You just closed Q3 for a mid-sized upstream oil and gas company and the CFO asks you to explain why adjusted EBITDA came in below budget. Management wants a variance bridge that separates market effects from operating execution, and you only have the quarter's budget and actual production, realized price, lease operating expense, and G&A. Assume all production is sold in the quarter and depreciation is excluded because the focus is adjusted EBITDA.
| Metric | Budget Q3 | Actual Q3 |
|---|---|---|
| Production (Mboe) | 9.0 | 8.4 |
| Realized price per boe | $72 | $69 |
| LOE per boe | $18 | $20 |
| Cash G&A ($mm) | $42.0 | $44.0 |
How would you structure the variance analysis, quantify the main drivers of the EBITDA miss, and explain which items were market-driven versus operationally driven?