Dune Energy Reports Third Quarter 2012 Financial And Operating Results
HOUSTON, Nov. 2, 2012 /PRNewswire/ -- Dune Energy, Inc. (OTCBB: DUNR) today announced results for the third quarter of calendar year 2012.
Revenue and Production
Revenue for the third quarter of 2012 totaled $13.4 million as compared with $15.1 million for the third quarter of 2011. Production volumes in the third quarter were 107 Mbbls of oil and 0.71 Bcf of natural gas, or 1.36 Bcfe. This compares with 120 Mbbls of oil and 0.68 Bcf of natural gas, or 1.40 Bcfe for the third quarter of 2011. In the third quarter of 2012, the average sales price per barrel of oil was $103.33 and $3.34 per Mcf for natural gas, as compared with $98.93 per barrel and $4.77 per Mcf, respectively for the third quarter of 2011. Production declined 3% in the third quarter of 2012 as compared to the third quarter of 2011. Oil prices increased 4% and gas prices decreased 30% from 2011 levels. During the third quarter of 2012 oil accounted for 47% of the total production volumes on an equivalent basis; however, oil revenue accounted for 82% of the total revenue. Total production for the first three quarters of 2012 was 4.1 Bcfe as compared to 4.5 Bcfe in the first three quarters of 2011. During 2012 Hurricane Isaac and facilities downtime accounted for approximately 0.3 Bcfe of deferred production.
Costs and Expenses
Total lease operating expense was $6.5 million for the third quarter of 2012 as compared to $6.1 million for the third quarter of 2011, or $4.81 and $4.40 per Mcfe produced, respectively. DD&A expense was $0.9 million for the third quarter of 2012 as compared to $5.5 million for the third quarter of 2011, or $0.68 and $3.94 per Mcfe produced, respectively. This reduction in DD&A reflects the impact of the reallocation of costs on the depletable base resulting from the Restructuring and the mid-year reserve additions. G&A expense totaled $2.1 million for the third quarter of 2012 compared to $2.4 million in the third quarter of 2011. Interest and financing expense was $2.4 million in the third quarter compared to $10.1 million in the third quarter of 2011. As part of the restructuring on December 22, 2011, a $40 million term loan was repaid and replaced with a $200 million revolving credit facility under which $36 million was borrowed at September 30, 2012 and $2.0 million in letters of credit were outstanding. The $300 million of Senior Secured Notes were reduced to $3.0 million at year-end 2011 and repaid during the third quarter of 2012. New notes of $49.5 million with a maturity of 2016 were added as part of the restructuring. This amount increased to $53.9 million as of September 30, 2012 due to the notes payment-in-kind feature.
Earnings
Net loss available to common stockholders totaled $1.4 million for the third quarter of 2012. This compares with a $15.6 million loss in 2011. Preferred stock dividends were $5.3 million in the third quarter of 2011. The preferred stock was eliminated as part of the December 22, 2011 restructuring and was converted into $4 million cash and 1.5% of the common shares outstanding on a restructured basis. Consequently, there were no preferred stock dividends in 2012.
Liquidity/Credit Facility
At the end of the quarter we had $5.6 million in cash and $12 million available under our Credit Facility based on $50 million of availability. The $200 million revolving credit facility was amended on September 25, 2012 maintaining availability at $50 million. The EBITDAX to Total Debt Covenant was increased to 5.0 to 1.0 for the quarters ending September 30, 2012 and December 31, 2012. The covenant will return to the 4.0 to 1.0 ratio on March 31, 2013. Without the two quarter covenant relief, we would have been required to reduce our borrowings under the revolver at September 30, 2012 to $29 million from $36 million. Nevertheless, fourth quarter EBITDAX may not be sufficient to permit access to the full amount of credit remaining available under the revolver by year-end. However, the two quarters relief on this covenant allows time to attempt to raise additional capital. We are currently in discussions with our major shareholders regarding raising new capital to fund the ongoing development and exploration opportunities within our portfolio.
2012 Operations Summary and Capital Program
Leeville Field
The first of the recently defined 20 Proved Undeveloped (PUD) locations is currently drilling below 9,000 feet with a target depth of 11,200 feet. The operator intends to drill at least two more of these development locations prior to the end of the year. Dune has a 40% interest in each of these wells. A 20,500 foot exploratory well has been proposed in which Dune would have a 20% working interest. Our net dry hole exposure on this well would be approximately $3.8 million and reserve exposure would be approximately 800 Mboe. This well is anticipated to commence drilling in late November.
Garden Island Bay Field
Dredging is nearly complete for drilling the SL 214 # 918 well (Kappa) and the work over of the SL 214 # 551 well. A rig is anticipated to commence activities in the fourth quarter.
