Triangle Petroleum Provides Financial and Operational Results For Second Quarter Fiscal Year 2015

Q2 FY2015

Revenue

q/q % Change

Adj.-EBITDA

E&P

$80.5

32%

$54.4

28%

RockPile

$102.1

66%

$28.8

108%

Caliber

$2.9

142%

$2.3

229%

Total

$185.5

$85.4

*Exploration and production operating segment ("E&P") Adjusted-EBITDA includes all exploration and  production related business lines, and does not include TPC (parent company) other revenues and expenses

*Caliber revenue and Adjusted-EBITDA represents Triangle's ownership share of the partnership which increased to 31.8% from 30% on June 30, 2014, resulting in an average ownership of 30.6% for Q2 fiscal 2015

Three Months Ended July 31,

2014

2013

Revenues

Oil, natural gas and natural gas liquids sales

$    80,506

$    34,639

Oilfield services

61,483

15,755

Total Revenues

141,989

50,394

Expenses

Production taxes

8,677

3,919

Lease operating expenses

6,698

2,830

Gathering, transportation and processing

3,733

69

Oilfield services^(a)

43,554

12,692

Depreciation and amortization

26,706

10,918

Accretion of asset retirement obligations

41

9

Corporate and Other stock-based compensation

1,336

1,092

E&P stock-based compensation

344

247

RockPile stock-based compensation

127

99

Corporate and Other cash G&A expenses

2,591

1,417

E&P cash G&A expenses

4,442

1,683

RockPile cash G&A expenses

5,251

2,446

Total operating expenses

103,500

37,421

Operating Income

38,489

12,973

Gain (loss) on equity investment derivatives

(7,534)

-

Gain (loss) from commodity derivative activities

(921)

(4,399)

Interest expense

(5,385)

(1,969)

Income (loss) from equity investment

190

(596)

Interest income

47

43

Other income

5

747

Total other income

(13,598)

(6,174)

Net Income Before Income Taxes

24,891

6,799

Income tax provision^(b)

(10,339)

-

Net Income

$    14,552

$      6,799

Net Income per Common Share

Basic

$        0.17

$        0.12

Diluted^(c)

$        0.15

$        0.12

Adjusted Net Income per Common Share^(d)

Basic

$        0.23

$        0.19

Diluted^(c)

$        0.20

$        0.19

Weighted Average Common Shares

Basic

86,172

56,451

Diluted

103,774

57,012

(a) Includes intercompany eliminations; reference Note 4 – Segment Reporting in our Q2 fiscal 2015 Form 10-Q for additional details.

(b) The effective tax rate for the three months ended July 31, 2014 is approximately 41.5%, which differs from the statutory income tax rate due to permanent book to tax differences. Income tax provision is primarily a non-cash expense, with a cash tax expense component of approximately $0.4 million.

(c) Includes net interest expense add-back of $1.0 million in Q2 fiscal 2015 related to outstanding convertible notes.

(d) Reference accompanying Reconciliation Tables and Use of Segment Information and Non-GAAP Measures at end of press release for additional detail.

July 31, 2014

January 31, 2014

Assets

Cash and equivalents

$        107,527

$                 81,750

Other current assets

157,124

113,131

Net property and equipment

1,051,853

753,880

Other noncurrent assets

91,950

78,823

Total assets

$     1,408,454

$            1,027,584

Liabilities and Stockholders' Equity

Current liabilities

$        191,323

$               159,368

5% convertible note

132,543

129,290

Long-term debt

499,470

205,067

Other noncurrent liabilities

31,631

10,697

Total stockholders' equity

553,487

523,162

Total liabilities and stockholders' equity

$     1,408,454

$            1,027,584

(1)

The Company often provides financial metrics for Triangle's segments of operation. Revenues for each segment are disclosed in notes to the financial statements contained in the Company's Form 10-K and Form 10-Q filings, but the sum of those stand-alone revenues differ from Triangle's consolidated revenues for the corresponding reporting period. Triangle's consolidated revenues would reflect segment revenues reduced for intracompany sales (i.e. for RockPile services to Triangle's E&P segment).

 Triangle also believes that stand-alone segment revenue assists investors in measuring RockPile's and Caliber's performance as stand-alone companies without eliminating, on a consolidated basis, certain revenues attributable to services for Triangle's economic interests in wells operated by Triangle's E&P segment.

(2)

Adjusted-EBITDA represents income before interest expense, income taxes, depreciation and amortization, other non-cash items, and non-recurring items. Adjusted-EBITDA is not a calculation based upon generally accepted accounting principles in the U.S. ("GAAP"). Triangle has presented Adjusted-EBITDA by segment because it regularly reviews Adjusted-EBITDA by segment as a measure of the segment's operating performance. Triangle also believes Adjusted-EBITDA assists investors in comparing segment performance on a consistent basis without regard to interest expense, income taxes, depreciation and amortization, other non-cash items, and non-recurring items which can vary significantly depending upon many factors. 

The total of Adjusted-EBITDA by segment is not indicative of Triangle's consolidated Adjusted-EBITDA, which reflects other matters such as (i) additional parent administrative costs, (ii) intracompany eliminations, (iii) paid-in-kind interest expense on the convertible notes and (iv) the use of the equity method, rather than consolidation, for Triangle's investment in Caliber.  The Adjusted-EBITDA measures presented in the "Reconciliation Tables" may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.

We believe that net income before income taxes is the performance measure calculated and presented in accordance with GAAP that is most directly comparable to Adjusted-EBITDA. Net income before income taxes will be significantly affected by consolidated interest expense and full-cost pool amortization. Such amortization varies with changes in proved reserves, well costs during the year, and future plans in developing proved undeveloped reserves.

