Amendment to Our Revolving Credit Facility
Exhibit 99.2
Amendment to Our Revolving Credit Facility
On September 22, 2023, we entered into the first amendment (the “First Amendment”) to the Third Amended and Restated Credit Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “Sitio Revolving Credit Facility”). The First Amendment, amongst other things, (i) increases our borrowing base and lender commitment to $850.0 million and (ii) provides for the issuance of the notes in the announced offering without resulting in a borrowing base reduction.
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As of June 30, 2023, Sitio’s ratio of net debt to Pro Forma Adjusted EBITDA for the last twelve months, as adjusted to give effect to the consummation of those certain 2023 Acquisitions that occurred after June 30, 2023, was 1.61x.
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We define Pro Forma Adjusted EBITDA as Adjusted EBITDA plus 2023 Acquisitions EBITDA and Xxxxxxx Merger EBITDA.
The following table presents a reconciliation of Adjusted EBITDA and Pro Forma Adjusted EBITDA to the most directly comparable GAAP financial measure for the period indicated (in thousands).
| Three Months Ended June 30, 2023 |
Last Twelve Months Ended June 30, 2023 |
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| (in thousands) | ||||||||
| Net income (loss) |
$ | (2,973 | ) | $ | 118,342 | |||
| Interest expense, net |
23,159 | 77,751 | ||||||
| Income tax expense (benefit) |
(683 | ) | 9,537 | |||||
| Depreciation, depletion and amortization |
74,239 | 211,216 | ||||||
| Impairment of oil and natural gas properties |
25,617 | 25,617 | ||||||
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| EBITDA |
$ | 119,359 | $ | 442,463 | ||||
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| Non-cash share-based compensation expense |
5,422 | 18,378 | ||||||
| Losses (gains) on unsettled derivative instruments |
1,140 | (20,507 | ) | |||||
| Change in fair value of warrant liability |
(584 | ) | (3,298 | ) | ||||
| Loss on debt extinguishment |
— | 12,270 | ||||||
| Merger-related transaction costs |
1,814 | 16,114 | ||||||
| Write off of financing costs |
— | 1,180 | ||||||
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| Adjusted EBITDA |
$ | 127,151 | $ | 466,600 | ||||
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| Xxxxxxx Xxxxxx XXXXXX: June 30, 2022 to December 28, 2022 |
— | 158,495 | ||||||
| 2023 Acquisitions EBITDA (1) |
$ | 6,733 | $ | 35,080 | ||||
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| Pro Forma Adjusted EBITDA |
$ | 133,884 | $ | 660,175 | ||||
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| (1) | Does not include $0.6 million of 2023 Acquisitions EBITDA related to the transaction which closed on June 13, 2023, and therefore, was reflected in Adjusted EBITDA for the period from June 13, 2023 to June 30, 2023. |
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We define Pro Forma Discretionary Cash Flow as Discretionary Cash Flow plus 2023 Acquisitions Discretionary Cash Flow from April 1, 2023 to June 30, 2023.
The following table presents a reconciliation of Discretionary Cash Flow and Pro Forma Discretionary Cash Flow to the most directly comparable GAAP financial measure for the period indicated (in thousands).
| Three Months Ended June 30, 2023 |
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| Cash flow from operations |
$ | 103,852 | ||
| Interest expense, net |
23,159 | |||
| Income tax expense (benefit) |
(683 | ) | ||
| Deferred tax expense |
10,172 | |||
| Changes in operating assets and liabilities |
(9,715 | ) | ||
| Management fees to affiliates |
— | |||
| Amortization of deferred financing costs and long-term debt discount |
(1,448 | ) | ||
| Merger-related transaction costs |
1,814 | |||
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| Adjusted EBITDA |
$ | 127,151 | ||
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| Less: |
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| Cash interest expense |
24,040 | |||
| Cash taxes |
8,261 | |||
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| Discretionary Cash Flow |
$ | 94,850 | ||
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| 2023 Acquisitions Discretionary Cash Flow: April 1 to June 30, 2023(1) |
$ | 6,733 | ||
| Pro Forma Discretionary Cash Flow |
$ | 101,583 | ||
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| (1) | Does not include $0.6 million of 2023 Acquisitions Discretionary Cash Flow related to the transaction which closed on June 13, 2023, and therefore, was reflected in Discretionary Cash Flow for the period from June 13, 2023 to June 30, 2023. |
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We define Unlevered Free Cash Flow as revenue less production taxes and Cash G&A.
We define Pro Forma Unlevered Free Cash Flow as Unlevered Free Cash Flow plus 2023 Acquisitions Unlevered Free Cash Flow from April 1, 2023 to June 30, 2023.
The following table presents a reconciliation of Unlevered Free Cash Flow and Pro Forma Unlevered Free Cash Flow to the most directly comparable GAAP financial measure for the period indicated (in thousands).
| Three Months Ended June 30, 2023 |
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| Revenue |
$ | 136,466 | ||
| Less: |
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| Production taxes |
10,344 | |||
| Xxxx G&A |
6,695 | |||
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| Unlevered Free Cash Flow |
$ | 119,427 | ||
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| 2023 Acquisitions Unlevered Free Cash Flow: April 1 to June 30, 2023(1) |
$ | 6,733 | ||
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| Pro Forma Unlevered Free Cash Flow |
$ | 126,160 | ||
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| (1) | Does not include $0.6 million of 2023 Acquisitions Unlevered Free Cash Flow related to the transaction which closed on June 13, 2023, and therefore, was reflected in Unlevered Free Cash Flow for the period from June 13, 2023 to June 30, 2023. |
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As of September 25, 2023, we had $599.0 million of borrowings outstanding under the Sitio Revolving Credit Facility and $0.4 million of cash and cash equivalents.
