SOURCE: American Eagle Energy Corporation

November 13, 2013 16:05 ET

American Eagle Energy Reports Results for Third Quarter 2013

DENVER, CO--(Marketwired - November 13, 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 Adjusted EBITDA for the third quarter ended September 30, 2013. The Company intends to file its Quarterly Report on Form 10-Q with the U.S. Securities and Exchange Commission by the end of the day tomorrow, Thursday, November 14, 2013.

Third Quarter 2013 Highlights

  • American Eagle reports record quarterly oil production of 125,343 barrels of oil equivalent ("BOE"), or an average of 1,362 barrels of oil equivalent per day ("BOEPD"). Third quarter production was up 6% from 117,164 BOE (1,288 BOEPD) quarter-over-quarter for the period ended June 30, 2013 ("QOQ") and up 232% from 37,792 BOE (411 BOEPD) year-over-year for the quarter ended September 30, 2012 ("YOY");
  • Record quarterly oil sales of $11.6 million, up 12% QOQ and up 305% YOY;
  • Record Adjusted EBITDA* of $7.2 million or $0.14 per share (basic and diluted);
  • Adjusted Cash Flow* of $6.0 million or $0.11 per share (basic and diluted); and
  • Adjusted Income* of $3.7 million or $0.07 per share (basic and diluted).

* Non-GAAP financial measure. Please see Adjusted EBITDA, Adjusted Cash Flow, and Adjusted Income descriptions and tables later in this earnings release for a reconciliation of these measures to their nearest comparable GAAP measure.

Management Comments

Brad Colby, President and CEO of American Eagle, said, "We are pleased to announce our third quarter results which include both record oil production and EBITDA. We have successfully closed the first part of our previously announced acquisition with capital from our Morgan Stanley credit facility as well as successfully closing on a $27 million equity offering. Our current two rig program is working to increase production and develop reserves in the proved area of Spyglass with infill drilling in the Three Forks and Middle Bakken zones and to expand the current proved area to the west and south with a combination of Middle Bakken and Three Forks wells. We look forward to continued increases in production, cash flow and proved reserves."

Third Quarter 2013 Financial and Operational Results

For the quarter ended September 30, 2013, the Company had oil sales of $11.6 million, which represented an increase of 12% from $10.4 million in oil sales for the second quarter ended June 30, 2013 and an increase of 305% from $2.9 million for the third quarter ended September 30, 2012. This increase in revenue is due primarily to production from 25 gross (7.94 net) operated wells in the Spyglass Project area producing in the Three Forks and Bakken formations as of September 30, 2013, compared to production from 20 gross (6.41 net) operated wells at the end of June 30, 2013 and 5 gross (0.85 net) operated wells as of September 30, 2012. Oil represented 99.5% of revenue and 98.4% of production during the third quarter 2013.

Adjusted EBITDA for third quarter 2013 was $7.2 million, up 12% from $6.4 million for the second quarter ended June 30, 2013 and up over 464% from $1.3 million for the third quarter ended September 30, 2012. The increase in Adjusted EBITDA from the most recent quarter was driven mostly by higher revenues from increased production which was up 6% QOQ and improved realized pricing which was also up 6% QOQ. Lease operating expenses for the quarter ended September 30, 2013 were higher than normal due to routine workover expenses that include changing out downhole pumps, as a number of the Company's operated wells are now approaching their second year of production, and continuation of road and location repairs that were necessary as a result of extreme weather conditions experienced during the first half of the year. American Eagle added five gross (1.53 net) operated wells during the quarter ended September 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. On a YOY basis, the higher production and revenue helped to leverage operating expenses as general and administrative expenses, excluding stock-based compensation, decreased from $21.52 per BOE to $12.01 per BOE. General and administrative expenses grew quarter-over-quarter due to higher legal and accounting fees during the period as the Company contemplated various transactions that included an acquisition that was closed in early October 2013. Adjusted EBITDA per BOE for the quarter ended September 30, 2013 was $57.36, compared to $54.99 per BOE for the second quarter ended June 30, 2013 and $33.71 per BOE for the third quarter ended September 30, 2012.

