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Civitas Resources Reports First Quarter 2024 Results

Permian execution delivering ahead of plan

Cumulative divestments exceed $300 million with non-core DJ Basin transactions; Maintaining full-year guidance as strong performance offsets asset sales impact

Civitas Resources, Inc. (NYSE: CIVI) (the "Company" or "Civitas") today reported its first quarter 2024 financial and operating results. A webcast and conference call is planned for 9 a.m. MT (11 a.m. ET) on Friday, May 3, 2024. Participation details are available in this release, and supplemental materials can be accessed on the Company's website, www.civitasresources.com.

Key First Quarter 2024 Results

 

Three Months Ended

March 31, 2024

Net Income ($MM)

$175.8

Adjusted Net Income ($MM)(1)

$277.1

Operating Cash Flow ($MM)

$812.6

Adjusted EBITDAX ($MM)(1)

$928.2

Total Sales Volumes (MBoe/d)

335.5

Oil Volumes (MBbl/d)

156.2

Capital Expenditures ($MM)

$649.5

Adjusted Free Cash Flow ($MM)(1)

$145.6

(1) Non-GAAP financial measure; see attached reconciliation schedules at the end of this release.

Additional Highlights

  • Civitas closed its previously-announced acquisition of certain oil and gas assets in the Midland Basin from Vencer Energy, LLC ("Vencer Energy") in January 2024 and assumed operatorship ahead of schedule in April. The Company assumed operatorship of its Delaware Basin assets in February 2024.
  • As a result of operational efficiencies achieved in the Permian Basin, Civitas drilled three net miles (1.5 wells) and completed six net miles (3 wells) more than planned in the first quarter.
  • The Company recently executed agreements to divest two non-core DJ Basin asset packages for $215 million, with total divestment proceeds now exceeding the $300 million target announced in June of last year. The assets have combined production of approximately 7 MBoe/d (~5 MBoe/d full year 2024 impact based on anticipated closing) and approximately 82,400 net operated acres. The divested acreage primarily represented Civitas' long-dated future development in its northeast extension area.
  • The Company's Board of Directors declared a dividend of $1.50 per share ($0.50 per share base and $1.00 per share variable) to be paid on June 26 to shareholders of record as of June 12, 2024.
  • Share repurchases during the quarter totaled $67 million, or 1,028,468 shares at an average repurchase price of $65.08 per share.

“Civitas is off to a great start this year with strong performance across our portfolio,” said CEO Chris Doyle. “This quarter was the first reporting period that all our new businesses were together, and our results highlight just the beginning of Civitas' bright future ahead. In the Permian, our execution is already unlocking value through improved cycle times and cost reductions, and in the DJ, performance continues to exceed expectations. We surpassed our goal to sell $300 million in non-core assets, and we will use the proceeds to strengthen our balance sheet and support our shareholder return program. Civitas is well positioned to create future value for our shareholders through the execution of our strategic principles: maximizing free cash flow, enhancing our strong balance sheet, returning cash to owners, and leading in ESG.”

First Quarter 2024 Financial and Operating Results

Crude oil, natural gas, and natural gas liquids ("NGL") sales for the first quarter of 2024 were $1.3 billion, up 18% from the fourth quarter of 2023. The increase was primarily related to 19% higher sales volumes and slightly lower realized commodity pricing. Crude oil accounted for 81% of total revenue for the first quarter of 2024.

Sales volume for the first quarter 2024 were higher than expected at 336 MBoe/d, which benefited from continued strong well performance and accelerated turn-in-line ("TIL") timing. Compared to the fourth quarter of 2023, Permian Basin volumes were 58% higher, while DJ Basin volumes were slightly lower. The increase in Permian Basin sales volumes was primarily related to the inclusion of the Vencer Energy assets, following the closing of the acquisition on January 2, 2024. First quarter DJ Basin gas volumes were benefited by late 2023 TILs commencing production in the core of Wattenberg, while oil volumes were impacted by 1.6 MBbl/d as a result of DJ Basin barrels produced but not sold due to a new pipeline takeaway agreement and associated linefill requirements. Oil represented nearly 47% of total Company first quarter volumes, consistent with expectations.