Capital Program
During the first nine months of the year we expended approximately $20.9 million for capital projects including four wells at Garden Island Bay and numerous other projects throughout our field operations. Depending on cash flow and availability under our revolver, we anticipate the capital budget for the full year to be between $26 and $30 million. Primary areas of focus in the final quarter of the year will be the Leeville Field and Garden Island Bay Field.
James A. Watt, President and CEO of the company stated, "We have defined numerous drilling opportunities in both our Leeville and Garden Island Bay fields. Activity has commenced in both fields and depending on success and capital availability is scheduled to continue into the first quarter of 2013."
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FORWARD-LOOKING STATEMENTS: This document includes 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 which 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.
| Dune Energy, Inc. |
||||
| Consolidated Balance Sheets |
||||
| (Unaudited) |
||||
| Successor |
||||
| ASSETS |
September 30, 2012 |
December 31, 2011 |
||
| Current assets: |
||||
| Cash |
$ 5,628,912 |
$ 20,393,672 |
||
| Restricted cash |
- |
17,184 |
||
| Accounts receivable |
6,850,057 |
8,107,009 |
||
| Current derivative asset |
221,286 |
- |
||
| Prepayments and other current assets |
708,997 |
2,556,373 |
||
| Total current assets |
13,409,252 |
31,074,238 |
||
| Oil and gas properties, using successful efforts accounting - proved |
231,119,963 |
210,199,348 |
||
| Less accumulated depreciation, depletion and amortization |
(10,006,482) |
- |
||
| Net oil and gas properties |
221,113,481 |
210,199,348 |
||
| Property and equipment, net of accumulated depreciation of $191,778 and $ - |
133,529 |
230,074 |
||
| Deferred financing costs, net of accumulated amortization of $574,771 and $19,449 |
2,624,743 |
2,915,229 |
||
| Noncurrent derivative asset |
1,109,806 |
- |
||
| Other assets |
2,692,706 |
3,006,564 |
||
| 6,560,784 |
6,151,867 |
|||
| TOTAL ASSETS |
$ 241,083,517 |
$ 247,425,453 |
||
| LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
| Current liabilities: |
||||
| Accounts payable |
$ 5,904,784 |
$ 6,759,073 |
||
| Accrued liabilities |
10,523,555 |
10,042,683 |
||
| Current maturities on long-term debt (see note 3) |
- |
4,557,857 |
||
| Total current liabilities |
16,428,339 |
21,359,613 |
||
| Long-term debt (see note 3) |
89,864,064 |
88,503,991 |
||
| Other long-term liabilities |
12,595,463 |
12,630,676 |
||
| Total liabilities |
118,887,866 |
122,494,280 |
||
| Commitments and contingencies |
- |
- |
||
| STOCKHOLDERS' EQUITY |
||||
| Preferred stock, $.001 par value, 1,000,000 shares authorized, 250,000 shares undesignated, no shares issued and outstanding |
- |
- |
||
| Common stock, $.001 par value, 4,200,000,000 shares authorized, 39,389,945 and 38,579,630 shares issued |
39,390 |
38,580 |
||
| Treasury stock, at cost (235 and 235 shares) |
(552) |
(552) |
||
| Additional paid-in capital |
126,264,444 |
124,893,145 |
||
| Accumulated deficit |
(4,107,631) |
- |
||
| Total stockholders' equity |
122,195,651 |
124,931,173 |
||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 241,083,517 |
$ 247,425,453 |
||
| Dune Energy, Inc. |
||||||||
| Consolidated Statements of Operations |
||||||||
| (Unaudited) |
||||||||
| Successor |
Predecessor |
Successor |
Predecessor |
|||||
| Three months ended |
Three months ended |
Nine months ended |
Nine months ended |
|||||
| September 30, 2012 |
September 30, 2011 |
September 30, 2012 |
September 30, 2011 |
|||||
| Revenues |
$ 13,440,370 |
$ 15,106,459 |
$ 39,942,295 |
$ 48,415,854 |
||||
| Operating expenses: |
||||||||
| Lease operating expense and production taxes |
6,517,031 |
6,144,112 |
19,375,697 |
20,098,475 |
||||
| Accretion of asset retirement obligation |
365,439 |
329,379 |
1,096,317 |
988,137 |
||||
| Depletion, depreciation and amortization |
