| 23 EBITDAX represents net income (loss) before interest expense, taxes, and depreciation, depletion and amortization, and oil & gas expenses. Adjusted EBITDAX represents EBITDAX further adjusted to reflect the items in the table below, all of which are required in determining our compliance with financial covenants under the RBC Credit Facility. We have included EBITDAX and Adjusted EBITDAX in this presentation to provide investors with a supplemental measure of our operating performance and information about the calculation of some of the financial covenants that are contained in our credit agreements. We believe EBITDAX is an important supplemental measure of operating performance because it eliminates items that have less bearing on our operating performance and so highlights trends in our core business that may not otherwise be apparent when relying solely on GAAP financial measures. We also believe that securities analysts, investors and other interested parties frequently use EBITDAX in the evaluation of companies, many of which present EBITDAX when reporting their results. Adjusted EBITDAX is a material component of the covenants that are imposed on us by our credit agreements. We are subject to financial covenant ratios that are calculated by reference to Adjusted EBITDAX. Non-compliance with the financial covenants contained in these credit agreements could result in a default, an acceleration in the repayment of amounts outstanding and a termination of lending commitments. Our management and external users of our financial statements, such as investors, commercial banks, research analysts and others, also use EBITDAX and Adjusted EBITDAX to assess: the financial performance of our assets without regard to financing methods, capital structure or historical cost basis; the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness; our operating performance and return on capital as compared to those of other companies in our industry, without regard to financing or capital structure; and the feasibility of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities. EBITDAX and Adjusted EBITDAX are not in accordance with generally accepted accounting principles (GAAP). As discussed above, we believe that the presentation of EBITDAX and Adjusted EBITDAX is appropriate. However, when evaluating our results, you should not consider EBITDAX and Adjusted EBITDAX in isolation of, or as a substitute for, measures of our financial performance as determined in accordance with GAAP, such as net income (loss). EBITDAX and Adjusted EBITDAX have material limitations as a performance measure because they exclude items that are necessary elements of our costs and operations. Because other companies may calculate EBITDAX and Adjusted EBITDAX differently than we do, EBITDAX may not be, and Adjusted EBITDAX as presented is not, comparable to similar measures reported by other companies. The following table reconciles net income to EBITDAX and Adjusted EBITDAX for the periods presented ($ in thousands): Adjusted EBITDA Reconciliation LTM LTM 9 mo December 31, 2015 December 31, 2016 Crimson Net loss $ (335,048) $ (58,029) 41,362 Interest expense 3,164 3,802 1,171 Income tax expense (benefit) (75,226) 342 23,139 Depreciation,depletion and amortization 133,380 63,323 65,529 Exploration expenses 11,979 1,816 1,811 EBITDAX $ (261,751) $ 11,254 $ 133,012 Unrealized gain on derivative instruments $ - $ 3,446 1,132 Non-cash equity-based compensation charges 6,516 6,457 3,180 Impairment of oil and gas properties 285,870 10,438 767 Loss (gain) on sale of assets and investment in affiliates 31,537 (1,453) (24,598) Adjusted EBITDAX $ 62,172 $ 30,142 $ 113,493 |
