LINN Energy Reports Second-Quarter 2018 Results

Aug 08, 2018

LINN Energy Reports Second-Quarter 2018 Results

HOUSTON, Aug. 08, 2018 (GLOBE NEWSWIRE) -- LINN Energy, Inc. (OTCQB: LNGG) (“LINN” or the “Company”) announces financial and operating results for the second quarter 2018 and highlights the following:

  • Executed strategic plan to separate into two public companies, LINN, which owns a 50% equity interest in Roan Resources, LLC (“Roan”), and Riviera Resources, Inc. (“Riviera”), on August 7, 2018
  • Strong balance sheet with no debt and a second quarter ending cash balance of approximately $301 million
  • Returned more than $660 million of capital to LINN shareholders through share repurchases
  • Blue Mountain Midstream LLC (“Blue Mountain”) successfully started up the Chisholm Trail III cryogenic gas plant located in the core of the prolific Merge/SCOOP/STACK plays
  • Riviera management team to host conference call Thursday, August 23, 2018 at 10 a.m. (Central)

"It is remarkable what our Company and Board has accomplished since our reorganization. We successfully completed our merger with Citizen Energy to create the largest and only pure play growth company in the prolific Merge/SCOOP/STACK basin.  Blue Mountain, a wholly owned subsidiary of Riviera, recently commissioned a state of the art cryogenic natural gas processing facility with 250 mmcfe a day of designed processing capacity to service the rapidly expanding Merge/SCOOP/STACK basin.  We sold almost $2 billion of assets, in over 20 separate transactions, at a significant premium to proved developed PV-10. This allowed us tremendous financial flexibility to pay off all our debt, return more than $660 million of capital to our shareholders and build a significant cash balance. Finally, we completed our strategic plan to separate into two public companies, LINN, which owns a 50% equity interest in Roan, and Riviera, allowing us to unlock the value of the two companies. I would like to thank our employees for their hard work in executing our vision and look forward to the bright futures of Roan and Riviera,” said David Rottino, LINN’s President and Chief Executive Officer and President and Chief Executive Officer of Riviera.

The condensed consolidated results herein include the Riviera business, because the spin-off of Riviera from LINN (the “Spin-Off”) occurred after the quarter ended. As such, our financial information after the impact of the Spin-Off may not be meaningful to investors.  Please read the “Risk Factors” included in the Company’s Quarterly Report on Form 10-Q for the second quarter 2018, which will be filed later today with the Securities and Exchange Commission.

   
Key Financial Results (1)  
   
  Second Quarter
$ in millions 2018 2017
Average daily production (MMcfe/d) 312 710
Oil, natural gas and NGL sales $87 $243
Income from continuing operations $7 $223
Loss from discontinued operations, net of income taxes $0 $(3)
Net income $7 $220
Adjusted EBITDAX (a non-GAAP financial measure) (2) $11 $112
LINN Adjusted EBITDAX for Roan (a non-GAAP financial measure)(3) $31 N/A
Net cash provided by operating activities $4 $55
Oil and natural gas capital $7 $71
Total capital $42 $96

(1) All amounts reflect continuing operations with the exception of net income, for the second quarter of 2017 and 2018.  The amounts do not, however, reflect the separation of Riviera from LINN, which occurred on August 7, 2018.
(2) Excludes Adjusted EBITDAX from discontinued operations of approximately $12 million for the three months ended June 30, 2017. Includes severance expense of $14 million for the three months ended June 30, 2018.
(3) Represents the Adjusted EBITDAX for LINN’s 50% equity interest in Roan for the period from April 1, 2018, to June 30, 2018. See Schedule 1 below for a reconciliation of Adjusted EBITDA

Completed Spin-Off of Riviera Resources, Inc.
As previously disclosed, the Company completed the Spin-Off on August 7, 2018 after the market closed. The Spin-Off was effected through a pro rata distribution of all of the outstanding shares of Riviera’s common stock to LINN stockholders of record as of 5:00 p.m. on August 3, 2018, the record date for the Spin-Off.  On August 7, 2018, the distribution date for the Spin-Off, each LINN stockholder received one share of Riviera common stock for each share of LINN common stock held by such stockholder on the record date.

