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8-K - CURRENT REPORT - Yuma Energy, Inc. | yuma_8k.htm |
Exhibit 99.1
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Yuma
Energy, Inc.
|
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|
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NEWS
RELEASE
Yuma Energy, Inc. Announces Third Quarter 2016
Financial Results
HOUSTON,
TX – (Marketwired – November 14, 2016) – Yuma
Energy, Inc. (NYSE MKT: YUMA) (the “Company” or
“Yuma”) today announced its financial results for the
quarter ended September 30, 2016. These financial results only
reflect Yuma Energy, Inc. as a stand-alone entity prior to the
merger with Davis Petroleum Acquisition Corp., and do not reflect
the combination of the two companies.
Financial Results
Sales and Other Operating Revenues
The
following table presents the net quantities of oil, natural gas and
natural gas liquids produced and sold by us for the three and nine
months ended September 30, 2016 and 2015, and the average sales
price per unit sold.
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Three Months
Ended September 30,
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Nine Months
Ended September 30,
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||
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2016
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2015
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2016
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2015
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Production
volumes:
|
|
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Crude oil and
condensate (Bbl)
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47,079
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61,938
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155,986
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186,531
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Natural gas
(Mcf)
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340,189
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497,868
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1,148,587
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1,488,408
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Natural gas liquids
(Bbl)
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12,613
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20,899
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41,771
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54,838
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Total
(Boe) (1)
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116,390
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165,815
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389,188
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489,437
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Average prices
realized:
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Excluding commodity
derivatives:
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Crude oil and
condensate (per Bbl)
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$42.49
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$46.10
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$37.51
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$50.52
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Natural gas (per
Mcf)
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$2.72
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$2.72
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$2.28
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$2.77
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Natural gas liquids
(per Bbl)
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$17.94
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$18.61
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$17.71
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$19.20
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Including commodity
derivatives:
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|
|
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Crude oil and
condensate (per Bbl)
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$53.46
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$51.41
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$49.24
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$66.25
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Natural gas (per
Mcf)
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$2.64
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$2.93
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$2.61
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$4.24
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Natural gas liquids
(per Bbl)
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$17.94
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$18.61
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$17.71
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$19.20
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(1)
Barrels of oil
equivalent have been calculated on the basis of six thousand cubic
feet (Mcf) of natural gas equal to one barrel of oil equivalent
(Boe).
1
The
following table presents our revenues for the three and six months
ended September 30, 2016 and 2015.
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Three Months
Ended September 30,
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Nine Months
Ended September 30,
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2016
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2015
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2016
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2015
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Sales of natural
gas and crude oil:
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Crude oil and
condensate
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$2,000,373
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$2,855,530
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$5,851,235
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$9,423,519
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Natural
gas
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924,994
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1,340,877
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2,616,440
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4,112,065
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Natural gas
liquids
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226,259
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388,966
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739,961
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1,053,076
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Realized gain
(loss) on commodity derivatives
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488,409
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432,824
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2,205,216
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5,114,609
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Unrealized loss on
commodity derivatives
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(40,473)
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3,460,825
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(2,613,044)
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(1,847,371)
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Gas marketing
sales
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-
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63,637
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-
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167,923
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Total
revenues
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$3,599,562
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$8,542,659
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$8,799,808
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$18,023,821
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NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA
The
following table reconciles reported net income to Adjusted EBITDA
for the periods indicated:
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Three Months
Ended September 30,
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Nine Months
Ended September 30,
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||
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2016
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2015
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2016
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2015
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Net
Loss
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$(2,115,444)
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$(90,410)
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$(20,863,218)
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$(13,323,076)
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Depreciation,
depletion & amortization of property and equipment
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1,711,043
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3,123,812
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6,178,248
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11,020,278
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Interest expense,
net of interest income and amounts capitalized
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245,343
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131,114
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974,248
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319,561
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Income tax
benefit
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(47,429)
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329,653
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(1,272,664)
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(3,605,839)
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Impairment of oil
and gas properties
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-
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-
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11,015,589
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-
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Impairment of
goodwill
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-
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-
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-
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4,927,508
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Merger
costs
|
229,647
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-
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1,061,324
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-
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Stock-based
compensation net of capitalized cost
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189,211
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338,619
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909,309
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2,210,950
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Unrealized (gains)
losses on commodity derivatives
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40,473
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(3,460,825)
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2,613,044
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1,847,371
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Accretion of asset
retirement obligation
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107,760
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170,209
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318,016
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499,766
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Adjusted
EBITDA
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$360,604
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$542,172
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$933,896
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$3,896,519
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Adjusted EBITDA is
used as a supplemental financial measure by our management and by
external users of our financial statements, such as investors,
commercial banks and others, to assess our operating performance
compared to that of other companies in our industry, without regard
to financing methods, capital structure or historical costs basis.