  Three Months Ended  
  Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31,   Sep. 30,  
  2013   2013   2013   2012   2012  
Crude Oil Revenues ($000s) $11,585   $10,366   $7,628   $4,920   $2,874  
Natural Gas Revenues ($000s) $26   $4   $1   $3   $1  
Natural Gas Liquids Revenues ($000s) $28   $0   $0   $0   $0  
                          
Net Production:                         
Crude Oil (Barrels)  123,343    117,000    87,440    60,526    37,719  
Crude Oil Mix  98 %  100 %  100 %  100 %  100 %
Natural Gas (Mcf)  6,333    981    187    759    435  
Natural Gas Liquids (Barrels)  944    0    0    0    0  
                          
Total Net Production (BOE)  125,343    117,164    87,471    60,653    37,792  
Quarter-Over-Quarter Increase  7 %  34 %  44 %  60 %  71 %
                          
Average Daily Production (BOEPD)  1,362    1,288    972    659    411  
Quarter-Over-Quarter Increase  6 %  32 %  47 %  60 %  69 %
                          
Average Sales Prices:                         
Crude Oil Per Barrel $93.92   $88.60   $87.23   $81.29   $76.19  
Effect of Settled Oil Derivatives Per Barrel $0.94   $0.00   $0.00   $0.00   $0.00  
Crude Oil Net of Settled Derivatives Per Barrel $94.86   $88.60   $87.23   $81.29   $76.19  
Natural Gas Per Mcf $4.09   $4.39   $5.70   $3.43   $3.06  
Natural Gas Liquids Per Barrel $29.67   $0.00   $0.00   $0.00   $0.00  
Realized Price Per BOE $93.78   $88.51   $87.21   $81.16   $76.08  
                          
Average Per BOE:                         
Lease Operating Expenses $14.09   $15.31   $9.27   $13.06   $13.67  
Production Taxes $10.28   $9.89   $9.58   $8.55   $7.18  
G&A Expenses, Excluding Stock-Based Compensation $12.04   $8.31   $12.23   $19.39   $21.52  
Total $36.41   $33.51   $31.08   $41.00   $42.37  
                          
Adjusted EBITDA per BOE $57.36   $54.99   $56.13   $40.16   $33.71  

Well Development Activity

During the third quarter 2013, American Eagle added five gross operated wells to production in its Spyglass Project area in northwestern Divided County, North Dakota, four of which are producing from the Three Forks formation. The fifth well is the first resulting from the Carry Agreement that was announced in August 2013, in which its JV partner pays 100% of the Company's working interest share of well development costs for up to five Middle Bakken wells, all of which are operated by American Eagle.

The following operated wells were added to production during the month of September 2013 for which the Company has received at least 30 days of cumulative production:

     30 Day IP Rate Lateral Length Approximate Infill Number
Well  Formation BOEPD Ft DSU Acreage in DSU
            
Elbert State 16-36N  Three Forks 344 5419 800 2nd
            
            
Roberta 1-3  Three Forks 408 9615 1280 3rd
            
            
Lester 16-33  Three Forks 226 5580 800 2nd
            
            
Albert 16-33S  Three Forks 357 9928 1200 4th
            

The Lauren 2-3NBK well is the fifth well that began producing the last day of the quarter and is cleaning up, but has not yet produced for a cumulative 30 days of production. It is part of the Carry Agreement.

In addition to the wells detailed above, American Eagle has spud six additional wells, three of which are part of the Carry Agreement targeting the Middle Bakken formation and three are part of the Farm-Out Agreement, two of which are targeting the Middle Bakken formation and one targeting the Three Forks formation. The Company is in the process of completing these wells and expects to provide further details in the next operational update.

Operated Well Development Guidance

American Eagle began drilling with a second rig during late September and currently has two rigs drilling. The Company plans to continue drilling with two rigs through the end of first quarter 2014. American Eagle plans to continue operating with a balanced approach to capital spending utilizing one to two rigs to develop additional operated wells in the Spyglass Project area during 2014.

The operated well development plan is unchanged from the previous operations update on October 16, 2013, which for the second half of 2013 includes a total of 14 gross wells. Specifically, the plan consists of the five Middle Bakken wells that are part of the five well Carry Agreement with its JV partner, six wells (three Middle Bakken and three Three Forks wells) that are part of the six well Farm-Out Agreement with its JV partner, and three additional wells (two Three Forks and one Middle Bakken) that are not part of either agreement.

The Company anticipates that its capital spending related to operated wells will approximate $19 million for the second half of 2013. Approximately $8.7 million was spent on operated wells during the quarter ended September 30, 2013 and anticipates spending approximately $10.3 million during the fourth quarter ended December 31, 2013.

