PDC Energy Announces 2014 Year-End and Fourth-Quarter Results, Reduces 2015 Capital Program to $473 Million and Maintains 50% Production Growth Guidance
Last update: 19/02/2015 8:00:06 am
PDC Energy Announces 2014 Year-End and Fourth Quarter Results, Reduces 2015 Capital Program to $473 Million and Maintains 50% Production Growth Guidance
DENVER, February 19, 2015 (GLOBE NEWSWIRE) -- PDC Energy, Inc. ("PDC" or the "Company") (Nasdaq:PDCE) today reported its 2014 year-end and fourth quarter financial and operating results from continuing operations. The Company also announced a reduction of its 2015 capital budget to $473 million from the previously announced $557 million. The Company maintains its 50% production growth guidance, driven by its five rig drilling program in the core Wattenberg.
2014 Highlights -- Achieved 42% production growth over 2013 to 25,464 barrels of oil equivalent per day ("Boe/d") in 2014, or 9.3 million barrels of oil equivalent ("MMBoe") for the year from continuing operations.
-- Crude oil and natural gas liquids ("NGLs") production volumes accounted for 65% of 2014 production from continuing operations.
-- Completed a strategic divestiture of dry gas assets in the Marcellus Shale for approximately $250 million.
-- Increased total proved reserves to 250 MMBoe, an 11% increase from year-end 2013 adjusted for the Marcellus sale.
-- Increased proved, probable and possible ("3P") reserves 38% to 993 MMBoe from year-end 2013.
Bart Brookman, Chief Executive Officer and President, commented, "2014 was an excellent year for PDC as we continued to execute on our long-term growth strategy. We significantly grew production and cash flow while again achieving double digit growth in proved reserves. We completed our transition to a liquids-rich portfolio with the divestiture of our Marcellus assets, which increased our crude oil and NGLs production mix to approximately 65 percent. In 2015, we are focusing on further development of our inner and middle core Wattenberg assets while maintaining a strong balance sheet with top-tier debt metrics. We have seen significant reductions to our capital cost structure and expect to benefit from strong operational enhancements, both of which will increase our drilling economics in 2015. These improvements generate solid returns for PDC and our shareholders, even in this challenging commodity price environment. The Company is well-positioned both financially and operationally to continue its track record of strong organic growth."
Financial Results
Full Year 2014 Results
Net income for 2014 was $155.4 million, or $4.24 per diluted share, compared to a net loss of $22.3 million, or $0.69 per diluted share, for 2013. Net income includes $163.5 million of impairments primarily related to the Company's Utica Shale development plan as a result of low commodity prices and reclassification of reserves. This compares to $52.5 million of impairments in 2013. Included in net income and adjusted net loss, a non-GAAP financial measure defined below, was a pre-tax gain of $76.3 million related to the divestiture of its Marcellus assets. Adjusted net loss was $37.7 million for 2014, compared to adjusted net income of $0.5 million for 2013. Adjusted net loss for 2014 excludes a pre-tax gain of $193.1 million compared to a pre-tax loss of $22.8 million in 2013 on unsettled commodity derivative instruments.
Net cash from operating activities was $236.7 million for 2014, compared to $159.2 million for 2013. Adjusted cash flows from operations, a non-GAAP financial measure defined below, were $250.2 million for 2014, compared to $207.8 million in 2013. Adjusted cash flow for 2014 was reduced by $40.3 million related to the settlement of two lawsuits during 2014.
Total revenues for 2014 were $856.2 million, a 118% increase from $392.7 million for 2013. Crude oil, natural gas and NGLs sales revenues increased 38% to $471.4 million in 2014 compared to $340.8 million in 2013. The average sales price, excluding net settlements on derivatives, was $50.72 per barrel of oil equivalent ("Boe") for 2014, compared to $52.23 per Boe for 2013.
Net commodity price risk management activities for 2014 resulted in a gain of $309.3 million. The gain was comprised of a $311.3 million increase in fair value of unsettled derivatives and a $2.0 million loss in net settlements. The positive net fair value of unsettled derivatives was primarily the result of lower crude oil index prices.
Production costs for 2014, which include lease operating expenses ("LOE"), production taxes, transportation, gathering and processing expenses and certain production and engineering staff-related overhead costs, as well as other costs to operate wells and pipelines, were $83.6 million, or $9.00 per Boe, nearly 10% less on a per Boe basis compared to $64.9 million, or $9.94 per Boe, for 2013. The decrease in production costs on a per Boe basis in 2014 was primarily related to increased production volumes. LOE on a per Boe basis was $4.36 for 2014 compared to $4.78 for 2013.