It is also used to assess our ability to incur and service debt and
fund capital expenditures. Our
Adjusted EBITDA should not be considered an alternative to net
income (loss), operating income (loss), cash flow provided by (used
in) operating activities or any other measure of financial
performance or liquidity presented in accordance with GAAP. Our
Adjusted EBITDA may not be comparable to similarly titled measures
of another company because all companies may not calculate Adjusted
EBITDA in the same manner.
2
Yuma
Energy, Inc.
CONSOLIDATED
BALANCE SHEETS
(Unaudited)
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September
30,
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December
31,
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2016
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2015
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(Unaudited)
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(As
Restated)
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ASSETS
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CURRENT
ASSETS:
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Cash and cash
equivalents
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$1,831,928
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$5,355,191
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Accounts
receivable, net of allowance for doubtful accounts:
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Trade
|
2,942,948
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2,829,266
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Officers and
employees
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65,153
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75,404
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Other
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338,461
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633,573
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Commodity
derivative instruments
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1,016,583
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2,658,047
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Prepayments
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321,237
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704,523
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Other deferred
charges
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29,921
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415,740
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Total current
assets
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6,546,231
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12,671,744
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OIL AND GAS
PROPERTIES (full cost method):
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Not subject to
amortization
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15,336,916
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14,288,716
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Subject to
amortization
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205,331,835
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204,512,038
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220,668,751
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218,800,754
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Less: accumulated
depreciation, depletion and amortization
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(134,312,088)
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(117,304,945)
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Net oil and gas
properties
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86,356,663
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101,495,809
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OTHER PROPERTY AND
EQUIPMENT:
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Land, buildings and
improvements
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2,795,000
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2,795,000
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Other property and
equipment
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3,497,948
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3,460,507
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6,292,948
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6,255,507
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Less: accumulated
depreciation and amortization
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(2,361,010)
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(2,174,316)
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Net other property
and equipment
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3,931,938
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4,081,191
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OTHER ASSETS AND
DEFERRED CHARGES:
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Commodity
derivative instruments
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177,724
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1,070,541
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Deposits
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414,064
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264,064
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Other noncurrent
assets
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-
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38,104
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Total other assets
and deferred charges
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591,788
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1,372,709
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TOTAL
ASSETS
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$97,426,620
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$119,621,453
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3
Yuma
Energy, Inc.
CONSOLIDATED
BALANCE SHEETS – CONTINUED
(Unaudited)
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September
30,
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December
31,
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2016
