May 9, 2024
Diversified Energy
Company PLC
("Diversified" or the "Company")
Diversified Reports Solid
First Quarter and Benefits from Expansion of NGL Processing
Capabilities
Year-Over-Year Absolute Debt
Reduction and Expense Improvements
Black Bear Facility
Strengthens the Company's Midstream Value Chain and Integrates
Complementary Long-life Infrastructure Assets
Diversified Energy Company PLC (LSE:
DEC, NYSE: DEC) is pleased to announce it is trading in line with
expectations and provides the following operations and trading
update for the quarter ended March 31,
2024. In addition, the Company is providing an update on its
Black Bear processing facility.
Delivering Reliable Results
•
Recorded average 1Q24 production of 723 MMcfepd
(121 Mboepd)
◦ Exit rate
of 742 MMcfepd (124
Mboepd)
◦ Production
essentially flat from 4Q23 adj. production of 725 MMcfepd (121
Mboepd)(a)
• Operating
Cash Flow of $107 million, and
Net loss of $15 million inclusive of non-cash unsettled derivative
fair value adjustments, and non-cash depreciation, depletion and
amortization
• Achieved
1Q24 Adjusted EBITDA of $102 million and Free Cash Flow of $74 million
◦ Realized
48% Adjusted EBITDA Margin(b)
and TTM Free Cash Flow Yield of 31%(c)
• Adjusted
Operating Cost per Unit(d) of $1.68/Mcfe ($10.10/Boe);
~7% improvement vs 4Q23
• Realized
$22 million in gains on settled derivatives
as a result of a prudent hedging program, providing a 28% uplift to Adjusted EBITDA
◦ Recently
added additional natural gas hedges in 2026 at $3.95 and 2027 at
$4.01
Expansion of Processing Capabilities- Black Bear
Facility
• Located in DeSoto Parish, Louisiana, includes two processing
plants, and FERC regulated NGL pipeline
• Strategic
purchase in April 2022 for ~$10 million as part of overall vertical
integration strategy
• Recently
completed upgrade and reroute that provides processing capacity for
~120 Mmcfpd
◦
Anticipated to process ~66 Mmcfpd of DEC production while also
allowing for potential third-party processing revenue and
additional volume from potential bolt-on acquisitions
•
Improvement of ~20% on transportation and fractionation fees and
anticipated margin improvement of ~$9 million per year
◦ Eliminates
third-party processing and compression fees on the transferred
Diversified production volumes
Executing Strategic Objectives
• Declared
1Q24 interim dividend of $0.29 cents per
share
•
Repurchased ~400,000 shares in 2024 for £3.9 million
($5 million) at an
average of £9.74/share
◦
~$18 million of share repurchases
(inclusive of EBT(e) purchases) since the 2023 Annual
General Meeting, representing ~3% of Issued Share
Capital
◦ More than
$830 million in aggregate return of
capital(f) since the Company's 2017 initial public
offering
• Reduced
debt outstanding by ~20% (~$309 million) compared to Q1
2023
•
$115 million of undrawn credit facility
capacity and unrestricted cash; leverage ratio(g) of
2.5x
• Previously
announced acquisition of Oaktree Capital Management working
interest proceeding on schedule and anticipated to close in due
course
Creating Value Through Stewardship
• Published
2023 Sustainability Report highlighting significant emissions
reduction achievements, record levels of well retirement, and
implementation of innovative sustainability strategies
• Next LVL
Energy completed 76 well retirements
through March 2024, in line with prior year retirements of
74 wells over the same period
Rusty Hutson, Jr., CEO of Diversified,
commented:
"Building a portfolio of
high-performing, mature producing assets and optimizing the cost
structure has been the foundation of our strategic vision since
inception. The Company's ability to continue to deliver solid
results, both operationally and financially, reinforces the success
of this strategy. I am pleased that our ongoing focus on cost
reduction opportunities has translated directly into a 7%
sequential quarterly operating cost improvement, allowing us to
effectively navigate the current natural gas market
headwinds.
Additionally, I am excited to
announce that our Black Bear processing facility has begun
service. Completing this strategic project demonstrates our
success in leveraging in-house expertise to unlock value and
facilitate meaningful cash flow generation. This facility will
integrate our own natural gas production in the area and is
expected to deliver approximately $9 million of additional margin
creation annually while providing additional potential upside from
any non-utilized capacity to process third-party gas from other
operators and accretive bolt-on acquisitions in the Cotton Valley
and Haynesville region.
