×

Penn Virginia Corporation Reports Third Quarter 2017 Results

HOUSTON, Nov. 08, 2017 (GLOBE NEWSWIRE) -- Penn Virginia Corporation (“Penn Virginia” or the “Company”) (NASDAQ:PVAC) today announced its financial and operational results for the third quarter of 2017.

Third Quarter 2017 Overview

  • Closed the previously announced acquisition of Eagle Ford assets located primarily in Lavaca County, Texas on September 29, 2017.

  • Produced 9,396 barrels of oil equivalent per day (“BOEPD”), of which 73% was crude oil. For October 2017, production averaged approximately 12,200 BOEPD.

  • Incurred a net loss of $5.9 million, or $0.40 per diluted share and adjusted net income(1) of $8.6 million, or $0.57 per diluted share. Generated adjusted EBITDAX(1) of $21.5 million, or approximately $24.85 per barrel of oil equivalent (“BOE”), which represents a 63% margin.

  • Successfully completed the Chicken Hawk 5H well in a new landing zone of the lower Eagle Ford shale, which could optimize recoveries.

  • Recently replaced Penn Virginia’s two drilling rigs with three H&P flex drilling rigs in the Eagle Ford. With the increase in rig count, the Company expects production to be between 20,500 and 22,500 BOEPD for the full year 2018.

(1) Adjusted net income and adjusted EBITDAX are non-GAAP financial measures. Definitions of non-GAAP financial measures and reconciliations of non-GAAP financial measures to the closest GAAP-based financial measures appear at the end of this release.

“Despite the impact of Hurricane Harvey, our operations team did an excellent job of safely and efficiently preparing for this unprecedented storm and quickly restoring production, and we appreciate their significant efforts during such a difficult time,” said John A. Brooks, President and Chief Executive Officer. “However, Hurricane Harvey did impact our near-term development plan by slowing the drilling and completions operations going into the fourth quarter. We are addressing this by adding a third rig to our program and made improvements to our operating team. Depending on commodity prices, we anticipate keeping the third rig active through the end of 2018. We expect this rig will allow us to increase our volumes to a range of 20,500 to 22,500 BOEPD for 2018 while still aiming to drill within cash flow by year end 2018.”

Mr. Brooks continued, “On our latest pad, we tested a new landing zone within the lower Eagle Ford about 40 feet above the traditional landing zone. The test well, Chicken Hawk 5H, is showing initial results exceeding the Company’s type curve. While it is early, we are encouraged by this data point in that it shows we can stack and stagger within the lower Eagle Ford and get better stimulation of the zone and optimize recoveries.”

Third Quarter 2017 Operating Results

Total production in the third quarter of 2017 decreased approximately 7% from the second quarter of 2017 to 864 thousand barrels of oil equivalent (“MBOE”), or 9,396 BOEPD. Approximately 73%, or 627 MBOE, was from crude oil, 14% from natural gas liquids (“NGLs”), and 13% from natural gas. For October 2017, production averaged approximately 12,200 BOEPD.

Penn Virginia drilled and turned to sales seven gross (five net) Eagle Ford wells during the quarter, completing operations on its Chicken Hawk and Jake Berger pads. The Company tested two different "stack and stagger" configurations. The Chicken Hawk 2H and Jake Berger 2H wells were landed in the upper Eagle Ford. The Chicken Hawk 5H well was landed in the upper portion of the lower Eagle Ford and is testing a new landing zone. The balance of the wells targeted the traditional lower Eagle Ford. Penn Virginia’s average working interest in the Chicken Hawk and Jake Berger pads are approximately 76% and 64%, respectively.

