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Microsoft Word - 3Q 2015 QAR DRAFT final
Sundance Energy Australia Limited
28 Greenhill Road, Wayville. South Australia. 5067 ACN 112 202 883 Telephone: +61 8 8363 0388 Facsimile: +61 8 8132 0766 www.sundanceenergy.com.au
Activities Report for the Quarter Ended 30 September 2015
Highlights
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Continued Execution on Operating Objectives
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Achieved year‐to‐date production of 7,934 Boe/d and third quarter production of 6,710 boe/d. Third quarter production was negatively impacted by ~900 Boepd due to shut‐in wells related to:
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Hook up of hydrogen sulfide (H2S) treatment facilities on additional pad. Shut in 8 gross (8.0 net) wells for ~79 days during installation of the facilities resulting in estimated lost production of ~600 Boe/d and
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Force majeure shut‐in by gas marketer resulting in estimated lost production of ~300 Boe/d.
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Quarterly production pro forma allowing for estimated lost production was ~7,600 Boe/d and September actual production of ~8,300 Boe/d; the Company reaffirms its 2015 production guidance of 7,850 - 8,500 Boe/d.
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Realized Adjusted EBITDAX of $52.9 million year‐to‐date and $11.8 million for the third quarter with EBITDAX margins of 72% and 64% respectively, despite approximately 50% decrease in realized pricing period‐over‐period.
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Reduced cash operating costs from $20.39 / Boe for the nine months ended 30 September 2014 to $14.50/ Boe for the nine months ended 30 September 2015 primarily due to a $3.90 per Boe reduction in general and administrative expenses.
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Growing Business within Cash Flows
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The Ammann EFS 1HA and 2HA (both Dimmit wells with ~9,100 ft laterals) achieved peak 24‐ hour production rates of 918 and 640 Boe/d respectively.
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Funded all of the Company's year‐to‐date drilling, completion and well facility capital expenditures of $51.0 million with Adjusted EBITDAX of $52.9 million. In addition, the Company spent $18.1 million on field optimisation projects that are expected to increase cash flows through gas sales (eliminating flared production) or reduce lease operating expenses.
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Closed the acquisition of New Standard Energy's Eagle Ford and Cooper Basin assets.
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23 gross (13.5 net) horizontal wells were waiting on completion at quarter end, of which 10 gross (9.6 net) were Sundance‐operated.
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Clean Balance Sheet with Flexibility
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As at the date of this report, the Company's oil hedges covered a total of 1.5 million bbls through 2019 with a weighted average floor of $56.15 and ceiling of $80.24; including 185,000 bbls in the fourth quarter of 2015 and 557,000 bbls in 2016 with weighted average floors of $64.01 and
$57.77, and weighted average ceilings of $78.75 and $76.89, respectively.
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Operating Results
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Unaudited
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Units
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Three Months Ended
30 September
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Nine Months Ended
30 September
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2015
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2014
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2015
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2014
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Production Summary, net of Royalties
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370,882
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456,813
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1,396,284
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1,093,198
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Oil Production Bbls
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Natural Gas Production, excluding flare Mcf
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681,433
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466,564
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1,899,360
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1,271,915
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NGL Production Bbls
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117,592
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77,878
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267,186
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183,743
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Total Production, excluding flare Boe
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602,046
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612,452
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1,980,031
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1,488,927
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Average Daily Production, excluding flare Boe/d
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6,544
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6,657
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7,252.86
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5,454
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Flared Gas Boe/d
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166
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378
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681
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407
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Average Daily Production, including flare Boe/d
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6,710
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7,035
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7,934
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5,861
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Sales Revenue, net of Royalties
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16,252
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42,520
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66,599
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104,240
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Oil Sales
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US$000s
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Natural Gas Sales
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US$000s
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953
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1,527
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3,660
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5,360
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NGL Sales
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US$000s
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1,159
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2,426
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3,216
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6,285
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Total Sales Revenue
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US$000s
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18,364
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46,473
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73,475
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115,885
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Realised Product Pricing
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43.82
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93.08
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47.70
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95.35
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Oil
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US$/Bbl
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Effect of Hedging
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US$/Bbl
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7.95
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(0.15)
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5.62
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(0.50)
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Net Oil
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US$/Bbl
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51.77
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92.93
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53.32
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94.85
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Natural Gas
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US$/Mcf
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1.40
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3.27
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1.93
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4.21
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Effect of Hedging
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US$/Mcf
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0.19
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0.09
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0.17
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(0.06)
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Net Natural Gas
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US$/Mcf
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1.59
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3.36
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2.10
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4.15
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NGL
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US$/Bbl
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9.86
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31.16
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12.04
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34.21
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Total Average Realised Price
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US$/Boe
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30.50
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75.88
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37.11
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77.83
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Effect of Hedging
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US$/Boe
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5.12
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0.04
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4.12
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0.41
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Total Net Average Realised Price
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US$/Boe
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35.62
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75.92
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41.23
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78.24
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Revenue (US$000s) & Production (Boe/d), net of
Royalties
12,000
10,000
8,000
6,000
4,000
2,000
0
$50,000
$45,000
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
Revenue for the quarter decreased by $28.1 million, or 61 percent, to $18.4 million compared to the same period in the prior year. This decrease in revenue was primarily due to lower realised pricing of $43.82 per barrel and $1.40 per Mcf in the current quarter compared to
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015
Revenue
Boe/d
$93.08 per barrel and $3.27 per Mcf for oil and natural gas, respectively, in the prior year, which negatively impacted revenue by $22.0 million. In addition, production volumes slightly decreased by 113 Boe/d to 6,544 Boe/d which resulted in lower revenue of $6.1 million.
