, /PRNewswire/ -- (NYSE: JAG) ("" or the "Company") today announced financial and operating results for the fourth quarter and full-year ended December 31, 2018.
, President and Chief Executive Officer, commented, "2018 marked another successful year for , as we firmly delivered on our objective of operational execution.
We ended the year with top-tier operating margins, improved average well performance year-over-year, and reduced proved developed finding and development costs, which have resulted in peer-leading return on capital employed.
The entire team was instrumental in achieving each of our 2018 strategic goals, setting the stage for a strong 2019. As we begin the year, the team remains focused on driving additional efficiencies by executing on a 2019 program that contemplates an activity level similar to 2018 with approximately less in capital expenditures.
As we continue to grow our early stage Company, we will strive to consistently provide capital efficient growth, while keeping the balance sheet strong at under two times leverage in a /Bbl commodity price environment.
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By executing on these goals, we believe that we can efficiently get to the size and scale where we can provide organic, sustainable free cash flow to our investors. By continually pressing on capital efficiency, we remain confident in our ability to create shareholder value on our contiguous acreage blocks in the core oil window of the southern ."
Fourth Quarter Results
During the fourth quarter, the Company turned online 9 gross operated wells and reported average daily production of 38.4 MBoe per day, above the high-end of the Company's previously announced guidance range of 36.0 – 38.0 MBoe per day.
Oil production for the quarter averaged 29.1 MBbls per day, above the midpoint of the Company's previously announced guidance range of 28.0 – 30.0 MBbls per day. Average daily production in the fourth quarter of 2018, grew sequentially by 6% from the third quarter of 2018, and by 60% from the fourth quarter of 2017.
Fourth quarter production mix was comprised of 76% oil, 15% NGLs, and 9% natural gas. Similar to the third quarter of 2018, the Company had increased ethane recovery, which resulted in increased NGL and oil equivalent volumes for the fourth quarter of 2018.
Reported revenue for the fourth quarter of 2018 was , compared to in the fourth quarter of 2017.
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The increase in revenue in the fourth quarter of 2018 compared to the same period in 2017 was a result of the 60% increase in production volumes, as fourth quarter 2018 average realized prices, before the effects of derivative settlements, were 17% below the fourth quarter of 2017 on a per Boe basis.
Average realized prices for the fourth quarter of 2018 are included in the table below.
Three Months Ended December 31, 2018
Before the Effects of
After the Effects of
NGL ($/Bbl) (1)
Gas ($/Mcf) (1)
(1) Due to the adoption of ASC 606 (Revenue Recognition) as of January 1, 2018, the average sales prices are net of gathering and processing expenses ("G&P") of $0.25 per Mcf of natural gas and $5.69 per Bbl of NGLs.
The table below provides a summary of the Company's fourth quarter and full-year 2018 actuals in comparison to its previously provided guidance ranges.
Three Months Ended December 31, 2018
Average daily equivalent production (MBoe/d)
36.0 – 38.0
Average daily oil production (MBbl/d)
28.0 – 30.0
Twelve Months Ended December 31, 2018
Average daily production (MBoe/d)
33.6 – 34.1
Average daily oil production (MBbl/d)
26.1 – 26.6
Lease operating expense ($/Boe)
$3.25 – $3.75
General and administrative (before equity-based compensation) ($MM)
$42 – $44
Production and ad valorem taxes (% of revenue)
6.0% – 7.0%
Drilling and completion ($MM)
$650 – $680
Infrastructure and other ($MM)
$18 – $22
Total development capital ($MM)
$668 – $702
Gross horizontal wells brought online
45 – 47
(1) Guidance as provided in the Company's third quarter earnings and operational update press release on November 8, 2018.
For the fourth quarter of 2018, the Company reported net income of , or per diluted common share.
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Net income for the fourth quarter of 2017 was , or per diluted common share. Adjusted net income (a non-GAAP measure) for the fourth quarter of 2018, was , or per diluted common share, compared to , or per diluted common share for the same period in 2017.
Adjusted net income (a non-GAAP measure) eliminates certain non-cash and non-recurring items such as certain equity-based compensation, non-cash mark-to-market gains or losses on derivatives and impairment expense, further adjusted for any associated changes in estimated income tax expense.
Adjusted EBITDAX (a non-GAAP measure) for the fourth quarter of 2018 was , an increase of from the fourth quarter of 2017.
Please reference the reconciliations of these non-GAAP measures to the most directly comparable GAAP measures at the end of this release.
During the fourth quarter, the Company identified a portion of its Big Tex acreage that it does not currently intend to develop before the expiration of its leases.
As a result, a non-cash impairment expense of unproved properties was recorded in the amount of .
Capital expenditures for drilling and completion activities were for the three months ended December 31, 2018. Activity during the quarter included drilling and completing 10 gross (9.4 net) wells, of which, 9 gross (8.9 net) wells were operated by .
Additionally, a portion of the capital spent during the fourth quarter relates to 19 gross (18.4 net) operated wells that were in various stages of being drilled or completed at December 31, 2018. Including capital expenditures for infrastructure of and leasehold acquisition costs of , total capital expenditures for the quarter were .
The Company's leasehold acquisition costs for the quarter represent additions or extensions of approximately 1,500 net acres, primarily in Whiskey River.
During 2018, the Company added approximately 4,100 net acres to its position. As of December 31, 2018, the Company had approximately 79,500 net acres, including Big Tex acres that were impaired, but are still leased by the Company, and approximately 5,100 net surface acres.
The table below provides a comparative breakout of the Company's capital expenditures for the periods indicated:
Capital Expenditures for Oil and Gas Activities
Three Months Ended December 31,
Twelve Months Ended December 31,
Drilling and completion costs
Total oil and gas capital expenditures
Proved oil and gas reserves at were estimated at 118.9 MMBoe, an increase of 44% from 82.4 MMBoe at .
The composition of the reserves at the end of 2018 were 77% oil, 12% NGL, and 11% natural gas. Proved developed reserves at year-end 2018 increased 89% from year-end 2017 to 71.4 MMBoe, and represent 60% of total proved reserves compared to 40% at year-end 2017. The Company expects its 2019 exit-to-exit aggregate decline for these PDP wells to be approximately 45%, compared to a 49% aggregate decline rate in 2018. All-in proved reserve replacement for 2018 was 393%.
As of , the Company's PV-10 value for proved reserves (a non-GAAP measure) was , an increase of 100% from the prior year. For 2018, the Company's organic proved developed finding and development ("F&D") costs were per Boe, a decrease of 23% from 2017. Organic proved developed F&D costs are defined as the sum of drilling and completion, infrastructure, and exploration costs included in the above table, divided by the sum of proved developed reserves added through extensions, discoveries and other, including infill reserves in an existing proved field, converted to proved developed, and revisions of previous estimates, included in the proved reserve roll-forward table below.
Please reference the reconciliation of the non-GAAP measure, PV-10 to the most directly comparable GAAP measure, Standardized Measure of Discounted Future Net Cash Flows, at the end of this release.
Proved Reserve Roll-Forward
Balance December 31, 2017
Acquisitions of reserves
Extensions, discoveries and other, including infill reserves in an existing proved field