American Eagle Energy Reports Results for Second Quarter 2013
19.08.2013 | CNW
DENVER, Aug. 19, 2013 - American Eagle Energy Corporation (OTCQX: AMZG) (the "Company" or "American Eagle"), a Williston Basin focused E&P company, announces record oil production and record earnings for the second quarter ended June 30, 2013. The Company filed its Quarterly Report on Form 10-Q with the U.S. Securities and Exchange Commission today.Second Quarter 2013 Highlights
- American Eagle reports record quarterly oil production of 117,164 barrels of oil equivalent (BOE), or an average of 1,288 barrels of oil equivalent per day (BOEPD). Second quarter production was up 32% from 87,472 BOE (972 BOEPD) in the previous quarter ended March 31, 2013 and up 412% from 22,883 BOE (251 BOEPD) year-over-year for the quarter ended June 30, 2012;
- Record quarterly oil sales of $10.4 million (100% of which is attributable to the sale of crude oil), up 36% from $7.6 million in the first quarter ended March 31, 2013;
- Record Adjusted EBITDA* of $6.4 million or $0.12 per share (basic and diluted) for the three months ended June 30, 2013, up 31% from $4.9 million in the first quarter ended March 31, 2013; and
- Record Adjusted Income* of $2.5 million or $0.05 per share (basic and diluted) for the three months ended June 30, 2013, up 28% from $1.9 million in the first quarter ended March 31, 2013.
* Non-GAAP financial measure. Please see Adjusted EBITDA and Adjusted Income (Loss) descriptions and tables later in this earnings release for a reconciliation of these measures to their nearest comparable GAAP measure.
Second Quarter 2013 Financial and Operational Results
For the quarter ended June 30, 2013, the Company had oil sales of $10.4 million, which represented an increase of 36% from $7.6 million in oil sales for the first quarter ended March 31, 2013 and an increase of 513% from $1.7 million for the second quarter ended June 30, 2012. This increase in revenue is due primarily to production from 19 gross (6.0 net) operated wells in the Spyglass Project area producing in the Three Forks and Bakken formations as of June 30, 2013, compared to production from 13 gross (3.3 net) wells and 3 gross (0.4 net) operated wells as of March 31, 2013 and June 30, 2012, respectively. Oil represented 100% of revenue and production during the second quarter 2013. Due to strong well results in northwestern Divide County, North Dakota, infrastructure is being built to collect gas production, with an expectation that the Company will be able to recognize gas sales during the second half of 2014. American Eagle continues to add operated wells in its Spyglass Project area and expects total production to grow as its operated wells come on line.
Adjusted EBITDA for second quarter 2013 was $6.4 million, up 31% from $4.9 million for the first quarter ended March 31, 2013 and up over 1,900% from $0.3 million for the second quarter ended June 30, 2012. The increase in Adjusted EBITDA from the most recent quarter was driven mostly by higher revenues from increased production which was up 32% quarter-over-quarter and improved realized pricing. On a year-over-year basis, the higher production and revenue also helped to leverage operating expenses as general and administrative expenses stayed relatively flat. Production expenses or lease operating expense for the quarter ended June 30, 2013 were higher than normal due to significant road and location repairs as a result of extreme winter weather conditions and higher than normal spring rainfall. We added 6 gross operated wells during the quarter ended June 30, 2013. Typically, lease operating expenses associated with newly completed wells are higher in the first few months of production, during which time the wells' operating activities and characteristics are stabilizing. Adjusted EBITDA per BOE for the quarter ended June 30, 2013 was $54.99, compared to $56.13 per BOE for the first quarter ended March 31, 2013 and $13.84 per BOE for the second quarter ended June 30, 2012.