As of the Spin-Off, LINN stockholders owned one share each of:

  • LINN (OTCQB: LNGG), which owns a 50% equity interest in Roan Resources LLC, which is focused on the accelerated development of the Merge/SCOOP/STACK play in Oklahoma;
     
  • Riviera (OTCQX: RVRA), an independent oil and gas company with a strategic focus on efficiently operating its mature low-decline assets, developing its growth-oriented assets, and returning capital to shareholders. Riviera’s assets consist of:
    • LINN’s legacy properties located in the Hugoton Basin, East Texas, North Louisiana, Michigan/Illinois, the Uinta Basin and Mid-Continent regions; and
    • Blue Mountain Midstream LLC, a midstream company centered in the core of the Merge play in the Anadarko Basin.

Trading of LINN Shares and Riviera Shares
LINN shares continue to trade on the OTCQB Market under the ticker symbol “LNGG”. Riviera is now an independent reporting company that will trade on the OTCQX Market under the ticker symbol “RVRA”.

Strong Balance Sheet
From its successful divestiture program in 2017 and 2018, the Company has extinguished all outstanding debt. As of June 30, 2018, the Company had no borrowings outstanding under its $425 million revolving credit facility and had approximately $378 million available borrowing capacity inclusive of outstanding letters of credit. LINN has a second quarter ending cash balance of approximately $301 million. Prior to the Spin-Off transaction, all but $40 million of cash was transferred to Riviera. The remaining cash at LINN will be available for use by LINN to fund certain obligations of the Company arising after the Spin-Off and prior to any consolidation with Roan. LINN will transfer any such remaining cash to Riviera prior to any consolidation of LINN and Roan.

Share Repurchases
Since its financial reorganization, the Company has returned more than $640 million of capital to LINN shareholders through the share repurchase program, tender offer and the employee liquidity program. The Company also retired approximately $20 million of Class A-2 units related to the Linn Energy HoldCo, LLC profits interest.

Second Quarter 2018 Activity
Production averaged 312 MMcfe/d for the second quarter 2018, exceeding the midpoint of guidance.  The Company outperformed guidance despite a production shut-in in the Hugoton field caused by a third party pipeline issue.  The Company continued to participate in significant non-operated drilling activity in the NW STACK.

Commissioned Chisholm III Cryogenic Gas Plant
Blue Mountain, a former subsidiary of the Company that became a subsidiary of Riviera in connection with the Spin-Off, completed a major processing capacity addition to its Chisholm Trail system at the end of the second quarter 2018 with the successful start up of the Chisholm Trail III cryogenic gas plant. Located in the core of the prolific Merge/SCOOP/STACK plays, the plant is a state of the art cryogenic processing facility with an initial design capacity of 150 million cubic feet per day (“MMcf/d”) and total designed processing capacity of 250 MMcf/d.

Roan Resources
Roan Resources was formed in the second quarter of 2017 and is focused on the accelerated development of approximately 154,000 net acres in the prolific Merge/SCOOP/STACK play of Oklahoma.

During the second quarter of 2018, Roan operated six to seven drilling rigs in the Merge and drilled 25 operated wells with lateral lengths ranging between one-to-two miles. Completion activity in the second quarter remained slower while awaiting the start-up of Blue Mountain’s Chisolm Trail cryogenic plant. Therefore, net production averaged approximately 36,400 BOE/d, down slightly from first quarter.  The cryogenic plant is now operating and current net average production is approximately 45,000 BOE/d.  Roan’s exit-rate production for 2018 is projected to be between 58,000 and 64,000 net BOE/d.