The table below shows production results and related operating information for the Company's recent Eagle Ford wells:

Gross /
Net
Lateral
Length
Frac
Proppant
24-Hour IP
Avg Daily Prod (1)
Equivalent
Rate


Oil
Wells(Feet)Stages(lbs per foot)(BOPD/1000 ft)(BOEPD/1000 ft)%
2-String Type Curve 6000242000 22525190%
Lager 3H1 / .47920402452 24531777%
Zebra 6H1 / .44592272817 24727689%
Zebra 7H1 / .44860292934 32636789%
Chicken Hawk 2H (2)1 / .84386222485 9210488%
Chicken Hawk 3H1 / .84314222213 17819690%
Chicken Hawk 4H1 / .84822242458 19621890%
Chicken Hawk 5H (3)1 / .82866161985 23626589%
Jake Berger 2H (2)1 / .64730242516 10311887%
Jake Berger 4H1 / .64443262811 21223989%
Jake Berger 5H1 / .66211362896 15817292%

(1) Wellhead rates only; the natural gas associated with these wells is yielding between 135 and 155 barrels of NGLs per million cubic feet.
(2) Well completed in the Upper Eagle Ford ("Marl").
(3) Well completed in the Upper Bench of the Lower Eagle Ford.

During the third quarter of 2017, Penn Virginia’s drilling operations were significantly impacted by mechanical issues on both of its contracted drilling rigs. The associated downtime resulted in delays and contributed to drilling shorter than expected laterals for several of the Company’s horizontal wells. Both of the previous drilling rigs have been released, and the Company has recently contracted three Helmerich and Payne (“H&P”) flex rigs.

To assist in the execution of Penn Virginia’s future drilling plans, the Company recently hired a Vice President of Operations with extensive drilling and completion experience in the Eagle Ford play. Penn Virginia has also expanded its team with several new key personnel, which will complement the Company’s existing operations and technical teams.

Penn Virginia has completed frac operations on the four-well Rhino Hunter pad and the wells have been placed on flowback. Frac operations have commenced on the three-well Oryx Hunter pad and the Company expects to turn these three wells to sales in late November 2017. Two of the H&P rigs are currently drilling wells on the Furrh pad located in Area 1 and the Geo Hunter pad located in Area 2. Operational improvements have already been realized as the Geo Hunter 3H was drilled four and a half days faster than the Lager 3H at an equivalent depth. The third H&P rig has begun mobilization and is expected to begin drilling on the Schacherl Effenberger pad located in Area 2 by mid-November 2017. A total of six wells on the three pads are expected to be drilled by the end of 2017, with completion operations anticipated to commence immediately following drilling operations. Given the uncertainty in timing of drilling and completion activities in the fourth quarter, the Company’s fourth quarter production volumes may not fully benefit from higher activity levels. This may cause lower than expected volumes during the fourth quarter depending on completion schedules causing some volumes to shift into the first quarter of 2018. Contingent upon the level of commodity prices, the Company currently plans to maintain a three-rig drilling program throughout 2018.

In the third quarter of 2017, Penn Virginia added 19,600 net acres through the acquisition and leased more than 300 incremental acres, thereby increasing its core acreage position to approximately 75,800 net acres, net of expirations for the quarter. The Company currently has an estimated 605 gross (454 net) drilling locations, of which 88% are Penn Virginia operated and 43 are anticipated to be extended reach laterals. Approximately 92% of the Company’s core acreage is held by production. This location count estimate does not include any locations in the upper Eagle Ford or Austin Chalk formations.

“Looking to next year, we have developed a detailed plan that supports our significant production growth targets, while remaining steadfast in our focus on maintaining financial discipline,” said Mr. Brooks. “I feel confident the new rigs and technical expertise we have added will restore our previous operational efficiency with a clear path to continued improvements.”

Third Quarter 2017 Financial Results

Total product revenues were $34.3 million in the third quarter of 2017 compared to $36.3 million in the second quarter of 2017, primarily due to a 7% decrease in production that was partially offset by increased commodity prices. Crude oil sales contributed approximately 87% of total product revenues.

