Dune Energy Reports Third Quarter 2013 Financial And

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Dune Energy Reports Third Quarter 2013 Financial And Operating Results

HOUSTON, Nov. 5, 2013 /PRNewswire/ -- Dune Energy, Inc. (OTCBB UNR) today announced results for the third quarter of calendar year 2013.

Revenue and Production

Revenue for the third quarter of 2013 totaled $13.7 million as compared with $13.4 million for the third quarter of 2012.  Production volumes in the third quarter were 109 Mbbls of oil and 0.48 Bcf of natural gas, or 189 Mboe.  This compares with 107 Mbbls of oil and 0.71 Bcf of natural gas, or 225 Mboe for the third quarter of 2012.  In the third quarter of 2013, the average sales price per barrel of oil was $109.28 and $3.77 per Mcf for natural gas, as compared with $103.33 per barrel and $3.34 per Mcf, respectively for the third quarter of 2012.  Production decreased 16% in the third quarter of 2013 as compared to the third quarter of 2012.  Oil prices increased 6% and gas prices increased 13% from 2012 levels.  During the third quarter of 2013 oil accounted for 57% of the total production volumes on an equivalent basis; however, oil revenue accounted for 87% of the total revenue.

Costs and Expenses

Total lease operating expense (LOE) was $5.7 million for the third quarter of 2013 as compared to $6.4 million for the third quarter of 2012, or $30.16 and $28.44 per Boe produced, respectively.  DD&A expense was $5.2 million for the third quarter of 2013, or $27.51 per Boe. G&A expense totaled $2.9 million for the third quarter of 2013 compared to $2.1 million in the third quarter of 2012.  Interest and financing expense did not fluctuate between quarters amounting to around $2.5 million. 

First quarter of 2013 LOE was $6.9 million and second quarter was $7.8 million.  This decrease from the prior quarters reflects reclassifying the "Mystery Sheen" at Garden Island Bay as a remediation cost rather than LOE.  As a result of this decision we recorded a non-cash remediation cost of $4.6 million in the 3rd quarter of 2013.  This removed approximately $700,000 from the year to date LOE costs and future costs associated with this remediation will not be charged to LOE. 

Earnings

Net loss totaled $30.4 million for the third quarter of 2013.  This compares with income of $1.4 million in 2012.  This net loss was primarily associated with two factors.  The first was a $22.3 million non-cash impairment at our Garden Island Bay field primarily associated with the impact of lower expected future oil prices on the economic life of the field's proved reserves reflected in the June 30, 2013 Reserve Report and the second was a $4.6 million non-cash charge associated with remediation costs mentioned above.

Liquidity

At the end of the quarter we had $1.6 million in cash and $39 million available under our Credit Facility based on $50 million of availability.  The revolver is subject to a mid-year redetermination based on a new reserve report dated June 30, 2013.  The report has been submitted to our banks for review and we are awaiting their determination of the availability under the revolver.

The availability under the revolver is subject to a 4.0 to 1.0 ratio of total debt to trailing 12 months EBITDAX.  This covenant limits our total availability under the revolver to an effective liquidity.  At the end of the third quarter we had total debt as defined of $69.4 million and trailing 12 month EBITDAX of $20.1 million resulting in a ratio of 3.45, well within the covenant restriction.  Effective liquidity at the end of the 3rd quarter was $12.6 million.  Fourth quarter EBITDAX which is primarily driven by production revenues less LOE will determine our effective availability under the revolver at the end of the year.

2013 Operations Summary and Capital Program

Production

Production volumes for the 3rd quarter of 2013 were down from the 2nd quarter of 2013 by approximately 531 Boe/day primarily related to a third party pipeline shut-in our outside-operated Leeville field.  In addition, delays in infrastructure and maintenance work occurred at the Leeville field, as operator and majority-owner changed due to a sale of interests.  The new operator is addressing these issues and we anticipate production from Leeville returning to second quarter levels in the fourth quarter of 2013.