In the first quarter of 2024, differentials for the Company's crude oil and natural gas sales volumes averaged negative $1.36 per barrel and $0.63 per thousand cubic feet, respectively. The Company's crude oil realization was in line with expectation for the quarter, while its natural gas differential was better than expectation as a result of strong Colorado Intrastate Gas pricing, which reflected local seasonal demand. NGL realizations per barrel represented 29% of West Texas Intermediate crude oil in the first quarter of 2024.

The following table presents crude oil, natural gas, and NGL sales volumes by operating region as well as consolidated average sales prices for the periods presented:

 

 

Three Months Ended

 

 

March 31,

2024

 

December 31,

2023

Average sales volumes per day

 

 

 

 

Crude oil (Bbls/d)

 

 

 

 

DJ Basin

 

 

73,136

 

 

79,855

Permian Basin

 

 

83,025

 

 

51,813

Total

 

 

156,161

 

 

131,668

Natural gas (Mcf/d)

 

 

 

 

DJ Basin

 

 

343,740

 

 

315,112

Permian Basin

 

 

253,115

 

 

154,304

Total

 

 

596,855

 

 

469,416

Natural gas liquids (Bbls/d)

 

 

 

 

DJ Basin

 

 

38,470

 

 

40,410

Permian Basin

 

 

41,393

 

 

28,474

Total

 

 

79,863

 

 

68,884

Average sales volumes per day (Boe/d)

 

 

 

 

DJ Basin

 

 

168,896

 

 

172,784

Permian Basin

 

 

166,604

 

 

106,004

Total

 

 

335,500

 

 

278,788

 

 

 

 

 

Average Sales Prices (before derivatives):

 

 

 

 

Crude oil (per Bbl)

 

$

75.69

 

$

77.04

Natural gas (per Mcf)

 

$

1.60

 

$

1.83

Natural gas liquids (per Bbl)

 

$

22.73

 

$

17.94

Total (per Boe)

 

$

43.49

 

$

43.89

Realized hedging losses totaled $11 million for the first quarter of 2024, primarily a result of the Company's crude oil hedges during a period of strengthening oil prices. The Company has recently added additional crude oil, natural gas and basis hedges (Waha and CIG) to reduce revenue volatility. A complete listing of derivative positions can be found in the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2024.

Total cash operating expense per Boe, including lease operating expense, gathering, transportation and processing expenses, midstream operating expense, as well as cash general and administrative (a non-GAAP measure(1)), for the first quarter of 2024 was $9.19, in the lower half of the Company's annual guidance. Lease operating expenses during the quarter benefited from the achievement of ongoing field-level synergies and optimization of chemicals in the Permian Basin.

Depreciation, depletion, and amortization averaged $15.29 per Boe during the first quarter. Exploration expense for the quarter totaled $12 million and was primarily related to the acquisition of seismic data in the Permian Basin.

As a result of the Vencer Energy acquisition that closed in January 2024, the Company recorded $23 million in transaction costs associated with legal, advisor and other associated costs. Civitas' first quarter effective income tax rate of 16.6% was impacted by deferred tax benefits from state apportionment changes as a result of the Vencer Energy asset acquisition.

As of the end of the first quarter, Civitas' financial liquidity was $1.5 billion, consisting of cash on hand and available borrowing capacity on the Company's credit facility. The Company's borrowings on its revolving credit facility was reduced $350 million from the end of 2023.

(1) Non-GAAP financial measure; see attached reconciliation schedules at the end of this release.

First Quarter 2024 Capital Expenditures

Capital expenditures for the quarter totaled 33% of the Company's full-year 2024 expected capital. Investments in the first quarter were slightly higher than planned based primarily on accelerated drilling and completion activity in the Permian Basin and certain long-lead item purchases. In the Permian Basin, the Company drilled, completed, and turned to sales 39, 51, and 39 gross operated wells, respectively, during the quarter. In the DJ Basin, the Company drilled, completed, and turned to sales 37, 22, and 11 gross operated wells.

The Company's full-year 2024 budget is unchanged at $1.8 - $2.1 billion. Capital expenditures are anticipated to trend lower throughout the year, with an estimated 60-65% of full-year capital to be invested in the first half of the year.