Total direct operating expenses, which consist of lease operating expense (“LOE”), gathering, processing and transportation (“GPT”) expense, severance and ad valorem taxes, and cash general and administrative (“G&A”) expense, were $15.3 million, or $17.66 per BOE, in the third quarter of 2017 compared to $12.9 million, or $13.96 per BOE, in the second quarter. Cash G&A expense rose $3.1 million from the previous quarter to $5.9 million, with the increase substantially associated with $1.5 million of transaction-related expenses associated with the recent acquisition and added personnel costs to support future drilling plans.

Net loss for the third quarter of 2017 was $5.9 million, or $0.40 per diluted share, compared to net income of $21.3 million, or $1.42 per diluted share, in the second quarter of 2017.

Adjusted net income(1) was $8.6 million, or $0.57 per diluted share in the third quarter of 2017, compared $9.9 million or $0.66 per diluted share in the second quarter of 2017.

Adjusted EBITDAX(1) was $21.5 million in the third quarter of 2017, an 8% decrease from the second quarter of 2017. Adjusted EBITDAX per BOE was $24.85 for the third quarter of 2017.

(1) Adjusted net income and Adjusted EBITDAX are a non-GAAP financial measure. Definitions of non-GAAP financial measures and reconciliations of non-GAAP financial measures to the closest GAAP-based financial measures appear at the end of this release.

Hedging Update

Penn Virginia enters into oil hedges on a portion of its production to help mitigate commodity price risk.

The table below sets forth Penn Virginia’s current oil hedge positions:

WTI - Oil
Volumes
(Barrels Per Day)
WTI - Average
Price ($/barrel)
LLS - Oil
Volumes
(Barrels Per Day)
LLS - Average
Price
($/barrel)
2017 Q44,381$48.59663$56.18
20185,477$49.301,500$51.97
20192,915$49.872,500$51.30
20201,000$50.35- -

Balance Sheet and Liquidity

During the third quarter of 2017, the Company incurred $29.4 million of capital expenditures in addition to amounts incurred in connection with the recent acquisition. Drilling and completion capital represented approximately 98% of non-acquisition related capital. Penn Virginia underspent third quarter drilling and completion capital by approximately $20 million due primarily to delays caused by Hurricane Harvey and is shifting this amount to its 2018 capital spending program.

As of September 30, 2017, Penn Virginia had $57.0 million outstanding on its credit facility and liquidity of $187.2 million. As of November 6, 2017, the Company had $61.0 million outstanding on its credit facility and $179.7 million of liquidity.

The Company is committed to maintaining financial discipline and a strong balance sheet with a targeted net debt to EBITDAX ratio of 1.5x or below. Penn Virginia believes it will achieve its leverage target by the end of 2018 and expects to spend within cash flow by the fourth quarter of 2018. At the end of the third quarter of 2017, pro forma for the recent acquisition, the Company’s net debt to EBITDAX ratio was 2.4x.

Guidance

The table below sets forth the Company’s current operational guidance for 2017 and 2018.

2017 2018
Production (BOEPD) % oil % oil
Fourth quarter 13,300 – 14,00074% 23,000 – 25,000 73%
Full Year10,400 – 11,000 73% 20,500 – 22,50073%
Realized Price Differentials - Fourth Qtr.
Oil (off WTI, per barrel)$1.00 - $2.00
Natural gas (off Henry Hub, per MMBtu)$0.10 - $0.20
Direct Operating Expenses - Fourth Qtr., per BOE
Lease operating expense$4.75 - $5.25
GPT expense $2.75 - $3.00
Ad valorem and production taxes $2.80 - $3.10
Cash G&A expense $3.20 - $3.50
Fourth Quarter Capital Expenditures (millions)$45 - $65
Full Year Capital Expenditures (millions)$120 - $140 $255 - $295

  • With the third rig expected to remain through the end of 2018, the Company expects approximately 75% production growth from the fourth quarter of 2017 to the fourth quarter of 2018, and 100% production growth in 2018 over 2017 volumes.
  • Fourth quarter 2017 volumes are expected to be slightly lower than previous guidance due to drilling and completion delays but the Company anticipates achieving the previously guided to range of 14,600 to 15,200 BOEPD by the end of the fourth quarter of 2017.
  • Due to drilling schedule delays, full year capital expenditures for 2018 include approximately $20 million of spending that is shifting from 2017.