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2015
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(Unaudited)
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(As
Restated)
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LIABILITIES AND
EQUITY
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CURRENT
LIABILITIES:
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Current maturities
of debt
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$29,800,000
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$30,063,635
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Accounts payable,
principally trade
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6,378,942
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7,933,664
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Commodity
derivative instruments
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74,331
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-
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Asset retirement
obligations
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243,711
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70,000
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Other accrued
liabilities
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2,593,813
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1,781,484
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Total current
liabilities
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39,090,797
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39,848,783
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OTHER NONCURRENT
LIABILITIES:
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Asset retirement
obligations
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8,571,895
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8,720,498
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Commodity
derivative instruments
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4,432
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-
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Deferred
taxes
|
144,700
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1,417,364
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Other
liabilities
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7,467
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30,090
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Total other
noncurrent liabilities
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8,728,494
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10,167,952
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EQUITY:
|
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Preferred
stock
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10,828,603
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10,828,603
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Common stock, no
par value (300 million shares authorized, 3,628,991 and 3,591,731
issued)
|
142,724,775
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141,858,946
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Accumulated
earnings (deficit)
|
(103,946,049)
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(83,082,831)
|
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Total
equity
|
49,607,329
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69,604,718
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TOTAL LIABILITIES
AND EQUITY
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$97,426,620
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$119,621,453
|
4
Yuma
Energy, Inc.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
|
Three Months
Ended September 30,
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Nine Months
Ended September 30,
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||
|
2016
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2015
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2016
|
2015
|
|
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(As
Restated)
|
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(As
Restated)
|
REVENUES:
|
|
|
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Sales of natural
gas and crude oil
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$3,151,626
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$4,649,009
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$9,207,636
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$14,756,582
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Net gains (losses)
from commodity derivatives
|
447,936
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3,893,650
|
(407,828)
|
3,267,239
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Total
revenues
|
3,599,562
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8,542,659
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8,799,808
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18,023,821
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|
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EXPENSES:
|
|
|
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Lease
operating
|
1,798,868
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2,718,919
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5,692,077
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9,168,260
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Re-engineering and
workovers
|
132,708
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1,136
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132,708
|
555,628
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Marketing cost of
sales
|
-
|
234,507
|
-
|
434,189
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General and
administrative – stock-based compensation
|
189,211
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338,619
|
909,309
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2,210,950
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General and
administrative – other
|
1,581,619
|
1,873,484
|
5,742,824
|
5,389,859
|
Depreciation,
depletion and amortization
|
1,711,043
|
3,123,812
|
6,178,248
|
11,020,278
|
Asset retirement
obligation accretion expense
|
107,760
|
