Dune Energy Reports Second Quarter 2011 Financial Results, and Updates Mid-Year Reserves
HOUSTON, Aug. 12, 2011 /PRNewswire/ -- Dune Energy, Inc. (OTCBB:DUNR) today announced results for the second quarter of 2011 and updated mid-year reserves.
Revenue and Production
Revenue from continuing operations for the second quarter totaled $15.9 million as compared with $16.0 million for the second quarter of 2010. Production volumes in the second quarter were 114 Mbbls of oil and .72 Bcf of natural gas, or 1.4 Bcfe. This compares with 147 Mbbls of oil and .99 Bcf of natural gas, or 1.9 Bcfe for the second quarter of 2010. In the second quarter of 2011, the average sales price per barrel of oil was $108.25 and $4.92 per Mcf for natural gas, as compared with $76.59 per barrel and $4.74 per Mcf, respectively for the second quarter of 2010. The primary reasons behind the decrease in revenue were lower production volumes in the second quarter of 2011 versus the second quarter of 2010. Oil volumes decreased 22% and gas volumes decreased 27% from 2010 levels. However, the average price per Mcfe produced was $11.31 in the second quarter of 2011 compared to $8.51 in the second quarter of 2010 or a 33% increase.
Costs and Expenses
Total lease operating expense from continuing operations for the second quarter totaled $6.9 million versus $6.6 million for the second quarter of 2010. Cash G&A expense totaled $1.8 million for the second quarter of 2011 versus $2.5 million for the second quarter of 2010. The $0.7 million decrease reflects a continued focus on cost controls. Interest financing expense was $10.1 million for the second quarter of 2011 versus the $9.2 million of 2010, primarily associated with payment of 10.5% interest on the $300 million of Senior Secured Notes and higher interest rates applicable to the Credit Agreement. We incurred a gain of $.4 million on hedging during the second quarter of 2010 versus no activity in 2011 due to settling all hedge balances in December 2010.
Earnings
Operating loss for the second quarter of 2011 was $3.7 million versus a $17.5 million operating loss in the second quarter of 2010. Net loss totaled $13.9 million for the second quarter of 2011 and $30.9 million for the second quarter of 2010. Preferred stock dividends were $4.5 million in the second quarter of 2011 versus $5.9 million in the second quarter of 2010. These dividends were paid in kind (PIK) and as such do not represent a cash payment. Net loss per share, both basic and fully diluted, for the quarter was $0.39, based on 48.7 million weighted average shares outstanding as compared with a loss of $.92 per share in the second quarter of 2010 with 40.4 million weighted average shares outstanding. The increased outstanding common shares are associated with the conversion of preferred shares into common shares.
Mid-Year 2011 Reserve Update
Dune’s mid-year reserves were evaluated by DeGolyer and MacNaughton. Based on SEC mandated pricing of the first day of each month for the prior year, total proved reserves were 5.4 million barrels of oil and 46.9 billion cubic feet of gas or 79.3 Bcfe. This compares to 5.7 million barrels of oil and 48.6 billion cubic feet of gas or 82.7 Bcfe at year-end 2010. The production of 3.1 Bcfe for the first six months of the year accounted for the majority of the change in reserves. Present worth at 10% value of these reserves was $228.9 million. Probable and possible reserves accounted for an additional 11.0 Bcfe and $35.5 million of present worth. The unrisked potential value of the intermediate prospects at Garden Island Bay, the Bullfrog prospect at Bateman Lake and the Blue Moon prospect at Leeville would add another 147.7 Bcfe with a present worth at 10% value of $619.2 million. The analysis of the unrisked potential was prepared by company engineers. The volume weighted average price was $93.23 per barrel of oil and $4.54 per million cubic feet of gas.