Third Quarter 2017 Conference Call

A conference call and webcast discussing third quarter 2017 financial and operational results is scheduled for Thursday, November 9, 2017 at 11:00 a.m. EST. Prepared remarks will be followed by a question and answer period. Investors and analysts may participate via phone by dialing (877) 316-5288 (international: (734) 385-4977) five to 10 minutes before the scheduled start time, or via webcast by logging on to the Company’s website, www.pennvirginia.com, at least 15 minutes prior to the scheduled start time to download supporting materials and install any necessary audio software.

An on-demand replay of the webcast will also be available on the Company’s website beginning shortly after the webcast. The replay will also be available from November 9, 2017 through November 16, 2017 by dialing (855) 859-2056 (international (404) 537-3406) and entering the pass code 99844250.

About Penn Virginia Corporation

Penn Virginia Corporation is an independent oil and gas company engaged in the exploration, development and production of oil, NGLs and natural gas in various domestic onshore regions of the United States, with a primary focus in the Eagle Ford Shale in south Texas. For more information, please visit our website at www.pennvirginia.com.

Forward-Looking Statements

Certain statements contained herein that are not descriptions of historical facts are “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as "guidance," "projects," "estimates," “expects," "continues," "intends," “plans,” "believes," forecasts," "future," and variations of such words or similar expressions in this press release to identify forward-looking statements. Because such statements include assumptions, risks, uncertainties and contingencies, actual results may differ materially from those expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies include, but are not limited to, the following: risks related to the recently completed acquisition, the Company’s ability to realize expected benefits of the recently completed acquisition; potential adverse effects of the completed bankruptcy proceedings on our liquidity, results of operations, business prospects, ability to retain financing and other risks and uncertainties related to our emergence from bankruptcy; our ability to satisfy our short-term and long-term liquidity needs, including our ability to generate sufficient cash flows from operations or to obtain adequate financing to fund our capital expenditures and meet working capital needs; negative events or publicity adversely affecting our ability to maintain our relationships with our suppliers, service providers, customers, employees, and other third parties; the occurrence and effects of unusual weather or operating conditions, including force majeure events and hurricanes; new capital structure and the adoption of fresh start accounting, including the risk that assumptions and factors used in estimating enterprise value vary significantly from the current estimates in connection with the application of fresh start accounting; plans, objectives, expectations and intentions contained in this press release that are not historical; our ability to execute our business plan in the current commodity price environment; any decline in and volatility of commodity prices for oil, NGLs, and natural gas; our anticipated production and development results; our ability to develop, explore for, acquire and replace oil and natural gas reserves and sustain production; our ability to generate profits or achieve targeted reserves in our development and exploratory drilling and well operations; any impairments, write-downs or write-offs of our reserves or assets; the projected demand for and supply of oil, NGLs and natural gas; our ability to contract for drilling rigs, frac crews, supplies and services at reasonable costs; our ability to obtain adequate pipeline transportation capacity for our oil and gas production at reasonable cost and to sell the production at, or at reasonable discounts to, market prices; the uncertainties inherent in projecting future rates of production for our wells and the extent to which actual production differs from that estimated in our proved oil and natural gas reserves; drilling and operating risks; concentration of assets; our ability to compete effectively against other oil and gas companies; leasehold terms expiring before production can be established and our ability to replace expired leases; costs or results of any strategic initiatives; environmental obligations, results of new drilling activities, locations and methods, costs and liabilities that are not covered by an effective indemnity or insurance; the timing of receipt of necessary regulatory permits; the effect of commodity and financial derivative arrangements; our ability to retain or attract senior management and key employees; counterparty risk related to the ability of these parties to meet their future obligations; compliance with and changes in governmental regulations or enforcement practices, especially with respect to environmental, health and safety matters; physical, electronic and cybersecurity breaches; litigation that impacts us, our assets or our midstream service providers; uncertainties relating to general domestic and international economic and political conditions; and other risks set forth in our filings with the SEC. Additional information concerning these and other factors can be found in our press releases and public filings with the SEC, including our most recent annual report on Form 10-K and quarterly reports on Form 10-Q.

