Highlights
Fourth Quarter 2017 Transaction Highlights
Management Comment
Full Year and Fourth Quarter 2017 Production
4th Quarter 2017 | Full Year 2017 | |||
Sales Volume (Total) | ||||
Oil (Bbls) | 16,875 | 111,914 | ||
Gas (Mcf) | 113,469 | 448,571 | ||
Sales volumes (Boe) | 35,789 | 186,676 | ||
Average Daily Production (Boe/d) | 389 | 511 | ||
Average Sales Prices | ||||
Oil (Bbl) | $ | 54.10 | $ | 45.16 |
Gas (Mcf) | $ | 3.14 | $ | 3.32 |
Barrel of Oil Equivalent | $ | 36.07 | $ | 35.06 |
Note: All production associated with the
2017 Year End Reserves
As of
As of | As of | ||||||
Proved Developed Oil Reserves (Bbls) | 676,030 | 657,280 | |||||
Proved Undeveloped Oil Reserves (Bbls) | - | - | |||||
Total Proved Oil Reserves (Bbls) | 676,030 | 657,280 | |||||
Proved Developed Gas Reserves (Mcf) | 888,507 | 1,379,163 | |||||
Proved Undeveloped Gas Reserves (Mcf) | - | - | |||||
Total Proved Gas Reserves (Mcf) | 888,507 | 1,379,163 | |||||
Total Proved Reserves (Boe) | 824,115 | 887,142 | |||||
Present Value of Estimated Future Net Revenues Before Income Taxes, Discounted at 10% (In thousands)* | $ | 9,253 | $ | 6,747 |
*
Operations Update
Full Year 2017 Financial Results
Revenues from sales of oil and natural gas during 2017 were
Lease operating expenses for 2017 were
General and administrative cash expenses for 2017 were
Adjusted EBITDA was
Credit Facility Update
As of
Credit Facility Covenants | Required Covenant Ratio | |||
Current Ratio | Greater than 1.0 to 1.0 | 3.7 to 1.0 | ||
PDP to Secured Debt* | Greater than 1.2 to 1.0 | 9.9 to 1.0 |
*Represents outstanding indebtedness of
**
Update to Hedging Activity
Action | Begin | End | Quantity (bbls/d) | Price | ||||||||||||||
Crude oil price swaps | Bought | 150 | 52.20 |
Action | Begin | End | Quantity (mcf/d) | Price | ||||||||||||||
Natural gas price swaps | Bought | 2,500 | 3.01 | |||||||||||||||
Natural gas price swaps | Sold | 2,000 | 2.98 |
About
We are an independent energy company focused on the lease acquisition and development of oil and gas producing properties in the continental
Forward-Looking Statements
This press release may include "forward-looking statements" within the meaning of the securities laws. All statements other than statements of historical facts included herein may constitute forward-looking statements. Forward-looking statements in this document may include statements regarding the Company's expectations regarding the Company's operational, exploration and development plans; expectations regarding the nature and amount of the Company's reserves; and expectations regarding production, revenues, cash flows and recoveries. When used in this press release, the words "will," "potential," "believe," "estimate," "intend," "expect," "may," "should," "anticipate," "could," "plan," "predict," "project," "profile," "model," or their negatives, other similar expressions or the statements that include those words, are intended to identify
forward-looking statements, although not all forward-looking statements contain such identifying words. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, fluctuations in oil and natural gas prices, uncertainties inherent in estimating quantities of oil and natural gas reserves and projecting future rates of production and timing of development activities, competition, operating risks, acquisition risks, liquidity and capital requirements, the effects of governmental regulation, adverse changes in the market for the Company's oil and natural gas production, dependence upon third-party vendors, and
other risks detailed in the Company's periodic report filings with the
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
2017 | 2016 | |||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and equivalents | $ | 3,277 | $ | 2,518 | ||||||
