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Recovery Energy Reports Third Quarter Financial Results and Provides Operations Update



Recovery Energy Reports Third Quarter Financial Results and Provides
Operations Update

Company-Operated Wattenberg Drilling Program Expected to Commence in Early
2014

DENVER, Nov. 14, 2013 (GLOBE NEWSWIRE) -- Recovery Energy, Inc. (Nasdaq:RECV),
an oil and gas exploration and production company focused on development in
the Wattenberg field and surrounding areas of the Denver-Julesburg (DJ) Basin
where it holds 112,000 net acres, reported its financial results for the
quarter ended September 30, 2013, and provided an operations update.

"The third quarter brought beneficial executive management changes and a
subsequent review of near-term oil E&P targets on our 112,000 net acre
leasehold position in the DJ Basin. We were pleased to recently complete the
Anderson 32-2 well remediation and Muddy 'J' formation workover in our Silo
East Prospect, creating a proof-of-concept completion program that sets up
several potential offsets to the Anderson well. We expect to drill two
locations there by the end of the first quarter," said A. Bradley Gabbard,
Chief Operating Officer and Chief Financial Officer. "Our new President, Avi
Mirman, with 20 years of experience in the investment banking and securities
industry including in the oil and gas sector, is focused on financing
unconventional E&P development of our two primary Wattenberg prospects. Avi
has brought a renewed excitement to the Board and the entire Recovery Energy
team."

"I am pleased to report forward momentum on both of our Wattenberg prospects,
where we are in the good company of many fine operators that continue to
report successful projects," said Mirman. Mirman also noted that "we are
currently participating in the drilling of one horizontal well in our North
Wattenberg Prospect that has been drilled to total depth, and is expected to
be completed late this year. We expect that our North Wattenberg property will
be fully developed by the end of 2014, and we are also planning on operating a
7 to 9 well program in our de-risked South Wattenberg Prospect and expect to
commence the drilling of the first two horizontal wells in this program,
targeting the Niobrara and Codell horizons, in the first quarter of 2014.

"I commend the team on the substantial progress made this quarter, and look
forward to gaining significant traction in both conventional and
unconventional drilling activity for Recovery Energy in the DJ Basin in the
months ahead," concluded Mirman.

Operations Highlights:

  * Wattenberg North Prospect - Horizontal non-operated well participation in
    Richter #34M-203, immediately adjacent to the company's acreage, was
    drilled from a pad operated by leasehold neighbor, PDC Energy, and targets
    the Niobrara "B" Bench and Codell formations. The Richter 34M-203 was
    drilled to a total depth of 11,812 feet, and completion activities are
    scheduled to commence in late this year.
  * Wattenberg South Prospect - Increased net working interest participation
    in 320-acre South Wattenberg Prospect to 63%. The company also completed
    negotiations of a surface use agreement and commenced activities to permit
    the drilling of up to seven horizontal wells to test the Niobrara and
    Codell formations.
  * Silo East Prospect - Anderson 32-2 well remediation and workover has been
    successfully completed and sets up several potential offsets to the
    Anderson well, with two of up to a total of 12 field locations expected to
    be drilled by the end of the first quarter of 2014. Recovery Energy owns a
    50% interest in the 1,200 acre Silo East Prospect area, including a 50%
    interest in the Anderson 32-2 well.
  * Northern Colorado Acreage - An assessment of operations following Northern
    Colorado regional flooding in September confirmed none of the company's
    producing properties were affected and only one of its properties,
    operated by a third party operator, had any substantial downtime. Recovery
    Energy did not have any resultant significant interruptions of its
    revenues or unexpected material expenses.

Third Quarter Financial Results

For the quarter ended September 30, 2013, the Company reported revenues from
oil and gas operations of $1.09 million, as compared to $1.94 million for the
quarter ended September 30, 2012, a decrease of $0.85 million, or 44.81%.
Total costs and expenses for the quarter ended September 30, 2013 decreased to
$2.17 million compared from $3.18 million for the quarter ended September 30,
2012. This resulted in a net loss for the same period in 2013 and 2012 of
approximately $1.90 million and $2.84 million, respectively a decrease of
$0.94 million, or a 33% decrease in net loss.

