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Ranger Oil Fourth Quarter, Full Year 2022 Results

Share Print Bookmark    |    Thursday,March 09,2023

Ranger Oil Corporation announced financial and operational results for the fourth quarter and full-year 2022, current operational achievements, and an update on the merger with Baytex Energy Corp.

Baytex Merger Update:

• Entered into definitive merger agreement with Baytex on February 27, 2023; transaction close expected late second quarter 2023

• Combined company creates a leading diversified energy company with strong cash flow and balance sheet, substantial inventory, and a focus on shareholder returns and long-term value creation

• After the transaction closes, Baytex plans to increase direct shareholder returns to 50% of free cash flow, including initiating a dividend

• Baytex expects combination to approximately double EBITDA, increase free cash flow per share by ~20%, while maintaining a leverage ratio of ~1.0x or lower

Operational Achievements / Highlights:

• Current production of more than 50 thousand barrels of oil equivalent per day ("Mboe/d") and 36 thousand barrels of oil per day ("Mbbl/d"); expected to sustain through end of first quarter

• Continued inventory expansion through acquisitions, trades, and optimization, replacing more than 200% of 2022 development

• Continued optimization of development techniques resulted in another new IP-30 field record with an IP-30 rate of over 2,100 bbl/d and over 3,000 boe/d

• Year-end 2022 total estimated proved reserves of 254,485 Mboe with a standardized measure of $4.8 billion and a pre-tax value of future net cash flows discounted at 10% ("PV-10"⁽¹⁾, a non-GAAP measure) of $5.6 billion using SEC pricing. Estimated year-end proved developed pre-tax value of future net cash flows discounted at 10% ("PD PV-10"⁽¹⁾, a non-GAAP measure) of $3.1 billion using SEC pricing

Full-Year 2022 Highlights:

• Achieved record financial results, including net income of $464.5 million, adjusted net income⁽¹⁾ of $442.3 million. Adjusted EBITDAX⁽¹⁾ of $747.1 million, net cash provided by operating activities of $675.4 million, and pro forma adjusted free cash flow⁽¹⁾ of $198.1 million.

• Total sales volumes increased 47% year-over-year and exceeded initial March 2022 guidance. Total sales volumes were 40.8 Mboe/d and crude oil sales volumes were 29.2 Mbbl/d

• Drilling and completion ("D&C") capital expenditures were $513.9 million

• Closed 11 bolt-on acquisitions in the Eagle Ford totaling approximately $143 million⁽²⁾

• Announced approximately $90 million returned to shareholders to date through share repurchase and dividend programs since May 2022. To date the Company has repurchased more than 5% of its total common stock outstanding, or about 2.27 million shares of Class A common stock at an average price $35.19 of per share

• Continued strengthening of capital structure with a leverage ratio⁽³⁾ of approximately 0.75x at year-end, down from 1.3x at the end of 2021. Ranger has announced three borrowing base increases under its revolving credit facility during 2022, and the borrowing base currently stands at $950 million ($500 million of elected commitments), reflecting the ongoing growth in the value of its proved and producing reserves

• Reported total proved reserves at year-end of 254,485 Mboe, of which 67% were oil and 42% were proved developed

Fourth Quarter Highlights:

• Total sales volumes of 44.2 Mboe/d; crude oil sales volumes of 31.7 Mbbl/d for the fourth quarter of 2022; winter weather negatively impacted volumes by ~4%; adjusting for the impact of the storm and shut-ins, production would have been approximately 46.1 Mboe/d and 32.9 Mbbl/d

• Net income of $109.6 million and adjusted net income⁽¹⁾ of $98.2 million

• Adjusted EBITDAX⁽¹⁾ of $187.7 million

• Net cash provided by operating activities of $186.2 million

• Pro forma adjusted free cash flow⁽¹⁾ of $13.9 million

• D&C capital expenditures of $157.1 million

• Repurchased an additional $15.1 million of shares at an average cost of $38.32 per share

Fourth Quarter 2022 Financial Results

Total operating expenses for the fourth quarter were $132.4 million, or $32.55 per boe. Lease operating expenses ("LOE") for the fourth quarter were $24.7 million. Adjusted direct operating expenses⁽¹⁾ were $59.1 million, or $14.52 per boe, which consist of LOE, gathering, processing, and transportation ("GPT") expenses, production and ad valorem taxes, and cash general and administrative ("G&A") expenses, excluding DD&A and significant special charges. A breakdown of operating expenses can be found in additional tables included in this release.

Shareholder Return Program

Since May 2022, the Company has repurchased approximately 2.27 million shares of its Class A common stock, more than 5% of total equity outstanding, at an average price of approximately $35.19 per share. In the fourth quarter of 2022, Ranger repurchased an additional $15.1 million of shares at an average cost of $38.32 per share.

The Board declared a cash dividend for the fourth quarter of $0.075 per share of Class A common stock payable March 30, 2023 to Class A common stockholders of record as of the close of business on March 17, 2023.

Year-End Proved Reserves

As of December 31, 2022, Ranger's estimated net proved reserves were 254,485 Mboe and included 169,232 Mbbls of oil, 245,069 MMcf of natural gas, and 44,408 Mbbls of NGLs with a standardized measure of discounted future net cash flows of $4.8 billion using SEC pricing of $93.67/bbl for oil, $6.36/MMBtu for natural gas, and $35.42/bbl for NGLs.

Balance Sheet and Liquidity

As of December 31, 2022, Ranger had $400 million of senior unsecured notes and approximately $207 million drawn, net of cash, on its revolving credit facility.