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

Q2 FY 2016

Revenue

y/y % Change

Adj.-EBITDA

y/y % Change

E&P

$55.3

-31%

$47.9

-11%

RockPile

$69.4

-32%

$7.9

-72%

Total

$124.7

-32%

$55.8

-33%

Q2 Fiscal 2016 Summary Consolidated Statement of Operations (in thousands)

Quarter Ended July 31,

2014

2015

Revenues

Oil, natural gas and natural gas liquids sales

$       80,506

$          55,263

Oilfield services^(a)

61,483

54,470

  Total revenues

141,989

109,733

Expenses

Lease operating expenses

6,698

11,369

Gathering, transportation and processing

3,733

6,641

Production taxes

8,677

5,449

Depreciation and amortization^(a)

26,707

32,244

Impairment of oil and natural gas properties

-

206,000

Accretion of asset retirement obligations

40

90

Oilfield services^(a)

43,554

46,719

Corporate and other stock-based compensation

1,337

3,167

E&P stock-based compensation

343

375

RockPile stock-based compensation

127

84

Corporate and other cash G&A expenses

2,591

5,056

E&P cash G&A expenses

4,442

933

RockPile cash G&A expenses

5,251

4,974

Total operating expenses

103,500

323,101

Operating Income (Loss)

38,489

Interest expense, net

(4,218)

(9,866)

Amortization of deferred loan costs

(1,167)

(731)

Gain on extinguishment of debt

-

1,156

Realized commodity derivative gains (losses)

(2,954)

17,016

Unrealized commodity derivative gains (losses)

2,033

8,033

Equity investment income (loss)

190

1,210

Gain (loss) on equity investment derivatives

(7,534)

4,516

Other income^(a)

52

(1,312)

Total other income (expense)

(13,598)

20,022

Income (Loss) Before Income Taxes

24,891

(193,346)

Income tax provision (benefit)^(b)

10,339

-

Net Income (Loss) Attributable to Common Stockholders

Net Income (Loss) per Common Share

Basic

$           0.17

$             (2.56)

Diluted^(c)

$           0.15

$             (2.56)

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

Basic

$           0.21

$             (0.01)

Diluted^(c)

$           0.18

$             (0.01)

Weighted Average Common Shares

Basic

86,172

75,410

Diluted

103,774

75,410

(a) Includes intercompany eliminations; reference Note 3 – Segment Reporting in our Q2 fiscal year 2016 Form 10-Q for additional details

(b) The effective tax rate for the quarter ended July 31, 2014 was approximately 41.5%. Income tax provision is a non-cash expense

(c) Includes interest expense add-back of $1.0 million net of income taxes and amounts capitalized in Q2 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

Q2 Fiscal 2016 Summary Consolidated Balance Sheet (in thousands)

January 31, 2015

July 31, 2015

Assets

Cash and equivalents

$                 67,871

$          45,870

Other current assets

241,638

151,783

Net property and equipment

1,261,006

916,589

Other noncurrent assets

84,355

95,715

Total assets

$            1,654,870

$     1,209,957

Liabilities and Stockholders' Equity

Current liabilities

$               271,842

$        190,767

5% convertible note

135,877

139,295

TUSA credit facility

119,272

172,272

TUSA 6.75% notes due July 2022

429,500

425,889

RockPile credit facility

104,887

86,920

Other notes and mortgages payable

10,102

12,687

Other noncurrent liabilities

38,372

4,435

Total stockholders' equity

545,018

177,692

Total liabilities and stockholders' equity

$            1,654,870

$     1,209,957

Q2 Fiscal 2016 Production Volumes and Average Pre-Hedging Realized Prices

Quarter Ended July 31, 

2014

2015

Production volumes

Crude oil (Mbbls)

837

1,015

Natural gas (MMcf)

494

751

Natural gas liquids (Mbbls)

51

102

  Total barrels of oil equivalent (Mboe)

970

1,242

Average daily production volumes (Boe/d)

10,543

13,500

Average realized prices:

Crude oil ($ per Bbl)

$       90.78

$       51.71

Natural gas ($ per Mcf)

$         5.49

$         2.56

Natural gas liquids ($ per Bbl)

$       35.29

$         8.36

Total average realized price ($ per Boe)

$       82.94

$       44.50

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 5% convertible note, 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).

Q2 Fiscal 2016 Segment Income and Elimination (in thousands)

Exploration and

Production

Oilfield Services

Corporate

 and Other^(a)

Eliminations and Other

Consolidated Total

Revenues

Oil, natural gas and natural gas liquids sales

$

55,263

$

-

$

-

$

-

$

55,263

Oilfield services for third parties

-

54,830

-

(360)

54,470

Intersegment revenues

-

14,601

-

(14,601)

-

Total Revenues

55,263

69,431

-

(14,961)

109,733

Expenses

LOE, GTP, Production Taxes and other expenses

23,459

-

-

-

23,459

Depreciation and amortization

24,617

8,718

407

(1,408)

32,334

Impairment of oil and natural gas properties

206,000

-

-

-

206,000

Cost of oilfield services

-

56,353

(1,238)

(8,396)

46,719

General and administrative

1,308

5,058

8,223

-

14,589

Total operating expenses

255,384

70,129

7,392

(9,804)

323,101

Operating Income

(200,121)

(698)

(7,392)

(5,157)

(213,368)

Other income (expense), net

18,290

(845)

3,116

(539)

20,022

Net Income (Loss) Before Income Taxes

$

(181,831)

$

(1,543)

$

(4,276)

$

(5,696)

^(b)

$

(193,346)

(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) $5.7 million RockPile, Caliber, and other services consolidated elimination results in a $5.7 million reduction in oil and natural gas property expenditures.

*Reference Note 3 – Segment Reporting in our Q2 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 July 31,

2014

2015

Net Income (Loss) Attributable to Common Stockholders

$    14,552

$    (193,346)

Impairment of oil and natural gas properties

-

206,000

Unrealized (gain) loss on commodity derivatives

(2,033)

(8,033)

(Gain) loss on equity investment derivatives

7,534

(4,516)

Gain on extinguishment of debt

-

(1,156)

Tax adjustment^(a)

(2,285)

-

Adjusted Net Income (Loss)

$        (1,051)

Adjusted Net Income (Loss) Per Common Share

Basic

$        0.21

$          (0.01)

Diluted^(b)

$        0.18

$          (0.01)

Weighted Average Common Shares

Basic

86,172

75,410

Diluted

103,774

75,410

(a) Tax adjustment is calculated by applying Company's effective tax rate of 41.5% for Q2 fiscal 2015 to pre-tax effected adjusting items

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

B.

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

Quarter Ended July 31,

2014

2015

Net Income (Loss) Before Income Taxes

$ 26,019

$ (181,831)

Depreciation and amortization

26,287

24,527

Impairment of oil and natural gas properties

-

206,000

Net interest expense

2,279

7,289

Stock-based compensation

343

375

Accretion of asset retirement obligations

40

90

Other

1,072

(530)

Unrealized commodity derivative losses (gains)

(2,033)

(8,033)

Adjusted-EBITDA

$ 54,007

$    47,887

 C.

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

Quarter Ended July 31,

2014

2015

Net Income (Loss) Before Income Taxes

$ 22,453

$ (1,543)

Depreciation and amortization

4,690

8,718

Stock-based compensation

127

84

Net interest expense

564

754

Other

930

(76)

Adjusted-EBITDA^(c)

$ 28,764

$  7,937

*RockPile Adjusted-EBITDA calculated per RockPile credit facility