Three Months Ended
------------------------------------------------
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
2013 2013 2012 2012 2012
-------- -------- -------- -------- --------
Oil Sales ($000s) $10,370 $7,629 $4,923 $2,875 $1,691
Net Production:
Crude Oil (Barrels) 117,001 87,440 64,886 33,359 22,698
Crude Oil Mix 100% 100% 100% 100% 99%
Natural Gas and Other
Liquids (Mcf) 980 187 548 646 1,112
Total Net Production (BOE) 117,164 87,471 64,977 33,467 22,883
Quarter-Over-Quarter
Increase 34% 35% 94% 46% 71%
Average Daily Production
(BOEPD) 1,288 972 706 364 251
Quarter-Over-Quarter
Increase 32% 38% 94% 45% 71%
Average Sales Prices:
Crude Oil Per Barrel $88.60 $87.23 $75.83 $86.13 $74.30
Natural Gas and Other
Liquids Per Mcf $4.40 $5.69 $3.60 $3.05 $3.82
Realized Price Per BOE $88.51 $87.21 $75.76 $85.91 $73.88
Average Per BOE:
Production Expenses $15.37 $9.96 $7.98 $8.11 $20.73
Production Taxes $9.84 $8.89 $12.19 $15.44 $9.64
G&A Expenses, Excluding
Shared-Based Compensation $8.31 $12.23 $18.10 $24.30 $29.67
Total $33.51 $31.08 $38.27 $47.85 $60.04
-------- -------- -------- -------- --------
Adjusted EBITDA per BOE $54.99 $56.13 $37.49 $38.07 $13.84
Well Development Activity
During the second quarter 2013, American Eagle added 6 operated wells to production in its Spyglass Project area in northwestern Divided County, North Dakota, in which the Company owns an average working interest of 45%. The Company currently has 4 operated wells with an average working interest of 44% that have been drilled and are awaiting completion. An additional operated well has been drilled and is awaiting completion. This well is the first well of our Carry Agreement with our Joint Venture Partner ("JV Partner") in which our JV Partner has agreed to pay 100% of the Company's working interest share of well development costs for up to 5 Bakken wells that will be operated by American Eagle, with American Eagle initially receiving 50% of the Company's net revenue interest in the wells' production over the first two years or until JV Partner has recouped 112% of development costs on a per-well basis, after which 100% of the Company's well bore interests on a per-well basis revert back to American Eagle.
Liquidity and Shares Outstanding
As of June 30, 2013, American Eagle had approximately $17.1 million in cash and $15.4 million total debt outstanding. On August 9, 2013, the Company completed the sale of 5,000,000 shares of its common stock directly to an investor pursuant to a Common Stock Purchase Agreement we entered into with the investor at a price of $2.00 per share. Following the offering, the Company has 55,068,346 shares of common stock outstanding.
American Eagle has recently obtained debt financing from Morgan Stanley Capital Group with a senior secured reserve based credit facility with a maximum potential commitment of up to $200 million. Initially, $68 million is committed and available for funding. American Eagle plans to draw the full $68 million available to retire the Macquarie Bank Limited swap facility, which it entered into at the end of last year, for approximately $18 million and use the remaining proceeds for working capital, well development, acreage acquisitions, and for other general corporate purposes. American Eagle believes that its cash on hand, cash flow from operations, proceeds from its recently completed share issuance, proceeds from its new credit facility and additional availability under the credit facility will adequately fund its two-rig drilling program.
June 1, 2013 Estimated Proved Reserves
American Eagle's estimated proved reserves at June 1, 2013 were 6.5 million barrels of oil equivalent ("MMBoe") with an associated PV-10 value of approximately $170.4 million, which represents a 48% increase in PV-10 value over its estimated proved reserves at December 31, 2012, adjusted to reflect Spyglass Project area only. Reserves for each period were prepared by a recognized, independent, third-party reserve engineering firm.
SEC Pricing Estimated Proved Reserves as of June 1, 2013
Crude Oil Natural Gas Pre-Tax PV-10
(Bbls) (Mcf) Total (Boe) Value
--------------- --------------- ----------- --------------
PDP Properties 3,052,400 1,717,900 3,338,717 $ 103,549,400
PUD Properties 2,932,500 1,080,000 3,112,500 $ 66,862,100
--------------- --------------- ----------- --------------
Total Estimated
Proved Properties 5,984,900 2,797,900 6,451,217 $ 170,411,500
(1) The table above values oil and natural gas reserve quantities and related discounted future net cash flows as of June 1, 2013 assuming average constant realized prices of $90.15 per Bbl of oil and $3.50 per Mcf for natural gas. The average natural gas price reflects the value of processed natural gas sales and natural gas liquids.
(2) Boe are computed based on a conversion ratio of one Boe for each barrel of oil and one Boe for every 6,000 cubic feet (6 Mcf) of natural gas.