American Eagle's development plan for 2014 remains unchanged from the operations update on October 16, 2013. The Company plans to drill and complete 18 gross (approximately ten net) wells during 2014, at an estimated aggregate cost to the Company of approximately $65 million. American Eagle estimates the cost of drilling and completing each long-lateral well, on 1,280-acre drill spacing units ("DSUs") to be approximately $6.8 million per well, and the cost of drilling and completing each short-lateral well, on correctional sections south of the Canadian border on 800-acre DSUs, to be approximately $6.2 million per well.

Production Guidance

The Company estimates that average production for the fourth quarter ended December 31, 2013, should be approximately 2,100 BOEPD, which is unchanged from the operations update on October 16, 2013. This includes the previously announced acquisition of approximately 9,700 net acres with approximately 750 BOEPD of production, which closed on October 2, 2013. American Eagle anticipates an increase in volumes as completed wells are added to production, which should be partially offset from wells that may be shut-in as adjacent wells are fracture stimulated.

Liquidity and Shares Outstanding

As of September 30, 2013, American Eagle had approximately $19.0 million in cash and $68.0 million total debt outstanding. In early October 2013, the Company completed the sale of 15,765,794 shares of its common stock at $1.70 per share for gross proceeds of approximately $26.8 million and net proceeds of approximately $25.0 million. American Eagle also closed on the first part of the previously announced acquisition in its Spyglass Project area. For a gross purchase price of $47 million, or $45 million in cash after purchase price adjustments, the Company acquired approximately 9,700 net acres in Spyglass with production of approximately 750 BOEPD. American Eagle financed the acquisition with $40 million that was previously committed under the Senior Credit Facility with Morgan Stanley and $5 million from cash on hand. Pro forma for the common stock offering, additional debt financing and acquisition, the Company's cash balance would be approximately $39.0 million, with $108.0 million of outstanding debt and 70.9 million shares of common stock outstanding.

American Eagle believes that its cash on hand, cash flow from operations, proceeds from its recently completed share issuance, proceeds from its credit facility and additional availability under the credit facility should adequately fund its two-rig drilling program.

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 income, dividend income, interest expense, income taxes, depletion, depreciation, and amortization, non-cash expenses related to stock-based compensation, impairment of oil and gas properties, loss on early extinguishment of debt, and unrealized loss (gain) from mark-to-market on derivatives 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  
   September 30,   June 30,   March 31,   December 31,   September 30,  
   2013   2013   2013   2012   2012  
                           
Net income (loss)   ($936,237 ) $2,637,484   $355,347    ($9,679,580 ) $892,194  
Less: Interest income   (1,700 )  (1,472 )  (3,156 )  (1,566 )  (1,895 )
Less: Dividend income   (16,697 )  (16,982 )  (17,240 )  (17,499 )  (17,425 )
Add: Interest expense   1,315,865    414,797    418,340    -    -  
Add: Income tax expense (benefit)   (646,123 )  1,192,691    1,092,092    (594,081 )  (386,160 )
Add: Depletion, depreciation and amortization   2,524,039    2,116,378    1,274,923    1,713,556    579,434  
Add: Stock-based compensation   302,842    287,172    237,348    260,922    207,790  
Add: Impairment of oil and gas properties   -    -    1,525,027    10,631,345    -  
Add: Loss on early extinguishment of debt   3,713,972    -    -    -    -  
Add: Unrealized loss on derivatives   934,287    (186,754 )  27,507    122,651    -  
Adjusted EBITDA  $7,190,248   $6,443,314   $4,910,188   $2,435,748   $1,273,938  

Adjusted Cash Flow

In addition to reporting net income (loss) as defined under GAAP, American Eagle also presents cash flow after paying interest expense ("Adjusted Cash Flow"), which is a non-GAAP performance measure. Adjusted Cash Flow consists of Adjusted EBITDA 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 Cash Flow 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 Cash Flow to manage its business, including in preparing its annual operating budget and financial projections. Management does not view Adjusted Cash Flow 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 Adjusted EBITDA to Adjusted Cash Flow for the periods presented:

  Three Months Ended
  September 30,   June 30,   March 31,   December 31,  September 30,
  2013   2013   2013   2012  2012
                       