Many of the factors that will determine our future results are beyond the ability of management to control or predict. Readers should not place undue reliance on forward-looking statements, which reflect management's views only as of the date hereof. The statements in this release speak only as of the date of this release. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law.

Contact

Steve Hartman
Chief Financial Officer
Ph: (713) 722-6529
E-Mail: invest@pennvirginia.com


PENN VIRGINIA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - unaudited
(in thousands, except per share data)
Successor Successor Successor Predecessor Successor Predecessor
Three Months Three Months September 13 July 1 Nine Months January 1
Ended Ended Through Through Ended Through
September 30, June 30, September 30, September 12, September 30, September 12,
2017
2017
2016
2016
2017
2016
Revenues
Crude oil $29,963 $32,351 $5,508 $23,392 $92,387 $81,377
Natural gas liquids (NGLs) 2,393 2,043 333 1,680 6,738 6,064
Natural gas 1,977 1,880 475 1,889 6,200 6,208
Total product revenues 34,333 36,274 6,316 26,961 105,325 93,649
Gain (loss) on sales of assets, net 9 (134) - 504 (60) 1,261
Other, net 117 142 33 (804) 462 (600)
Total revenues 34,459 36,282 6,349 26,661 105,727 94,310
Operating expenses
Lease operating 5,254 5,370 756 4,209 15,540 15,626
Gathering, processing and transportation 2,399 2,555 576 4,767 7,505 13,235
Production and ad valorem taxes 1,668 2,119 375 574 5,766 3,490
General and administrative 5,939 2,873 1,476 6,748 12,093 37,434
Total direct operating expenses 15,260 12,917 3,183 16,298 40,904 69,785
Share-based compensation
- equity classified awards 1,013 848 - 147 2,707 1,511
Exploration - - - 4,641 - 10,288
Depreciation, depletion and amortization 10,659 11,076 2,029 8,024 31,545 33,582
Total operating expenses 26,932 24,841 5,212 29,110 75,156 115,166
Operating income (loss) 7,527 11,441 1,137 (2,449) 30,571 (20,856)
Other income (expense)
Interest expense (1,202) (1,274) (218) (1,363) (3,014) (58,018)
Derivatives (12,275) 11,061 (4,369) 8,934 15,802 (8,333)
Other 3 101 9 (2,154) 104 (3,184)
Reorganization items, net - - - 1,152,373 - 1,144,993
Income (loss) before income taxes (5,947) 21,329 (3,441) 1,155,341 43,463 1,054,602
Income tax benefit (expense) - - - - - -
Net income (loss) (5,947) 21,329 (3,441) 1,155,341 43,463 1,054,602
Preferred stock dividends - - - - - (5,972)
Net income (loss) attributable
to common shareholders $(5,947) $21,329 $(3,441) $1,155,341 $43,463 $1,048,630
Net income (loss) per share:
Basic $(0.40) $1.42 $(0.23) $12.94 $2.90 $11.91
Diluted $(0.40) $1.42 $(0.23) $10.37 $2.89 $8.50
Weighted average shares outstanding:
Basic 14,994 14,992 14,992 89,292 14,993 88,013
Diluted 14,994 15,050 14,992 111,458 15,062 124,087
Successor Successor Successor Predecessor Successor Predecessor
Three Months Three Months September 13 July 1 Nine Months January 1
Ended Ended Through Through Ended Through
September 30, June 30, September 30, September 12, September 30, September 12,
2017
2017
2016
2016
2017
2016
Production
Crude oil (MBbls) 627 685 127 547 1,920 2,311
NGLs (MBbls) 125 131 27 133 375 533
Natural gas (MMcf) 676 653 174 695 2,094 3,012
Total (MBOE) 864 925 183 796 2,644 3,346
Prices
Crude oil ($ per Bbl) $47.78 $47.25 $43.35 $42.75 $48.12 $35.21
NGLs ($ per Bbl) $19.19 $15.59 $12.56 $12.66 $17.98 $11.37
Natural gas ($ per Mcf) $2.92 $2.88 $2.73 $2.72 $2.96 $2.06
Prices - Adjusted for derivative settlements
Crude oil ($ per Bbl) $49.04 $46.57 $43.35 $44.68 $47.25 $55.98
NGLs ($ per Bbl) $19.19 $15.59 $12.56 $12.66 $17.98 $11.37
Natural gas ($ per Mcf) $2.92 $2.88 $2.73 $2.72 $2.96 $2.06
Aggregate price (excluding the effects of derivatives) $39.72 $39.24 $34.59 $33.88 $39.84 $27.99
% oil production 72.5% 74.1% 69.6% 68.8% 72.6% 69.1%