We will continue to observe our
commitment to our "Focus Five" priorities while looking to capture
synergies, operate efficiently, and ensure Diversified remains the
Right Company at the
Right Time. We look forward to completing the
acquisition of additional working interest production from Oaktree.
This acquisition provides Diversified with increased volumes in our
Central region, which has exposure to the LNG pricing markets on
the US Gulf Coast. I am confident that the reliability and
consistency of our assets will continue to provide meaningful cash
flow, financial flexibility and support our ability to return value
to shareholders."
Black Bear Processing Facility
In April 2022, the Company closed on
the strategic purchase of the Black Bear processing facility for
approximately $10 million in cash. This NGL processing facility
located within the Company's Central Region (DeSoto Parish, LA)
maintains two 60,000 mcf per day cryogenic processing plants (total
capacity of approximately 120,000 mcf per day) with direct
connection to downstream natural gas and NGL markets. At full
utilization, the facility can produce approximately 3,000 barrels
per day of NGL's. The Company has completed a reroute and
maintenance optimization program relative to the facility that will
increase processed volumes to approximately 66,000 mcf per day of
Diversified's natural gas production, which is approximately a 400%
increase from when Diversified acquired the facility. The addition
of this strategic midstream infrastructure is anticipated to drive
further cost improvements, provide the potential for ethane
recovery, and present the ability to receive third-party revenue
from the current non-utilized capacity.
Operations and Finance Update
Production
The Company recorded exit rate
production in March 2024 of 742 MMcfepd
(124 Mboepd) and delivered 1Q24 average net daily production of 723 MMcfepd (121 Mboepd).
Diversified's average production for the quarter reflects the
exceptionally shallow decline profile of its assets, with average
production for the period representing an effectively 0% change in volumes(a) compared to the 4Q23
average of 725 MMcfepd (121 Mboepd), adjusted
for the recent divestiture of assets associated with the previously
announced ABSVII Asset Sale transaction.
Margin and Total Cash Expenses per Unit
Diversified's consistent application
of the Company's hedging strategy again provided material
insulation from commodity price volatility, positively impacting
1Q24 per unit Total Revenues, inclusive of Settled Hedges of
$3.25/Mcfe ($19.50/Boe) despite headwinds to natural gas prices
during the quarter.
Adjusted EBITDA
Margins(b) of 48% (42% unhedged) reflect the benefit of the Company's per
unit revenues and ongoing decreases in commodity-price linked
expenses that more than offset production-related changes to
per-unit Lease Operating Expense and Midstream
Expense. General and Administrative expenses remained
consistent with prior period
levels.
|
|
1Q24
|
|
4Q23
|
|
|
|
|
$/Mcfe
|
|
$/Boe
|
|
$/Mcfe
|
|
$/Boe
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Average Realized Price1
|
|
$ 3.25
|
|
$ 19.50
|
|
$ 3.49
|
|
$
20.92
|
|
(7) %
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Cost per
Unit(d)
|
|
1Q24
|
|
4Q23
|
|
|
|
|
$/Mcfe
|
|
$/Boe
|
|
$/Mcfe
|
|
$/Boe
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Lease Operating
Expense2
|
|
$ 0.65
|
|
$ 3.91
|
|
$ 0.62
|
|
$ 3.69
|
|
6%
|
Midstream Expense
|
|
0.27
|
|
1.61
|
|
0.25
|
|
1.48
|
|
9%
|
Gathering and
Transportation
|
|
0.31
|
|
1.85
|
|
0.35
|
|
2.07
|
|
(11)%
|
Production Taxes
|
|
0.12
|
|
0.74
|
|
0.19
|
|
1.16
|
|
(36)%
|
Total Operating Expense2
|
|
$ 1.35
|
|
$ 8.12
|
|
$
1.40
|
|
$
8.40
|
|
(3)%
|
Employees, Administrative Costs and
Professional Fees(h)
|
|
0.33
|
|
1.98
|
|
0.41
|
|
2.46
|
|
(20)%
|
Adjusted Operating Cost per Unit2
|
|
$ 1.68
|
|
$
10.10
|
|
$
1.81
|
|
$ 10.86
|
|
(7)%
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin(b)
|
|
48%
|
|
48%
|
|
|
1 1Q24
excludes $0.05/Mcfe ($0.30/Boe) and 4Q23 excludes $0.08/Mcfe ($0.49/Boe) of other
revenues generated by Next LVL Energy
Values may not sum due to rounding
2 1Q24 excludes $(0.07)/Mcfe ($(0.39)/Boe) and
4Q23 excludes $(0.08)/Mcfe ($(0.47)/Boe) of expenses attributable to Next LVL
Energy
Values may not sum due to rounding
Results of Hedging and Current Financial
Derivatives Portfolio
Diversified's consistent application
of hedges to strategically secure cash flows and margins resulted
in a 1Q24 hedge floor price of $3.36/Mcf,
40% higher than the average settled price
for NYMEX Henry Hub during the quarter(j).