Fourth quarter production volumes are anticipated to be between 2,100 Boe/day and 2,400 Boe/day largely dependent on facilities and maintenance work being completed in our Leeville field, volumes remaining at current levels in our recently completed Wieting #31 well at Chocolate Bayou and new production coming on line at the Kappa well (GIB SL 214 #913ST1).  This well should commence production within the month.  Additionally we are preparing to drill the LOPT 10 well in our Live Oak field which should commence production in December.  

Capital Program

In the first three quarters of the year we have spent a total of $40 million primarily in our Leeville, Garden Island Bay and Chocolate Bayou fields.  We anticipate $10 to $12 million being spent in the fourth quarter to finish drilling and completing the Kappa well at Garden Island Bay, drilling the LOPT 10 at Live Oak Field, and depending on partner timing, potentially commencing a well at Leeville.  We will carefully monitor our capital expenditure against our effective liquidity to stay within the constraints of our credit agreements.

James A. Watt, President and CEO of the company stated, "Based on current forecasts, we anticipate a capital program of approximately $50 million for calendar 2013.  This is the largest investment we have put into our asset since 2008.  To date the results of the program had added new reserves at excellent finding and development costs and have added new production.  We anticipate 2014 will have a similar drilling program as 2013 with a large portion of the program front end loaded in our Leeville field." 

Click here for more information: http://www.duneenergy.com/news.html?b=1683&1=1

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.

Investor Contact:
Steven J. Craig
Sr. Vice President Investor Relations and Administration
713-229-6300

 

 

Dune Energy, Inc.

Consolidated Balance Sheets

(Unaudited)





September 30,

2013

December 31,

2012

ASSETS



Current assets:



Cash           

$       1,596,807

$     22,793,916

Accounts receivable

8,846,173

6,723,233

Current derivative asset          



765,992

Prepayments and other current assets 

391,688

5,160,533

Total current assets            

10,834,668

35,443,674

Oil and gas properties, using successful efforts accounting—proved     

284,490,074

239,233,653

Less accumulated depreciation, depletion, amortization and impairment  

(49,172,275 )

(13,806,672 )

Net oil and gas properties 

235,317,799

225,426,981

Property and equipment, net of accumulated depreciation of $206,558 and $256,380             

169,867

71,080

Deferred financing costs, net of accumulated amortization of $1,375,079 and $771,061          

1,941,052

2,428,453

Noncurrent derivative asset              

82,292

397,886

Other assets         

3,676,444

2,692,797


5,869,655

5,590,216

TOTAL ASSETS 

$   252,022,122

$   266,460,871




LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:



Accounts payable    

$     15,917,507

$       6,987,857

Accrued liabilities    

9,678,767

12,529,899

Current derivative liability      

6,841



Current maturities on long-term debt (see note 2)              



1,623,541

Total current liabilities       

25,603,115

21,141,297

Long-term debt (see note 2)              

69,424,434

83,429,862

Other long-term liabilities  

22,472,330

13,860,597

Total liabilities     

117,499,879

118,431,756

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, 71,907,952 and 59,022,445 shares issued              

71,908

59,022

Treasury stock, at cost (63,810 and 1,056 shares)         

(121,146 )

(1,914 )

Additional paid-in capital  

177,341,601

155,824,868

Accumulated deficit           

(42,770,120 )

(7,852,861 )

Total stockholders' equity

134,522,243

148,029,115

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            

$   252,022,122

$   266,460,871






Dune Energy, Inc.

Consolidated Statements of Operations

(Unaudited)







Three months

ended

September 30, 2013

Three months

ended

September 30, 2012

Nine months

ended

September 30, 2013

Nine months

ended

September 30, 2012

Revenues:





Oil and gas revenues               

$        13,706,257

$        13,440,370

$        42,611,399

$        39,942,295

Other revenues         





963,150



Total revenues    

13,706,257

13,440,370

43,574,549

39,942,295

Operating expenses:





Lease operating expense and production taxes 

5,677,034

6,419,316

20,084,684

19,004,600

Accretion of asset retirement obligation

402,732

365,439

1,208,196

1,096,317

Depletion, depreciation and amortization

5,183,118

926,277

13,144,822

10,198,260

General and administrative expense      

2,924,299

2,117,447

8,641,758

7,541,041

Loss on settlement of asset retirement obligation liability               



62,148



951,094

Impairment of oil and gas properties     

22,250,000



22,250,000



Remediation costs    

4,284,246

97,715

4,586,000

371,097

Total operating expense    

40,721,429

9,988,342

69,915,460

39,162,409

Operating income (loss)     

(27,015,172 )

3,452,028

(26,340,911 )

779,886

Other income (expense):





Other income             

82

2,715

774

16,417

Interest expense       

(2,541,193 )

(2,419,864 )

(7,460,381 )

(7,201,331 )

Gain (loss) on derivative instruments   

(809,439 )

(2,430,239 )

(1,116,741 )

2,297,397

Total other income (expense)            

(3,350,550 )

(4,847,388 )

(8,576,348 )

(4,887,517 )

Net loss

$       (30,365,722 )

$         (1,395,360 )

$       (34,917,259 )

$         (4,107,631 )

Net loss per share:





Basic and diluted      

$                  (0.42 )

$                  (0.04 )

$                  (0.54 )

$                  (0.10 )

Weighted average shares outstanding:





Basic and diluted      

71,907,952

39,391,382

64,779,930

39,207,325



Dune Energy, Inc.

Consolidated Statements of Cash Flows

(Unaudited)





Nine months

ended

September 30, 2013

Nine months

ended

September 30, 2012

CASH FLOWS FROM OPERATING ACTIVITIES



Net loss

$      (34,917,259 )

$        (4,107,631 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:



Depletion, depreciation and amortization             

13,144,822

10,198,260

Amortization of deferred financing costs             

604,018

555,322

Stock-based compensation    

1,763,135

1,306,197

Loss on settlement of asset retirement obligation liability



951,094

Accretion of asset retirement obligation              

1,208,196

1,096,317

Impairment of oil and gas properties     

22,250,000



Remediation costs    

4,586,000



Unrealized loss (gain) on derivative instruments

1,088,427

(1,331,092 )

Changes in:



Accounts receivable     

(2,223,214 )

1,256,952

Prepayments and other assets    

4,768,845

1,847,376

Payments made to settle asset retirement obligations             

(196,314 )

(2,082,624 )

Accounts payable and accrued liabilities  

9,266,089

2,192,585

NET CASH PROVIDED BY OPERATING ACTIVITIES               

21,342,745

11,882,756

CASH FLOWS FROM INVESTING ACTIVITIES



Cash investment in proved and unproved properties  

(40,435,570 )

(19,126,544 )

Decrease in restricted cash               



17,184

Purchase of furniture and fixtures    

(146,963 )

(95,233 )

Decrease (increase) in other assets 

(983,647 )

313,858

NET CASH USED IN INVESTING ACTIVITIES            

(41,566,180 )

(18,890,735 )

CASH FLOWS FROM FINANCING ACTIVITIES



Proceeds from sale of common stock              

20,000,000



Common stock issuance costs         

(233,516 )



Payments on short-term debt            

(1,623,541 )

(4,557,857 )

Increase in long-term debt issuance costs     

(116,617 )

(198,924 )

Payments on long-term debt             

(19,000,000 )

(3,000,000 )

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES            

(973,674 )

(7,756,781 )

NET CHANGE IN CASH BALANCE               

(21,197,109 )

(14,764,760 )

Cash balance at beginning of period    

22,793,916

20,393,672

Cash balance at end of period

$         1,596,807

$         5,628,912

SUPPLEMENTAL DISCLOSURES



Interest paid         

$         1,837,444

$         2,094,165

Income taxes paid               





NON-CASH INVESTING AND FINANCIAL DISCLOSURES



Accrued interest converted to long-term debt               

$         4,994,572

$         4,360,073

Non-cash investment in proved and unproved properties in accounts payable     



1,794,071

Revision to asset retirement obligation

4,820,851



SOURCE Dune Energy, Inc.


Copyright 2013 PR Newswire
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