General and administrative ("G&A") expense for 2014 was $115.9 million, up from $60.0 million in 2013, primarily due to $40.3 million in connection with previously-disclosed litigation. Incremental increases of $8.8 million in payroll and benefits, approximately half of which were non-cash stock-based charges, and $4.6 million in legal fees also contributed to the increase year-over-year. G&A expense, net of the one-time litigation expenses, decreased 11.6% on a per Boe basis to $8.13 for 2014, compared to $9.20 per Boe for 2013, due to the increase in production volumes.
Depreciation, depletion and amortization expense ("DD&A") related to crude oil and natural gas properties was $188.5 million, or $20.28 per Boe, in 2014, compared to $111.6 million, or $17.05 per Boe, in 2013. The increase in 2014 compared to 2013 is due primarily to increased production and a higher DD&A rate attributable to Utica production in southeast Ohio. DD&A from all sources was $201.7 million in 2014 compared to $129.5 million in 2013.
Interest expense for 2014 was $47.8 million compared to $50.1 million for 2013. The slight decrease in interest expense was primarily related to the use of cash proceeds from the Company's 2013 equity offering to fund 2014 activity.
PDC's available liquidity as of December 31, 2014 was pro forma $648.3 million, compared to $647 million as of December 31, 2013. The slight increase in liquidity includes a $250 million increase to the Company's borrowing base in October 2014. The Company, as of December 31, 2014, had $67.7 million drawn on its revolving credit facility, and cash and cash equivalents of $16.1 million. The Company incurred capital expenditures of $628.6 million during 2014, funded primarily from cash on hand, cash proceeds from the divestiture of its Marcellus assets and revenues from the sale of oil, natural gas and NGLs.
Fourth Quarter 2014 Results
Net income for the fourth quarter of 2014 was $131.8 million, or $3.64 per diluted share, compared to $13.2 million, or $0.36 per diluted share, for the fourth quarter of 2013. Adjusted net loss was $39.9 million for the fourth quarter of 2014, compared to adjusted net income of $16.1 million for the same 2013 period. Net cash from operating activities was $34.7 million in the fourth quarter of 2014, compared to net cash from operating activities of $39.6 million in the fourth quarter of 2013. Adjusted cash flows from operations were $69.9 million in the fourth quarter of 2014, compared to $72.3 million in the same 2013 period.
Fourth quarter 2014 production from continuing operations increased 29% to 28,060 Boe/d compared to 21,735 Boe/d in the fourth quarter of 2013, and increased 10% compared to 25,600 Boe/d in the third quarter of 2014. The increase in fourth quarter 2014 production was primarily due to ongoing successful horizontal drilling in the Wattenberg Field.
Crude oil, natural gas and NGLs sales revenues were $99.9 million in the fourth quarter of 2014, compared to $113.8 million in the fourth quarter of 2013. The average sales price, excluding net settlements on derivatives, was $38.68 per Boe for the fourth quarter of 2014, compared to $54.65 per Boe for the same 2013 period. The decline in average sales price per Boe was primarily attributable to lower crude oil prices.
Net commodity price risk management activities for the fourth quarter of 2014 resulted in a gain of $297.6 million, which was comprised of a $276.9 million gain in fair value of unsettled derivatives and $20.7 million of positive net settlements on derivatives.
Production costs were $19.0 million, or $7.37 per Boe, for the fourth quarter of 2014, compared to $19.2 million, or $9.58 per Boe, for the fourth quarter of 2013. The reduction in production costs on a Boe basis was primarily attributable to increased production volumes.
G&A expense was $19.3 million for the fourth quarter of 2014, up from $16.0 million for the fourth quarter of 2013, primarily due to legal and consulting fees for partnership-related litigation.
DD&A was $50.4 million, or $19.51 per Boe, in the fourth quarter of 2014, compared to $37.7 million, or $18.88 per Boe, in the fourth quarter of 2013. The increase in comparative periods was due to higher production volumes and a higher per Boe DD&A rate.
Interest expense for the fourth quarter of 2014 was $11.6 million compared to $12.3 million for the fourth quarter of 2013. The decrease in interest expense was primarily related to a higher percentage of capital expenditures funded with cash on hand.
Updated 2015 Capital and Production Guidance
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