The following table presents capital expenditures by operating region for the periods presented:

 

 

Three Months Ended

 

 

March 31,

2024

 

December 31,

2023

Capital Expenditures (in thousands)

 

 

 

 

DJ Basin

 

$

262,595

 

$

190,183

Permian Basin

 

 

386,234

 

 

279,981

Other/Corporate

 

 

703

 

 

537

Total

 

$

649,532

 

$

470,701

Asset Divestments

The Company recently executed agreements to divest two non-core DJ Basin asset packages totaling combined production of nearly 7 MBoe/d (40% oil) and 82,400 net operated acres, for approximately $215 million. The first of these two asset packages, which closed in late March 2024, consisted primarily of non-operated production located throughout the DJ Basin. The second asset sale package included both production and operated acreage, and the transaction is expected to close at the end of May 2024. Including non-operated acreage sold in late 2023, total asset sales from the divestment program now exceed $300 million. Annual EBITDA from the divested assets is estimated to be approximately $70 million at $75 oil.

Civitas reiterated its full-year 2024 sales volume outlook of 325 - 345 MBoe/d, with outperformance in the first quarter and an enhanced outlook for the remainder of the year offsetting the full-year impact from asset sales, which is estimated at 5 MBoe/d. The Company expects second quarter 2024 sales volumes (both oil and total equivalent) to be broadly flat with first quarter levels, before increasing in the second half of the year.

Webcast / Conference Call Information

The Company plans to host a webcast and conference call to discuss these results at 9 a.m. MT (11 a.m. ET) on Friday, May 3, 2024. The webcast will be available on the Investor Relations section of the Company’s website at www.civitasresources.com. The dial-in number for the call is 888-510-2535, with passcode 4872770.

About Civitas Resources, Inc.

Civitas Resources, Inc. is an independent, domestic oil and gas producer focused on development of its premier assets in the Denver-Julesburg (“DJ”) and Permian Basins. Civitas has a proven business model combining capital discipline, a strong balance sheet, cash flow generation and sustainable cash returns to shareholders. Civitas employs leading ESG practices and is Colorado’s first carbon neutral oil and gas producer. For more information about Civitas, please visit www.civitasresources.com.

Cautionary Statement Regarding Forward-Looking Information

Certain statements in this press release concerning future opportunities for Civitas, future financial performance and condition, guidance, and any other statements regarding Civitas’ future expectations, beliefs, plans, objectives, financial conditions, returns to shareholders, assumptions, or future events or performance that are not historical facts are “forward-looking” statements based on assumptions currently believed to be valid. Forward-looking statements are all statements other than statements of historical facts. The words “anticipate,” “believe,” “ensure,” “expect,” “if,” “intend,” “estimate,” “probable,” “project,” “forecasts,” “predict,” “outlook,” “aim,” “will,” “could,” “should,” “would,” “potential,” “may,” “might,” “anticipate,” “likely,” “plan,” “positioned,” “strategy,” and similar expressions or other words of similar meaning, and the negatives thereof, are intended to identify forward-looking statements. Specific forward-looking statements include statements regarding the Company’s plans and expectations with respect to the future production, capital expenditures, and divestitures, and the effects of such on the Company’s results of operations, financial position, growth opportunities, reserve estimates and competitive position. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995.

