Bonanza Creek Energy, Inc. :BCEI-US: Earnings Analysis: Q2, 2016 By the Numbers : August 9, 2016

Bonanza Creek Energy, Inc. reports financial results for the quarter ended June 30, 2016.

We analyze the earnings along side the following peers of Bonanza Creek Energy, Inc. – Anadarko Petroleum Corporation, Whiting Petroleum Corporation, Continental Resources, Inc. and Oasis Petroleum Inc. (APC-US, WLL-US, CLR-US and OAS-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 54.53 million, Net Earnings of USD -49.48 million.
  • Gross margins widened from -6.80% to 15.87% compared to the same period last year, operating (EBITDA) margins now 41.82% from 48.34%.
  • Year-on-year change in operating cash flow of -173.26% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings declined although operating margins improved from -35.27% to -16.24%.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2015-06-30 2015-09-30 2015-12-31 2016-03-31 2016-06-30
Relevant Numbers (Quarterly)
Revenues (mil) 90.42 72.15 57.03 44.17 54.53
Revenue Growth (%YOY) -40.39 -53.86 -53.7 -39.55 -39.69
Earnings (mil) -40.48 -110.38 -576.58 -47.24 -49.48
Earnings Growth (%YOY) -3343.27 -330.24 -1248.72 -160.88 -22.24
Net Margin (%) -44.76 -152.98 -1010.97 -106.93 -90.73
EPS -0.83 -2.25 -11.76 -0.96 -1
Return on Equity (%) -17.85 -52.94 -466.41 -100.95 -139.99
Return on Assets (%) -7.7 -21.88 -143.38 -14.03 -14.56

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Market Share Versus Profits

Revenues History
Earnings History

BCEI-US‘s change in revenue this period compared to the same period last year of -39.69% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that BCEI-US is holding onto its market share. Also, for comparison purposes, revenues changed by 23.44% and earnings by -4.74% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Earnings Growth Analysis

The company’s earnings declined year-on-year largely because of the increases in operating costs. Its operating margins (EBITDA margins) went from 48.34% to 41.82%. This decline in earnings would have been worse except for the fact that the company showed improvement in gross margins, from -6.80% to 15.87%. For comparison, gross margins were 1.00% and EBITDA margins 14.07% in the immediate last period.

Gross Margin Versus EBITDA Margin

Cash Versus Earnings – Sustainable Performance?

BCEI-US‘s change in operating cash flow of -173.26% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Margins

Despite an overall improvement in operating (EBIT) margins, the company’s earnings fell. EBIT margins went from -35.27% to -16.24%. The decline in earnings appears to be largely because of one-time items. Pretax margins declined from -73.18% to -90.73%.

EBIT Margin Versus PreTax Margin
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Bonanza Creek Energy, Inc.

Company Profile

Bonanza Creek Energy, Inc. is an independent energy company, which engages in the acquisition, exploration, development and production of onshore oil and associated liquids. It holds interest in Wattenberg, Mid-Continent and North Park properties. The company was founded on December 2, 2010 and is headquartered in Denver, CO.

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