For the balance of the year, the
Company's strategy continues to be well-placed for cash generation
with a remaining 2024 average natural gas hedge floor of
$3.41/Mcf, currently situated at a
~40% premium to the NYMEX
strip(i) and a ~65% premium to
the 2.04/MMBtu active contract
price(i). The table below represents the Company's
full-year hedge positions through calendar year 2026 at
April 30, 2024:
|
GAS (Mcf)
|
|
NGL (Bbl)
|
|
OIL (Bbl)
|
|
Wtd. Avg.
Hedge Price(j)(k)
|
|
~ % of
Production Hedged(l)
|
|
Wtd. Avg.
Hedge Price(j)
|
|
~ % of
Production Hedged(l)
|
|
Wtd. Avg.
Hedge Price(j)
|
|
~ % of
Production Hedged(l)
|
|
|
|
|
|
|
|
|
|
|
|
|
FY24
|
$3.42
|
|
85%
|
|
$37.74
|
|
65%
|
|
$62.54
|
|
55%
|
FY25
|
$3.20
|
|
80%
|
|
$30.22
|
|
45%
|
|
$59.01
|
|
40%
|
FY26
|
$3.18
|
|
60%
|
|
$27.68
|
|
25%
|
|
$59.48
|
|
30%
|
Natural gas pricing has shown a
meaningful recent improvement during 2024, driven by several
overriding supply and demand factors, including continued
production management through curtailments, deferrals of well
completions, and the emerging data center thematic, which would
require material volumes of additional natural gas power demand.
The table below illustrates the natural gas price curve
movements:
|
|
Strip at February
2024
|
|
Strip at May
2024
|
|
Pricing
Improvement
|
2025
|
|
$3.35
|
|
$3.51
|
|
5%
|
2026
|
|
$3.68
|
|
$3.95
|
|
7%
|
2027
|
|
$3.74
|
|
$4.04
|
|
8%
|
2028
|
|
$3.70
|
|
$3.99
|
|
8%
|
2029
|
|
$3.62
|
|
$3.96
|
|
9%
|
2030
|
|
$3.51
|
|
$3.95
|
|
13%
|
2031-2034
|
|
$3.38
|
|
$4.06
|
|
20%
|
Source: Bloomberg, all values priced in
$/MMBtu
|
Environmental Update
Emissions Reductions Activity
During the quarter, Diversified
continued to execute its emissions detection activities throughout
its operating footprint through a combination of aerial LiDAR and
handheld LDAR deployments. Upstream emissions surveys in Appalachia
and the Central Region have maintained no-leak rates of
99% through the quarter, reflecting the
ongoing impact of Diversified's stewardship focus.
The Company continues to seek
innovation in its application of emissions reductions and
mitigation efforts, including pilot projects to convert upstream
and midstream facilities from natural gas-powered pneumatic devices
to air compression and electric actuation.
Asset Retirement Progress and Next LVL Energy
Update
In 1Q24 the
Company safely retired 76 wells
(72 operated by Diversified), consistent
with the 74 well retirements in 1Q23 and
representing substantial progress towards the Company's annual goal
of retiring 200 operated wells per year. Next LVL Energy's plans
for the remainder of 2024 include revenue generation from its
continued partnership with states and third-party operators.
Diversified expects to achieve full-year retirements similar to
2023 while significantly offsetting the
cash costs associated with retiring its own wells.
Oaktree Working Interest Acquisition
The Company's previously announced
acquisition of Oaktree's proportionate interest in the acquired
assets from Indigo, Tanos III, East Texas, and Tapstone (the
"Assets") continues to proceed as planned with an estimated
transaction close date within 60 days post general shareholder
meeting, pending shareholder and other customary
approvals.