Oil and gas sales receivable | 687 | 562 | ||||||||
Discontinued operations - assets of mining segment | 114 | 114 | ||||||||
Assets available for sale | 653 | 653 | ||||||||
Marketable securities | 876 | 947 | ||||||||
Refundable deposits | 250 | - | ||||||||
Other current assets | 61 | 95 | ||||||||
Total current assets | 5,918 | 4,889 | ||||||||
Oil and gas properties under full cost method: | ||||||||||
Unevaluated properties and exploratory wells in progress | 4,664 | 4,664 | ||||||||
Evaluated properties | 86,313 | 87,834 | ||||||||
Less accumulated depreciation, depletion and amortization | (83,362 | ) | (82,640 | ) | ||||||
Net oil and gas properties | 7,615 | 9,858 | ||||||||
Other assets: | ||||||||||
Property and equipment, net | 1,717 | 1,864 | ||||||||
Other assets | 66 | 156 | ||||||||
Total other assets | 1,783 | 2,020 | ||||||||
Total assets | $ | 15,316 | $ | 16,767 | ||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable and accrued liabilities: | ||||||||||
Payable to major operator | $ | - | $ | 2,710 | ||||||
Contingent ownership interests | - | 1,430 | ||||||||
Other | 707 | 743 | ||||||||
Related party payable | 50 | - | ||||||||
Accrued compensation and benefits | 64 | 49 | ||||||||
Current portion of long-term debt | 600 | 6,000 | ||||||||
Liabilities from derivative contracts | 161 | - | ||||||||
Total current liabilities | 1,582 | 10,932 | ||||||||
Noncurrent liabilities: | ||||||||||
Long-term debt, less current portion | 937 | - | ||||||||
Asset retirement obligations | 913 | 1,045 | ||||||||
Warrant liability | 1,200 | 1,030 | ||||||||
Other liabilities | 22 | 2 | ||||||||
Total noncurrent liabilities | 3,072 | 2,077 | ||||||||
Commitments, contingencies, and related party transactions (Note 10) | ||||||||||
Shareholders' equity: | ||||||||||
Preferred stock, par value | 1 | 1 | ||||||||
Common stock, | 118 | 61 | ||||||||
Additional paid-in capital | 136,631 | 127,576 | ||||||||
Accumulated deficit | (125,185 | ) | (123,825 | ) | ||||||
Other comprehensive loss | (903 | ) | (55 | ) | ||||||
Total shareholders' equity | 10,662 | 3,758 | ||||||||
Total liabilities and shareholders' equity | $ | 15,316 | $ | 16,767 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
2017 | 2016 | 2015 | |||||||||||||
Revenue: | |||||||||||||||
Oil | $ | 5,054 | $ | 4,689 | $ | 9,047 | |||||||||
Natural gas and liquids | 1,491 | 1,057 | 1,249 | ||||||||||||
Total revenue | 6,545 | 5,746 | 10,296 | ||||||||||||
Operating expenses: | |||||||||||||||
Oil and gas operations: | |||||||||||||||
Production costs | 3,402 | 2,728 | 7,352 | ||||||||||||
Depreciation, depletion and amortization | 753 | 2,529 | 8,412 | ||||||||||||
Impairment of oil and gas properties | - | 9,568 | 57,676 | ||||||||||||
General and administrative: | |||||||||||||||
Compensation and benefits, including directors and contract employees | 741 | 640 | 2,602 | ||||||||||||
Stock-based compensation | 323 | 213 | 948 | ||||||||||||
Employee severance costs | - | 3 | 504 | ||||||||||||
Professional fees, insurance and other | 2,314 | 1,994 | 1,866 | ||||||||||||
Total operating expenses | 7,533 | 17,675 | 79,360 | ||||||||||||
Operating Loss | (988 | ) | (11,929 | ) | (69,064 | ) | |||||||||
Other income (expense): | |||||||||||||||
Realized gain (loss) on commodity price risk derivatives | 135 | 1,440 | (75 | ) | |||||||||||
Unrealized gain (loss) on commodity price risk derivatives | (161 | ) | (1,634 | ) | 1,634 | ||||||||||
Gain on sale of assets | 3 | 102 | 121 | ||||||||||||
Gain on sale of oil and gas properties | 4,318 | - | - | ||||||||||||
Loss on debt for equity conversion | (4,440 | ) | - | - | |||||||||||
Gain (loss) on investments | 777 | 750 | (68 | ) | |||||||||||