170,209
|
318,016
|
499,766
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Impairments
|
-
|
-
|
11,015,589
|
4,927,508
|
Other
|
6,612
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(274,329)
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(10,173)
|
444,320
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Total
expenses
|
5,527,821
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8,186,357
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29,978,598
|
34,650,758
|
|
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INCOME (LOSS) FROM
OPERATIONS
|
(1,928,259)
|
356,302
|
(21,178,790)
|
(16,626,937)
|
|
|
|
|
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OTHER INCOME
(EXPENSE):
|
|
|
|
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Interest
expense
|
(245,359)
|
(131,114)
|
(974,403)
|
(337,499)
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Other,
net
|
10,745
|
14,055
|
17,311
|
35,521
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Total
other income (expense)
|
(234,614)
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(117,059)
|
(957,092)
|
(301,978)
|
|
|
|
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NET INCOME (LOSS)
BEFORE INCOME TAXES
|
(2,162,873)
|
239,243
|
(22,135,882)
|
(16,928,915)
|
|
|
|
|
|
Income tax expense
(benefit)
|
(47,429)
|
329,653
|
(1,272,664)
|
(3,605,839)
|
|
|
|
|
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NET INCOME
(LOSS)
|
(2,115,444)
|
(90,410)
|
(20,863,218)
|
(13,323,076)
|
|
|
|
|
|
PREFERRED STOCK,
PERPETUAL PREFERRED SERIES A:
|
|
|
|
|
Dividends paid in
cash
|
-
|
320,626
|
-
|
940,315
|
Dividends in
arrears
|
320,625
|
-
|
961,877
|
-
|
|
|
|
|
|
NET
INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$(2,436,069)
|
$(411,036)
|
$(21,825,095)
|
$(14,263,391)
|
|
|
|
|
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EARNINGS (LOSS) PER
COMMON SHARE ADJUSTED FOR OCTOBER 26,2016
1-FOR-20 REVERSE STOCK SPLIT:
|
|
|
|
|
Basic
|
$(0.67)
|
$(0.11)
|
$(6.04)
|
$(4.03)
|
Diluted
|
$(0.67)
|
$(0.11)
|
$(6.04)
|
$(4.03)
|
|
|
|
|
|
WEIGHTED AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING
ADJUSTED FOR OCTOBER 26, 2016 1-FOR-20 REVERSE STOCK
SPLIT:
|
|
|
|
|
Basic
|
3,628,683
|
3,580,163
|
3,611,241
|
3,539,755
|
Diluted
|
3,628,683
|
3,580,163
|
3,611,241
|
3,539,755
|
5
Yuma Energy, Inc.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
Nine Months
Ended September 30,
|
|
|
2016
|
2015
|
|
|
(As
Restated)
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
Reconciliation of
net loss to net cash provided by (used in) operating
activities
|
|
|
Net
loss
|
$(20,863,218)
|
$(13,323,076)
|
Impairment of oil
and gas properties
|
11,015,589
|
-
|
Impairment of
goodwill
|
-
|
4,927,508
|
Depreciation,
depletion and amortization of property and equipment
|
6,178,248
|
11,020,278
|
Accretion of asset
retirement obligation
|
318,016
|
499,766
|
Stock-based
compensation net of capitalized cost
|
909,309
|
2,210,950
|
Amortization of
other assets and liabilities
|
518,478
|
209,904
|
Deferred tax
expense (benefit)
|
(1,272,664)
|
(3,608,239)
|
Bad debt expense
increase (decrease)
|
(10,173)
|
787,264
|
Unrealized losses
on commodity derivatives
|
2,613,044
|
1,847,371
|
Other
|
-
|
(342,944)
|
Changes in current
operating assets and liabilities:
|
|
|
Accounts
receivable
|
201,854
|
4,411,640
|
Other
current assets
|
383,286
|
(77,453)
|
Accounts
payable
|
(1,471,397)
|
(13,938,649)
|
Other
current liabilities
|
783,551
|
1,095,356
|
Other noncurrent
assets and liabilities
|
(108,618)
|
-
|
NET CASH USED IN
OPERATING ACTIVITIES
|
(804,695)
|
(4,280,324)
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
Capital
expenditures on property and equipment
|
(2,588,455)
|
(11,211,634)
|
Proceeds from sale
of property
|
340,603
|
30,442
|
Decrease in
short-term investments
|
-
|
1,170,868
|
NET CASH USED IN
INVESTING ACTIVITIES
|
(2,247,852)
|
(10,010,324)
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
Change in borrowing
on line of credit
|
-
|
$6,800,000
|
Proceeds from
insurance note
|
-
|
813,562
|
Payments on
insurance note
|
(263,635)
|
(579,005)
|
Line of credit
financing costs
|
(132,659)
|
(215,141)
|
Net proceeds from
sale of common stock
|
-
|
1,363,160
|
Net proceeds from
sale of perpetual preferred stock
|
-
|
870,386
|
Cash dividends to
preferred shareholders
|
-
|
(940,315)
|
Common stock
purchased from employees
|
(74,422)
|
(300,732)
|
Other
|
-
|
(31,485)
|
NET CASH PROVIDED
BY (USED IN) FINANCING ACTIVITIES
|
(470,716)
|
7,780,430
|
|
|
|
NET DECREASE IN
CASH AND CASH EQUIVALENTS
|
(3,523,263)
|
(6,510,218)
|
|
|
|
CASH AND CASH
EQUIVALENTS AT BEGINNING OF PERIOD
|
5,355,191
|
11,558,322
|
|
|
|
CASH AND CASH
EQUIVALENTS AT END OF PERIOD
|
$1,831,928
|
$5,048,104
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
Interest payments
(net of interest capitalized)
|
$354,344
|
$73,342
|
Interest
capitalized
|
$395,244
|
$750,107
|
Supplemental
disclosure of significant non-cash activity:
|
|
|
(Increase) decrease
in capital expenditures financed by accounts payable
|
$83,325
|
$2,979,301
|
6
About Yuma Energy, Inc.
Yuma
Energy, Inc. is an independent Houston-based exploration and
production company. We are focused on the acquisition, development,
and exploration for conventional and unconventional oil and natural
gas resources, primarily in the U.S. Gulf Coast and California. We
have employed a 3-D seismic-based strategy to build a multi-year
inventory of development and exploration prospects. Our current
operations are focused on onshore assets located in central and
southern Louisiana, where we are targeting the Austin Chalk,
Tuscaloosa, Wilcox, Frio, Marg Tex and Hackberry formations.
We also have company-operated conventional fields located
onshore in south Louisiana and the upper Texas Gulf Coast, and
non-operated properties include Eagle Ford and Eaglebine properties
in east Texas. In addition, we have a non-operated position in
the Bakken Shale in North Dakota and operated positions in Kern and
Santa Barbara Counties in California. Our common stock is traded on
the NYSE MKT under the trading symbol “YUMA.” For more
information about Yuma Energy, Inc., please visit our website at
www.yumaenergyinc.com.
