder of 2014.
The following table presents a summary of all recent operated horizontal wells drilled with more than one month of production history:
Well Name |
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County |
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Lateral Length (ft) |
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Zone |
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30-Day IP (Boe/d) |
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Kemmer 4210LS |
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Midland |
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5,247 |
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Lower Spraberry |
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979 |
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Headlee 3911H |
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Midland |
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7,270 |
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Lower Spraberry |
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782 |
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Johnson Ranch 912MS |
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Martin |
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7,848 |
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Middle Spraberry |
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751 |
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Kemmer 4210WB |
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Midland |
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5,281 |
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Wolfcamp B |
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742 |
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Johnson Ranch 912WB |
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Martin |
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7,365 |
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Wolfcamp B |
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685 |
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Parks Bell 3909H |
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Midland |
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7,277 |
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Lower Spraberry |
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683 |
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Fendley 404LS |
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Ector |
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4,462 |
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Lower Spraberry |
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552 |
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Fendley 404MS |
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Ector |
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4,641 |
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Middle Spraberry |
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386 |
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2
Quarterly Operational Results
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RSP Permian, Inc. Pro Forma |
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Three Months Ended |
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March 31, 2014 |
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December 31, 2013 |
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March 31, 2013 |
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Production data: |
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Oil (MBbls) |
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594 |
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516 |
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350 |
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Natural gas (MMcf) |
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621 |
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574 |
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495 |
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NGLs (MBbls) |
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143 |
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109 |
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82 |
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Total (MBoe) |
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841 |
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721 |
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514 |
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Average Net Daily Production (Boe/d) |
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9,339 |
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7,837 |
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5,713 |
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Average prices before effects of hedges(1)(2): |
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Oil (per Bbl) |
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$ |
94.21 |
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$ |
94.38 |
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Natural gas (per Mcf) |
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3.86 |
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3.38 |
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NGLs (per Bbl) |
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30.82 |
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28.94 |
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Total (per Boe) |
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$ |
74.65 |
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$ |
74.64 |
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Average realized prices after effects of hedges(1)(2): |
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Oil (per Bbl) |
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$ |
93.57 |
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$ |
94.91 |
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Natural gas (per Mcf) |
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3.86 |
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3.38 |
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NGLs (per Bbl) |
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30.82 |
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28.94 |
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Total (per Boe) |
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$ |
74.19 |
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$ |
75.02 |
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Average costs (per Boe): |
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Lease operating expenses |
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$ |
9.23 |
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$ |
8.74 |
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Production and ad valorem taxes |
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4.91 |
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6.31 |
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Depreciation, depletion and amortization |
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23.79 |
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17.96 |
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General and administrative expenses(3) |
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2.46 |
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1.60 |
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(1) Average prices shown in the table reflect prices both before and after the effects of our realized commodity derivative transactions. Our calculation of such effects includes realized gains or losses on cash settlements for commodity derivative transactions and an adjustment to reflect premiums incurred previously or upon settlement that are attributable to instruments settled in the period.
(2) Average realized prices for oil are net of transportation costs. Average realized prices for natural gas do not include transportation costs; instead, transportation costs related to our gas production and sales are included in our lease operating expenses. No transportation costs are associated with NGL production and sales.
(3) Pro forma general and administrative expenses for 4Q13 do not include additional expenses we would have incurred as a result of being a public company.
Production volumes for the quarter ended March 31, 2014 averaged 9,339 Boe/d or a total of 841 MBoe. Production for the first quarter of 2014 was comprised of 71% crude oil, 17% NGLs, and 12% natural gas. Our average realized oil, natural gas, and NGL prices were $94.21/Bbl, $3.86/Mcf, and $30.82/Bbl, respectively. Per unit cash expenses (including lease operating, production and ad valorem taxes, and general and administrative) were $16.60 per Boe. For the quarter, Adjusted EBITDAX was $48.7 million and adjusted net income totaled $17.0 million or $0.23 per diluted share.