Roan brought online several impressive wells during the quarter. The Dutch 1H-33-28 (9,700’ lateral) and Dutch 1H-4-9 (7,475’ lateral) had an average 30-day IP rate of 1,918 BOE/d (67% liquids) and 1,360 BOE/d (66% liquids), respectively.  The Spectacular Bid 18-11-6 2H (4,915’ lateral) had an average 30-day IP rate of 1,728 BOE/d (75% liquids) and the Barbour 1-10-7 1H (4,960’ lateral) had an average 30-day IP rate of 1,487 BOE/d (56% liquids). All four wells are in Canadian county targeting the Woodford or Mayes formation. Roan currently has 13 drilled but uncompleted (“DUC”) wells.

Additional information on Roan’s operations, activity, financials and guidance can be found in the Roan Investor Presentation that was posted to LINN’s website on July 30, 2018 and in the second quarter supplemental presentation located on LINN's website.

     
Second Quarter Actuals versus Guidance
     
  Q2 Actuals  Q2 Guidance
Net Production (MMcfe/d) 312 295 – 325
Natural gas (MMcf/d) 238 230 – 255
Oil (Bbls/d) 1,800 1,650 – 1,750
NGL (Bbls/d) 10,518 9,250 – 10,000
     
Other revenues, net (in thousands) (1) $ 9,027 $ 10,000 - $ 12,000
     
Operating Costs (in thousands) $ 52,598 $ 48,000 – $ 54,000
Lease operating expenses $ 24,088 $ 24,000 – $ 27,000
Transportation expenses $ 21,213 $ 17,000 – $ 19,000
Taxes, other than income taxes $ 7,297 $ 7,000 – $ 8,000
     
General and administrative expenses (2) $ 20,044 $ 20,000 – $ 22,000
General and administrative severance expenses $ 14,163 $ 11,000 – $ 14,000
     
Targets (Mid-Point) (in thousands)    
Adjusted EBITDAX (3) $ 11,135 $6,000
Interest expense(4) $ — $ —
Oil and natural gas capital $ 7,167 $9,000
Total capital $ 42,026 $54,000
     
Weighted Average NYMEX Differentials    
Natural gas (MMBtu) ($ 0.32) ($ 0.52) – ($ 0.43)
Oil (Bbl) ($ 1.22) ($ 2.90) – ($ 2.50)
NGL price as a % of NYMEX oil price 35% 30% – 34%
     

(1) Includes other revenues and margin on marketing activities
(2) Excludes share-based compensation expenses and severance expenses
(3) Includes a reduction to EBITDAX for estimated severance expenses, costs associated with managing assets divested during 2018, associated divestment costs, required transition services under purchase and sale agreements and estimated separation costs 
(4) Excludes non cash interest expense

Earnings Call / Form 10‑Q
The Company will file its second quarter form 10-Q with the Securities and Exchange Commission later today. The Company will not be hosting a conference call or webcast in connection with its second quarter 2018 results. Supplemental information can be found at the following link on our website: http://ir.linnenergy.com/presentations.cfm.

Riviera Resources Investor Conference Call
As previously announced, Riviera will host a conference call Thursday, August 23, 2018 at 10 a.m. (Central) to discuss additional strategic and financial information related to Riviera and its wholly owned subsidiary, Blue Mountain Midstream LLC. Investors and analysts are invited to participate in the call by dialing (844) 625-4392, or (409) 497-0988 for international calls using Conference ID: 2336839. Interested parties may also listen over the internet at www.RivieraResourcesInc.com.

A replay of the call will be available on Riviera’s website or by phone until September 6, 2018.  The number for the replay is (855) 859-2056 or (404) 537-3406 for international calls using Conference ID: 2336839. Presentation materials will be made available prior to the start of the call on Riviera’s website www.RivieraResourcesInc.com under the Investor Relations tab on the date of the events.

About LINN Energy
LINN Energy, Inc. was formed in February 2017 as the reorganized successor to LINN Energy, LLC. Headquartered in Houston, Texas, the Company’s current focus is the development of the Merge/SCOOP/STACK in Oklahoma through its equity interest in Roan Resources LLC.