The table above assumes prices and costs discounted using an annual discount rate of 10% without future escalation, without giving effect to non-property related expenses such as general and administrative expenses, debt service and depreciation, depletion and amortization. The "PV-10" values of the Company's estimated proved reserves presented in the foregoing table may be considered a non-GAAP financial measure as defined by the SEC. As of June 1, 2013, the PV-10 value for the Company's estimated proved reserves was equal to the standardized measure of discounted future net cash flows.
Uncertainties are inherent in estimating quantities of proved reserves, including many risk factors beyond the Company's control. Reserve engineering is a subjective process of estimating subsurface accumulations of oil and natural gas that cannot be measured in an exact manner. As a result, estimates of proved reserves may vary depending upon the engineer valuing the reserves. Further, the Company's actual realized price for its oil and natural gas is not likely to average the pricing parameters used to calculate its proved reserves. As such, the oil and natural gas quantities and the value of those commodities ultimately recovered from the Company's properties will vary from reserve estimates.
Non-GAAP Financial Measures
Adjusted EBITDA
In addition to reporting net income (loss) as defined under GAAP, American Eagle also presents net earnings before interest expense, interest income, dividend income, income taxes, depreciation, depletion, and amortization, impairment of oil and gas properties, unrealized gain (loss) from mark-to-market on derivatives and non-cash expenses relating to share-based payments recognized under ASC Topic 718 ("Adjusted EBITDA"), which is a non-GAAP performance measure. Adjusted EBITDA consists of net earnings after adjustment for those items described in the table below. Adjusted EBITDA does not represent, and should not be considered an alternative to GAAP measurements, such as net income (loss) (its most directly comparable GAAP measure), and the calculations thereof may not be comparable to similarly titled measures reported by other companies. By eliminating the items described below, American Eagle believes the measure is useful in evaluating its fundamental core operating performance. The Company also believes that Adjusted EBITDA is useful to investors because similar measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies in similar industries. American Eagle's management uses Adjusted EBITDA to manage its business, including in preparing its annual operating budget and financial projections. Management does not view Adjusted EBITDA 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 Adjusted EBITDA for the periods presented:
Three Months Ended
---------------------------------------------------------------
June 30, March 31, December 31, September 30, June 30,
2013 2013 2012 2012 2012
---------- ---------- ------------ ------------- ----------
Net income
(loss) $2,637,484 $355,347 ($9,679,580) $892,194 ($147,153)
Interest
income (1,472) (3,156) (1,566) (1,898) (1,468)
Dividend
income (16,982) (17,240) (17,499) (17,425) (11,449)
Unrealized loss (gain) on
derivatives (186,754) 27,507 122,651 - -
Interest
expense 347,853 373,109 - 3 521
Income tax expense
(benefit) 1,192,691 1,092,092 (594,081) (386,160) 17,860
Depletion, depreciation and
amortization 2,183,322 1,320,154 1,713,556 579,434 270,400
Stock-based compensation
expense 287,172 237,348 260,922 207,790 188,096
Impairment of oil and gas
properties - 1,525,027 10,631,345 - -
Adjusted
EBITDA $6,443,314 $4,910,188 $2,435,748 $1,273,938 $316,807
========== ========== ============ ============= ==========
Adjusted Income (Loss)
In addition to reporting net income (loss) as defined under GAAP, American Eagle also presents net earnings before the impairment of oil and gas properties and the effect of unrealized gain (loss) from mark-to-market on derivatives ("adjusted income (loss)"), which is a non-GAAP performance measure. Adjusted income (loss) consists of net earnings after adjustment for those items described in the table below. Adjusted income (loss) does not represent, and should not be considered an alternative to GAAP measurements, such as net income (loss), and our calculations thereof may not be comparable to similarly titled measures reported by other companies. By eliminating the items described below, American Eagle believes the measure is useful in evaluating its fundamental core operating performance. The Company also believes that adjusted income (loss) is useful to investors because similar measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies in similar industries. American Eagle's management uses adjusted income (loss) to manage its business, including in preparing its annual operating budget and financial projections. Management does not view adjusted income (loss) 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 adjusted income (loss) for the periods presented:
Three Months Ended
---------------------------------------------------------------
June 30, March 31, December 31, September 30, June 30,
2013 2013 2012 2012 2012
---------- ---------- ------------ ------------- ----------
Net income
(loss) $2,637,484 $355,347 ($9,679,580) $892,194 ($147,153)
Unrealized loss (gain) on
derivatives (186,754) 27,507 122,651 - -
Impairment of oil and gas
properties - 1,525,027 10,631,345 - -
Adjusted Income
(Loss) $2,450,730 $1,907,881 $1,074,416 $892,194 ($147,153)
========== ========== ============ ============= ==========
ABOUT AMERICAN EAGLE ENERGY CORPORATION
American Eagle Energy Corporation is an independent exploration and production operator that is focused on acquiring acreage and developing wells in the Williston Basin of North Dakota and Montana, targeting the Bakken and Three Forks shale oil formations. The Company is based in Denver, CO. More information about American Eagle Energy can be found at www.americaneagleenergy.com or by contacting investor relations at 303-798-5235 or ir@amzgcorp.com. Company filings with the Securities and Exchange Commission can be obtained free of charge at the SEC's internet site at www.sec.gov.
