Triangle Petroleum Provides Financial Results And Operational Update For All Business Segments For First Quarter Fiscal Year 2016

Q1  FY 2016

Revenue

y/y % Change

Adj.-EBITDA

y/y % Change

E&P

$47.8

-21%

$44.5

5%

RockPile

$80.6

31%

$3.5

-75%

Total

$128.4

5%

$48.0

-15%

Q1 Fiscal 2016 Summary Consolidated Statement of Operations (in thousands)

Quarter Ended April 30,

2014

2015

Revenues

Oil, natural gas and natural gas liquids sales

$             60,834

$             47,778

Oilfield services^(a)

38,948

70,510

Total revenues

99,782

118,288

Expenses

Lease operating expenses

4,726

10,909

Gathering, transportation and processing

3,802

6,348

Production taxes

6,348

4,787

Depreciation and amortization^(a)

21,287

37,806

Impairment of oil and natural gas properties

-

192,000

Accretion of asset retirement obligations

25

57

Oilfield services^(a)

27,710

65,464

Corporate and other stock-based compensation

1,523

2,136

E&P stock-based compensation

395

321

RockPile stock-based compensation

90

51

Corporate and other cash G&A expenses

3,518

4,977

E&P cash G&A expenses

2,778

748

RockPile cash G&A expenses

5,097

6,626

Total operating expenses

77,299

332,230

Operating Income (Loss)

22,483

(213,942)

Interest expense, net

(2,672)

(9,106)

Amortization of deferred loan costs

(192)

(616)

Realized commodity derivative gains (losses)

(818)

19,468

Unrealized commodity derivative gains (losses)

(4,638)

(33,442)

Equity investment income (loss)

(126)

188

Gain (loss) on equity investment derivatives

10,454

-

Gain on Caliber capital transactions

-

2,880

Other income^(a)

62

930

Total other income (expense)

2,070

(19,698)

Income (Loss) Before Income Taxes

24,553

(233,640)

Income tax provision (benefit)^(b)

10,011

(53,441)

Net Income (Loss) Attributable to Common Stockholders

$             14,542

$          (180,199)

Net Income (Loss) per Common Share

Basic

$                 0.17

$                (2.39)

Diluted^(c)

$                 0.15

$                (2.39)

Adjusted Net Income (Loss) per Common Share^(d)

Basic

$                 0.13

$                (0.09)

Diluted^(c)

$                 0.12

$                (0.09)

Weighted Average Common Shares

Basic

85,952

75,256

Diluted

103,314

75,256

(a) Includes intercompany eliminations; reference Note 3 – Segment Reporting in our fiscal year 2015 Form 10-K for additional details

(b) The tax benefit for the quarter ended April 30, 2015 is associated with the establishment of a full valuation allowance against our net deferred tax assets. The effective tax rate for the quarter ended April 30, 2014 was approximately 40.8%. Income tax provision is a non-cash expense

(c) Includes interest expense add-back of $0.9 million net of income taxes and amounts capitalized Q1 fiscal 2015 related to outstanding convertible note

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

Q1 Fiscal 2016 Summary Consolidated Balance Sheet (in thousands)

January 31, 2015

April 30, 2015

Assets

Cash and equivalents

$                 67,871

$             50,277

Other current assets

241,638

160,222

Net property and equipment

1,261,006

1,099,434

Other noncurrent assets

84,355

87,840

Total assets

$            1,654,870

$        1,397,773

Liabilities and Stockholders' Equity

Current liabilities

$               271,842

$           200,881

5% convertible note

135,877

137,576

TUSA credit facility

119,272

146,272

TUSA 6.75% notes due July 2022

429,500

429,500

RockPile credit facility

104,887

99,016

Other notes and mortgages payable

10,102

9,982

Other noncurrent liabilities

38,372

7,256

Total stockholders' equity

545,018

367,290

Total liabilities and stockholders' equity

$            1,654,870

$        1,397,773

Q1 Fiscal 2016 Production Volumes and Average Pre-Hedging Realized Prices

Quarter Ended April 30, 

2014

2015

Production volumes

Crude oil (Mbbls)