3
Capital Expenditures
1st Quarter 2014 Capital Expenditures |
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(in millions) |
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Drilling, completion and workovers |
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$ |
64 |
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Infrastructure |
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2 |
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Acquisitions and additions to leasehold |
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84 |
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Contributed Working Interests (1) |
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32 |
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Total Capital Expenditures |
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$ |
183 |
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(1) In connection with the IPO, certain working interests were contributed to RSP Permian, Inc. in exchange for cash. RSP sold shares of common stock in the IPO and remitted a portion of the cash proceeds thereof to the contributors.
Liquidity Update
The Company retired all of its outstanding debt with a portion of its proceeds from the IPO. Since the IPO, the Company has drawn on its revolving credit facility to fund its drilling and for acquisitions. As of March 31, 2014, the Company had borrowed $110 million on its revolving credit facility which has a $300 million borrowing base, and had $99 million of debt, net of cash, outstanding, leaving the Company approximately $200 million of liquidity under its revolving credit facility.
Hedging Update
The Company hedged approximately 60% of remaining 2014 expected oil production at an average floor of approximately $88 / bbl and approximately 60% of remaining 2014 natural gas production at a floor of $4.00/MMBtu.
Our open positions as of March 31, 2014 were as follows:
Description & Production Period |
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Volume (Bbls) |
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Weighted Average Floor price ($/Bbl)(1) |
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Weighted Average Ceiling price ($/Bbl)(1) |
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Weighted
Average Swap price ($/Bbl)(1) |
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Crude Oil Swaps: |
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April 2014 December 2014 |
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90,000 |
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$ |
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$ |
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$ |
96.40 |
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April 2014 December 2015 |
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210,000 |
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92.60 |
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Crude Oil Collars: |
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April 2014 September 2014 |
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6,000 |
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$ |
85.00 |
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$ |
113.04 |
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April 2014 December 2014 |
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738,000 |
|
85.79 |
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102.11 |
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$ |
|
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April 2014 December 2015 |
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525,000 |
|
85.00 |
|
95.00 |
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January 2015 December 2015 |
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72,000 |
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80.00 |
|
93.25 |
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July 2014 September 2014 |
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90,000 |
|
90.00 |
|
101.50 |
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|
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October 2014 December 2014 |
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90,000 |
|
90.00 |
|
97.33 |
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|
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January 2015 March 2015 |
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120,000 |
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90.00 |
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92.53 |
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(1) The crude oil derivative contracts are settled based on the months average daily NYMEX price of West Texas Intermediate Light Sweet Crude.
Description & Production Period |
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Volume (MMBtu) |
|
Weighted Average Floor price ($/MMBtu)(1) |
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Weighted Average Ceiling price ($/MMBtu)(1) |
|
Weighted Average Swap price ($/MMBtu)(1) |
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Natural Gas Collars: |
|
|
|
|
|
|
|
|
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April 2014 December 2014 |
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1,350,000 |
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$ |
4.00 |
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$ |
4.78 |
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$ |
|
|
|
|
|
|
|
|
|
|
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(1) The natural gas derivative contracts are settled based on the NYMEX closing settlement price.
4
Subsequent to March 31, 2014 we entered into the following oil and natural gas commodity hedges:
Description & Production Period |
|
Volume (Bbls) |
|
Weighted Average Floor price ($/Bbl)(1) |
|
Weighted Average Ceiling price ($/Bbl)(1) |
|
Weighted
Average Swap price ($/Bbl)(1) |
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Crude Oil Collars: |
|
|
|
|
|
|
|
|
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January 2015 December 2015 |
|
960,000 |
|
$ |
85.00 |
|
$ |
95.00 |
|
$ |
|
|
January 2015 June 2015 |
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240,000 |
|
90.00 |
|
96.00 |
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$ |
|
|
|
|
|
|
|
|
|
|
|
|
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(1) The crude oil derivative contracts are settled based on the months average daily NYMEX price of West Texas Intermediate Light Sweet Crude.
Earnings Conference Call
On May 13, 2014, at 10:00 a.m. Central Time, RSP will discuss its first quarter 2014 results. Hosting the call will be Steven Gray, Chief Executive Officer, Zane Arrott, Chief Operating Officer, and Scott McNeill, Chief Financial Officer.