Footnotes:
(a)
|
Sequential period decline rate of
~0% calculated as the change in average daily production from 4Q23
to 1Q24, excluding the net production impact of the ABSVII
divestiture on the previously reported average daily production for
4Q23.
|
(b)
|
For purposes of comparability,
Adjusted EBITDA Margin excludes Other Revenue of $3 million in 1Q24 and $6
million in 4Q23, and Lease Operating Expense of $4 million in 1Q24 and $6
million in 4Q23 associated with Diversified's wholly owned plugging
subsidiary, Next LVL Energy; For more information, please refer to
the Non-IFRS reconciliations.
|
(c)
|
Calculated using the trailing twelve
Free Cash Flow per share, dividend m the trailing twelve month
average share price of £14.79 /
$18.58; Trailing twelve month Free Cash
Flow per Share calculated as Free Cash Flow of $279 million dividend by average shares outstanding of
48,269,478 during the twelve month
period.
|
(d)
|
Adjusted Operating Cost represent
total lease operating costs plus recurring administrative costs.
Total lease operating costs include base lease operating expense,
owned gathering and compression (midstream) expense, third-party
gathering and transportation expense, and production taxes.
Recurring administrative expenses (Adjusted G&A) is a Non-IFRS
financial measure defined as total administrative expenses
excluding non-recurring acquisition & integration costs and
non-cash equity compensation; For purposes of comparability,
excludes certain amounts related to Diversified's wholly
owned plugging subsidiary, Next LVL Energy.
|
(e)
|
As used herein, "EBT" refers to
Diversified's Employee Benefit Trust, which was established in 2022
to purchase shares already in the market and is operated through a
third-party trustee. The objective of the EBT is to benefit the
employees of the Company and its wholly owned subsidiaries and in
particular, to provide a mechanism to satisfy rights to shares
arising on the exercise or vesting of awards under share based
incentive plans and reduce dilution for shareholders.
|
(f)
|
Includes the total value of
dividends paid and declared and share repurchases (including
Employee Benefit Trust) since the Company's initial public offering
in 2017.
|
(g)
|
As used herein, Net Debt-to-Adjusted
EBITDA, or "Leverage", is measured as current Net Debt, divided by
pro forma Adjusted EBITDA for the twelve months ended March
31, 2024; For more information, please refer to the included
Non-IFRS reconciliations.
|
(h)
|
As used herein, employees,
administrative costs and professional services represents total
administrative expenses excluding cost associated with
acquisitions, other adjusting costs and non-cash expenses. We use
employees, administrative costs and professional services because
this measure excludes items that affect the comparability of
results or that are not indicative of trends in the ongoing
business.
|
(i)
|
Using NYMEX strip at May 1, 2024,
inclusive settled contracts for January 2024 through May
2024.
|
(j)
|
Weighted average price reflects the
weighted average of the swap price and floor price for collar
contracts as applicable.
|
(k)
|
MMBtu prices have been
converted to Mcf using a richness factor of
1Mcf=1.07MMBtu.
|
(l)
|
Illustrative percent hedged,
calculated using 1Q24 average production and assuming a
consolidated annual corporate decline rate of 10%.
|
For Company-specific items, refer
also to the Glossary of Terms and/or Alternative Performance
Measures found in the Company's Annual Report and Form 20-F
for the year ended December 31, 2023 filed with the United States
Securities and Exchange Commission.
For further information, please
contact:
Diversified Energy Company PLC
|
+1
973 856 2757
|
Doug Kris
|
dkris@dgoc.com
|
Senior Vice President, Investor
Relations & Corporate Communications
|
www.div.energy
|
|
|
FTI
Consulting
|
dec@fticonsulting.com
|
U.S. & UK Financial Public
Relations
|
|
About Diversified Energy Company PLC
Diversified is a leading publicly
traded energy company focused on natural gas and liquids
production, transport, marketing, and well retirement. Through our
differentiated strategy, we acquire existing, long-life assets and
invest in them to improve environmental and operational performance
until retiring those assets in a safe and environmentally secure
manner. Recognized by ratings agencies and organizations for our
sustainability leadership, this solutions-oriented, stewardship
approach makes Diversified the Right Company at the Right Time to
responsibly produce energy, deliver reliable free cash flow, and
generate shareholder value.
