Bonanza Creek Energy, Inc. :BCEI-US: Earnings Analysis: Q3, 2016 By the Numbers : November 11, 2016

Bonanza Creek Energy, Inc. reports financial results for the quarter ended September 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., PDC Energy Inc, Oasis Petroleum Inc., Resolute Energy Corporation and Northern Oil and Gas, Inc. (APC-US, WLL-US, CLR-US, PDCE-US, OAS-US, REN-US and NOG-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 49.33 million, Net Earnings of USD -34.90 million.
  • Gross margins widened from -21.25% to 18.78% compared to the same period last year, operating (EBITDA) margins now 33.38% from 57.17%.
  • Year-on-year change in operating cash flow of -57.23% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

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

2015-09-30 2015-12-31 2016-03-31 2016-06-30 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 72.15 57.03 44.17 54.53 49.33
Revenue Growth (%YOY) -53.86 -53.7 -39.55 -39.69 -31.63
Earnings (mil) -110.38 -576.58 -47.24 -49.48 -34.9
Earnings Growth (%YOY) -330.24 -1248.72 -160.88 -22.24 68.38
Net Margin (%) -152.98 -1010.97 -106.93 -90.73 -70.76
EPS -2.25 -11.76 -0.96 -1 -0.71
Return on Equity (%) -52.94 -466.41 -100.95 -139.99 -137.84
Return on Assets (%) -21.88 -143.38 -14.03 -14.56 -11.07

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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 -31.63% 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 -9.55% and earnings by 29.46% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings growth has been influenced by the year-on-year improvement in gross margins from -21.25% to 18.78%. However the company’s overhead costs have prevented it from fully capitalizing on these gross margin improvements. In fact, the company’s operating margins (EBITDA margins) showed no improvement over the same period last year.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

BCEI-US‘s change in operating cash flow of -57.23% 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

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from -47.62% to -30.81% and (2) one-time items. The company’s pretax margins are now -70.76% compared to -250.31% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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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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