The call can be accessed live over the telephone by dialing (877) 705-6003, or for international callers, (201) 493-6725. A replay will be available shortly after the call and can be accessed by dialing (877) 870-5176, or for international callers (858) 384-5517. The passcode for the replay is 13581256. The replay will be available until May 27, 2014. Interested parties may also listen to a simultaneous webcast of the conference call by logging onto RSPs website at www.rsppermian.com in the Investor Relations section. A replay of the webcast will also be available for approximately 30 days following the call.
About RSP Permian, Inc.
RSP is an independent oil and natural gas company focused on the acquisition, exploration, development and production of unconventional oil and associated liquids-rich natural gas reserves in the Permian Basin of West Texas. The vast majority of our acreage is located on large, contiguous acreage blocks in the core of the Midland Basin, a sub-basin of the Permian Basin, primarily in the adjacent counties of Midland, Martin, Andrews, Dawson, and Ector. The Companys common stock is traded on the NYSE under the ticker symbol RSPP. For more information, visit www.rsppermian.com.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the federal securities laws. All statements, other than historical facts, that address activities that RSP assumes, plans, expects, believes, intends or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. Forward-looking statements are based on managements current beliefs, based on currently available information, as to the outcome and timing of future events. These forward-looking statements involve certain risks and uncertainties that could cause the results to differ materially from those expected by the management of RSP. Information concerning these risks and other factors can be found in RSPs filings with the SEC, including its Form 10-K, which can be obtained free of charge on the SECs web site located at http://www.sec.gov. RSP undertakes no obligation to update or revise any forward-looking statement.
5
RSP PERMIAN, LLC
PROFORMA STATEMENTS OF OPERATIONS
(In thousands, except for unit and per unit data)
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Pro Forma (1) |
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Actual & Predecessor |
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Three Months Ended |
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Three Months Ended |
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March 31, 2014 |
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December 31, 2013 |
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March 31, 2014 |
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March 31, 2013 |
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Revenues: |
|
|
|
|
|
|
|
|
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Oil sales |
|
$ |
55,930 |
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$ |
48,733 |
|
$ |
51,471 |
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$ |
21,923 |
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Natural gas sales |
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$ |
2,397 |
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$ |
1,937 |
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$ |
2,206 |
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$ |
1,165 |
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NGL sales |
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$ |
4,417 |
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$ |
3,145 |
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$ |
4,081 |
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$ |
1,567 |
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|
|
|
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|
|
|
|
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Total revenues |
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$ |
62,744 |
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$ |
53,815 |
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$ |
57,758 |
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$ |
24,655 |
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|
|
|
|
|
|
|
|
|
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Net cash from derivative instruments |
|
(380 |
) |
(1,468 |
) |
(380 |
) |
(736 |
) |
|
|
|
|
|
|
|
|
|
|
Adjusted Total Revenues |
|
$ |
62,364 |
|
$ |
52,347 |
|
$ |
57,378 |
|
$ |
23,919 |
|
|
|
|
|
|
|
|
|
|
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Operating Expenses: |
|
|
|
|
|
|
|
|
|
Lease operating expenses |
|
$ |
7,757 |
|
$ |
6,298 |
|
$ |
7,063 |
|
$ |
3,355 |
|
Production and ad valorem taxes |
|
4,127 |
|
4,546 |
|
3,876 |
|
1,636 |
|
General and administrative expenses |
