Black Ridge Oil & Gas Announces Second Quarter 2014 Financial and Operational Results

MINNETONKA, Minn., Aug. 12, 2014 /PRNewswire/ -- Black Ridge Oil & Gas, Inc. ("the Company") (OTCQB: ANFC), a growth-oriented exploration and production (E&P) company focused on non-operated Bakken and Three Forks properties, today announced financial and operating results for the quarter ended June 30, 2014.

Second Quarter 2014 Highlights

• Record quarterly production averaged 715 barrels of oil equivalent per day ("Boe/d"), representing 153% growth compared to the second quarter of 2013, and 36% growth compared to the first quarter of 2014;
• Adjusted EBITDA increased to a record $3.6 million, representing a 194% increase compared to $1.2 million for the second quarter of 2013, and a 52% increase compared to the first quarter of 2014;
• Record oil and gas sales, excluding the effect of derivatives, totaled $5.6 million, representing 158% growth compared to the second quarter of 2013;
• Reduced G&A expenses to $9.75/Boe compared to $22.80/Boe in the second quarter of 2013, representing a 57% decrease;
• Participated in the completion of 19 gross (0.77 net) wells, resulting in a total of 207 gross (6.28 net) producing wells as of June 30, 2014, representing an increase of 123%, on a net well basis, compared to the second quarter of 2013;
• As of June 30, 2014, the Company was participating in an additional 47 gross (1.64 net) wells that were preparing to drill, drilling, awaiting completion or completing.

Management Comment

"The second quarter of 2014 was our strongest in the history of the Company. Our disciplined focus on identifying and developing acreage in the core of the Williston Basin resulted in robust production growth, particularly from our Stockyard Creek prospect," commented Black Ridge's Chief Executive Officer Ken DeCubellis. "Across the basin, we see operating partners hone in on best practices for completion design, leading to stronger well economics. As we look to the remainder of 2014 and into 2015, we are excited about the quality of wells in our development pipeline, highlighted by a five gross (0.63 net) well Mandaree prospect in the prolific Antelope area of McKenzie County that we expect to begin producing in the fourth quarter of 2014."

Second Quarter 2014 Operating and Financial Results

The following table presents selected operating and financial data for the periods indicated.

Second Quarter 2014 Operational Results

Production for the second quarter of 2014 totaled 65.1 thousand barrels of oil equivalent ("MBoe"), averaging a record 715 Boe/d, representing 153% growth over the second quarter of 2013 and 36% growth over the first quarter of 2014 on a Boe/d basis.

Throughout the second quarter of 2014, the Company participated in the completion of 19 gross (0.77 net) wells compared to 8 gross (0.23 net) wells in the second quarter of 2013. Well additions were driven by development in the Stockyard Creek prospect.

As of June 30, 2014, the Company had participated in a total of 207 gross (6.28 net) producing wells compared to 81 gross (2.82 net) wells in the second quarter of 2013, representing an increase of 123% on a net well basis.

In addition to the 6.28 net producing wells, the Company owned working interests in 47 gross (1.64 net) wells that were preparing to drill, drilling, awaiting completion, or completing as of June 30, 2014.

The Company controlled approximately 10,000 net mineral acres prospective for the Bakken and Three Forks formations in North Dakota and eastern Montana as of June 30, 2014.

Second Quarter 2014 Financial Results

Oil and gas sales, which exclude the effect of derivatives, totaled $5.6 million for the second quarter of 2014, representing 158% growth over the second quarter of 2013 and 38% growth over the first quarter of 2014. The increase over the second quarter of 2013 was driven primarily by the 153% growth in production.

For the second quarter of 2014, the Company realized a loss on settled derivatives of $0.3 million. The company realized a non-cash mark-to-market loss on unsettled derivatives of $0.9 million.  The Company had no derivatives in place for the second quarter of 2013.

For the second quarter of 2014, the Company's realized oil price was $91.27 per barrel of oil before the effect of settled derivatives. The Company's realized price was 11% per barrel below the NYMEX WTI benchmark in the second quarter of 2014. For the second quarter of 2014, the Company's realized price for natural gas, including natural gas liquids, was $4.97 per MCF, a 9% decrease compared to $5.48 per MCF in the second quarter of 2013. The realized price on a per BOE basis, including settled derivatives, was $81.33, a decrease of 3% compared to the second quarter of 2013 and a decrease of 2% compared to the first quarter of 2014.

Production expenses increased to $596 thousand in the second quarter of 2014 compared to $269 thousand in the second quarter of 2013, driven primarily by the Company's production growth. On a per unit basis, this equated to a 13% decrease in production expenses to $9.15/Boe in the second quarter of 2014 from $10.47/Boe in the second quarter of 2013.

Production taxes increased to $592 thousand in the second quarter of 2014 from $233 thousand in the second quarter of 2013, driven primarily by increased production. For the second quarter of 2014, production taxes averaged 10.7% of oil and gas sales compared to 10.8% for the second quarter of 2013.

General and administrative ("G&A") expenses increased to $634 thousand for the second quarter of 2014 from $587 thousand for the second quarter of 2013. On a per Boe basis, G&A expenses averaged $9.75/Boe for the second quarter of 2014, representing a 57% decrease from $22.80/Boe in the second quarter of 2013 and a decrease of 40% from $16.33/Boe in the first quarter of 2014. The decrease in G&A expenses per Boe is due to production gains exceeding increases in G&A expenses.

Depletion, depreciation, amortization, and accretion ("DD&A") totaled $2.1 million in the second quarter of 2014, an increase of 145% as compared to $0.9 million in the second quarter of 2013. Depletion expense, the largest component of DD&A, was $32.76/Boe in the second quarter of 2014, representing a decrease of 3% as compared to $33.75/Boe in the second quarter of 2013.