Net cash used in operating activities was $1.56 million, compared to $2.75
million during the nine months ended September 30, 2012, a decrease of cash
used in operating activities of $1.19 million or 43%. Net cash used in
investing activities was $0.12 million, compared to net cash used in investing
activity of $3.27 million during the nine months ended September 30, 2012, a
decrease of cash used in investing activities of $3.15 million or 96%. Net
cash provided in financing activities was $1.06 million, compared to net cash
provided by financing activities of $4.01 million during the nine months ended
September 30, 2012, a decrease of $2.95 million, or 74%. Net change in cash
and cash equivalents for the nine months ended September 30, 2013 was a
decrease in cash of $0.62 million compared to a decrease in cash and cash
equivalent for the nine months ended September 30, 2012 of $2.01 million, a
decrease of $1.39 million, or 69.15%.

About Recovery Energy, Inc.

Recovery Energy, Inc. ("Recovery Energy") is a Denver-based independent oil
and gas exploration and production company that operates in the
Denver-Julesburg (DJ) Basin where it holds approximately 125,000 gross,
112,000 net acres. Recovery Energy's near-term E&P focus is to grow reserves
and production in its de-risked Wattenberg Field acreage targeting the
Niobrara benches and Codell Sandstone.

Forward Looking Statements

This press release may include or incorporate by reference "forward-looking
statements" as defined by the SEC, including statements, without limitation,
regarding the Company's expectations, beliefs, intentions or strategies
regarding the future. Such forward-looking statements relate to, among other
things the Company's: (1) proposed exploration and drilling operations, (2)
expected investments, production and revenue, and (3) the Company's growth
plans potential of its properties. These statements are qualified by important
factors that could cause the Company's actual results to differ materially
from those reflected by the forward-looking statements. Such factors include
but are not limited to: (1) the Company's ability to finance its continued
exploration and drilling operations, (2) positive confirmation of the
reserves, production and operating expenses associated with the Company's
properties; and (3) the general risks associated with oil and gas exploration
and development, including those risks and factors described from time to time
in the Company's reports and registration statements filed with the SEC.

 
RECOVERY ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
                                                    September 30, December 31,
                                                    2013          2012
Assets
Current assets:                                                    
Cash                                                $ 353,934     $ 970,035
Restricted cash                                     584,746       671,382
Accounts receivable (net of allowance of $50,000
and $50,000 at September 30, 2013 and December 31,  482,115       934,591
2012, respectively)
Prepaid assets                                      351,542       13,458
Total current assets                                1,772,337     2,589,466
                                                                   
Oil and gas properties (full cost method), at cost:                
Developed properties                                58,223,296    58,610,095
Undeveloped acreage, excluded from amortization     28,258,138    28,067,005
Wells in progress, excluded from amortization       180,153       193,515
Total oil and gas properties, at cost               86,661,587    86,870,615
                                                                   
Less accumulated depreciation, depletion,           (44,989,495)  (43,187,962)
amortization, and impairment
Total oil and gas properties, net                   41,672,092    43,682,653
                                                                   
Other assets:                                                      
Office equipment, net                               95,006        90,630
Deferred financing costs, net                       443,116       974,856
Restricted cash and deposits                        215,541       215,435
Total other assets                                  753,663       1,280,921
Total assets                                        $ 44,198,092  $ 47,553,040

 
 
RECOVERY ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
                                                 September 30,  December 31,
                                                 2013           2012
Liabilities and Shareholders' Equity
Current liabilities:                                             
Accounts payable                                 $ 771,275      $ 1,831,590
Commodity price derivative liability             40,955         --
Accrued expenses                                 1,684,030      1,411,016
Short term loans payable                         18,967,191     388,351
Convertible notes payable, net of discount       13,128,936     --
Convertible notes conversion derivative          1,150,000      --
liability
Total current liabilities                        35,742,387     3,630,957
                                                                 
Long term liabilities:                                           
Asset retirement obligation                      1,028,831      911,546
Term loans payable                               --             18,947,963
Convertible notes payable, net of discount       --             10,300,361
Convertible notes conversion derivative          --             1,680,000
liability
Total long-term liabilities                      1,028,831      31,839,870
                                                                 