About Roan Resources LLC
Roan is an independent oil and natural gas company headquartered in Oklahoma City, Oklahoma, focused on the development, exploration and acquisition of unconventional oil and natural gas reserves in the Merge, SCOOP and STACK plays in Oklahoma. Roan was formed in the second quarter of 2017 by LINN and Citizen Energy II, LLC (“Citizen”). In exchange for their contributions, LINN and Citizen each received a 50% equity interest in Roan. Roan’s operations team took over field operations from LINN and Citizen in early 2018. For more information, please visit www.RoanResources.com.

About Riviera Resources
Riviera Resources is an independent oil and gas company with a strategic focus on efficiently operating its mature low-decline assets, developing its growth-oriented assets, and returning capital to shareholders. Riviera’s assets consist of properties located in the Hugoton Basin, East Texas, North Louisiana, Michigan/Illinois, the Uinta Basin and Mid-Continent regions; and Blue Mountain Midstream LLC, a wholly owned subsidiary centered in the core of the Merge play in the Anadarko Basin. More information about Riviera and Blue Mountain Midstream LLC, is available at Riviera’s website, www.RivieraResourcesInc.com.

Forward-Looking Statements
Statements made in this press release that are not historical facts are “forward-looking statements.” These statements are based on certain assumptions and expectations made by the Company which reflect management’s experience, estimates and perception of historical trends, current conditions, and anticipated future developments. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or anticipated in the forward-looking statements. These include risks relating to financial and operational performance and results of the Company and Roan Resources LLC, uncertainties relating to the Company’s and Riviera's ability to realize the anticipated benefits of the Spin-Off, the potential negative effects of the Spin-Off, continued low or further declining commodity prices and demand for oil, natural gas and natural gas liquids, ability to hedge future production, ability to replace reserves and efficiently develop current reserves, the capacity and utilization of midstream facilities and the regulatory environment. These and other important factors could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. Please read “Risk Factors” in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other public filings. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information or future events.

CONTACTS: LINN Energy, Inc.
Investor Relations
(281) 840-4110
ir@linnenergy.com

       
Condensed Consolidated Balance Sheets (Unaudited)      
       
  June 30,
 2018
  December 31,
 2017
               
  (in thousands)
ASSETS      
Current assets:      
Cash and cash equivalents $ 301,365     $ 464,508  
Accounts receivable – trade, net 64,686     140,485  
Derivative instruments 3,934     9,629  
Restricted cash 43,387     56,445  
Other current assets 46,659     79,771  
Assets held for sale 22     106,963  
Total current assets 460,053     857,801  
       
Noncurrent assets:      
Oil and natural gas properties (successful efforts method) 785,815     950,083  
Less accumulated depletion and amortization (59,870 )   (49,619 )
  725,945     900,464  
       
Other property and equipment 566,861     480,729  
Less accumulated depreciation (44,412 )   (28,658 )
  522,449     452,071  
       
Derivative instruments 1,254     469  
Deferred income taxes 169,691     198,417  
Equity method investments 473,269     464,926  
Other noncurrent assets 5,264     6,975  
  649,478     670,787  
Total noncurrent assets 1,897,872     2,023,322  
Total assets $ 2,357,925     $ 2,881,123  
       
LIABILITIES AND EQUITY      
Current liabilities:      
Accounts payable and accrued expenses $ 179,887     $ 253,975  
Stock-based payment liability 111,792     -  
Derivative instruments 5,536     10,103  
Other accrued liabilities 19,830     58,617  
Liabilities held for sale -     43,302  
Total current liabilities 317,045     365,997  
       
Noncurrent liabilities:      
Derivative instruments 24     2,849  
Asset retirement obligations and other noncurrent liabilities 105,531     160,720  
Total noncurrent liabilities 105,555     163,569  
       
       
Equity:      
Class A common stock 79     84  
Additional paid-in capital 1,427,458     1,899,642  
Retained earnings 507,788     432,860  
Total common stockholders’ equity 1,935,325     2,332,586  
Noncontrolling interests -     18,971  
Total equity 1,935,325     2,351,557  
Total liabilities and equity $ 2,357,925     $ 2,881,123  
               