These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those anticipated, including, but not limited to, Civitas’ future financial condition, results of operations, strategy and plans; the ability of Civitas to realize anticipated synergies related to Civitas' recent acquisitions in the timeframe expected or at all; changes in capital markets and the ability of Civitas to finance operations in the manner expected; the effects of commodity prices; the risks of oil and gas activities; and the fact that operating costs and business disruption may be greater than expected. Additionally, risks and uncertainties that could cause actual results to differ materially from those anticipated also include: declines or volatility in the prices we receive for our oil, natural gas, and natural gas liquids; general economic conditions, whether internationally, nationally, or in the regional and local market areas in which we do business, including any future economic downturn, the impact of continued or further inflation, disruption in the financial markets, and the availability of credit on acceptable terms; the Company’s ability to identify and select possible additional acquisition and disposition opportunities; the effects of disruption of our operations or excess supply of oil and natural gas due to world health events, and the actions by certain oil and natural gas producing countries, including Russia; the ability of our customers to meet their obligations to us; our access to capital on acceptable terms; our ability to generate sufficient cash flow from operations, borrowings, or other sources to enable us to fully develop our undeveloped acreage positions; our ability to continue to pay dividends at their current level or at all; the presence or recoverability of estimated oil and natural gas reserves and the actual future sales volume rates and associated costs; uncertainties associated with estimates of proved oil and gas reserves; the possibility that the industry may be subject to future local, state, and federal regulatory or legislative actions (including additional taxes and changes in environmental, health and safety regulation and regulations addressing climate change); environmental, health and safety risks; seasonal weather conditions, as well as severe weather and other natural events caused by climate change; lease stipulations; drilling and operating risks, including the risks associated with the employment of horizontal drilling and completion techniques; our ability to acquire adequate supplies of water for drilling and completion operations; the availability of oilfield equipment, services, and personnel; exploration and development risks; operational interruption of centralized oil and natural gas processing facilities; competition in the oil and natural gas industry; management’s ability to execute our plans to meet our goals; unforeseen difficulties encountered in operating in new geographic areas; our ability to attract and retain key members of our senior management and key technical employees; our ability to maintain effective internal controls; access to adequate gathering systems and pipeline take-away capacity; our ability to secure adequate processing capacity for natural gas we produce, to secure adequate transportation for oil, natural gas, and natural gas liquids we produce, and to sell the oil, natural gas, and natural gas liquids at market prices; costs and other risks associated with perfecting title for mineral rights in some of our properties; political conditions in or affecting other producing countries, including conflicts in or relating to the Middle East (including the current events related to the Israel-Palestine conflict), South America, and Russia (including the current events involving Russia and Ukraine), and other sustained military campaigns or acts of terrorism or sabotage; the effects of any pandemic or other global health epidemic; other economic, competitive, governmental, legislative, regulatory, geopolitical, and technological factors that may negatively impact our businesses, operations, or pricing; and disruptions to our business due to acquisitions and other significant transactions. Expectations regarding business outlook, including changes in revenue, pricing, capital expenditures, cash flow generation, strategies for our operations, oil and natural gas market conditions, legal, economic, and regulatory conditions, and environmental matters are only forecasts regarding these matters.

Additional information concerning other factors that could cause results to differ materially from those described above can be found under Item 1A. “Risk Factors” and “Management’s Discussion and Analysis” sections in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, subsequently filed Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings made with the Securities and Exchange Commission.

All forward-looking statements speak only as of the date they are made and are based on information available at the time they were made. The Company assumes no obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

 

Schedule 1: Condensed Consolidated Statements of Operations

(in thousands, except for per share amounts, unaudited)

 

 

Three Months Ended

 

March 31, 2024

 

March 31, 2023

Operating net revenues:

 

 

 

Crude oil, natural gas, and NGL sales

$

1,327,756

 

 

$

654,841

 

Other operating income

 

1,447

 

 

 

1,181

 

Total operating net revenues

 

1,329,203

 

 

 

656,022

 

Operating expenses:

 

 

 

Lease operating expense

 

131,465

 

 

 

45,838

 

Midstream operating expense

 

13,561

 

 

 

10,061

 

Gathering, transportation, and processing

 

88,901

 

 

 

67,352

 

Severance and ad valorem taxes

 

101,906

 

 

 

52,362

 

Exploration

 

11,534

 

 

 

571

 

Depreciation, depletion, and amortization

 

466,840

 

 

 

201,303

 

Transaction costs

 

22,720

 

 

 

482

 

General and administrative expense (including $11,199 and $7,380, respectively, of stock-based compensation)

 

57,878

 

 

 

36,858

 

Other operating expense

 

7,566

 

 

 

138

 

Total operating expenses

 

902,371

 

 

 

414,965

 

Other income (expense):

 

 

 

Derivative gain (loss), net

 

(109,680

)

 

 

25,160

 

Interest expense

 

(109,786

)

 

 

(7,449

)

Loss on property transactions, net

 

(1,430

)

 

 

(241

)

Other income

 

4,904

 

 

 

9,023

 

Total other income (expense)

 

(215,992

)

 

 

26,493

 

Income from operations before income taxes

 

210,840

 

 

 

267,550

 

Income tax expense

 

(35,019

)

 

 

(65,089

)

Net income

$

175,821

 

 

$

202,461

 

 

 

 

 

Earnings per common share:

 

 

 

Basic

$

1.75

 

 

$

2.48

 

Diluted

$

1.74

 

 

$

2.46

 

Weighted-average common shares outstanding:

 