Rental and other income (loss) | (321 | ) | (169 | ) | 431 | ||||||||||
Warrant revaluation gain (loss) | (170 | ) | 210 | - | |||||||||||
Interest expense | (513 | ) | (442 | ) | (263 | ) | |||||||||
Total other income (expense) | (372 | ) | 257 | 1,780 | |||||||||||
Loss from continuing operations | (1,360 | ) | (11,672 | ) | (67,284 | ) | |||||||||
Discontinued operations: | |||||||||||||||
Discontinued operations | - | (2,448 | ) | (2,992 | ) | ||||||||||
Impairment loss on discontinued operations | - | - | (22,620 | ) | |||||||||||
Loss from discontinued operations | - | (2,448 | ) | (25,612 | ) | ||||||||||
Net loss | (1,360 | ) | (14,120 | ) | (92,896 | ) | |||||||||
Change in fair value of marketable equity securities, net of tax | (848 | ) | (55 | ) | 56 | ||||||||||
Comprehensive loss | $ | (2,208 | ) | $ | (14,175 | ) | $ | (92,840 | ) | ||||||
Loss from continuing operations | (1,360 | ) | (11,672 | ) | (67,284 | ) | |||||||||
Accrued dividends related to Series A Convertible Preferred Stock | (514 | ) | (232 | ) | - | ||||||||||
Loss from continuing operations applicable to common shareholders | (1,874 | ) | (11,904 | ) | (67,284 | ) | |||||||||
Loss per share- basic and diluted | |||||||||||||||
Continuing operations | $ | (0.23 | ) | $ | (2.50 | ) | $ | (14.38 | ) | ||||||
Discontinued operations | - | (0.51 | ) | (5.48 | ) | ||||||||||
Total | $ | (0.23 | ) | $ | (3.01 | ) | $ | (19.86 | ) | ||||||
Weighted average shares outstanding | |||||||||||||||
Basic and diluted | 5,899,802 | 4,768,013 | 4,677,500 | ||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED
(In Thousands)
2017 | 2016 | 2015 | |||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net loss | $ | (1,360 | ) | $ | (14,120 | ) | $ | (92,896 | ) | ||||||
Loss from discontinued operations | - | 2,448 | 25,612 | ||||||||||||
Loss from continuing operations | (1,360 | ) | (11,672 | ) | (67,284 | ) | |||||||||
Adjustments to reconcile loss from continuing operations to net cash provided by / (used in) operating activities: | |||||||||||||||
Depreciation, depletion, accretion, and amortization | 890 | 2,529 | 8,557 | ||||||||||||
Debt amortization | - | - | - | ||||||||||||
Impairment of oil and gas properties | - | 9,568 | 57,676 | ||||||||||||
Change in fair value of oil price risk derivative | 161 | 1,634 | (1,634 | ) | |||||||||||
Interest change in Major Operator | (141 | ) | (1,476 | ) | - | ||||||||||
Gain on sale of oil and gas properties | (4,318 | ) | - | - | |||||||||||
Loss on conversion of debt to equity | 4,440 | - | - | ||||||||||||
Gain on sale of assets | (3 | ) | (102 | ) | (121 | ) | |||||||||
Stock-based compensation and services | 323 | 213 | 948 | ||||||||||||
(Gain)/loss on Warrants | 170 | (210 | ) | - | |||||||||||
(Gain) on receipt of marketable securities | (777 | ) | (750 | ) | - | ||||||||||
Other | 73 | 378 | (110 | ) | |||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Decrease (increase) in: | |||||||||||||||
Oil and gas sales receivable | (125 | ) | 580 | 2,034 | |||||||||||
Other assets | (159 | ) | 86 | 63 | |||||||||||
Increase (decrease) in: | |||||||||||||||
Accounts payable | (77 | ) | (1,050 | ) | 1,126 | ||||||||||
Oil and gas operator overpayment | - | - | 1,429 | ||||||||||||
Accrued compensation and benefits | 11 | (1,133 | ) | (188 | ) | ||||||||||
Other liabilities | - | - | 8 | ||||||||||||
Net cash provided by / (used in) operating activities | (892 | ) | (1,405 | ) | 2,504 | ||||||||||
Cash flows from investing activities: | |||||||||||||||
Capital expenditures | (299 | ) | (194 | ) | (3,620 | ) | |||||||||
Proceeds from sale of oil and gas properties and other | 2,000 | - | 264 | ||||||||||||