|
1,771 |
|
1,157 |
|
5,001 |
|
555 |
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses |
|
$ |
13,654 |
|
$ |
12,001 |
|
$ |
15,940 |
|
$ |
5,546 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDAX, as defined (2) |
|
$ |
48,709 |
|
$ |
40,346 |
|
$ |
41,438 |
|
$ |
18,373 |
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion, and amortization |
|
$ |
19,994 |
|
$ |
12,940 |
|
$ |
16,361 |
|
$ |
10,202 |
|
Asset retirement obligation accretion |
|
38 |
|
53 |
|
29 |
|
25 |
|
Exploration |
|
756 |
|
74 |
|
756 |
|
63 |
|
Interest expense |
|
1,131 |
|
4,865 |
|
1,131 |
|
624 |
|
Stock-based compensation, net |
|
294 |
|
|
|
12,015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income before income taxes |
|
$ |
26,497 |
|
$ |
22,414 |
|
$ |
11,146 |
|
$ |
7,459 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax expense |
|
9,539 |
|
8,069 |
|
4,733 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income, as defined (2) |
|
$ |
16,958 |
|
$ |
14,345 |
|
$ |
6,413 |
|
$ |
7,459 |
|
Adjusted net income per common share - Basic |
|
$ |
0.23 |
|
$ |
0.20 |
|
$ |
0.10 |
|
N/A |
|
Adjusted net income per common share - Diluted |
|
$ |
0.23 |
|
$ |
0.20 |
|
$ |
0.10 |
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
Other items included in income before taxes: |
|
|
|
|
|
|
|
|
|
Non-cash loss (gain) on derivatives, net |
|
3,773 |
|
(2,226 |
) |
3,773 |
|
921 |
|
Gain on asset sale |
|
|
|
|
|
|
|
(6,129 |
) |
Other income |
|
(309 |
) |
(339 |
) |
(310 |
) |
(199 |
) |
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
$ |
13,494 |
|
$ |
16,910 |
|
$ |
2,950 |
|
$ |
12,866 |
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
(1,247 |
) |
923 |
|
130,480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
$ |
14,741 |
|
$ |
15,987 |
|
$ |
(127,530 |
) |
$ |
12,866 |
|
Net income per common share - Basic |
|
$ |
0.20 |
|
$ |
0.22 |
|
$ |
(2.03 |
) |
N/A |
|
Net income per common share - Diluted |
|
$ |
0.20 |
|
$ |
0.22 |
|
$ |
(2.03 |
) |
N/A |
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
72,500 |
|
72,500 |
|
62,955 |
|
N/A |
|
Diluted |
|
72,500 |
|
72,500 |
|
62,955 |
|
N/A |
|
6
(1) RSP Permian, Inc. is a C-Corp. under the Internal Revenue Code of 1986, as amended, and is subject to income taxes. The Company computed a pro forma income tax provision for 4Q13 as if RSP Permian, L.L.C. and Rising Star Energy Development Co. (Rising Star) were subject to federal income taxes in 2013. For 4Q13 comparative purposes, we have included pro forma financial data to give effect to income taxes assuming the earnings of the RSP Permian, L.L.C. and Rising Star had been subject to federal income tax as a C-Corp. since inception. The unaudited pro forma data is presented for informational purposes only and does not purport to project our results of operations for any future period or our financial position as of any future date. The pro forma tax provision has been calculated at a rate based upon a federal corporate level tax rate and a state tax rate, net of federal benefit, incorporating permanent differences.
(2) Adjusted EBITDAX and adjusted net income are non-GAAP financial measures. For a definition of Adjusted EBITDAX and adjusted net income, see Use of Non-GAAP Financial Measures below.
Use of Non-GAAP Financial Measures
We define Adjusted EBITDAX as oil and gas revenues including net cash receipts (payments) on settled derivative instruments and premiums paid on put options that settled during the period, less lease operating expenses, production and ad valorem taxes, and general and administrative expenses excluding stock based compensation. Adjusted net income deducts from Adjusted EBITDAX depreciation, depletion, and amortization, accretion on asset retirement obligations, exploration expenses, interest expense, stock-based compensation and adjusted income tax expense.
Management believes Adjusted EBITDAX and adjusted net income are useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure. We exclude the items listed above in arriving at Adjusted EBITDAX and adjusted net income because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDAX and adjusted net income should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of our operating performance or liquidity. Certain items excluded from Adjusted EBITDAX and adjusted net income are significant components in understanding and assessing a companys financial performance, such as a companys cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDAX. Our computations of Adjusted EBITDAX and adjusted net income may not be comparable to other similarly titled measures of other companies.
Investor Contact:
Scott McNeill
Chief Financial Officer
214-252-2700
Investor Relations:
IR@rsppermian.com
214-252-2790
Source: RSP Permian, Inc.