 

 

Basic

 

100,546

 

 

 

81,719

 

Diluted

 

101,293

 

 

 

82,430

 

 

Schedule 2: Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

 

 

Three Months Ended

 

March 31, 2024

 

March 31, 2023

Cash flows from operating activities:

 

 

 

Net income

$

175,821

 

 

$

202,461

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation, depletion, and amortization

 

466,840

 

 

 

201,303

 

Stock-based compensation

 

11,199

 

 

 

7,380

 

Derivative (gain) loss, net

 

109,680

 

 

 

(25,160

)

Derivative cash settlement loss, net

 

(11,155

)

 

 

(10,550

)

Amortization of deferred financing costs and deferred acquisition consideration

 

12,345

 

 

 

1,150

 

Loss on property transactions, net

 

1,430

 

 

 

241

 

Deferred income tax expense

 

29,994

 

 

 

45,953

 

Other, net

 

(1,035

)

 

 

(8

)

Changes in operating assets and liabilities, net

 

17,433

 

 

 

116,079

 

Net cash provided by operating activities

 

812,552

 

 

 

538,849

 

Cash flows from investing activities:

 

 

 

Acquisitions of businesses, net of cash acquired

 

(833,902

)

 

 

 

Acquisitions of crude oil and natural gas properties

 

 

 

 

(30,824

)

Capital expenditures for drilling and completion activities and other fixed assets

 

(571,577

)

 

 

(250,389

)

Proceeds from property transactions

 

92,862

 

 

 

5,700

 

Other, net

 

 

 

 

(94

)

Net cash used in investing activities

 

(1,312,617

)

 

 

(275,607

)

Cash flows from financing activities:

 

 

 

Proceeds from credit facility

 

300,000

 

 

 

 

Payments to credit facility

 

(650,000

)

 

 

 

Payment of deferred financing costs and deferred acquisition consideration

 

(1,368

)

 

 

 

Dividends paid

 

(148,439

)

 

 

(173,376

)

Common stock repurchased and retired

 

(66,936

)

 

 

(300,107

)

Proceeds from exercise of stock options

 

 

 

 

440

 

Payment of employee tax withholdings in exchange for the return of common stock

 

(7,070

)

 

 

(2,118

)

Principal payments on finance lease obligations

 

(763

)

 

 

 

Net cash used in financing activities

 

(574,576

)

 

 

(475,161

)

Net change in cash, cash equivalents, and restricted cash

 

(1,074,641

)

 

 

(211,919

)

Cash, cash equivalents, and restricted cash:

 

 

 

Beginning of period(1)

 

1,126,815

 

 

 

768,134

 

End of period(1)

$

52,174

 

 

$

556,215

 

 

 

 

 

(1) Includes $2.0 million of restricted cash and consists of $1.9 million of interest earned on cash held in escrow that is presented in deposits for acquisitions within the accompanying unaudited condensed consolidated balance sheets (“balance sheets”) for the period ended December 31, 2023 and $0.1 million of funds for road maintenance and repairs that is presented in other noncurrent assets within the accompanying balance sheets for all periods presented.

Schedule 3: Condensed Consolidated Balance Sheets

(in thousands, unaudited)

 

 

March 31, 2024

 

December 31, 2023

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

52,070

 

 

$

1,124,797

 

Accounts receivable, net:

 

 

 

Crude oil and natural gas sales

 

601,991

 

 

 

505,961

 

Joint interest and other

 

228,004

 

 

 

247,228

 

Derivative assets

 

10,602

 

 

 

35,192

 

Deposits for acquisitions

 

 

 

 

163,164

 

Prepaid expenses and other

 

62,268

 

 

 

68,070

 

Total current assets

 

954,935

 

 

 

2,144,412

 

Property and equipment (successful efforts method):

 

 

 

Proved properties

 

14,973,145

 

 

 

12,738,568

 

Less: accumulated depreciation, depletion, and amortization

 

(2,751,356

)

 

 

(2,339,541

)

Total proved properties, net

 

12,221,789

 

 

 

10,399,027

 

Unproved properties

 

957,403

 

 

 

821,939

 

Wells in progress

 

759,657

 

 

 

536,858

 

Other property and equipment, net of accumulated depreciation of $9,861 in 2024 and $9,808 in 2023

 

57,095

 

