The 3 Critical Numbers From Vanguard Natural Resources LLC's Earnings
Image source: Getty Images.
Continue Reading Below
With a razor-thin margin for error, Vanguard Natural Resources (NASDAQ: VNR) needed to show tangible progress on several issues in its second-quarter report. It did just that, especially in three critical numbers. However, even with those steps forward, the company still has much work to do before it's back on solid ground.
1. Distributable cash flow was up 65%
With oil and gas prices remaining weak, Vanguard Natural Resources is working hard to mute this impact by cutting costs. According to CEO Scott Smith, this resulted in "significant savings in lease operating expenses and general administrative expenses over the first half of the year" after stripping out the impact of the mergers with LRR Energy and Eagle Rock Energy.
<3>More From Fool.com
Continue Reading Below
Advertisement Warren Buffett Tells You How to Turn $40 Into $10 Million LeBron James: The Next Warren Buffett? Social Security: 3 Things to Know Before Taking Benefits Early As of 5/13 As of 7/26 % Hedged Average Price % Hedged Average Price 2016 Natural Gas 81% $4.18 86% $4.27 2017 Natural Gas 69% $3.70 75% $3.71 2016 Oil 82% $66.39 94% $65.81 2017 Oil 23% $84.68 24% $84.55 Data source: Vanguard Natural Resources. As that chart shows, the company added a meaningful amount of oil and gas hedges through the end of next year to lock in a larger portion of its production well above the current market price. That was a common theme during the quarter as producers took advantage of the recentrun-upin oil and gas prices to lock in production. Range Resources, for example, boosted its hedge portfolio and now has 80% of its natural gas production hedged in 2016 at a floor price of $3.22 per Mcf. While Vanguard Natural Resources' finances remain very strained, the company is making progress to improve. Its decision to bolster its oil and gas hedges during the quarter as prices rallied could be what keeps the company afloat if prices take another tumble later this year. That said, it's not back on solid ground just yet. It needs to find other ways to chip away at that credit facility to get its outstanding borrowings well below borrowing capacity so it can have a little more breathing room. A secret billion-dollar stock opportunity Matt DiLallofree for 30 daysconsidering a diverse range of insightsdisclosure policy
Investor takeaway
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early, in-the-know investors! To be one of them, just click here