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 $660 million of capital to our shareholders and build a significant cash balance. Finally, we completed our strategic plan to separate into two public companies, LINN, which owns a 50% equity interest in Roan, and Riviera, allowing us to unlock the value of the two companies. I would like to thank our employees for their hard work in executing our vision and look forward to the bright futures of Roan and Riviera,” said David Rottino, LINN’s President and Chief Executive Officer and President and Chief Executive Officer of Riviera.
The condensed consolidated results herein include the Riviera business, because the spin-off of Riviera from LINN (the “Spin-Off”) occurred after the quarter ended. As such, our financial information after the impact of the Spin-Off may not be meaningful to investors. Please read the “Risk Factors” included in the Company’s Quarterly Report on Form 10-Q for the second quarter 2018, which will be filed later today with the Securities and Exchange Commission.
|Key Financial Results (1)|
|$ 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)|
|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|
(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.
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 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.