 

 

62,392

 

Total property and equipment, net

 

13,995,944

 

 

 

11,820,216

 

Derivative assets

 

254

 

 

 

8,233

 

Other noncurrent assets

 

132,890

 

 

 

124,458

 

Total assets

$

15,084,023

 

 

$

14,097,319

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued expenses

$

659,848

 

 

$

565,708

 

Production taxes payable

 

411,069

 

 

 

421,045

 

Crude oil and natural gas revenue distribution payable

 

814,552

 

 

 

766,123

 

Derivative liability

 

80,614

 

 

 

18,096

 

Deferred acquisition consideration

 

525,627

 

 

 

 

Other liabilities

 

87,986

 

 

 

80,915

 

Total current liabilities

 

2,579,696

 

 

 

1,851,887

 

Long-term liabilities:

 

 

 

Long-term debt

 

4,437,624

 

 

 

4,785,732

 

Ad valorem taxes

 

376,261

 

 

 

307,924

 

Derivative liability

 

5,690

 

 

 

 

Deferred income tax liabilities, net

 

594,775

 

 

 

564,781

 

Asset retirement obligations

 

336,560

 

 

 

305,716

 

Other long-term liabilities

 

118,489

 

 

 

99,958

 

Total liabilities

 

8,449,095

 

 

 

7,915,998

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

Preferred stock, $.01 par value, 25,000,000 shares authorized, none outstanding

 

 

 

 

 

Common stock, $.01 par value, 225,000,000 shares authorized, 100,084,095 and 93,774,901 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

 

5,067

 

 

 

5,004

 

Additional paid-in capital

 

5,402,979

 

 

 

4,964,450

 

Retained earnings

 

1,226,882

 

 

 

1,211,867

 

Total stockholders’ equity

 

6,634,928

 

 

 

6,181,321

 

Total liabilities and stockholders’ equity

$

15,084,023

 

 

$

14,097,319

 

 

Schedule 4: Adjusted Net Income

(in thousands, except per share amounts, unaudited)

Adjusted net income is a supplemental non-GAAP financial measure that is used by management to present a more comparable, recurring profitability between periods. We believe that adjusted net income provides external users of our consolidated financial statements with additional information to assist in their analysis of the Company. The Company defines adjusted net income as net income after adjusting for (1) the impact of certain non-cash items and one-time transactions and correspondingly (2) the related tax effect in each period. Adjusted net income is not a measure of net income as determined by GAAP.

The following table presents a reconciliation of the GAAP financial measure of net income to the non-GAAP financial measure of adjusted net income.

 

Three Months Ended

 

March 31,

2024

 

December 31,

2023

Net income

$

175,821

 

 

$

302,867

 

Adjustments to net income:

 

 

 

Unused commitments(1)

 

(1,226

)

 

 

1,067

 

Transaction costs

 

22,720

 

 

 

24,251

 

Loss on property transactions, net

 

1,430

 

 

 

 

Derivative (gain) loss, net

 

109,680

 

 

 

(129,881

)

Derivative cash settlement loss

 

(11,155

)

 

 

(23,339

)

Total adjustments to net income before taxes

 

121,449

 

 

 

(127,902

)

Tax effect of adjustments

 

(20,161

)

 

 

25,708

 

Total adjustments to net income after taxes

 

101,288

 

 

 

(102,194

)

 

 

 

 

Adjusted net income

$

277,109

 

 

$

200,673

 

 

 

 

 

Adjusted net income per diluted share

$

2.74

 

 

$

2.12

 

 

 

 

 

Diluted weighted-average common shares outstanding

 

101,293

 

 

 

94,519

 

 

 

 

 

(1) Included as a portion of other operating expense in the accompanying statements of operations.

Schedule 5: Adjusted EBITDAX

(in thousands, unaudited)

Adjusted EBITDAX is a non-GAAP measure that represents earnings before interest, income taxes, depreciation, depletion, and amortization, exploration expense, and other non-cash and non-recurring charges. Adjusted EBITDAX excludes certain items that we believe affect the comparability of operating results and can exclude items that are generally non-recurring in nature or whose timing and/or amount cannot be reasonably estimated. We present Adjusted EBITDAX because we believe it provides useful additional information to investors and analysts, as a performance measure, for analysis of our ability to internally generate funds for exploration, development, acquisitions, and to service debt. We are also subject to financial covenants under our revolving credit facility based on Adjusted EBITDAX ratios. In addition, Adjusted EBITDAX is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and natural gas exploration and production industry. Adjusted EBITDAX should not be considered in isolation or as a substitute for net income, net cash provided by operating activities, or other profitability or liquidity measures prepared under GAAP. Because Adjusted EBITDAX excludes some, but not all items that affect net income and may vary among companies, the Adjusted EBITDAX amounts presented may not be comparable to similar metrics of other companies.

