Dune Energy Reports Third Quarter 2013 Financial And Operating Results PR Newswire HOUSTON, Nov. 5, 2013 HOUSTON, Nov. 5, 2013 /PRNewswire/ --Dune Energy, Inc. (OTCBB:DUNR) 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 3^rd quarter of 2013 were down from the 2^nd 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) September30, December31, 2013 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 284,490,074 239,233,653 efforts accounting—proved Less accumulated depreciation, depletion, (49,172,275 ) (13,806,672 ) amortization and impairment Net oil and gas properties 235,317,799 225,426,981 Property and equipment, net of accumulated depreciation of $206,558 and 169,867 71,080 $256,380 Deferred financing costs, net of accumulated amortization of $1,375,079 and 1,941,052 2,428,453 $771,061 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 — 1,623,541 note 2) 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, 71,908 59,022 71,907,952 and 59,022,445 shares issued Treasury stock, at cost (63,810 and 1,056 (121,146 ) (1,914 ) shares) 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' $ 252,022,122 $ 266,460,871 EQUITY Dune Energy, Inc. Consolidated Statements of Operations (Unaudited) Three months Three months Nine months Nine months ended ended ended ended September30,2013 September30,2012 September30,2013 September30,2012 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 5,677,034 6,419,316 20,084,684 19,004,600 and production taxes Accretion of asset 402,732 365,439 1,208,196 1,096,317 retirement obligation Depletion, depreciation 5,183,118 926,277 13,144,822 10,198,260 and amortization General and administrative 2,924,299 2,117,447 8,641,758 7,541,041 expense Loss on settlement of asset retirement — 62,148 — 951,094 obligation liability Impairment of oil and 22,250,000 — 22,250,000 — gas properties Remediation costs 4,284,246 97,715 4,586,000 371,097 Total operating 40,721,429 9,988,342 69,915,460 39,162,409 expense Operating income (27,015,172 ) 3,452,028 (26,340,911 ) 779,886 (loss) Other income (expense): Other 82 2,715 774 16,417 income Interest expense (2,541,193 ) (2,419,864 ) (7,460,381 ) (7,201,331 ) Gain (loss) on derivative (809,439 ) (2,430,239 ) (1,116,741 ) 2,297,397 instruments Total other income (3,350,550 ) (4,847,388 ) (8,576,348 ) (4,887,517 ) (expense) 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 Nine months ended ended September30,2013 September30,2012 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 13,144,822 10,198,260 amortization Amortization of deferred financing 604,018 555,322 costs Stock-based compensation 1,763,135 1,306,197 Loss on settlement of asset — 951,094 retirement obligation liability Accretion of asset retirement 1,208,196 1,096,317 obligation Impairment of oil and gas 22,250,000 — properties Remediation costs 4,586,000 — Unrealized loss (gain) on 1,088,427 (1,331,092 ) derivative instruments 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 (196,314 ) (2,082,624 ) retirement obligations Accounts payable and accrued 9,266,089 2,192,585 liabilities NET CASH PROVIDED BY OPERATING 21,342,745 11,882,756 ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Cash investment in proved and (40,435,570 ) (19,126,544 ) unproved properties Decrease in restricted — 17,184 cash Purchase of furniture and (146,963 ) (95,233 ) fixtures Decrease (increase) in other (983,647 ) 313,858 assets NET CASH USED IN INVESTING (41,566,180 ) (18,890,735 ) ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of common 20,000,000 — stock Common stock issuance (233,516 ) — costs Payments on short-term (1,623,541 ) (4,557,857 ) debt Increase in long-term debt issuance (116,617 ) (198,924 ) costs Payments on long-term (19,000,000 ) (3,000,000 ) debt NET CASH PROVIDED BY (USED IN) (973,674 ) (7,756,781 ) FINANCING ACTIVITIES NET CHANGE IN CASH (21,197,109 ) (14,764,760 ) BALANCE Cash balance at beginning of 22,793,916 20,393,672 period 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 $ 4,994,572 $ 4,360,073 long-term debt Non-cash investment in proved and unproved properties in accounts — 1,794,071 payable Revision to asset retirement 4,820,851 — obligation SOURCE Dune Energy, Inc. Website: http://www.duneenergy.com
Dune Energy Reports Third Quarter 2013 Financial And Operating Results
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