Based on escalated strip prices, total proved reserves were 5.5 million barrels of oil and 48.4 billion cubic feet of gas or 81.6 Bcfe. This compares to 5.8 million barrels of oil and 49.8 billion cubic feet of gas or 84.4 Bcfe at year end 2010. The production of 3.1 Bcfe for the first six months of the year accounted for the majority of the change in reserves. Present worth at 10% value of these reserves was $306.2 million. Probable and possible reserves accounted for an additional 11.1 Bcfe and $47.5 million of present worth at 10% value. The unrisked potential value of the intermediate prospects at Garden Island Bay, the Bullfrog prospect at Bateman Lake and the Blue Moon prospect at Leeville would add another 147.7 Bcfe with a present worth at 10% value of 744.6 million. The analysis of the unrisked potential was prepared by company engineers. The volume weighted average price was $107.81 per barrel of oil and $6.61 per million cubic feet gas.
2011 Capital Program/Operational Update
During the remainder of 2011, we anticipate allocating capital to converting proved undeveloped (PUD) locations at Garden Island Bay to proved developed reserves. Additionally, drilling activities will be conducted at Live Oak Field, Pearsall, Bateman Lake Field and Leeville Field. Total capital anticipated for 2011 will be approximately $27.7 million. See investor overview for August, 2011 on our website for more details on operations and plans for the remainder of 2011.
James A. Watt, President and Chief Executive Officer stated, “Our challenge for the second half of the year is to implement a restructuring of our debt to allow capital to be dedicated to unlocking value in our reserve base. Such restructuring would in all probability involve a debt for equity exchange with the existing note holders and would be implemented either in an out of court transaction or an in court proceeding.”
Click here for more information: http://www.duneenergy.com/news.html?b=1683&1=1
FORWARD-LOOKING STATEMENTS: This document includes forward-looking statements that are intended to be covered by “forward-looking statements” safe harbor provided by the Private Securities Litigation Reform Act of 1995. All statements included in this press release that address activities, events or developments that Dune Energy expects, believes or anticipates will or may occur in the future are forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning estimates of expected drilling and development wells and associated costs, statements relating to estimates of, and increases in, production, cash flows and values, statements relating to the continued advancement of Dune Energy, Inc.'s projects and other statements that are not historical facts. When used in this document, the words such as "could," "plan," "estimate," "expect," "intend," "may," "potential," "should," and similar expressions are forward-looking statements. Although Dune Energy, Inc. believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include the potential that the Company's projects will experience technological and mechanical problems, geological conditions in the reservoir may not result in commercial levels of oil and gas production, changes in product prices and other risks disclosed in Dune's Annual report on Form 10-K filed with the U.S. Securities and Exchange Commission.
Investor Contact:
Steven J. Craig
Sr. Vice President Investor Relations and Administration
713-229-6300
Dune Energy, Inc. |
|||||
Consolidated Balance Sheets |
|||||
(Unaudited) |
|||||
ASSETS |
June 30, 2011 |
December 31, 2010 |
|||
Current assets: |
|||||
Cash |
$ 21,829,866 |
$ 23,670,192 |
|||
Restricted cash |
- |
15,753,441 |
|||
Accounts receivable |