7
Exhibit
99.2
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Q1 2014
Earnings Presentation May 13, 2014
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2
Forward-Looking Information Certain statements and information in this
presentation may constitute forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. The words believe,
expect, anticipate, plan, intend, foresee, should, would,
could or other similar expressions are intended to identify forward-looking
statements, which are generally not historical in nature. These forward-looking
statements are based on our current expectations and beliefs concerning
future developments and their potential effect on us. While management
believes that these forward-looking statements are reasonable as and when
made, there can be no assurance that future developments affecting us will be
those that we anticipate. Our forward-looking statements involve significant
risks and uncertainties (some of which are beyond our control) and
assumptions that could cause actual results to differ materially from our
historical experience and our present expectations or projections. Important
factors that could cause actual results to differ materially from those in
the forward-looking statements include, but are not limited to, the
volatility of commodity prices, product supply and demand, competition,
access to and cost of capital, uncertainties about estimates of reserves and
resource potential and the ability to add proved reserves in the future, the
assumptions underlying production forecasts, the quality of technical data,
environmental and weather risks, including the possible impacts of climate
change, the ability to obtain environmental and other permits and the timing
thereof, other government regulation or action, the costs and results of
drilling and operations, the availability of equipment, services, resources
and personnel required to complete the Companys operating activities, access
to and availability of transportation, processing and refining facilities,
the financial strength of counterparties to the Companys credit facility and
derivative contracts and the purchasers of the Companys production, and acts
of war or terrorism. For additional information regarding known material
factors that could cause our actual results to differ from our projected
results, please see our filings with the SEC, including our Annual Report on
Form 10-K for the year ended December 31, 2013. Existing and prospective
investors are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date hereof. We undertake no
obligation to publicly update or revise any forward-looking statements after
the date they are made, whether as a result of new information, future events
or otherwise.
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3 RSP Overview
Market Snapshot Permian Basin Pure Play Pro Forma Production and Reserves(3)
___________________________ As of May 8, 2014. Balance as of March 31, 2014.
Pro forma production and reserves give effect to the formation transactions
described in 10-K and 10-Q. Reserves as of 12/31/13 per independent reserve
report prepared by Ryder Scott, and adjusted to include managements PDP
reserve estimates for acquisitions YTD 2014. Average daily production for
quarter ended March 31, 2014. NYSE Symbol: RSPP Market Cap(1): ~$2.0 billion
Net Debt(2): ~$0.1 billion Enterprise Value: ~$2.1 billion Focus Area Dawson
Area Acreage Summary Effective Horizontal Acreage Gross Net Middle Spraberry
53,183 38,267 Lower Spraberry 54,408 38,827 Wolfcamp A 34,689 21,496 Wolfcamp
B 47,988 32,900 Wolfcamp D 39,884 26,863 Total Horizontal Acreage 230,152
158,353 Surface Acreage 55,700 39,957 Average Daily Production (4) 9.3 MBoe/d
Proved Reserves 55.6 MMBoe % Oil 65% % NGL 19% % Natural Gas 16% % Proved
Developed 42%
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4 Q1 2014
Financial Update Financial Update Pro Forma Daily Production (2) Pro Forma
Results (1)(2) ___________________________ Please see reconciliation of
Adjusted EBITDAX and Adjusted Net Income. Pro forma results include formation