SAFE HARBOR
This press release may contain forward-looking statements regarding future events and the Company's future results that are subject to the safe harbors created under the Securities Act of 1933 (the "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act"). All statements other than statements of historical facts included in this press release regarding the Company's financial position, business strategy, plans and objectives of management for future operations, industry conditions, and indebtedness covenant compliance are forward-looking statements. When used in this report, forward-looking statements are generally accompanied by terms or phrases such as "estimate," "project," "predict," "believe," "expect," "anticipate," "target," "plan," "intend," "seek," "goal," "will," "should," "may" or other words and similar expressions that convey the uncertainty of future events or outcomes. Items contemplating or making assumptions about, actual or potential future sales, market size, collaborations, and trends or operating results also constitute such forward-looking statements.
Forward-looking statements involve inherent risks and uncertainties and important factors (many of which are beyond the Company's control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: general economic or industry conditions, nationally and/or in the communities in which the Company conducts business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies, or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting the Company's operations, products, services, and prices.
The Company has based these forward-looking statements on its current expectations and assumptions about future events. While management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory, and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control. The Company does not assume any obligations to update any of these forward-looking statements.
AMERICAN EAGLE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three--Month
Period For the Six-Month Period
Ended June 30, Ended June 30,
-------------------------- -------------------------
2013 2012 2013 2012
------------ ------------ ------------ -----------
Oil and gas
sales $ 10,369,993 $ 1,690,673 $ 17,998,700 $ 2,916,252
Operating expenses:
Oil and gas production
costs 2,953,522 694,954 4,602,056 1,101,510
General and
administrative 1,260,329 867,008 2,567,662 2,045,700
Depreciation, amortization and depletion
expense 2,183,322 270,400 3,503,476 567,197
Impairment of oil and gas properties, subject to
amortization - - 1,525,027 -
----------- ----------- ----------- ----------
Total operating
expenses 6,397,173 1,832,362 12,198,221 3,714,407
----------- ----------- ----------- ----------
Total operating
income (loss) 3,972,820 (141,689) 5,800,479 (798,155)
Interest income 1,472 1,468 4,628 4,871
Dividend income 16,982 11,449 34,222 28,730
Interest expense (347,853) (521) (720,962) (703)
Unrealized gain
on derivatives 186,754 - 159,247 -
----------- ----------- ----------- ----------
Income (loss)
before taxes 3,830,175 (129,293) 5,277,614 (765,257)
Income tax benefit
(expense) (1,192,691) (17,860) (2,284,783) 259,769
----------- ----------- ----------- ----------
Net income (loss) $ 2,637,484 $ (147,153) $ 2,992,831 $ (505,488)
=========== =========== =========== ==========
Net income (loss) per common share:
Basic $ 0.05 $ (0.00) $ 0.06 $ (0.01)
=========== =========== =========== ==========
Diluted $ 0.05 $ (0.00) $ 0.06 $ (0.01)
=========== =========== =========== ==========
Weighted average number of shares outstanding --
Basic 50,068,346 45,842,782 49,979,948 45,741,054
=========== =========== =========== ==========
Diluted 51,968,872 45,842,782 51,778,242 45,741,054
=========== =========== =========== ==========
INVESTOR RELATIONS CONTACT:
Marty Beskow, Vice President of Capital Markets and Strategy
American Eagle Energy Corporation
303-798-5235
ir@amzgcorp.com
www.americaneagleenergy.com
Brad Holmes
EnergyIR
713-654-4009
B_holmes@att.net