   
Condensed Consolidated Statements of Operations (Unaudited)  
   
  Successor
  Three Months Ended June 30,
  2018   2017
               
  (in thousands, except per share amounts)
Revenues and other:      
Oil, natural gas and natural gas liquids sales $ 87,004     $ 243,167  
Gains (losses) on oil and natural gas derivatives (7,525 )   45,714  
Marketing revenues 42,967     12,547  
Other revenues 6,387     6,391  
  128,833     307,819  
Expenses:      
Lease operating expenses 24,088     71,057  
Transportation expenses 21,213     37,388  
Marketing expenses 40,327     6,976  
General and administrative expenses 92,395     34,458  
Exploration costs 53     811  
Depreciation, depletion and amortization 21,980     51,987  
Taxes, other than income taxes 7,297     17,871  
Gains on sale of assets and other, net (101,777 )   (306,878 )
  105,576     (86,330 )
Other income and (expenses):      
Interest expense, net of amounts capitalized (584 )   (7,551 )
Earnings (losses) from equity method investments (9,327 )   91  
Other, net 538     (1,163 )
  (9,373 )   (8,623 )
Reorganization items, net (1,259 )   (3,377 )
Income from continuing operations before income taxes 12,625     382,149  
Income tax expense 5,722     158,770  
Income from continuing operations 6,903     223,379  
Loss from discontinued operations, net of income taxes     (3,322 )
Net income 6,903     220,057  
Net income attributable to noncontrolling interests 1,799      
Net income attributable to common stockholders $ 5,104     $ 220,057  
       
Income (loss) per share/unit attributable to common stockholders:      
Income from continuing operations per share – Basic $ 0.06     $ 2.49  
Income from continuing operations per share – Diluted $ 0.06     $ 2.47  
       
Loss from discontinued operations per share – Basic $     $ (0.04 )
Loss from discontinued operations per share – Diluted $     $ (0.04 )
       
Net income per share – Basic $ 0.06     $ 2.45  
Net income per share – Diluted $ 0.06     $ 2.43  
       
Weighted average shares outstanding – Basic   78,718       89,849  
Weighted average shares outstanding – Diluted   79,277       90,484  
       


         
Condensed Consolidated Statements of Operations (Unaudited)      
         
  Successor     Predecessor
  Six Months
Ended
June 30, 2018
  Four Months
Ended
June 30, 2017
    Two Months
Ended
February 28, 2017
(in thousands, except per share and per unit amounts)            
Revenues and other:            
Oil, natural gas and natural gas liquids sales $ 223,880     $ 323,492       $ 188,885  
Gains (losses) on oil and natural gas derivatives (22,555 )   33,755       92,691  
Marketing revenues 89,234     15,461       6,636  
Other revenues 12,281     8,419       9,915  
  302,840     381,127       298,127  
Expenses:            
Lease operating expenses 71,972     95,687       49,665  
Transportation expenses 40,307     51,111       25,972  
Marketing expenses 82,082     9,515       4,820  
General and administrative expenses 137,174     44,869       71,745  
Exploration costs 1,255     866       93  
Depreciation, depletion and amortization 50,445     71,901       47,155  
Taxes, other than income taxes 15,749     24,948       14,877  
(Gains) losses on sale of assets and other, net (207,852 )   (306,394 )     829  
  191,132     (7,497 )     215,156  
Other income and (expenses):            
Interest expense, net of amounts capitalized (988 )   (11,751 )     (16,725 )
Earnings from equity method investments 16,018     130       157  
Other, net 369     (1,551 )     (149 )
  15,399     (13,172 )     (16,717 )
Reorganization items, net (3,210 )   (5,942 )     2,331,189  
Income from continuing operations before income taxes 123,897     369,510       2,397,443  
Income tax expense (benefit) 45,896     153,455       (166 )
Income from continuing operations 78,001     216,055       2,397,609  
Loss from discontinued operations, net of income taxes     (3,254 )     (548 )
Net income 78,001     212,801       2,397,061  
Net income attributable to noncontrolling interests 3,073            
Net income attributable to common stockholders/unitholders $ 74,928     $ 212,801       $ 2,397,061  
             