transactions as described in 10-K and 10-Q. 19% 18% During the first quarter
of 2014, production on a pro forma basis averaged approximately 9.3 MBoe/d, a
production increase of ~19% over Q4 2013 and an increase of ~63% over Q1 2013
RSP generated $49mm of pro forma Adjusted EBITDAX and $17mm of pro forma
Adjusted Net Income in Q1 2014(1) RSP Permian, Inc. RSP Permian, Inc. Q1 2014
Pro Forma Q4 2013 Pro Forma Avg Daily Production Oil (Boe/d) 6,597 5,613
Natural Gas (Mcf/d) 6,904 6,235 NGL (Boe/d) 1,592 1,181 Total (Boe/d) 9,339
7,837 Avg Realized Prices Oil (per Bbl) $94.21 $94.38 Natural Gas (per Mcf)
3.86 3.38 NGLs (per Bbl) 30.82 28.94 Total (per Boe) $74.65 $74.64 Total
Revenues ($MM) $62.7 $53.8 Adjusted EBITDAX ($MM) 48.7 40.3 Adjusted Net
Income ($MM) 17.0 14.3 Cash Expenses per Boe ($ / Boe) LOE $9.23 $8.74 Production
& Ad Valorem 4.91 6.31 G&A 2.46 1.60
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2nd operated
vertical rig arrived in Q1 4th operated horizontal rig arrived in April
Infrastructure (water supply wells, frac pit, and deep SW disposal well) in
Spanish Trail prepared for horizontal rig arrival Two pilot wells in Dawson
scheduled for first production in Q3 Lower Spraberry well drilled and waiting
on completion and Wolfcamp B well currently drilling Four dual well/dual
zone pads on production Kemmer 4210H(LS) / Kemmer 4210WB Lower Spraberry /
Wolfcamp B combination Johnson Ranch 912H(WB) / Johnson Ranch 912MS Middle
Spraberry / Wolfcamp B combination Fendley 404MS / Fendley 404LS Middle
Spraberry / Lower Spraberry combination Cross Bar Ranch 1717WB / Cross Bar
Ranch 1717WA Wolfcamp B / Wolfcamp A combination Will add Middle Spraberry
/ Lower Spraberry combination wells to pad in 4th Qtr. Three dual well/dual
zone pads currently drilling or completing Cross Bar Ranch 3025WD / Cross
Bar Ranch 3025WB Wolfcamp D (Cline) / Wolfcamp B combination Will add
Middle Spraberry / Lower Spraberry combination wells to pad in 3rd Qtr.
Headlee 3505LS / Headlee 3505WB Lower Spraberry / Wolfcamp B combination
Morgan 3601LS / Morgan 3601WB Lower Spraberry / Wolfcamp B combination
Operations moving rapidly toward full multi-well/multi-zone pad development
Lower Spraberry wells and short (~5,000) lateral Wolfcamp B wells
outperforming expectations Capital cost continue to trend down Updated type
curves and reduced capital have increased expected IRRs 5 Current Activity
Operations Update Recent Well Results Net Horizontal Production since Program
Inception Boe/d 2014E Net Production: Targeting 40%+ Hz; averaged <2
operated Hz rigs in 2013; 3rd hz rig arrived in Jan 2014 and 4th arrived in
April 2014 Hz Drilling Ramp (1 full-time rig) 2nd operated Hz rig Lateral
30-Day IP Well Name County Length (ft) Zone (Boe/d) Status Kemmer 4210LS
Midland 5,247 Lower Spraberry 979 Producing Headlee 3911H Midland 7,270 Lower
Spraberry 782 Producing Johnson Ranch 912MS Martin 7,848 Middle Spraberry 751
Producing Kemmer 4210WB Midland 5,281 Wolfcamp B 742 Producing Johnson Ranch
912WB Martin 7,365 Wolfcamp B 685 Producing Parks Bell 3909H Midland 7,277
Lower Spraberry 683 Producing Fendley 404LS Ector 4,462 Lower Spraberry 552
Producing Fendley 404MS Ector 4,641 Middle Spraberry 386 Producing Cross Bar
Ranch 1717H(WB) Andrews 6,955 Wolfcamp B NA Producing Cross Bar Ranch
1717H(WA) Andrews 7,107 Wolfcamp A NA Producing Keystone 1003LS Midland 7,440
Lower Spraberry NA Producing Cross Bar Ranch 3025WD Martin 4,292 Wolfcamp D
NA Completing Headlee 3505LS Midland 5,126 Lower Spraberry NA Completing
Cross Bar Ranch 3025WB Martin 6,240 Wolfcamp B NA Completing Headlee 3505WB
Midland 5,176 Wolfcamp B NA Completing Morgan 3601LS Dawson 7,090 Lower
Spraberry NA Completing Parks Bell 3909MS Midland NA Middle Spraberry NA
Drilling Cross Bar Ranch 2017WA Andrews NA Wolfcamp A NA Drilling Cross Bar
Ranch 2017LS Andrews NA Lower Spraberry NA Drilling Spanish Trail 217LS
Midland NA Lower Spraberry NA Drilling Morgan 3601WB Dawson NA Wolfcamp B NA
Drilling First Test Wells 3rd operated Hz rig 2014E Net Production: Targeting
