U.S. Energy Corp. (Nasdaq:USEG) ("we", "us" or the "Company"),
today reported its first quarter 2015 highlights and selected
financial results for the quarter ended March 31, 2015 and provided
an operational update.
Selected Highlights for the Three Months Ended March 31,
2015
- Produced 86,227 barrels of oil equivalent ("BOE"), or an
average of 958 BOE per day ("BOE/D") as compared to 105,093 BOE or
an average of 1,168 BOE/D during the three months ended March 31,
2014. Production decreased as a result of normal production
declines and fewer wells being drilled during the period due to the
low commodity prices, when compared to the same period of the
previous year.
- First quarter 2015 production came from a total of 140 gross
(20.41 net) wells. During the three months ended March 31, 2015, we
received an average of $893,000 per month from these producing
wells with an average operating cost of $531,000 per month
(including workover costs) and production taxes of $86,000, for
average net cash flows of $276,000 per month from oil and gas
production before non-cash depletion expense.
- During the first quarter, we recorded a net loss after taxes of
$23.7 million or $0.85 per share basic and diluted, as compared to
net income after taxes of $250,000, or $0.01 per share basic and
diluted, during the same period of 2014. During the three months
ended March 31, 2015, the Company recorded a proved property
impairment of $19.2 million related to its oil and gas assets,
which represents $0.69 of the $0.85 per share loss during the
quarter. The impairment was primarily due to a decline in the price
of oil. There were no proved property impairments recorded
during the first three months of 2014.
- At March 31, 2015, we had $4.0 million in cash and cash
equivalents.
- The Company recognized $2.7 million in revenues during the
three months ended March 31, 2015 as compared to $8.3 million
during the same period of the prior year. The $5.6 million
decrease in revenue is primarily due to lower oil and gas prices
and lower oil and gas sales volumes in the first quarter of 2015
when compared to the same period of 2014.
- Cash provided by operations for the three months ended March
31, 2015 decreased to $1.8 million as compared to cash provided by
operations of $4.4 million for the same period of 2014. The
$2.6 million year over year decrease in cash from operating
activities is primarily due to lower oil and gas revenue, partially
offset by lower oil and gas operating expenses during the first
quarter of 2015 as compared to the first quarter of 2014.
- Adjusted Net Income (Loss), a non-GAAP measure that excludes
non-recurring items and mark-to-market gains and losses on
derivative instruments, was an Adjusted Net Loss of $4.4 million
during the three months ended March 31, 2015, or $0.16 per basic
and diluted share. Adjusted Net Income was $491,000 for the
three months ended March 31, 2014, or $0.02 per basic and diluted
share. Please refer to the reconciliation in this release for
additional information about this measure.
- Earnings before interest, income taxes, depreciation, depletion
and amortization, accretion of discount on asset retirement
obligations, non-cash impairments, unrealized derivative gains and
losses and non-cash compensation expense ("Modified EBITDAX"), was
a $1.2 million loss for the three months ended March 31, 2015,
compared to a $4.0 million gain for the three months ended March
31, 2014. Modified EBITDAX is a non-GAAP financial measure. Please
refer to the reconciliation in this release for additional
information about this measure.
Senior Credit Facility
- Our Credit Agreement with Wells Fargo Bank, N.A. provides a
$100.0 million senior secured credit facility. Effective
April, 15, 2015 we have a redetermined borrowing base of $7.5
million with a maturity date of July 30, 2017. The
redetermination was based on reserves and production forecasts as
of December 31, 2014, taking into account current oil and natural
gas price forecasts. At March 31, 2015, we had $6.0 million
drawn on the facility.
Operational Update
The Company's oil and gas development activities are currently
focused in South Texas and in the Williston Basin of North
Dakota. Our focus through these development activities is to
increase production, reserves, revenues and cash flow from
operations while prudently managing the Company's level of risk and
debt. During these times of reduced commodity pricing,
however, we have along with our partners opted to dramatically
reduce drilling and capital expenditures in order to preserve
capital and in-ground value for more robust times.
South Texas - Buda Limestone – Eagle Ford and Austin Chalk
formations
The Company currently participates with four operating partners
in its proportionate share of approximately 28,696 gross (6,781
net) leasehold acres in Zavala and Dimmit Counties, Texas.
The acreage realizes its production from the Buda Limestone,
Eagle Ford and Austin Chalk formations. Production averaged
270 net BOE/D from 35 gross (9.53 net) producing wells during the
first quarter of 2015.
South Texas well status table:
Well Name |
Operator |
Spud Date |
Working Interest |
Net Revenue Interest |
Status |
Richard #1 |
CML |
3/16/2015 |
12.90% |
9.87% |
Producing |
S McKnight 1305B |
U.S. Enercorp. |
3/5/2015 |
33.33% |
24.50% |
Flowing Back |
|
|
Average: |
23.12% |
17.19% |
|
On March 16, 2015, CML Exploration, LLC spud the Richard #1
well, targeting the Buda formation. The well was drilled and was
completed open hole without fracture stimulation. Production
commenced in early May 2015 and the well had a peak early 24-hour
flow back rate of approximately 820 gross BOE/D.