Forward-Looking Statements
This announcement contains
forward-looking statements (within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995) concerning the financial
condition, results of operations and business of the Company and
its wholly owned subsidiaries (the "Group"), the Assets, and the
Group following the Oaktree acquisition. All statements other than
statements of historical fact are, or may be deemed to be,
forward-looking statements. These forward-looking statements, which
contain the words "anticipate", "believe", "intend", "estimate",
"expect", "may", "will", "seek", "continue", "aim", "target",
"projected", "plan", "goal", "achieve" and words of similar
meaning, reflect the Company's beliefs and expectations and are
based on numerous assumptions regarding the Company's present and
future business strategies and the environment the Company and the
Group will operate in and are subject to risks and uncertainties
that may cause actual results to differ materially. No
representation is made that any of these statements or forecasts
will come to pass or that any forecast results will be achieved.
Forward-looking statements involve inherent known and unknown
risks, uncertainties and contingencies because they relate to
events and depend on circumstances that may or may not occur in the
future and may cause the actual results, performance or
achievements of the Company or the Group to be materially different
from those expressed or implied by such forward looking statements.
Many of these risks and uncertainties relate to factors that are
beyond the Company's or the Group's ability to control or estimate
precisely, such as future market conditions, currency fluctuations,
the behavior of other market participants, the actions of
regulators and other factors such as the Company's or the Group's
ability to continue to obtain financing to meet its liquidity
needs, changes in the political, social and regulatory framework in
which the Company or the Group operate or in economic or
technological trends or conditions. The list above is not
exhaustive and there are other factors that may cause the Company's
or the Group's actual results to differ materially from the
forward-looking statements contained in this announcement,
Including the risk factors described in the "Risk Factors" section
in the Company's Annual Report and Form 20-F for the year ended
December 31, 2023, filed with the United States Securities and
Exchange Commission.
Forward-looking statements speak
only as of their date and neither the Company nor the Group nor any
of its respective directors, officers, employees, agents,
affiliates or advisers expressly disclaim any obligation to
supplement, amend, update or revise any of the forward-looking
statements made herein, except where it would be required to do so
under applicable law. In light of these risks, uncertainties and
assumptions, the events described in the forward-looking statements
in this announcement, such as the timing, if at all, of completion
of the Oaktree acquisition, may not occur. As a result, you are
cautioned not to place undue reliance on such forward-looking
statements. Past performance of the Company cannot be relied on as
a guide to future performance. No statement in this announcement is
intended as a profit forecast or a profit estimate and no statement
in this announcement should be interpreted to mean that the
financial performance of the Company for the current or future
financial years would necessarily match or exceed the historical
published for the Company.
Use
of Non-IFRS Measures
Certain key operating metrics that
are not defined under IFRS (alternative performance measures) are
included in this announcement. These non-IFRS measures are used by
us to monitor the underlying business performance of the Company
from period to period and to facilitate comparison with our peers.
Since not all companies calculate these or other non-IFRS metrics
in the same way, the manner in which we have chosen to calculate
the non-IFRS metrics presented herein may not be compatible with
similarly defined terms used by other companies. The non-IFRS
metrics should not be considered in isolation of, or viewed as
substitutes for, the financial information prepared in accordance
with IFRS. Certain of the key operating metrics are based on
information derived from our regularly maintained records and
accounting and operating systems.
Adjusted EBITDA
As used herein, EBITDA represents
earnings before interest, taxes, depletion, depreciation and
amortization. adjusted EBITDA includes adjusting for items that are
not comparable period-over-period, namely, accretion of asset
retirement obligation, other (income) expense, loss on joint and
working interest owners receivable, (gain) loss on bargain
purchases, (gain) loss on fair value adjustments of unsettled
financial instruments, (gain) loss on natural gas and oil property
and equipment, costs associated with acquisitions, other adjusting
costs, non-cash equity compensation, (gain) loss on foreign
currency hedge, net (gain) loss on interest rate swaps and items of
a similar nature.