The following table presents a reconciliation of the GAAP financial measure of net income to the non-GAAP financial measure of Adjusted EBITDAX:

 

Three Months Ended

 

March 31,

2024

 

December 31,

2023

Net Income

$

175,821

 

 

$

302,867

 

Total adjustments to net income before taxes (from schedule 4)

 

121,449

 

 

 

(127,902

)

Exploration

 

11,534

 

 

 

632

 

Depreciation, depletion, and amortization

 

466,840

 

 

 

416,634

 

Stock-based compensation(2)

 

11,199

 

 

 

9,354

 

Interest expense

 

109,786

 

 

 

90,071

 

Interest income(1)

 

(3,425

)

 

 

(5,175

)

Income tax expense

 

35,019

 

 

 

76,028

 

Adjusted EBITDAX

$

928,223

 

 

$

762,509

 

 

 

 

 

(1) Included as a portion of other income in the condensed consolidated statements of operations.

(2) Included as a portion of general and administrative expense in the condensed consolidated statements of operations.

Schedule 6: Adjusted Free Cash Flow

(in thousands, unaudited)

Adjusted Free Cash Flow is a supplemental non-GAAP financial measure that is calculated as net cash provided by operating activities before changes in operating assets and liabilities and less exploration and development of crude oil and natural gas properties, changes in working capital related to capital expenditures, and purchases of carbon credits. We believe that Adjusted Free Cash Flow provides additional information that may be useful to investors in evaluating our ability to generate cash from our existing crude oil and natural gas assets to fund future exploration and development activities and to return cash to stockholders. Adjusted Free Cash Flow is a supplemental measure of liquidity and should not be viewed as a substitute for cash flows from operations because it excludes certain required cash expenditures.

The following table presents a reconciliation of the GAAP financial measure of net cash provided by operating activities to the non-GAAP financial measure of Adjusted Free Cash Flow:

 

 

Three Months Ended

 

 

March 31,

2024

 

December 31,

2023

Net cash provided by operating activities

 

$

812,552

 

 

$

843,188

 

Add back: Changes in operating assets and liabilities, net

 

 

(17,433

)

 

 

(158,105

)

Cash flow from operations before changes in operating assets and liabilities

 

 

795,119

 

 

 

685,083

 

Less: Cash paid for capital expenditures for drilling and completion activities and other fixed assets

 

 

(571,577

)

 

 

(570,269

)

Less: Changes in working capital related to capital expenditures

 

 

(77,955

)

 

 

100,105

 

Capital expenditures

 

 

(649,532

)

 

 

(470,164

)

Less: Purchases of carbon credits and renewable energy credits

 

 

 

 

 

(287

)

Adjusted Free Cash Flow

 

$

145,587

 

 

$

214,632

 

 

Schedule 7: Cash General and Administrative

(in thousands, unaudited)

Cash general and administrative is a non-GAAP measure that excludes stock-based compensation, that we believe affects the comparability of operating results as it is non-cash. Cash general and administrative is a non-GAAP measure that we include in our total cash operating expense per BOE. We believe it provides useful additional information to investors and analysts, as a performance measure, for analysis of our operations.

The following table presents a reconciliation of the GAAP financial measure of general and administrative expense to the non-GAAP financial measure of cash general and administrative:

 

 

Three Months Ended

 

 

March 31,

2024

 

December 31,

2023

General and administrative expense (as reported)

 

$

57,878

 

 

$

54,524

 

Less: Stock-based compensation

 

 

(11,199

)

 

 

(9,354

)

Cash general and administrative expense

 

$

46,679

 

 

$

45,170

 

 

"This quarter was the first reporting period that all of our new businesses were together, and our results highlighted just the beginning of Civitas' bright future ahead," said CEO Chris Doyle.

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