Williston Basin, North Dakota
The Company participates with ten operating partners in its
proportionate share of approximately 84,810 gross (3,511 net) acres
in Williams, McKenzie and Mountrail Counties, North
Dakota. The acreage realizes its production from the Bakken
and Three Forks formations. Production averaged 609 net BOE/D
from 102 gross (10.32 net) producing wells during the first quarter
of 2015.
Williston Basin well status table:
Well Name |
Operator |
Formation |
Spud Date |
Working
Interest |
Net Revenue
Interest |
Status |
Excalibur 6-25-36H |
Emerald Oil Inc. |
Bakken |
10/26/2014 |
0.82% |
0.63% |
Producing |
Excalibur 7-25-36H |
Emerald Oil Inc. |
Bakken |
11/8/2014 |
0.82% |
0.63% |
Drilled - Comp. Pending |
Satter 21X-01B |
XTO |
Bakken |
10/22/2014 |
0.13% |
0.10% |
Drilled - Comp. Pending |
Satter 21X-01F |
XTO |
Three Forks |
10/26/2014 |
0.13% |
0.10% |
Drilled - Comp. Pending |
Satter 21X-01C |
XTO |
Three Forks |
10/27/2014 |
0.13% |
0.10% |
Drilled - Comp. Pending |
Satter 31X-1H |
XTO |
Three Forks |
1/1/2015 |
0.13% |
0.10% |
Drilled - Comp. Pending |
Satter 31X-1D |
XTO |
Bakken |
2/6/2015 |
0.13% |
0.10% |
Drilled - Comp. Pending |
Satter 31X-1CXD |
XTO |
Bakken |
3/14/2015 |
0.13% |
0.10% |
Drilled - Comp. Pending |
Satter 31X-1G2 |
XTO |
Three Forks |
3/12/2015 |
0.13% |
0.10% |
Drilling |
|
|
|
Average: |
0.28% |
0.22% |
|
CEO Statement
"Although our production, revenues and borrowing base have
suffered significant decreases during the first quarter of 2015 as
a result of the commodity price downturn, we remain committed to
the development and expansion of our oil and gas portfolio. We
are continuing to evaluate accretive acquisition opportunities in
this price environment with significant upside potential and are
confident that the current market conditions will allow us to find
the right opportunity for meaningful growth. In order to
accomplish our acquisition initiatives we are currently seeking
additional sources of funding from within our banking contacts,"
stated Keith Larsen, CEO of U.S. Energy Corp.
Financial Highlights
The following table sets forth selected financial information
for the three months ended March 31, 2015 and 2014. The
information is derived from the Company's financial statements
included in its Quarterly Report on Form 10-Q for the three months
ended March 31, 2015. All of this information should be read
in conjunction with the Form 10-Q and the financial statements
contained therein, including the notes to the financial
statements.
U.S. ENERGY
CORP. |
SELECTED FINANCIAL
DATA |
(Unaudited) |
(Amounts in thousands,
except per share amounts) |
|
|
|
|
March 31, |
December 31, |
|
2015 |
2014 |
Balance Sheets: |
|
|
Cash and cash equivalents |
$ 3,976 |
$ 4,010 |
Current assets |
$ 5,632 |
$ 7,500 |
Current liabilities |
$ 9,504 |
$ 7,966 |
Working capital |
$ (3,872) |
$ (466) |
Total assets |
$ 101,499 |
$ 123,523 |
Long-term obligations |
$ 8,188 |
$ 8,162 |
Shareholders' equity |
$ 83,807 |
$ 107,395 |
|
|
|
Shares Outstanding |
28,047,661 |
28,047,661 |
|
|
|
|
For the three months
ended March 31, |
|
2015 |
2014 |
Statements of Operations: |
|
|
Operating revenues |
$ 2,679 |
$ 8,256 |
Income (loss) from
operations |
$ (23,519) |
$ 627 |
Other income &
expenses |
$ (184) |
$ (377) |
Net income (loss) |
$ (23,703) |
$ 250 |
Net income (loss) per
share |
|
|
Basic and diluted |
$ (0.85) |
$ 0.01 |
Weighted average shares
outstanding |
|
|
Basic |
28,047,661 |
27,738,083 |
Diluted |
28,047,661 |
28,142,253 |
Non-GAAP Financial Measures
Modified EBITDAX
In addition to reporting net income (loss) as defined under
GAAP, in this release we also present net earnings before interest,
income taxes, depreciation, depletion, and amortization, accretion
of discount on asset retirement obligations, non-cash impairments,
unrealized derivative gains and losses and non-cash compensation
expense ("Modified EBITDAX"), which is a non-GAAP performance
measure. Modified EBITDAX excludes certain items that the
Company believes affect the comparability of operating results and
can exclude items that are generally one-time or whose timing
and/or amount cannot be reasonably estimated. Modified EBITDAX
is a non-GAAP measure that is presented because the Company
believes that it provides useful additional information to
investors as a performance measure. We believe that Modified
EBITDAX is useful to investors because similar measures are
frequently used by securities analysts, investors, and other
interested parties in their evaluation of companies in the energy
industry. Our management uses Modified EBITDAX to manage our
business, including preparation of our annual operating budget and