Adjusted EBITDA should not be
considered in isolation or as a substitute for operating profit or
loss, net income or loss, or cash flows provided by operating,
investing, and financing activities. However, we believe such a
measure is useful to an investor in evaluating our financial
performance because it (1) is widely used by investors in the
natural gas and oil industry as an indicator of underlying
business performance; (2) helps investors to more
meaningfully evaluate and compare the results of our operations
from period to period by removing the often-volatile revenue impact
of changes in the fair value of derivative instruments prior to
settlement; (3) is used in the calculation of a key metric in one
of our Credit Facility financial covenants; and (4) is used by us
as a performance measure in determining executive compensation.
When evaluating this measure, we believe investors also commonly
find it useful to evaluate this metric as a percentage of our total
revenue, inclusive of settled hedges, producing what we refer to as
our adjusted EBITDA margin.
The following table presents a reconciliation of the IFRS
Financial measure of Net Income (Loss) to Adjusted EBITDA for each
of the periods listed:
Amounts in 000's
|
Three Months
Ended
March 31,
2024
|
|
Three Months
Ended
March 31,
2023
|
|
Twelve Months
Ended
December 31,
2023
|
Income (loss) available to ordinary shareholders after
taxation
|
$(15,145)
|
|
$392,751
|
|
$759,701
|
Finance costs
|
27,416
|
|
32,259
|
|
134,166
|
Accretion of asset retirement
obligation
|
7,183
|
|
6,968
|
|
26,926
|
Other (income) expense
|
(5)
|
|
(41)
|
|
(385)
|
Income tax (benefit)
expense
|
5,633
|
|
126,549
|
|
240,643
|
Depreciation, depletion and
amortization
|
57,015
|
|
55,236
|
|
224,546
|
Gain on bargain purchase
|
-
|
|
-
|
|
-
|
(Gain) loss on fair value
adjustments of unsettled financial instruments
|
13,552
|
|
(475,001)
|
|
(905,695)
|
(Gain) loss on oil and gas programme
and equipment(a)
|
4
|
|
(224)
|
|
20
|
(Gain) loss on sale of equity
interest
|
-
|
|
-
|
|
(18,440)
|
Unrealized (gain) loss on
investment
|
-
|
|
-
|
|
(4,610)
|
Impairment of proved
properties
|
-
|
|
-
|
|
41,616
|
Costs associated with
acquisitions
|
1,519
|
|
5,610
|
|
16,775
|
Other adjusting
costs(b)
|
3,693
|
|
2,042
|
|
17,794
|
Non-cash equity
compensation
|
1,268
|
|
1,951
|
|
6,494
|
(Gain) on foreign currency
hedge
|
-
|
|
521
|
|
521
|
(Gain) loss on interest rate
swap
|
(50)
|
|
2,740
|
|
2,722
|
Total Adjustments
|
$117,228
|
|
$(241,390)
|
|
$(216,907)
|
Adjusted EBITDA
|
$102,083
|
|
$151,361
|
|
$542,794
|
a)
Excludes proceeds received for leasehold
sales.
b)
Other adjusting costs for the year ended December 31, 2023
were primarily associated with legal and professional fees related
to the U.S. listing, legal fees for certain litigation, and
expenses associated with unused firm transportation
agreements.
|
Net Debt and Net Debt-to-Adjusted
EBITDA
As used herein, net debt represents
total debt as recognized on the balance sheet less cash and
restricted cash. Total debt includes our borrowings under the
Credit Facility and borrowings under or issuances of, as
applicable, our subsidiaries' securitization facilities. We believe
net debt is a useful indicator of our leverage and capital
structure.
As used herein, net debt-to-adjusted
EBITDA, or "leverage" or "leverage ratio," is measured as net debt
divided by adjusted trailing twelve-month EBITDA. We believe that
this metric is a key measure of our financial liquidity and
flexibility and is used in the calculation of a key metric in one
of our Credit Facility financial covenants.