Adjusted EBITDA (1) $7,190,248   $6,443,314   $4,910,188   $2,435,748  $1,273,938
Less: Interest expense  (1,315,865 )  (414,797 )  (418,340 )  -   -
Add: Amortization of deferred financing  161,758    66,944    45,231    -   -
Adjusted Cash Flow $6,036,141   $6,095,461   $4,537,079   $2,435,748  $1,273,938
                       
Adjusted Cash Flow per share - basic $0.11   $0.12   $0.09   $0.05  $0.03
Adjusted Cash Flow per share - diluted $0.11   $0.12   $0.09   $0.05  $0.03
                       
Weighted average shares - basic  52,894,433    50,068,346    49,890,568    45,842,782   45,842,782
Weighted average shares - diluted  54,930,378    51,968,872    51,558,334    46,235,033   46,235,033
                       
(1) See previous table for reconciliation of net income (loss) to Adjusted EBITDA.

Adjusted Income

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, loss on early extinguishment of debt, and the effect of unrealized loss (gain) 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
  September 30,   June 30,   March 31,  December 31,   September 30,
  2013   2013   2013  2012   2012
                       
Net income (loss)  ($936,237 ) $2,637,484   $355,347   ($9,679,580 ) $892,194
Add: Impairment of oil and gas properties  -    -    1,525,027   10,631,345    -
Add: Loss on early extinguishment of debt  3,713,972    -    -   -    -
Add: Unrealized loss on derivatives  934,287    (186,754 )  27,507   122,651    -
Adjusted Income $3,712,022   $2,450,730   $1,907,881  $1,074,416   $892,194
                       
Adjusted Income per share - basic $0.07   $0.05   $0.04  $0.02   $0.02
Adjusted Income per share - diluted $0.07   $0.05   $0.04  $0.02   $0.02
                       
Weighted average shares - basic  52,894,433    50,068,346    49,890,568   45,842,782    45,842,782
Weighted average shares - diluted  54,930,378    51,968,872    51,558,334   46,235,033    46,235,033

Conference Call

American Eagle will host a conference call on Thursday, November 14, 2013 at 10:00 a.m. Eastern Time (8:00 a.m. Mountain Time) to discuss financial and operational results for the quarter.

American Eagle Energy Corporation 3Q 2013 Financial and Operational Results Conference Call
Date:   Thursday, November 14, 2013
Time:   10:00 a.m. Eastern Time
   9:00 a.m. Central Time
   8:00 a.m. Mountain Time
   7:00 a.m. Pacific Time
Webcast:   Live and rebroadcast over the Internet at American Eagle website
Website:   www.americaneagleenergy.com
Telephone Dial-In:   877-407-9171 (toll-free) and 201-493-6757 (international)
   
Telephone Replay:   Available through Thursday, November 21, 2013
   877-660-6853 (toll-free) and 201-612-7415 (international)
   Passcode: 13572777

ABOUT AMERICAN EAGLE ENERGY CORPORATION

American Eagle Energy Corporation is an independent exploration and production operator focused on acquiring acreage and developing wells that target the Bakken and Three Forks shale oil formations in the Williston Basin of North Dakota and Montana. 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 BALANCE SHEETS  
(UNAUDITED)  
   
           
  September 30,
2013
    December 31,
2012
 
Current assets:              
  Cash $ 19,038,092     $ 19,057,727  
  Trade receivables   29,992,585       24,750,444  
  Income tax receivable   223,167       190,000  
  Prepaid expenses   135,019       133,067  
  Derivative asset   118,013       -  
    Total current assets   49,506,876       44,131,238  
Equipment and leasehold improvements, net of accumulated depreciation and amortization of $296,628 and $227,067, respectively   146,617       201,329  
Oil and gas properties, full-cost method - subject to amortization, net of accumulated depletion of $8,760,276 and $2,978,403, respectively   99,798,033       43,291,543  
Oil and gas properties, full-cost method - not subject to amortization   2,908,972       7,349,994  
Marketable securities   1,030,897       1,049,859  
Other assets   5,017,689       890,149  
Total assets $ 158,409,084     $ 96,914,112  
Current liabilities:              
  Accounts payable $ 49,206,615     $ 54,473,721  
  Amounts due to working interest partners   -       4,956,817  
  Current derivative liability   -       122,651  
  Current portion of long-term debt   780,000       5,931,003  
    Total current liabilities   49,986,615       65,484,192  
Asset retirement obligation   886,020       441,609  
Noncurrent portion of long-term debt   67,220,000       10,068,997  
Noncurrent derivative liability   893,052          
Deferred taxes   5,238,543       3,519,494  
Total liabilities   124,224,230       79,514,292  
Stockholders' equity:              
  Common stock, $.001 par value, 194,444,444 shares authorized, 55,068,346 and 46,068,346 shares outstanding   55,068       46,068  
  Additional paid in capital   41,790,670       27,094,941  
  Accumulated other comprehensive loss   (8,378 )     (32,091 )
  Accumulated deficit   (7,652,506 )     (9,709,098 )
Total stockholders' equity   34,184,854       17,399,820  
Total liabilities and stockholders' equity $ 158,409,084     $ 96,914,112  
               