926,277 |
5,517,089 |
10,198,260 |
17,062,122 |
||||
| General and administrative expense |
2,117,447 |
2,367,095 |
7,541,041 |
6,532,214 |
||||
| Loss on settlement of asset retirement obligation liability |
62,148 |
- |
951,094 |
- |
||||
| Exploration expense |
- |
864,011 |
- |
6,047,841 |
||||
| Total operating expense |
9,988,342 |
15,221,686 |
39,162,409 |
50,728,789 |
||||
| Operating income (loss) |
3,452,028 |
(115,227) |
779,886 |
(2,312,935) |
||||
| Other income (expense): |
||||||||
| Other income |
2,715 |
4,183 |
16,417 |
40,632 |
||||
| Interest expense |
(2,419,864) |
(10,127,742) |
(7,201,331) |
(30,171,588) |
||||
| Gain (loss) on derivative instruments |
(2,430,239) |
- |
2,297,397 |
- |
||||
| Total other income (expense) |
(4,847,388) |
(10,123,559) |
(4,887,517) |
(30,130,956) |
||||
| Net loss |
(1,395,360) |
(10,238,786) |
(4,107,631) |
(32,443,891) |
||||
| Preferred stock dividend |
- |
(5,316,442) |
- |
(15,293,811) |
||||
| Net loss available to common shareholders |
$ (1,395,360) |
$ (15,555,228) |
$ (4,107,631) |
$ (47,737,702) |
||||
| Net loss per share: |
||||||||
| Basic and diluted |
$ (0.04) |
$ (31.78) |
$ (0.10) |
$ (99.11) |
||||
| Weighted average shares outstanding: |
||||||||
| Basic and diluted |
39,391,382 |
489,455 |
39,207,325 |
481,642 |
||||
| Dune Energy, Inc. |
|||
| Consolidated Statements of Cash Flows |
|||
| (Unaudited) |
|||
| Successor |
Predecessor |
||
| Nine months ended |
Nine months ended |
||
| September 30, 2012 |
September 30, 2011 |
||
| CASH FLOWS FROM OPERATING ACTIVITIES |
|||
| Net loss |
$ (4,107,631) |
$ (32,443,891) |
|
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|||
| Depletion, depreciation and amortization |
10,198,260 |
17,062,122 |
|
| Amortization of deferred financing costs and debt discount |
555,322 |
2,878,924 |
|
| Stock-based compensation |
1,306,197 |
459,254 |
|
| Loss on settlement of asset retirement obligation liability |
951,094 |
- |
|
| Accretion of asset retirement obligation |
1,096,317 |
988,137 |
|
| Unrealized gain on derivative instruments |
(1,331,092) |
- |
|
| Changes in: |
|||
| Accounts receivable |
1,256,952 |
3,111,471 |
|
| Prepayments and other assets |
1,847,376 |
(1,185,310) |
|
| Payments made to settle asset retirement obligations |
(2,082,624) |
(646,950) |
|
| Accounts payable and accrued liabilities |
2,192,585 |
4,414,747 |
|
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
11,882,756 |
(5,361,496) |
|
| CASH FLOWS FROM INVESTING ACTIVITIES |
|||
| Investment in proved and unproved properties |
(19,126,544) |
(11,384,325) |
|
| Decrease in restricted cash |
17,184 |
15,740,247 |
|
| Purchase of furniture and fixtures |
(95,233) |
(92,752) |
|
| Decrease in other assets |
313,858 |
545,077 |
|
| NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES |
(18,890,735) |
4,808,247 |
|
| CASH FLOWS FROM FINANCING ACTIVITIES |
|||
| Payments on short-term debt |
(4,557,857) |
(1,420,917) |
|
| Increase in long-term debt issuance costs |
(198,924) |
- |
|
| Payments on long-term debt |
(3,000,000) |
- |
|
| NET CASH USED IN FINANCING ACTIVITIES |
(7,756,781) |
(1,420,917) |
|
| NET CHANGE IN CASH BALANCE |
(14,764,760) |
(1,974,166) |
|
| Cash balance at beginning of period |
20,393,672 |
23,670,192 |
|
| Cash balance at end of period |
$ 5,628,912 |
$ 21,696,026 |
|
| SUPPLEMENTAL DISCLOSURES |
|||
| Interest paid |
$ 2,094,165 |
$ 19,334,652 |
|
| Income taxes paid |
- |
- |
|
| NON-CASH INVESTING AND FINANCIAL DISCLOSURES |
|||
| Accrued interest converted to long-term debt |
$ 4,360,073 |
$ - |
|
| Non-cash investment in proved and unproved properties in accounts payable |
1,794,071 |
- |
|
| Common stock issued for conversion of preferred stock |
- |
62,288,000 |
|
| Redeemable convertible preferred stock dividends |
- |
13,502,000 |
|
| Accretion of discount on preferred stock |
- |
1,791,811 |
|
| Investor Contact: |
SOURCE Dune Energy, Inc.
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