7,801,838 |
9,862,849 |
|||
Prepayments and other current assets |
1,836,186 |
2,542,624 |
|||
Total current assets |
31,467,890 |
51,829,106 |
|||
Oil and gas properties, using successful efforts accounting - proved |
530,070,560 |
526,760,643 |
|||
Less accumulated depreciation, depletion, amortization and impairment |
(299,587,828) |
(294,566,739) |
|||
Net oil and gas properties |
230,482,732 |
232,193,904 |
|||
Property and equipment, net of accumulated depreciation of $3,054,074 and $2,817,158 |
322,493 |
527,357 |
|||
Deferred financing costs, net of accumulated amortization of $1,749,794 and $1,456,592 |
492,885 |
786,087 |
|||
Other assets |
11,463,914 |
12,049,829 |
|||
12,279,292 |
13,363,273 |
||||
TOTAL ASSETS |
$ 274,229,914 |
$ 297,386,283 |
|||
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|||||
Current liabilities: |
|||||
Accounts payable |
$ 4,656,017 |
$ 6,953,863 |
|||
Accrued liabilities |
13,860,284 |
13,367,402 |
|||
Current maturities of long-term debt (see Note 3) |
336,755,537 |
- |
|||
Preferred stock dividend payable |
1,551,000 |
2,206,000 |
|||
Other current liabilities |
199,319 |
1,395,237 |
|||
Total current liabilities |
357,022,157 |
23,922,502 |
|||
Long-term debt, net of current maturities (see Note 3) |
- |
335,218,690 |
|||
Other long-term liabilities |
12,695,342 |
12,548,062 |
|||
Total liabilities |
369,717,499 |
371,689,254 |
|||
Commitments and contingencies |
- |
- |
|||
Redeemable convertible preferred stock, net of discount of $3,789,645 and $4,964,014, liquidation preference of $1,000 per share, 750,000 shares designated, 155,082 and 207,912 shares issued and outstanding |
151,292,355 |
202,947,986 |
|||
STOCKHOLDERS' DEFICIT |
|||||
Preferred stock, $.001 par value, 1,000,000 shares authorized, 250,000 shares undesignated, no shares issued and outstanding |
- |
- |
|||
Common stock, $.001 par value, 300,000,000 shares authorized, 48,949,530 and 41,912,723 shares issued |
48,950 |
41,912 |
|||
Treasury stock, at cost (128,388 shares) |
(62,920) |
(62,920) |
|||
Additional paid-in capital |
133,709,775 |
81,040,691 |
|||
Accumulated deficit |
(380,475,745) |
(358,270,640) |
|||
Total stockholders' deficit |
(246,779,940) |
(277,250,957) |
|||
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
$ 274,229,914 |
$ 297,386,283 |
|||
Dune Energy, Inc. |
|||||||||
Consolidated Statements of Operations |
|||||||||
(Unaudited) |
|||||||||
Three months ended |
Six months ended |
||||||||
June 30, |
June 30, |
||||||||
2011 |
2010 |
2011 |
2010 |
||||||
Revenues |
$ 15,889,731 |
$ 15,956,295 |
$ 33,309,395 |
$ 32,921,516 |
|||||
Operating expenses: |
|||||||||
Lease operating expense |
6,886,170 |
6,635,354 |
13,954,363 |
14,219,568 |
|||||
Accretion of asset retirement obligation |
329,379 |
459,421 |
658,758 |
920,149 |
|||||
Depletion, depreciation and amortization |
5,245,062 |
7,407,283 |
11,545,033 |
14,400,953 |
|||||
General and administrative expense |
2,026,228 |
2,902,941 |
4,165,119 |
6,348,897 |
|||||
Impairment of oil and gas properties |
- |
16,071,871 |
- |
16,071,871 |
|||||
Exploration expense |
5,183,830 |
- |
5,183,830 |
- |
|||||
Total operating expense |
19,670,669 |
33,476,870 |
35,507,103 |
51,961,438 |
|||||
Operating loss |
(3,780,938) |
(17,520,575) |
(2,197,708) |
(19,039,922) |
|||||
Other income (expense): |
|||||||||
Interest income |
16,299 |
120 |
36,449 |
612 |
|||||
Interest expense |
(10,099,719) |
(9,238,819) |
( 20,043,846) |
(18,110,452) |
|||||
Gain on derivative liabilities |
- |
436,390 |
- |
1,695,264 |
|||||
Total other income (expense) |
(10,083,420) |
(8,802,309) |
(20,007,397) |
(16,414,576) |
|||||
Loss on continuing operations |
(13,864,358) |
(26,322,884) |
(22,205,105) |