PENN VIRGINIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS - unaudited
(in thousands)
September 30,December 31,
2017
2016
Assets
Current assets $64,838 $38,884
Net property and equipment 486,060 247,473
Other assets 11,343 5,329
Total assets $562,241 $291,686
Liabilities and shareholders' equity
Current liabilities $75,870 $62,629
Other liabilities 9,554 18,509
Total long-term debt, net 245,055 25,000
Total shareholders' equity 231,762 185,548
Total liabilities and shareholders' equity $562,241 $291,686
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited
(in thousands)
Successor Successor Predecessor Predecessor Successor Predecessor
Three Months Three Months September 13 July 1 Nine Months January 1
Ended Ended Through Through Ended Through
September 30, June 30, September 30, September 12, September 12, September 12,
2017
2017
2016
2016
2017
2016
Cash flows from operating activities
Net income (loss) $(5,947) $21,329 $(3,441) $1,155,341 $43,463 $1,054,602
Adjustments to reconcile net income (loss) to
to net cash provided by operating activities:
Non-cash reorganization items - - - (1,178,302) - (1,178,302)
Depreciation, depletion and amortization 10,659 11,076 2,029 8,024 31,545 33,582
Accretion of firm transportation obligation - - - - - 317
Derivative contracts:
Net losses (gains) 12,275 (11,061) 4,369 (8,934) (15,802) 8,333
Cash settlements, net 788 (466) - 1,056 (1,670) 48,008
(Gain) loss on sales of assets, net (9) 134 - (504) 60 (1,261)
Non-cash exploration expense - - - 4,325 - 6,038
Non-cash interest expense 374 800 38 - 1,362 22,189
Share-based compensation (equity-classified) 1,013 848 - 147 2,707 1,511
Other, net 21 20 - - 59 (13)
Changes in operating assets and liabilities (4,897) 4,195 585 3,321 (11,430) 35,243
Net cash provided by (used in) operating activities 14,277 26,875 3,580 (15,526) 50,294 30,247
Cash flows from investing activities
Acquisition, net (200,162) - - - (200,162) -
Capital expenditures (24,261) (25,842) - (784) (67,844) (15,359)
Proceeds from sales of assets, net - - - 98 - 224
Other, net - - - - - 1,186
Net cash used in investing activities (224,423) (25,842) - (686) (268,006) (13,949)
Cash flows from financing activities
Proceeds from credit facility borrowings 25,000 7,000 - 75,350 39,000 75,350
Repayment of credit facility borrowings (5,000) - (21,000) (113,653) (7,000) (119,121)
Proceeds from second lien loans, net 196,000 - - - 196,000 -
Debt issuance costs paid (8,472) (1,090) - (3,011) (9,562) (3,011)
Proceeds received from rights offering, net - 55 - 49,943 55 49,943
Other, net - (25) - - (55) -
Net cash provided by (used in) financing activities 207,528 5,940 (21,000) 8,629 218,438 3,161
Net (decrease) increase in cash and cash equivalents (2,618) 6,973 (17,420) (7,583) 726 19,459
Cash and cash equivalents - beginning of period 10,105 3,132 31,414 38,997 6,761 11,955
Cash and cash equivalents - end of period $7,487 $10,105 $13,994 $31,414 $7,487 $31,414