40%+ Hz; averaged <2 operated Hz rigs in 2013; 3rd hz rig arrived in Jan
2014 and 4th arrived in April 2014
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6 Recent
Acquisition Overview Bolt-On Acquisitions Verde Expansion 18% Since IPO, RSP
has closed 3 separate transactions adding horizontal inventory Combined
purchase price of $79 million funded by borrowings under revolving credit
facility Martin County (East Cowden Acquisition) Acquired 17.5%
non-operated working interest of producing properties Located between
RSP-operated positions 6,451 gross (1,125 net) acres, ~500 Boe/d average net
production for February (2-stream) Diamondback Energy (operator) has identified
196 (34 net to RSP) locations in 6 intervals (Middle Spraberry, Lower
Spraberry, Wolfcamp A, Wolfcamp B, Wolfcamp D (Cline) and Clearfork)
Glasscock County (Dude Acquisition) Acquired 100% working interest in 961
acres of undeveloped leasehold 30 horizontal locations identified in 5
intervals (Middle Spraberry, Lower Spraberry, Wolfcamp A, Wolfcamp B,
Wolfcamp D) Dawson County (Verde Expansion) Acquired 3,766 gross (3,230
net) acres in Verde prospect area 61 net horizontal locations identified in 3
zones (Middle Spraberry, Lower Spraberry, Wolfcamp A/B) East Cowden
Acquisition Dude Acquisition IPO Acreage Acquired Acreage
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7 RSPs Pro
Forma Capitalization and Hedging ___________________________ Please see
reconciliation of Adjusted EBITDAX. Reflects Q1 2014 Adjusted EBITDAX
annualized for a full year. As of 12/31/2013. Adjusted to include
managements PDP reserve estimates for acquisitions YTD 2014. The crude oil
derivative contracts are settled based on the months average daily NYMEX price
of West Texas Intermediate Light Sweet Crude. The natural gas derivative
contracts are settled based on the NYMEX closing settlement price. Pro Forma
Capitalization Hedging Detail Description & Production Period Volume
(Bbls) Weighted Average Floor price ($/Bbl) (3) Weighted Average Ceiling
price ($/Bbl) (3) Weighted Average Swap price ($/Bbl) (3) Crude Oil Swaps:
April 2014 - December 2014 90,000 -- -- $96.40 April 2014 - December 2015
210,000 -- -- $92.60 Crude Oil Collars: April 2014 - September 2014 6,000
$85.00 $113.04 -- April 2014 - December 2014 738,000 $85.79 $102.11 -- April
2014 - December 2015 525,000 $85.00 $95.00 -- July 2014 - September 2014
90,000 $90.00 $101.50 -- October 2014 - December 2014 90,000 $90.00 $97.33 --
January 2015 - March 2015 120,000 $90.00 $92.53 -- January 2015 - June 2015
240,000 $90.00 $96.00 -- January 2015 - December 2015 1,032,000 $84.65 $94.88
-- Description & Production Period Volume (MMBtu) Weighted Average Floor
price ($/MMBtu) (3) Weighted Average Ceiling price ($/MMBtu) (3) Weighted
Average Swap price ($/MMBtu) (3) Natural Gas Collars: April 2014 - December
2014 1,350,000 $4.00 $4.78 -- ($ in millions) 3/31/2014 Cash $11 Revolving
Credit Facility 110 Total Debt $110 Net Debt $99 Financial & Operating
Statistics Q1 2014 Annualized Adjusted EBITDAX (1) $194.8 Proved Reserves
(MMboe) (2) 55.6 Proved Developed Reserves (MMboe) (2) 22.7 Credit Metrics
Total Debt / Annualized Adjusted EBITDAX (1) 0.6x Total Debt / Proved
Reserves ($/Boe) $1.98 Total Debt / Proved Developed Reserves ($/Boe) $4.85
Liquidity Borrowing Base $300 Less: Borrowings (110) Plus: Cash 11 Liquidity
$201
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8 Adjusted
EBITDAX and Adjusted Net Income Reconciliation Adjusted EBITDAX and Adjusted
Net Income Reconciliation ($ in thousands, except per unit amounts) RSP
Permian, Inc. Pro Forma Actual & Predecessor Quarter Ended Quarter Ended
Quarter Ended Quarter Ended March 31, 2014 December 31, 2013 March 31, 2014
March 31, 2013 Revenues Oil sales $55,930 $48,733 $51,471 $21,923 Natural gas
sales 2,397 1,937 2,206 1,165 NGL sales 4,417 3,145 4,081 1,567 Total
revenues $62,744 $53,815 $57,758 $24,655 Net cash from derivative instruments
(380) (1,468) (380) (736) Adjusted Total Revenues $62,364 $52,347 $57,378