(35,454,498) |
|||||
Loss on discontinued operations |
- |
(4,623,564) |
- |
(3,410,129) |
|||||
Net loss |
(13,864,358) |
(30,946,448) |
(22,205,105) |
(38,864,627) |
|||||
Preferred stock dividend |
(5,079,046) |
(6,468,368) |
(9,977,369) |
12,871,476) |
|||||
Net loss available to common shareholders |
$ (18,943,404) |
$ (37,414,816) |
$ (32,182,474) |
$ (51,736,103) |
|||||
Net loss per share: |
|||||||||
Basic and diluted from continuing operations |
$ (0.39) |
$ (0.81) |
$ (0.67) |
$ (1.20) |
|||||
Basic and diluted from discontinued operations |
- |
(0.11) |
- |
(0.08) |
|||||
Total basic and diluted |
$ (0.39) |
$ (0.92) |
$ (0.67) |
$ (1.28) |
|||||
Weighted average shares outstanding: |
|||||||||
Basic and diluted |
48,738,694 |
40,416,133 |
47,766,990 |
40,307,376 |
|||||
Dune Energy, Inc. |
||||||
Consolidated Statements of Cash Flows |
||||||
(Unaudited) |
||||||
Six months ended |
||||||
June 30, |
||||||
2011 |
2010 |
|||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||
Net loss |
$ (22,205,105) |
$ (38,864,627) |
||||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||
Loss on discontinued operations |
- |
3,410,129 |
||||
Depletion, depreciation and amortization |
11,545,033 |
14,400,953 |
||||
Impairment of oil and gas properties |
- |
16,071,871 |
||||
Amortization of deferred financing costs and debt discount |
1,855,729 |
1,841,852 |
||||
Stock-based compensation |
365,491 |
1,169,997 |
||||
Accretion of asset retirement obligation |
658,758 |
920,149 |
||||
Gain on derivative liabilities |
- |
(1,749,231) |
||||
Changes in: |
||||||
Accounts receivable |
2,061,011 |
4,873,396 |
||||
Prepayments and other assets |
706,438 |
2,244,591 |
||||
Payments made to settle asset retirement obligations |
(523,941) |
(170,555) |
||||
Accounts payable and accrued liabilities |
(1,792,501) |
(9,734,993) |
||||
NET CASH USED IN CONTINUED OPERATIONS |
(7,329,087) |
(5,586,468) |
||||
NET CASH PROVIDED BY DISCONTINUED OPERATIONS |
- |
2,920,768 |
||||
NET CASH USED IN OPERATING ACTIVITIES |
(7,329,087) |
(2,665,700) |
||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||
Investment in proved and unproved properties |
(9,547,714) |
(2,353,193) |
||||
Purchase of furniture and fixtures |
(81,283) |
(31,189) |
||||
Increase (decrease) in restricted cash |
15,744,279 |
(71,426) |
||||
Decrease in other assets |
595,077 |
102,629 |
||||
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES - CONTINUED OPERATIONS |
6,710,359 |
(2,353,179) |
||||
NET CASH PROVIDED BY INVESTING ACTIVITIES - DISCONTINUED OPERATIONS |
- |
29,400,348 |
||||
NET CASH PROVIDED BY INVESTING ACTIVITIES |
6,710,359 |
27,047,169 |
||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||
Proceeds from short-term debt |
- |
6,000,000 |
||||
Increase in loan costs |
- |
(1,131,509) |
||||
Payments on short-term debt |
(1,221,598) |
(31,353,692) |
||||
NET CASH USED IN FINANCING ACTIVITIES |
(1,221,598) |
(26,485,201) |
||||
NET CHANGE IN CASH BALANCE |
(1,840,326) |
(2,103,732) |
||||
Cash balance at beginning of period |
23,670,192 |
15,053,570 |
||||
Cash balance at end of period |
$ 21,829,866 |
$ 12,949,838 |
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SUPPLEMENTAL DISCLOSURES |
||||||
Interest paid |
$ 18,188,117 |
$ 16,322,703 |
||||
Income taxes paid |
- |
- |
||||
NON-CASH DISCLOSURES |
||||||
Common stock issued for conversion of preferred stock |
$ 62,288,000 |
$ 2,448,000 |
||||
Redeemable convertible preferred stock dividends |
8,803,000 |
11,650,000 |
||||
Accretion of discount on preferred stock |
1,174,369 |
1,143,737 |
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SOURCE Dune Energy, Inc.
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