Income (loss) per share/unit attributable to common stockholders/unitholders:      
Income from continuing operations per share/unit – Basic $ 0.95     $ 2.41       $ 6.80  
Income from continuing operations per share/unit – Diluted $ 0.93     $ 2.40       $ 6.80  
             
Loss from discontinued operations per share/unit – Basic $     $ (0.04 )     $ (0.01 )
Loss from discontinued operations per share/unit – Diluted $     $ (0.04 )     $ (0.01 )
             
Net income per share/unit – Basic $ 0.95     $ 2.37       $ 6.79  
Net income per share/unit – Diluted $ 0.93     $ 2.36       $ 6.79  
             
Weighted average shares/units outstanding – Basic 78,817     89,849       352,792  
Weighted average shares/units outstanding – Diluted 79,764     90,065       352,792  
             


         
Condensed Consolidated Statements of Cash Flows (Unaudited)      
         
  Successor     Predecessor
  Six Months
Ended
June 30, 2018
  Four Months
Ended
June 30, 2017
    Two Months
Ended
February 28, 2017
(in thousands)            
Cash flow from operating activities:            
Net income $ 78,001     $ 212,801       $ 2,397,061  
Adjustments to reconcile net income to net cash provided by operating activities:            
Loss from discontinued operations     3,254       548  
Depreciation, depletion and amortization 50,445     71,901       47,155  
Deferred income taxes 46,031     131,055       (166 )
(Gains) losses on derivatives 22,555     (33,755 )     (92,691 )
Cash settlements on derivatives (25,037 )   7,929       (11,572 )
Share-based compensation expenses 66,374     19,599       50,255  
Amortization and write-off of deferred financing fees 824     82       1,338  
(Gains) losses on sale of assets and other, net (224,091 )   (293,800 )     1,069  
Reorganization items, net           (2,359,364 )
Changes in assets and liabilities:            
(Increase) decrease in accounts receivable – trade, net 76,465     27,212       (7,216 )
(Increase) decrease in other assets 35,828     (9,146 )     528  
Increase (decrease) in accounts payable and accrued expenses (52,538 )   (89,755 )     20,949  
Increase (decrease) in other liabilities (22,955 )   22,421       2,801  
Net cash provided by operating activities – continuing operations 51,902     69,798       50,695  
Net cash provided by operating activities – discontinued operations     13,966       8,781  
Net cash provided by operating activities 51,902     83,764       59,476  
             
Cash flow from investing activities:            
Development of oil and natural gas properties (45,938 )   (61,534 )     (50,597 )
Purchases of other property and equipment (87,377 )   (27,287 )     (7,409 )
Proceeds from sale of properties and equipment and other 369,489     697,829       (166 )
Net cash provided by (used in) investing activities – continuing operations 236,174     609,008       (58,172 )
Net cash used in investing activities – discontinued operations     (1,645 )     (584 )
Net cash provided by (used in) investing activities 236,174     607,363       (58,756 )
Cash flow from financing activities:            
Proceeds from rights offerings, net           514,069  
Repurchases of shares (393,647 )          
Proceeds from borrowings     160,000        
Repayments of debt     (876,570 )     (1,038,986 )
Payment to holders of claims under the Predecessor’s second lien notes           (30,000 )
Distributions to noncontrolling interests (12,174 )   (2,973 )      
Cash settlements of equity classified RSUs (58,162 )          
Other (294 )   (87 )     (6,015 )
Net cash used in financing activities – continuing operations (464,277 )   (719,630 )     (560,932 )
Net cash used in financing activities – discontinued operations            
Net cash used in financing activities (464,277 )   (719,630 )     (560,932 )
             
Net decrease in cash, cash equivalents and restricted cash (176,201 )   (28,503 )     (560,212 )
Cash, cash equivalents and restricted cash:            
Beginning 520,953     144,022       704,234  
Ending $ 344,752     $ 115,519       $ 144,022  
                         

Schedule 1 - Adjusted EBITDAX (Non-GAAP Measure)

The non-GAAP financial measure of adjusted EBITDAX, as defined by the Company, may not be comparable to similarly titled measures used by other companies. Therefore, this non-GAAP measure should be considered in conjunction with net income (loss) and other performance measures prepared in accordance with GAAP. Adjusted EBITDAX should not be considered in isolation or as a substitute for GAAP.