The following table presents a reconciliation of the IFRS
Financial measure of Total Borrowings to the Non-IFRS measure of
Net Debt and a calculation of Net Debt-to-Adjusted EBITDA and Net
Debt-to-Pro Forma Adjusted EBITDA for each of the periods
listed:
Amounts in 000's
|
Three Months
Ended
March 31,
2024
|
|
Three Months
Ended
March 31,
2023
|
|
Twelve Months
Ended
December 31,
2023
|
Credit Facility
|
$193,000
|
|
$260,000
|
|
$159,000
|
ABS I Note
|
95,968
|
|
118,559
|
|
100,898
|
ABS II Note
|
120,494
|
|
142,028
|
|
125,922
|
ABS III Note
|
263,587
|
|
304,790
|
|
274,710
|
ABS IV Note
|
93,240
|
|
120,456
|
|
99,951
|
ABS V Note
|
271,502
|
|
349,460
|
|
290,913
|
ABS VI Note
|
148,071
|
|
195,845
|
|
159,357
|
ABS VII Note
|
-
|
|
-
|
|
-
|
Term Loan I
|
102,165
|
|
116,083
|
|
106,470
|
Miscellaneous
|
7,382
|
|
8,768
|
|
7,627
|
Total borrowings
|
$1,295,409
|
|
$1,615,989
|
|
$1,324,848
|
LESS: Cash
|
3,456
|
|
4,528
|
|
3,753
|
LESS: Restricted cash
|
32,828
|
|
42,941
|
|
36,251
|
Total non-current borrowings, net
|
$1,259,125
|
|
$1,568,516
|
|
$1,284,842
|
Adjusted EBITDA
|
$102,083
|
|
$151,361
|
|
$542,794
|
Pro
forma TTM adjusted EBITDA
|
$493,515
|
|
$669,478
|
|
$549,258
|
Net
debt-to-pro forma TTM adjusted
EBITDA(a)
|
2.5x
|
|
2.3x
|
|
2.3x
|
(a) excludes Miscellaneous debt, which is primarily related to
real estate, vehicles and equipment.
|
Free Cash Flow
As used herein, free cash flow
represents net cash provided by operating activities less
expenditures on natural gas and oil properties and equipment and
cash paid for interest. We believe that free cash flow is a useful
indicator of our ability to generate cash that is available for
activities other than capital expenditures. The Directors believe
that free cash flow provides investors with an important
perspective on the cash available to service debt obligations, make
strategic acquisitions and investments, and pay
dividends.
The following table presents a reconciliation of the IFRS
Financial measure of Net Cash from Operating Activities to the
Non-IFRS measure of Free Cash Flow for each of the periods
listed:
Amounts in 000's
|
Three Months
Ended
March 31,
2024
|
|
Three Months
Ended
March 31,
2023
|
|
Twelve Months
Ended
December 31,
2023
|
Net
cash provided by operating activities
|
$107,219
|
|
$63,014
|
|
$410,132
|
LESS: Expenditures on natural gas
and oil properties and equipment
|
(9,293)
|
|
(20,727)
|
|
(74,252)
|
LESS: Cash paid for
interest
|
(23,759)
|
|
(27,702)
|
|
(116,784)
|
Free Cash Flow
|
$74,167
|
|
$14,585
|
|
$219,096
|
Total Revenue, Inclusive of Settled
Hedges and Adjusted EBITDA Margin
As used herein, total revenue,
inclusive of settled hedges, includes the impact of derivatives
settled in cash. We believe that total revenue, inclusive of
settled hedges, is a useful because it enables investors to discern
our realized revenue after adjusting for the settlement of
derivative contracts.
The following table presents a reconciliation of the IFRS
Financial measure of Total Revenue to the Non-IFRS measure of Total
Revenue, Inclusive of Settled Hedges and a calculation of Adjusted
EBITDA Margin for each of the periods listed:
Amounts in 000's
|
Three Months
Ended
March 31,
2024
|
|
Three Months
Ended
March 31,
2023
|
|
Twelve Months
Ended
December 31,
2023
|
Total revenue(a)
|
$193,624
|
|
$295,922
|
|
$868,263
|
Net gain (loss) on commodity
derivative instruments(b)
|
22,066
|
|
(16,210)
|
|
178,064
|
Total revenue, inclusive of settled
hedges(a)
|
$215,690
|
|
$279,712
|
|
$1,046,327
|
Adjusted EBITDA
|
$102,083
|
|
$151,361
|
|
$542,794
|
Adjusted EBITDA Margin
|
47%
|
|
54%
|
|
52%
|
Adjusted EBITDA Margin, exclusive of Next LVL
Energy
|
48%
|
|
55%
|
|
53%
|
(a) Excludes proceeds received for leasehold
sales.
(b) Net gain (loss) on commodity derivative settlements
represents cash (paid) or received on commodity derivative
contracts. This excludes settlements on foreign currency and
interest rate derivatives as well as the gain (loss) on fair value
adjustments for unsettled financial instruments for each of the
periods presented.
|