financial projections. Modified EBITDAX does not represent,
and should not be considered an alternative to, GAAP measurements
such as net income (loss) (its most directly comparable GAAP
measure) or as a measure of liquidity, and our calculations thereof
may not be comparable to similarly titled measures reported by
other companies. Our management does not view Modified
EBITDAX 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 income (loss) to Modified EBITDAX for the periods
presented:
|
For the three months
ended March 31, |
|
2015 |
2014 |
Net income (loss) |
$ (23,703) |
$ 250 |
Impairment of oil and natural gas
properties |
19,240 |
-- |
Accretion of asset retirement obligation |
11 |
9 |
Non-cash compensation expense |
178 |
160 |
Unrealized loss on commodity derivatives |
63 |
173 |
Interest expense |
63 |
96 |
Depreciation, depletion and amortization |
2,941 |
3,362 |
Modified EBITDAX (Non-GAAP) |
$ (1,207) |
$ 4,050 |
Adjusted Net Income (Loss)
Adjusted Net Income (Loss) is another supplemental non-GAAP
financial measure that is used by management and external users of
the Company's condensed consolidated financial statements. The
Company defines Adjusted Net Income (Loss) as net income after
adjusting for the impact of certain non-recurring items, changes in
the fair value of derivative instruments, and impairments of oil
and gas properties.
The following table provides a reconciliation of net (loss)
income (GAAP) to Adjusted Net Income (Loss) (non-GAAP):
|
For the three months
ended March 31, |
|
2015 |
2014 |
Net (loss) income |
$ (23,703) |
$ 250 |
Impairment of oil and natural gas
properties |
19,240 |
-- |
Gain on sale of assets |
(16) |
(28) |
Change in fair value of derivative
instruments |
63 |
173 |
Interest expense |
63 |
96 |
Adjusted net (loss) income |
$ (4,353) |
$ 491 |
|
|
|
Adjusted earning per share: |
|
|
Basic and diluted |
$ (0.16) |
$ 0.02 |
Weighted average shares outstanding |
|
|
Basic |
28,047,661 |
27,738,083 |
Diluted |
28,047,661 |
28,142,253 |
About: U.S. Energy Corp.
U.S. Energy Corp. is a natural resource exploration and
development company with a primary focus on the exploration and
development of its oil and gas assets. The Company also owns
the Mount Emmons molybdenum deposit located in west central
Colorado. The Company is headquartered in Riverton, Wyoming
and trades on the NASDAQ Capital Market under the symbol
"USEG".
To view the Company's Financial Statements and Management's
Discussion and Analysis, please see the Company's 10-K for the
twelve months ended December 31, 2014 and its 10-Q for the three
months ended March 31, 2015, which are available at www.sec.gov and
www.usnrg.com.
The U.S. Energy Corp. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5043
Disclosure Regarding Forward-Looking
Statement
This news release includes statements which may constitute
"forward-looking" statements, usually containing the words "will,"
"anticipates," "believe," "estimate," "project," "expect,"
"target," "goal," or similar expressions. Forward looking
statements in this release relate to, among other things, U.S.
Energy's expected future capital expenditures and projects and
potential future transactions and the benefits to the Company of
such transactions. There is no assurance that any of the wells
referenced in this press release will be economic. Initial and
current production results from a well are not necessarily
indicative of its longer-term performance. The forward-looking
statements are made pursuant to the safe harbor provision of the
Private Securities Litigation Reform Act of
1995. Forward-looking statements inherently involve risks and
uncertainties that could cause actual results to differ materially
from the forward-looking statements. Factors that would cause
or contribute to such differences include, but are not limited to,
dry holes and other unsuccessful development activities, higher
than expected expenses or decline rates from production wells,
future trends in commodity and/or mineral prices, the availability
of capital, competitive factors, and other risks described in the
Company's filings with the SEC (including, without limitation, the
Form 10-K for the year ended December 31, 2014) all of which are
incorporated herein by reference. By making these
forward-looking statements, the Company undertakes no obligation to
update these statements for revision or changes after the date of
this release.
CONTACT: For further information, please contact:
Reggie Larsen
Director of Investor Relations
U.S. Energy Corp.
1-800-776-9271
Reggie@usnrg.com
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