Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 8, 2018 (August 8, 2018)

 

 

LINN ENERGY, INC.

(Exact name of registrant specified in its charter)

 

 

 

Delaware   000-51719   83-1207960

(State or Other Jurisdiction

Of Incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

600 Travis Street

Houston, Texas

  77002
(Address of principal executive offices)   (Zip Code)

(281) 840-4000

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 

 

 


Item 2.02

Results of Operations and Financial Condition.

On August 8, 2018, Linn Energy, Inc. (the “Company”) issued a press release announcing its earnings for the quarter ended June 30, 2018, and its updated guidance for 2018. The press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

This Form 8-K and the exhibit hereto shall be deemed “furnished” and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit
Number

  

Description

Exhibit 99.1    Press release dated August 8, 2018.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: August 8, 2018     LINN ENERGY, INC.
    By:  

/s/ David B. Rottino

    Name:   David B. Rottino
    Title:   President and Chief Executive Officer
EX-99.1

Exhibit 99.1

 

LOGO    NEWS RELEASE

LINN ENERGY REPORTS SECOND-QUARTER 2018 RESULTS

HOUSTON, Aug. 8, 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     Four Months           Two Months  
     Ended     Ended           Ended  
     June 30, 2018     June 30, 2017           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