Civitas Resources(US:CIVI)2023-11-06 16:00Financial Performance - Crude oil equivalent sales volumes increased by 33% for the three months ended September 30, 2023, compared to the same period in 2022, primarily due to the Hibernia and Tap Rock Acquisitions [145]. - Cash dividends declared and paid during the three months ended September 30, 2023, amounted to $163.5 million, or $1.74 per share [145]. - Crude oil sales revenue reached $841.4 million, a 29% increase from $653.8 million in the same period last year [150]. - Natural gas sales revenue decreased by 63% to $80.1 million from $215.9 million year-over-year [150]. - Product revenues increased by 3% to $1,034.4 million for the three months ended September 30, 2023, compared to $1,007.2 million for the same period in 2022, driven by a 33% increase in crude oil equivalent sales volumes [176]. - For the nine months ended September 30, 2023, product revenue decreased by 21% to $2,348.1 million compared to $2,974.5 million for the same period in 2022 [184]. - Product revenues decreased by 21% to $2.3 billion for the nine months ended September 30, 2023, compared to $3.0 billion in the same period of 2022, primarily due to a 29% drop in oil equivalent pricing [211]. - The company reported a net income of $139.7 million for the three months ended September 30, 2023, down from $405.8 million in 2022 [235]. - Basic net income per share for the nine months ended September 30, 2023, was $5.75, compared to $11.37 in 2022 [235]. Operating Expenses - Lease operating expenses increased by 110% to $94.7 million for the three months ended September 30, 2023, compared to $45.1 million in the same period last year [152]. - Operating expenses rose by 37% to $656.7 million for the three months ended September 30, 2023, compared to $479.5 million for the same period in 2022 [177]. - Midstream operating expenses increased by 56% to $35.0 million for the nine months ended September 30, 2023, from $22.4 million for the same period in 2022 [187]. - Total operating expenses increased to $1.55 billion for the nine months ended September 30, 2023, compared to $1.35 billion in 2022 [235]. Cash Flow and Liquidity - Cash flows from operating activities for the nine months ended September 30, 2023, were $1.4 billion, down from $2.0 billion during the same period in 2022 [145]. - The company reported net cash provided by operating activities of $1.4 billion for the nine months ended September 30, 2023, down from $2.0 billion in 2022 [198]. - Net cash provided by operating activities decreased by $569.3 million to $1.4 billion for the nine months ended September 30, 2023, compared to $2.0 billion in 2022 [226]. - As of September 30, 2023, the company's liquidity was $1.3 billion, consisting of $95.3 million in cash and $1.2 billion in available borrowing capacity [223]. Acquisitions and Capital Expenditures - The company entered into a purchase and sale agreement to acquire oil and gas properties from Vencer Energy for an undisclosed amount, with a cash deposit of 7.5% of the purchase price [161][162]. - On October 17, 2023, the company issued $1.0 billion in Senior Notes due 2030, with net proceeds expected to fund part of the Vencer Acquisition [164]. - Capital expenditures for the nine months ended September 30, 2023, totaled $894.6 million, including $28.7 million for land and midstream capital expenditures [171]. - The company closed the Hibernia Acquisition and Tap Rock Acquisition on August 2, 2023, increasing its Credit Facility commitments from $1.0 billion to $1.85 billion [223]. Debt and Interest Expense - Interest expense surged to $76.5 million for the three months ended September 30, 2023, from $7.5 million in the same period of 2022, due to debt issued for acquisitions [181]. - Total interest expense rose sharply to $92.7 million for the nine months ended September 30, 2023, compared to $24.7 million in 2022, driven by increased debt from acquisitions [219]. Taxation - Income tax expense for the nine months ended September 30, 2023, was $139.1 million, with an effective tax rate of 22.4%, compared to $312.2 million and 24.4% in 2022 [221]. Market and Operational Risks - The company is exposed to credit risk due to the concentration of oil and natural gas receivables with significant customers, which may adversely affect financial results if these customers fail to meet obligations [331]. - Marketability of production is influenced by the availability and capacity of third-party refineries and infrastructure, which could impact pricing and development plans if capacity is lacking [332]. - Production may be interrupted due to various factors such as accidents, weather, or labor issues, potentially affecting cash flow if a substantial amount is shut in simultaneously [333].