598

1,025

Natural gas (MMcf)

441

739

Natural gas liquids (Mbbls)

52

78

Total barrels of oil equivalent (Mboe)

724

1,226

Average daily production volumes (Boe/d)

8,135

13,775

Average realized prices:

Crude oil ($ per Bbl)

$                   90.88

$                   43.36

Natural gas ($ per Mcf)

$                     8.21

$                     3.23

Natural gas liquids ($ per Bbl)

$                   54.87

$                   12.18

Total average realized price ($ per Boe)

$                   84.08

$                   38.97

Use of Segment Information and Non-GAAP Measures

(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 intercompany 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 performance as a stand-alone company 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 company administrative costs, (ii) intercompany 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.

Triangle believes 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. Triangle presents 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

Oilfield    Services

Corporate and Other^(a)

 Eliminations and Other

Consolidated Total

Revenues

Oil, natural gas and natural gas liquids sales

$

47,778

$

-

$

-

$

-

$

47,778

Oilfield services for third parties

-

71,090

-

(580)

70,510

Intersegment revenues

-

9,504

-

(9,504)

-

Total Revenues

47,778

80,594

-

(10,084)

118,288

Expenses

LOE, GTP, Production Taxes and other expenses

22,101

-

-

-

22,101

Depreciation and amortization

29,299

9,489

325

(1,307)

37,806

Impairment of oil and natural gas properties

192,000

-

-

-

192,000

Cost of oilfield services

-

70,586

1,238

(6,360)

65,464

General and administrative

1,069

6,677

7,113

-

14,859

Total operating expenses

244,469

86,752

8,676

(7,667)

332,230

Operating Income

(196,691)

(6,158)

(8,676)

(2,417)

Other income (expense), net

(21,002)

(875)

2,686

(507)

Net Income (Loss) Before Income Taxes

$

(217,693)

$

(7,033)

$

(5,990)

$

(2,924)

^(b)

$

(a) Corporate and Other includes Triangle's 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 results from Triangle's investment in Caliber, including any changes in the fair value of equity investment derivatives.  Other than Caliber, these subsidiaries have limited activity

(b) $2.9 million RockPile, Caliber, and other services consolidated elimination results in a $2.9 million reduction in oil and natural gas property expenditures.

*Reference Note 3– Segment Reporting in our Q1 fiscal year 2016 Form 10-Q for additional details

Reconciliation Tables (in thousands)

A.

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

Quarter Ended April 30,

2014

2015

Net Income (Loss) Attributable to Common Stockholders

$             14,542

$          (180,199)

Impairment of oil and natural gas properties

-

192,000

Unrealized (gain) loss on commodity derivatives

4,638

33,442

(Gain) loss on equity investment derivatives

(10,454)

-

Gain on Caliber capital transactions

-

(2,880)

Tax benefit associated with reversal of deferred tax liability

-

(53,441)

Tax adjustment^(a)

2,373

4,210

Adjusted Net Income (Loss)

$              (6,868)

Adjusted Net Income (Loss) Per Common Share

Basic

$                 0.13

$                (0.09)

Diluted^(b)

$                 0.12

$                (0.09)

Weighted Average Common Shares

Basic

85,952

75,256

Diluted

103,314

75,256

B.

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

Quarter Ended April 30,

2014

2015

Net Income (Loss) Before Income Taxes

$              16,040

$          (217,693)

Depreciation and amortization

20,153

29,299

Impairment of oil and natural gas properties

-

192,000

Net interest expense

942

6,521

Stock-based compensation

395

321

Accretion of asset retirement obligations

25

57

Other

169

507

Unrealized commodity derivative losses (gains)

4,638

33,442

Adjusted-EBITDA

$              42,362

$              44,454

C.

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

Quarter Ended April 30,

2014

2015

Net Income (Loss) Before Income Taxes

$                8,437

$              (7,033)

Depreciation and amortization

3,590

9,489

Stock-based compensation

90

51

Net interest expense

507

787

Other

1,176

219

Adjusted-EBITDA 

$              13,800

$                3,513

*RockPile Adjusted-EBITDA calculated per RockPile credit facility