Proceeds from settlement of property litigation | - | - | 1,500 | ||||||||||||
Net change in restricted investments | - | - | 1,291 | ||||||||||||
Net cash provided by / (used) in investing activities: | 1,701 | (194 | ) | (565 | ) | ||||||||||
Cash flows from financing activities: | |||||||||||||||
Issuance of common stock | (27 | ) | 1,317 | - | |||||||||||
Redemption of common stock | - | (3 | ) | (29 | ) | ||||||||||
Payments for debt issuance costs | (23 | ) | (103 | ) | (125 | ) | |||||||||
Net cash provided by / (used in) financing activities | (50 | ) | 1,211 | (154 | ) | ||||||||||
Discontinued operations: | |||||||||||||||
Net cash used in operating activities | - | (448 | ) | (2,440 | ) | ||||||||||
Net cash used in investing activities | - | - | (1 | ) | |||||||||||
Net cash used in discontinued operations | - | (448 | ) | (2,441 | ) | ||||||||||
Net increase (decrease) in cash and equivalents | 759 | (836 | ) | (656 | ) | ||||||||||
Cash and equivalents, beginning of year | 2,518 | 3,354 | 4,010 | ||||||||||||
Cash and equivalents, end of year | $ | 3,277 | $ | 2,518 | $ | 3,354 | |||||||||
In addition to reporting net income (loss) as defined under GAAP, we also present net earnings before interest, income taxes, depletion, depreciation, and amortization, accretion of discount on asset retirement obligations, impairment of oil and natural gas properties, warrant revaluation (gains) and expenses, net gain (loss) from mark-to-market on commodity derivatives, cash settlements received (paid), standby rig expenses and non-cash expenses relating to share based payments recognized under ASC Topic 718 ("Adjusted EBITDA"), which is a non-GAAP performance measure. Adjusted EBITDA consists of net earnings after adjustment for those items described in the table below. Adjusted EBITDA does not represent, and should not be considered an alternative to GAAP measurements, such as net income (loss) (its most directly comparable GAAP measure), and our calculations thereof may not be comparable to similarly titled measures reported by other companies. By eliminating the items described below, we believe the measure is useful in evaluating its fundamental core operating performance. We also believe that Adjusted EBITDA is useful to investors because similar measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies in similar industries. Our management uses Adjusted EBITDA to manage our business, including in preparing our annual operating budget and financial projections. Our management does not view Adjusted EBITDA in isolation and also uses other measurements, such as net income (loss) and revenues to measure operating performance. The following table provides a reconciliation of net loss to Adjusted EBITDA for the periods presented:
2017 | 2016 | 2015 | ||||||||||||
Loss from continuing operations (GAAP) | $ | (1,360 | ) | $ | (11,672 | ) | $ | (67,284 | ) | |||||
Impairment of oil and gas properties | - | 9,568 | 57,676 | |||||||||||
Depreciation, depletion and amortization | 753 | 2,529 | 8,412 | |||||||||||
(Gain)/loss on investments | (777 | ) | (750 | ) | 68 | |||||||||
Stock-based compensation | 323 | 213 | 948 | |||||||||||
Employee severance costs | - | 3 | 504 | |||||||||||
(Gain)/loss on sale of assets | 3 | (102 | ) | (121 | ) | |||||||||
Gain on sale of oil and gas property | (4,318 | ) | - | - | ||||||||||
Loss on conversion of debt to equity | 4,440 | - | - | |||||||||||
(Gain)/loss on warrant revaluation | 170 | (210 | ) | - | ||||||||||
Interest expense | 513 | 442 | 263 | |||||||||||
Adjusted EBITDAX (Non-GAAP) | $ | (253 | ) | $ | 21 | $ | 466 |
Corporate Contact:Source:U.S. Energy Corp. Ryan Smith Chief Financial Officer (303) 993-3200 www.usnrg.com
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