Total liabilities                                36,771,218     35,470,827
                                                                 
Commitments and contingencies                                    
                                                                 
Shareholders' equity:                                            
Preferred stock, 10,000,000 authorized, none     --             --
issued and outstanding
Common stock, $0.0001 par value:100,000,000
shares authorized; 19,477,337 and 18,394,401     1,948          1,839
shares issued and outstanding as of September
30, 2013 and December 31, 2012, respectively
Additional paid in capital                       120,836,115    118,296,679
Accumulated deficit                               (113,411,189)  (106,216,305)
Total shareholders' equity                       7,426,874      12,082,213
Total liabilities and shareholders' equity       $ 44,198,092   $ 47,553,040

 
 
RECOVERY ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
                                                    
                      Three months ended September Nine months ended September
                      30,                          30,
                      2013           2012          2013           2012
                                                                   
Revenues                                                           
Oil sales             $ 1,003,745    $ 1,775,383    $ 3,320,083    $ 4,685,713
Gas sales              82,651         168,897       227,853        397,298
Operating fees         28,331         42,853        118,853        132,362
Realized gain (loss)
on commodity price     (43,551)       37,341        (23,661)       49,729
derivatives
Unrealized gain
(loss) on commodity    (20,000)       (130,000)    (20,000)        445,609
price derivatives
Total revenues         1,051,176      1,894,474     3,623,128      5,710,711
                                                                   
Costs and expenses                                                 
Production costs       318,322        397,793       877,623        1,033,635
Production taxes       102,919        198,781       380,958        561,278
General and            1,207,123      1,515,868     3,559,358      5,099,932
administrative
Depreciation,
depletion and          539,079        1,069,068     1,879,908      2,897,156
amortization
Impairment of          --             --            --             3,274,718
evaluated properties
Total costs and        2,167,443      3,181,510     6,697,847      12,866,719
expenses
                                                                   
Loss from operations   (1,116,267)    (1,287,036)   (3,074,719)    (7,156,008)
                                                                   
Other income           143            333           535            (372)
(expense)
Convertible notes
conversion derivative  700,000        600,000       670,000        700,000
gain (loss)
Interest expense      (1,485,022)    (2,149,931)    (4,790,700)    (6,320,919)
                                                                   
Net loss              $ (1,901,146)  $ (2,836,634) $ (7,194,884)  $
                                                                  (12,777,299)
Net loss per common
share Basic and       $ (0.09)       $ (0.16)       $ (0.38)       $ (0.72)
diluted
Weighted average
shares outstanding:    19,254,329     17,833,466    18,786,598     17,732,304
Basic and diluted

 
 
RECOVERY ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
                                               Nine months ended September 30,
                                               2013            2012
Cash flows from operating activities:                           
Net loss                                       $ (7,194,884)   $ (12,777,299)
Adjustments to reconcile net loss to net cash                   
used in operating activities:
Impairment provision, developed leases          --              3,274,718
Common stock issued for convertible note        830,660         686,934
interest
Common stock for services and compensation      1,293,315       1,773,658
Changes in the fair value of commodity price    20,000          (445,609)
derivatives
Amortization of deferred financing costs        531,739         1,504,751
Change in fair value of convertible notes       (670,000)       (700,000)
conversion derivative
Accretion of debt discount                      1,809,175       1,651,772
Depreciation, depletion, amortization and       1,873,002       2,897,156
accretion of asset retirement obligation
Changes in operating assets and liabilities:                    
Accounts receivable                             452,476         (433,567)
Restricted cash                                  86,636         (17,453)
Other assets                                    77,486          (21,294)
Accounts payable and other accrued expenses     (667,912)       (140,846)
Net cash used in operating activities          (1,558,307)      (2,747,079)
                                                                
Cash flows from investing activities:                           
Sale of oil and gas properties                  640,000         1,443,852
Additions to oil and gas properties             (303,814)       (436,023)
Drilling capital expenditures                   (429,678)       (4,278,785)
Other investing activities                      (25,081)        (3,112)
Net cash used in investing activities           (118,573)       (3,274,068)
                                                                
Cash flows from financing activities:                           
Proceeds from issuance of debt                  1,429,902       5,000,000
Repayment of debt                               (369,123)       (988,299)
Net cash provided by financing activities       1,060,779       4,011,701
                                                                
Change in cash and cash equivalents             (616,101)       (2,009,446)
Cash and cash equivalents at beginning of       970,035         2,707,722
period
Cash and cash equivalents at end of period      $ 353,934       $ 698,276

CONTACT: MDC GROUP
         Investor Relations:
         David Castaneda
         414.351.9758
        
         Media Relations:
         Susan Roush
         747.222.7012
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