(3)

Adjusted net income (loss) is defined as net income (loss) applicable to common stockholders adjusted to exclude certain charges or amounts in order to provide users of this financial information with additional meaningful comparisons between current results and the results of prior periods. We present this measure because (i) it is consistent with the manner in which the Company's performance is measured relative to the performance of its peers, (ii) this measure is more comparable to earnings estimates provided by securities analysts, and (iii) charges or amounts excluded cannot be reasonably estimated and guidance provided by the company excludes information regarding these types of items. These adjusted amounts are not a measure of financial performance under GAAP. We believe that net income (loss) is the performance measure calculated and presented in accordance with GAAP that is most directly comparable to adjusted net income (loss).

Exploration and Production

RockPile's Pressure Pumping and Other Services

Corporate and Other^(a)

 Eliminations and Other

Consolidated Total

Revenues

Oil, natural gas and natural gas liquids sales

$

80,506

$

-

$

-

$

-

$

80,506

Oilfield services for third parties

-

64,093

-

(2,610)

61,483

Intersegment revenues

-

37,962

-

(37,962)

-

Other

-

-

272

(272)

-

Total revenues

80,506

102,055

272

(40,844)

141,989

Expenses

Prod. taxes, LOE, and other expenses

19,149

-

-

-

19,149

Depreciation and amortization

23,439

4,690

186

(1,609)

26,706

Cost of oilfield services

-

68,867

-

(25,313)

43,554

General and administrative

4,786

5,378

3,927

-

14,091

Total operating expenses

47,374

78,935

4,113

(26,922)

103,500

Income (loss) from operations

33,132

23,120

(3,841)

(13,922)

38,489

Other income (expense), net

(4,267)

(667)

(7,580)

(1,084)

(13,598)

Net income (loss) before income taxes

$

28,865

$

22,453

$

(11,421)

$

(15,006)

^(b)

$

24,891

(a) Corporate and Other includes our corporate office and several subsidiaries that management does not consider to be part of the exploration and production or oilfield services segments.  Also included are our results from our investment in Caliber, including any changes in the fair value of our equity investment derivatives.  Other than our investment in Caliber, these subsidiaries have limited activity.

(b) $15.0 million RockPile, Caliber, and other services consolidated elimination results in a $15.0 million reduction in oil and natural gas property expenditures.

*Reference Note 4 – Segment Reporting in our Q2 fiscal 2015 Form 10-Q for additional details

a)  Consolidated Adjusted net income per common stockholder (reference disclosure (3) in "Use of Segment Information and Non-GAAP Measures")

Q2 fiscal 2015

Q2 fiscal 2014

Net income attributable to common stockholders

$            14,552

$              6,799

Loss on equity investment derivatives

7,534

-

Loss on commodity derivatives

921

4,399

Loss on investment in marketable securities

-

(581)

Tax impact^(a)

(3,512)

-

Adjusted net income

$            19,496

$            10,617

Adjusted net income per common

Basic

$                0.23

$                0.19

Diluted^(b)

$                0.20

$                0.19

Weighted average common shares

Basic

86,172

56,451

Diluted

103,774

57,012

(a) Tax impact is computed as pre tax-effected adjusting items multiplied by the Company's effective tax rate.

(b) Includes interest expense add-back of $1.0 million net of income taxes and amounts capitalized in Q2 fiscal year 2015 related to outstanding convertible notes.

b) 

E&P stand-alone Adjusted-EBITDA (reference disclosure (1) and (2) in "Use of Segment Information and Non-GAAP Measures")

Q2 fiscal 2015

Q1 fiscal 2015

Net income before income taxes

$          28,865

$          17,472

Depreciation and amortization

23,439

18,612

Net interest expense

3,351

1,113

Stock-based compensation

344

395

Accretion of asset retirement obligations

41

134

Loss on commodity derivatives

921

5,456

Settlements of commodity derivatives

(2,555)

(818)

Adjusted-EBITDA

$           54,407

$          42,365

c) 

RockPile stand-alone Adjusted-EBITDA (reference disclosure (1) and (2) in "Use of Segment Information and Non-GAAP Measures")

Q2 fiscal 2015

Q1 fiscal 2015

Net income before income taxes

$          22,453

$            8,437

Depreciation and amortization

4,690

3,590

Stock-based compensation

127

90

Net interest expense

564

507

Other

930

1,176

Adjusted-EBITDA

$          28,764

$          13,800

*RockPile Adjusted-EBITDA calculated as per RockPile credit facility

d)  

Caliber stand-alone Adjusted-EBITDA (reference disclosure (1) and (2) in "Use of Segment Information and Non-GAAP Measures")

Q2 fiscal 2015

Q1 fiscal 2015

Net income before income taxes

$                881

$                 51

Depreciation and amortization

510

231

Warrant amortization expense

171

56

Net interest expense

114

85

Net well connect fees billed⁽¹⁾

588

266

Adjusted-EBITDA

$            2,264

$               689

*Caliber Adjusted-EBITDA represents Triangle's ownership share of the partnership, before intracompany elimination, which increased to 31.8% from 30% on June 30, 2014, resulting in a Q2 fiscal 2015 average ownership of 30.6%

(1) Well connect fees are recorded as deferred revenue when completed and amortized over the expected term of the underlying production for revenue recognition purposes. The adjustment to EBITDA represents well connect fees billed, net of revenue recognized during the period