Agreement and Plan of Merger and Reorganization
On
February 10, 2016, Yuma Energy, Inc., a California corporation
(“Yuma
California”), Yuma Energy, Inc., a Delaware
corporation and wholly-owned subsidiary of Yuma California (the
“Company”),
Delaware Merger Subsidiary, Inc., a Delaware corporation and
wholly-owned subsidiary of the Company (“Merger Subsidiary”), and Davis
Petroleum Acquisition Corp. (“Davis”) entered into an agreement
and plan of merger and reorganization, as subsequently amended on
September 2, 2016 (the “Merger Agreement”), providing for
the merger of Yuma California with and into the Company (the
“Reincorporation
Merger”) and the merger of Merger Subsidiary with and
into Davis (the “Merger”). The Reincorporation
Merger and the Merger were consummated on October 26, 2016. In
connection with the Reincorporation Merger, Yuma California
converted each outstanding share of its 9.25% Series A Cumulative
Redeemable Preferred Stock, no par value per share (the
“Series A Preferred
Stock”), into 35 shares of its common stock, no par
value per share (the “Yuma
California Common Stock”), and then each share of Yuma
California Common Stock was exchanged for one-twentieth of one
share of common stock, $0.001 par value per share, of the Company
(the “Common
Stock”). In connection with the Merger, the Company
issued approximately 7,455,000 shares of Common Stock to former
holders of common stock of Davis and approximately 1,754,000 shares
of Series D Convertible Preferred Stock, $0.001 par value per share
(the “Series D Preferred
Stock”), of the Company, to former holders of Davis
preferred stock. After the Reincorporation Merger and the Merger,
the Company had approximately 12,201,000 shares of Common Stock
issued and outstanding.
In
connection with the Davis merger, on October 26, 2016, we entered
into a Credit Agreement providing for a $75.0 million 3-year
revolving credit facility (the “Credit Agreement”) with
SG Americas Securities, LLC (“SG Americas”) as Lead
Arranger and Bookrunner, Société Générale S.A.
as Administrative Agent and the lenders party thereto. The Credit
Agreement replaces our existing credit agreement. The initial
borrowing base of the Credit Agreement is $44.0 million, and is
subject to redetermination as of January 1, 2017 as well as April
1st and October 1st of each year. As of October 26, 2016, we had
approximately $39.5 million outstanding under the Credit Agreement.
All of the obligations under the Credit Agreement, and the
guarantee of those obligations, are secured by substantially all of
our assets and customary financial covenants have been
made.
Please refer to our annual report on Form 10-K/A for the year ended
December 31, 2015, our Form 10-Q for the quarterly periods ended
March 31, 2016, June 30, 2016, and September 30, 2016 and all our
filings with the SEC for further information.
7
Forward-Looking Statements
This
release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”), and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”).
Statements that are not strictly historical statements constitute
forward-looking statements and may often, but not always, be
identified by the use of such words such as “expects,”
“believes,” “intends,”
“anticipates,” “plans,”
“estimates,” “potential,”
“possible,” or “probable” or statements
that certain actions, events or results “may,”
“will,” “should,” or “could” be
taken, occur or be achieved. The forward-looking statements include
statements about future operations, estimates of reserve and
production volumes, the anticipated timing for closing the proposed
merger and the ability of the Company to enter into an amendment to
its credit agreement. Forward-looking statements are based on
current expectations and assumptions and analyses made by Yuma and
Davis in light of experience and perception of historical trends,
current conditions and expected future developments, as well as
other factors appropriate under the circumstances. However, whether
actual results and developments will conform with expectations is
subject to a number of risks and uncertainties, including but not
limited to: the possibility that the companies may be
unable to obtain stockholder approval or satisfy the other
conditions to closing; the possibility that the combined company
may be unable to obtain an acceptable reserve-based credit
facility; that problems may arise in the integration of the
businesses of the two companies; that the acquisition may involve
unexpected costs; the risks of the oil and gas industry (for
example, operational risks in exploring for, developing and
producing crude oil and natural gas); risks and uncertainties
involving geology of oil and gas deposits; the uncertainty of
reserve estimates; revisions to reserve estimates as a result of
changes in commodity prices; the uncertainty of estimates and
projections relating to future production, costs and expenses;
potential delays or changes in plans with respect to exploration or
development projects or capital expenditures; health, safety and
environmental risks and risks related to weather; further declines
in oil and gas prices; inability of management to execute its plans
to meet its goals, shortages of drilling equipment, oil field
personnel and services, unavailability of gathering systems,
pipelines and processing facilities and the possibility that
government policies may change. Yuma’s annual
report on Form 10-K/A for the year ended December 31, 2015,
quarterly reports on Form 10-Q, recent current reports on Form 8-K,
and other SEC filings discuss some of the important risk factors
identified that may affect its business, results of operations, and
financial condition. Yuma and Davis undertake no obligation to
revise or update publicly any forward-looking statements, except as
required by law.
For more information, please contact:
James
J. Jacobs
Treasurer
and Chief Financial Officer
Yuma
Energy, Inc.
1177
West Loop South, Suite 1825
Houston,
TX 77027
Telephone:
(713) 968-7000
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