Interest expense in the second quarter of 2014 totaled $1.3 million as compared to $0.6 million in the second quarter of 2013, primarily driven by increased borrowings as the Company financed acquisitions and well development.

Income tax benefit in the second quarter of 2014 was $306 thousand, an increase of 229% as compared to $93 thousand in the second quarter of 2013, and an increase of 8% compared to $284 thousand in the first quarter of 2014. The increase was primarily driven by the Company's loss before provision for income taxes.

The Company reported net loss attributable to common stockholders of $543 thousand, or $(0.01) per basic and diluted common share for the second quarter of 2014 as compared to net loss of $297 thousand, or ($0.01) per basic and diluted common share for the second quarter of 2013.

The Company recorded adjusted EBITDA of $3.6 million in the second quarter of 2014, an increase of 194% compared to adjusted EBITDA of $1.2 million in the second quarter of 2013 and an increase of 52% compared to $2.4 million in the first quarter of 2014. Adjusted EBITDA is a non-GAAP financial measure. Please refer to the reconciliation in this release for additional information about this measure.

Liquidity Position

The Company ended the second quarter of 2014 with $44.1 million drawn on its Senior and Subordinate Credit Facilities. As of June 30, 2014, total availability under the two facilities was $55 million. The Company expects a redetermination of the Senior Credit Facility borrowing base in August 2014. The Company expects to fund future development through operating cash flow and additional borrowings from the existing credit facilities. 

Well Update

Producing Wells: The following table sets forth Bakken and Three Forks wells in which Black Ridge holds a participating interest that were completed or acquired during the quarter ending June 30, 2014.

"Drilling" Wells: The following table sets forth Bakken and Three Forks wells in which Black Ridge holds a participating interest that are either preparing to drill, drilling, awaiting completion or completing as of June 30, 2014.

Non-GAAP Financial Measures

In addition to reporting net income (loss) as defined under GAAP, we also present Adjusted Net Income (Loss) and Adjusted EBITDA. We define Adjusted Net Income (Loss) as net income, excluding net losses on the mark-to-market of derivatives, net of tax. We define Adjusted EBITDA as net income before (i) interest expense, (ii) income taxes, (iii) depreciation, depletion and amortization, (iv) accretion of abandonment liability, (v) losses on the mark-to-market of derivatives, and (vi) non-cash expenses relating to share based payments recognized under ASC Topic 718. We believe the use of non-GAAP financial measures provides useful information to investors regarding our current financial performance; however, Adjusted Net Income (Loss) and Adjusted EBITDA do not represent, and should not be considered alternatives to GAAP measurements. We believe these measures are useful in evaluating our fundamental core operating performance. Specifically, we believe the non-GAAP Adjusted Net Income (Loss) and Adjusted EBITDA results provide useful information to both management and investors by excluding certain income and expenses that our management believes are not indicative of our core operating results. Although we use Adjusted Net Income (Loss) and Adjusted EBITDA to manage our business, including the preparation of our annual operating budget and financial projections, we believe that non-GAAP financial measures have limitations and do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP financial measures. A reconciliation of Adjusted Net Income (Loss) and Adjusted EBITDA to Net Income, GAAP, is included below:

Financial and Statistical Data Tables

Following are the financial highlights for the comparative three and six month period ended June 30, 2014 and 2013. The following information is based on GAAP reported earnings, with additional required disclosures included in the Company's Form 10-Q:

Cautionary Statement as to Forward-Looking Statements

Certain statements contained herein, which are not historical, are forward-looking statements that are subject to risks and uncertainties not known or disclosed herein that could cause actual results to differ materially from those expressed herein. These statements may include projections and other "forward-looking statements" within the meaning of the federal securities laws. Any such projections or statements reflect Black Ridge Oil & Gas current views about future events and financial performance. No assurances can be given that such events or performance will occur as projected and actual results may differ materially from those projected. Important factors that could cause the actual results to differ materially from those projected include, without limitation, general economic or industry conditions nationally and/or in the communities in which our Company conducts business, volatility in commodity prices for crude oil and natural gas, environmental risks, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital or have access to debt financing, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, increases in operator costs, other economic, competitive, governmental, regulatory and technical factors affecting our Company's operations, products, services and prices and other risks inherent in the Company's businesses that are detailed in the Company's Securities and Exchange Commission ("SEC") filings. Readers are encouraged to review these risks in the Company's SEC filings.

Upcoming Conference Presentation Schedule

Black Ridge Oil & Gas plans to present at the following energy conferences and investor events:

EnerCom's The Oil & Gas Conference® 19
August 19, 2014 at 2:20 PM MDT / 3:20 PM CDT
Denver, CO
Following the presentation, a webcast will be available on the Company's website at www.blackridgeoil.com or at http://www.oilandgas360.com/togc-webcast/anfc/.

IPAA OGIS
September 22, 2014 at 3:10 PM PDT / 5:10 PM CDT
San Francisco, CA

About Black Ridge Oil & Gas

Black Ridge Oil & Gas is a growth-oriented oil and gas exploration and production company based in Minnetonka, Minnesota. Black Ridge's focus is exclusive to the Williston Basin Bakken and Three Forks trend in North Dakota and Montana. Black Ridge Oil & Gas controls approximately 10,000 net acres prospective for Bakken and/or Three Forks development. For additional information, visit the Company's website at www.blackridgeoil.com.

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Contact:

Brenda Blume
Director of Investor and Public Relations
952-582-4303
[email protected]

Ken DeCubellis
Chief Executive Officer
952-426-1241
[email protected]

SOURCE Black Ridge Oil & Gas, Inc.