PENN VIRGINIA CORPORATION
CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited
(in thousands, except per unit amounts)
Readers are reminded that non-GAAP measures are merely a supplement to, and not a replacement for, or superior to financial measures prepared according to GAAP. They should be evaluated in conjunction with the GAAP financial measures. It should be noted as well that our non-GAAP information may be different from the non-GAAP information provided by other companies.
Reconciliation of GAAP "Net income (loss)" to Non-GAAP "Adjusted EBITDAX"
Adjusted EBITDAX represents net income (loss) before interest expense, income tax expense (benefit), depreciation, depletion and amortization expense, exploration, and share-based compensation expense, further adjusted to exclude the effects of gains and losses on sales of assets, accretion of firm transportation obligation, non-cash changes in the fair value of derivatives, and special items including acquisition transaction costs, reorganization items, strategic and financial advisory costs, restructuring expenses and account write-offs and reserves prior to our emergence from bankruptcy. We believe this presentation is commonly used by investors and professional research analysts for the valuation, comparison, rating, and investment recommendations of companies within the oil and gas exploration and production industry. We use this information for comparative purposes within our industry. Adjusted EBITDAX is not a measure of financial performance under GAAP and should not be considered as a measure of liquidity or as an alternative to net income (loss). Adjusted EBITDAX as defined by Penn Virginia may not be comparable to similarly titled measures used by other companies and should be considered in conjunction with net income (loss) and other measures prepared in accordance with GAAP, such as operating income or cash flows from operating activities. Adjusted EBITDAX should not be considered in isolation or as a substitute for an analysis of Penn Virginia's results as reported under GAAP.
Successor Successor Successor Predecessor Successor Predecessor
Three Months Three Months September 13 July 1 Nine Months January 1
Ended Ended Through Through Ended Through
September 30, June 30, September 30, September 12, September 30, September 12,
2017
2017
2016
2016
2017
2016
Net income (loss) $(5,947) $21,329 $(3,441) $1,155,341 $43,463 $1,054,602
Adjustments to reconcile to Adjusted EBITDAX:
Interest expense 1,202 1,274 218 1,363 3,014 58,018
Income tax (benefit) expense - - - - - -
Depreciation, depletion and amortization 10,659 11,076 2,029 8,024 31,545 33,582
Exploration - - - 4,641 - 10,288
Share-based compensation expense (equity-classified) 1,013 848 - 147 2,707 1,511
Loss (gain) on sale of assets, net (9) 134 - (504) 60 (1,261)
Accretion of firm transportation obligation - - - - - 317
Adjustments for derivatives:
Net losses (gains) 12,275 (11,061) 4,369 (8,934) (15,802) 8,333
Cash settlements, net 788 (466) - 1,056 (1,670) 48,008
Adjustment for special items:
Acquisition transaction costs 1,505 - - - 1,505 -
Reorganization items, net - - - (1,152,373) - (1,144,993)
Strategic and financial advisory costs - - - - - 18,036
Restructuring expenses - - 18 2,722 (20) 3,821
Account write-offs and reserves prior to emergence from bankruptcy - - - 3,123 - 3,123
Adjusted EBITDAX $21,486 $23,134 $3,193 $14,606 $64,802 $93,385
Adjusted EBITDAX per BOE $24.85 $25.02 $17.49 $18.36 $24.51 $27.91
Reconciliation of GAAP "General administrative expenses" to Non-GAAP "Adjusted cash-based general and administrative expenses"