For the quarter ended 30 September 2015, the Company produced an average of 6,710 Boe/d, which includes 166 Boe/d of flared gas. During the quarter, the Company completed the connection of H2S treatment facilities on an additional pad. Prior to completion, 8 gross (8.0 net) wells were shut‐in for approximately 79 days resulting in estimated lost production of ~600 Boe/d. In addition, the Company was subject to force majeure shut‐in by its gas marketer resulting in estimated lost production of ~300 Boe/d. Pro forma production, including the estimated lost production was approximately 7,600 Boe/d.
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Unaudited (US$000s, except per BOE)
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Three Months Ended
30 September
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Nine Months Ended
30 September
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2015
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2014
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2015
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2014
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Operating Activity
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$ 73,476
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$ 115,886
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Sales Revenue, net of Royalties
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$ 18,364
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$ 46,474
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Lease Operating Expenses (LOE)
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(5,240)
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(3,648)
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(14,015)
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(10,126)
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Production Taxes
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(1,106)
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(2,650)
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(4,347)
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(6,659)
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Cash G&A, net of amounts capitalised
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(3,455)
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(4,309)
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(10,344)
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(13,579)
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LOE/Boe:
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$ 8.70
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$ 5.96
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$ 7.08
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$ 6.80
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Production taxes as a % of revenue
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6.0%
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5.7%
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5.9%
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5.7%
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Cash G&A/Boe:
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$ 5.74
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$ 7.04
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$ 5.22
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$ 9.12
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Adjusted EBITDAX (1)
Adjusted EBITDAX Margin
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$ 11,805
64.3%
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$ 36,049
77.6%
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$ 52,949
72.1%
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$ 86,144
74.3%
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(1) The nine months ended 30 September 2015 excludes debt extinguishment costs of ~$1.5 million.
The Company has reduced its cash costs by 29 percent to $14.50/Boe for the nine months ended 30 September 2015 compared to the same prior year period. Cash costs include cash paid for LOE, production taxes, and G&A, net of amounts capitalised.
Lease Operating Expenses (LOE)
LOE per Boe was $7.08 for the nine month period ended 30 September 2015 and $8.70 per Boe for the third quarter of 2015 compared to $6.80 and $5.96, respectively, for the same periods in 2014. The primary driver of the increase in LOE per Boe for the quarter was workovers performed on wells to improve production and reduce costs. In addition, the Company had significant non‐recurring costs during the quarter related to optimising its separation equipment and upgrading its facility safety and flare systems.
Production Tax Expense
Production tax expense as a percentage of revenue increased slightly to 5.9 percent for the nine month period ended 30 September 2015 and 6.0 percent for the third quarter of 2015, compared to 5.7 percent for the comparable periods of 2014. The increase in the 2015 periods was due to a change in production mix from various severance tax jurisdictions.
Cash General and Administrative Costs (G&A)
Cash G&A per Boe, net of amounts capitalized, decreased 43 percent to $5.22 per Boe for the nine months ended 30 September 2015 compared to the same period in 2014, primarily due to lower salary‐related expenses and professional fees. The Company has also captured economies of scale in its fixed overhead cost structure due to increased production levels.
Cash G&A per Boe, net of amounts capitalized, decreased 18 percent to $5.74 per Boe for third quarter of 2015 compared to the same period in 2014, primarily due to lower salary‐related expenses and professional fees, partially offset by costs associated with the acquisition of New Standard Energy.
Adjusted EBITDAX
The Company's Adjusted EBITDAX decreased by $33.2 million to $52.9 million, (72 percent of revenue) for the nine month period ended 30 September 2015 compared to $86.1 million, (74 percent of revenue), for the same period in 2014. Despite significantly lower pricing, the Company has been able to maintain relatively high Adjusted EBITDAX margin.
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