$23,919 Operating Expenses Lease operating expenses $7,757 $6,298 $7,063
$3,355 Production and ad valorem taxes 4,127 4,546 3,876 1,636 General and
administrative expenses 1,771 1,157 5,001 555 Total operating costs and
expenses $13,654 $12,001 $15,940 $5,546 Adjusted EBITDAX $48,709 $40,346
$41,438 $18,373 Depreciation, depletion, and amortization $19,994 $12,940
$16,361 $10,202 Asset retirement obligation accretion 38 53 29 25 Exploration
756 74 756 63 Interest expense 1,131 4,865 1,131 624 Stock-based
compensation, net 294 12,015 Adjusted income before income taxes $26,497
$22,414 $11,146 $7,459 Adjusted income tax expense 9,539 8,069 4,733
Adjusted Net Income $16,958 $14,345 $6,413 $7,459 Adjusted Net Income per
common share - Basic $0.23 $0.20 $0.10 N/A Adjusted Net Income per common
share - Diluted $0.23 $0.20 $0.10 N/A
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9 Additional
Disclosures Supplemental Non-GAAP Financial Measures We define Adjusted
EBITDAX as oil and gas revenues including net cash receipts (payments) on
settled derivative instruments and premiums paid on put options that settled
during the period, less lease operating expenses, production and ad valorem
taxes, and general and administrative expenses excluding stock based
compensation. Adjusted Net Income deducts from Adjusted EBITDAX depreciation,
depletion, and amortization, accretion on asset retirement obligations,
exploration expenses, interest expense, stock-based compensation and adjusted
income tax expense. Management believes Adjusted EBITDAX and Adjusted Net
Income are useful because it allows us to more effectively evaluate our
operating performance and compare the results of our operations from period
to period without regard to our financing methods or capital structure. We
exclude the items listed above in arriving at Adjusted EBITDAX and Adjusted
Net Income because these amounts can vary substantially from company to
company within our industry depending upon accounting methods and book values
of assets, capital structures and the method by which the assets were
acquired. Adjusted EBITDAX and Adjusted Net Income should not be considered
as an alternative to, or more meaningful than, net income as determined in
accordance with GAAP or as an indicator of our operating performance or
liquidity. Certain items excluded from Adjusted EBITDAX and Adjusted Net Income
are significant components in understanding and assessing a companys
financial performance, such as a companys cost of capital and tax structure,
as well as the historic costs of depreciable assets, none of which are
components of Adjusted EBITDAX. Our computations of Adjusted EBITDAX and
Adjusted Net Income may not be comparable to other similarly titled measures
of other companies. Certain Reserve Information Cautionary Note to U.S.
Investors: The SEC prohibits oil and gas companies, in their filings with the
SEC, from disclosing estimates of oil or gas resources other than reserves,
as that term is defined by the SEC. This presentation discloses estimates of
quantities of oil and gas using certain terms, such as resource potential,
net recoverable resource potential, resource base, estimated ultimate
recovery, EUR or other descriptions of volumes of reserves, which terms
include quantities of oil and gas that may not meet the SECs definitions of
proved, probable and possible reserves, and which the SECs guidelines
strictly prohibit the Company from including in filings with the SEC. These
estimates are by their nature more speculative than estimates of proved
reserves and accordingly are subject to substantially greater risk of being recovered
by the Company. U.S. investors are urged to consider closely the disclosures
in the Companys periodic filings with the SEC. Such filings are available
from the Company at 3141 Hood Street, Suite 500, Dallas, Texas 75219,
Attention: Investor Relations, and the Companys website at
www.rsppermian.com. These filings also can be obtained from the SEC by
calling 1-800-SEC-0330.
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