Adjusted EBITDAX is a measure used by Company management to evaluate the Company’s operational performance and for comparisons to the Company’s industry peers. Management also believes this information may be useful to investors and analysts to gain a better understanding of the Company’s financial results.

The following presents a reconciliation of net income (loss) to adjusted EBITDAX:

   
  Three Months Ended June 30, 
  2018   2017
    (in thousands)    
Net income $   6,903     $   220,057  
Plus (less):              
Income from discontinued operations         3,322  
Interest expense   584       7,551  
Income tax expense   5,722       158,770  
Depreciation, depletion and amortization   21,980       51,987  
Exploration costs   53       811  
EBITDAX   35,242       442,498  
Plus (less):              
Noncash (gains) losses on oil and natural gas derivatives   6,955       (43,567 )
Accrued settlements on oil derivative contracts related to current production period (2)   935       1,583  
Share-based compensation expenses   58,188       15,422  
(Earnings) losses from equity method investments   9,327       (91 )
Gains on sale of assets and other, net (3)   (100,771 )     (307,290 )
Reorganization items, net (4)   1,259       3,377  
Adjusted EBITDAX $   11,135     $   111,932  
       


       
  Six Months Ended June 30,
  2018   2017(1)
  (in thousands)    
Net income $   78,001     $   2,609,862  
Plus (less):              
Income from discontinued operations         3,802  
Interest expense   988       28,476  
Income tax expense   45,896       153,289  
Depreciation, depletion and amortization   50,445       119,056  
Exploration costs   1,255       959  
EBITDAX   176,585       2,915,444  
Plus (less):              
Noncash (gains) losses on oil and natural gas derivatives   17,491       (130,089 )
Accrued settlements on oil derivative contracts related to current production period (2)   1,568       2,885  
Share-based compensation expenses   75,225       69,854  
Earnings from equity method investments   (16,018 )     (287 )
Gains on sale of assets and other, net (3)   (206,882 )     (307,120 )
Reorganization items, net (4)   3,210       (2,325,247 )
Adjusted EBITDAX $   51,179     $   225,440  
               

(1) All amounts reflect the combined results of the four months ended June 30, 2017 (successor) and the two months ended February 28, 2017 (predecessor).
(2) Represent amounts related to oil derivative contracts that settled during the respective period (contract terms had expired) but cash had not been received as of the end of the period.
(3) Primarily represent gains or losses on the sale of assets and gains or losses on inventory valuation.
(4) Represent costs and income directly associated with the Company’s filing for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code since the petition date, and also include adjustments to reflect the carrying value of certain liabilities subject to compromise at their estimated allowed claim amounts, as such adjustments are determined.

   
Roan Resources LLC Adjusted EBITDAX (LINN’s 50% Equity Interest)  
   
  Three Months ended
June 30, 2018
  (in thousands)
   
Net loss $ (11,378 )
Plus (less):  
Interest expense   544  
Depreciation, depletion and amortization   12,300  
Exploration costs   5,317  
EBITDAX   6,783  
  Noncash losses on oil and natural gas derivatives   22,415  
Share-based compensation expenses   1,417  
Adjusted EBITDAX $ 30,615  
       


   
  Six Months ended
June 30, 2018
  (in thousands)
   
Net income $ 6,162  
Plus (less):  
Interest expense   1,443  
Depreciation, depletion and amortization   23,233  
Exploration costs   9,242  
EBITDAX   40,080  
  Noncash losses on oil and natural gas derivatives   24,964  
Share-based compensation expenses   2,564  
Adjusted EBITDAX $ 67,608  
       

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Source: LINN Energy, Inc.