Adjusted cash-based general and administrative expense ("Adjusted G&A") is a supplemental non-GAAP financial measure that excludes certain non-recurring expenses and non-cash share-based compensation expense. We believe that the non-GAAP measure of Adjusted G&A is useful to investors because it provides readers with a meaningful measure of our recurring G&A expense and provides for greater comparability period-over-period. The table details all adjustments to G&A on a GAAP basis to arrive at Adjusted G&A.
Successor Successor Successor Successor Successor Successor
Three Months Three Months September 13 July 1 Nine Months January 1
Ended Ended Through Through Ended Through
September 30, June 30, September 30, September 12, September 30, September 12,
2017
2017
2016
2016
2017
2016
General and administrative expenses - direct $5,939 $2,873 $1,476 $6,748 $12,093 $37,434
Share-based compensation - equity-classified awards 1,013 848 - 147 2,707 1,511
GAAP General and administrative expenses 6,952 3,721 1,476 6,895 14,800 38,945
Less: Share-based compensation - equity-classified awards (1,013) (848) - (147) (2,707) (1,511)
Significant special charges:
Acquisition transaction costs (1,505) - - - (1,505) -
Strategic and financial advisory costs - - - - - (18,036)
Restructuring expenses - - (18) (2,722) 20 (3,821)
Adjusted cash-based general and administrative expenses $4,434 $2,873 $1,458 $4,026 $10,608 $15,577
Reconciliation of GAAP "Net income (loss)" to Non-GAAP "Adjusted net income (loss) attributable to common shareholders"
Adjusted net income (loss) is a non-GAAP financial measure that represents net income (loss) adjusted to exclude the effects, net of income taxes, of non-cash changes in the fair value of derivatives, net gains and losses on the sales of assets, acquisition transaction costs, reorganization items, strategic and financial advisory costs, restructuring expenses and account write-offs and reserves prior to our emergence from bankruptcy. We believe that Non-GAAP adjusted net income (loss) and non-GAAP adjusted net income (loss) per share amounts provide meaningful supplemental information regarding our operational performance. This information facilitates management's internal comparisons to the Company's historical operating results as well as to the operating results of our competitors. Since management finds this measure to be useful, the Company believes that our investors can benefit by evaluating both non-GAAP and GAAP results. Adjusted net income (loss) non-GAAP is not a measure of financial performance under GAAP and should not be considered as a measure of liquidity or as an alternative to net income (loss).
Successor Successor Successor Predecessor Successor Predecessor
Three Months Three Months September 13 July 1 Nine Months January 1
Ended Ended Through Through Ended Through
September 30, June 30, September 30, September 12, September 30, September 12,
2017 2017 2016 2016 2017 2016
Net income (loss) $(5,947) $21,329 $(3,441) $1,155,341 $43,463 $1,054,602
Adjustments for derivatives:
Net losses (gains) 12,275 (11,061) 4,369 (8,934) (15,802) 8,333
Cash settlements, net 788 (466) - 1,056 (1,670) 48,008
Loss (gain) on sale of assets, net (9) 134 - (504) 60 (1,261)
Acquisition transaction costs 1,505 - - - 1,505 -
Reorganization items, net - - - (1,152,373) - (1,144,993)
Strategic and financial advisory costs - - - - - 18,036
Restructuring expenses - - 18 2,722 (20) 3,821
Account write-offs and reserves prior to emergence from bankruptcy - - - 3,123 - 3,123
Impact of adjustment on income taxes - - - - - -
Adjusted net income (loss) $8,612 $9,936 $946 $431 $27,536 $(10,331)
Adjusted net income (loss) attributable to common shareholders, per diluted share $0.57 $0.66 $0.06 $0.00 $1.83 $(0.08)


Source:Penn Virginia Corporation