Riviera Resources Announces $1.00 Per Share Cash Distribution of Over $60 Million to Shareholders; Decision to Defer Drilling in North Louisiana; Commitment to Lowering General and Administrative Costs - Seite 2

General and Administrative Costs
As communicated on our February 27, 2020 conference call, the Company remains focused on finding ways to continue to reduce General and Administrative costs.  In the fourth quarter of 2019, Riviera Upstream’s General and Administrative expenses, excluding share-based compensation expenses and severance expenses, were approximately $8.9 million.  The Company expects by fourth quarter 2020, Upstream’s General and Administrative expenses, excluding share-based compensation expenses and severance expenses, will be approximately $4.4 million. 

With respect to Blue Mountain Midstream, the company expects General and Administrative expenses, excluding share-based compensation and severance expenses, will be approximately $10.4 million in 2020.  This represents a 15% decrease from 2019.

David Rottino further commented, “In light of our recent asset sales and the challenging commodity price environment, we remain proactive in reducing our G&A.  We have made significant progress in realizing Upstream cost savings thus far and we expect that will continue throughout the first half of 2020.  By Q4, 2020, we expect our Upstream G&A will be down 50% versus prior year.  In addition, Blue Mountain is reducing costs as well and expects to see 15% lower G&A in 2020 versus prior year.”

Distributions to Shareholders
As a C corporation, distributions to common shareholders of current or accumulated earnings and profits are qualified dividends eligible for the 23.8% maximum federal income tax rate, inclusive of the 3.8% Medicare tax rate applicable to net investment income.  Any distributions in excess of current or accumulated earnings and profits would be reported as returns of capital instead of qualified dividends.  Distributions that are classified as returns of capital are nontaxable to the extent they do not exceed a shareholder's adjusted tax basis in the Company's stock, or as a capital gain to the extent that the amount of the distribution exceeds a shareholder's adjusted tax basis in the Company's stock. As of March 6, 2020, the Company estimates it will have zero current and accumulated earnings and profits for the tax year ended December 31, 2020. An updated estimate of Riviera’s E&P will be provided in connection with publishing Form 8937 (which publication will occur within 45 days of the Distribution).