               
               
AMERICAN EAGLE ENERGY CORPORATION  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(UNAUDITED)  
   
   
  For the Three Month Period   For the Nine-Month Period  
  Ended September 30,   Ended September 30,  
  2013     2012   2013     2012  
Oil and gas sales $ 11,638,900     $ 2,875,190   $ 29,637,600     $ 5,791,442  
Operating expenses:                            
  Oil and gas production costs   3,054,953       788,016     7,657,009       1,889,526  
  General and administrative   1,812,249       1,021,026     4,379,911       3,066,726  
  Depletion, depreciation and amortization expense   2,524,039       579,434     5,915,340       1,146,631  
  Impairment of oil and gas properties, subject to amortization   -       -     1,525,027       -  
    Total operating expenses   7,391,241       2,388,476     19,477,287       6,102,883  
Total operating income (loss)   4,247,659       486,714     10,160,313       (311,441 )
Interest income   1,700       1,895     6,328       6,769  
Dividend income   16,697       17,425     50,919       46,155  
Interest expense   (1,315,865 )     -     (2,149,002 )     (706 )
Loss on early extinguishment of debt   (3,713,972 )     -     (3,713,972 )     -  
Realized gain on derivatives   115,708       -     115,708       -  
Unrealized loss on derivatives   (934,287 )     -     (775,040 )     -  
Income (loss) before taxes   (1,582,360 )     506,034     3,695,254       (259,223 )
Income tax benefit (expense)   646,123       386,160     (1,638,660 )     645,929  
Net income (loss) $ (936,237 )   $ 892,194   $ 2,056,594     $ 386,706  
                             
                             
Net income (loss) per common share:                            
  Basic $ (0.02 )   $ 0.02   $ 0.04     $ 0.01  
  Diluted $ (0.02 )   $ 0.02   $ 0.04     $ 0.01  
                             
                             
Weighted average number of shares outstanding                            
  Basic   52,894,433       45,842,782     50,962,119       45,775,211  
  Diluted   52,894,433       46,235,033     52,899,571       46,480,412  
                               
                               
                               
AMERICAN EAGLE ENERGY CORPORATION  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(UNAUDITED)  
   
   
  For the Nine-Month Periods  
  Ended September 30,  
  2013     2012  
Cash flows provided by operating activities:              
Net income $ 2,056,594     $ 386,706  
  Adjustments to reconcile net income (loss) to net cash provided by operating activities:              
  Stock based compensation   827,362       561,563  
  Depletion, depreciation and amortization   5,915,340       1,146,631  
  Accretion of discount on asset retirement obligation   35,523       2,435  
  Amortization of deferred financing costs   273,933       -  
  Provision for deferred income tax expense (benefit)   1,661,938       (280,936 )
  Loss on early extinguishment of debt   3,713,972       -  
  Impairment of oil and gas properties   1,525,027       -  
  Net losses on derivatives   652,388       -  
  Foreign currency transaction gains   2,104       (10,237 )
  Changes in operating assets and liabilities:              
    Increase in prepaid expense   (2,466 )     (60,284 )
    Increase in trade receivables   (3,031,789 )     (4,126,492 )
    Increase in income taxes receivable   (33,167 )     (276,744 )
    Increase in deposits   -       (3,304 )
    Increase in accounts payable   11,654,159       18,459,131  
    Decrease in income taxes payable   -       (1,460,137 )
Net cash provided by operating activities   25,250,918       14,338,332  
Cash flows used for investing activities:              
  Proceeds from the sale of oil and gas properties   -       478,565  
  Proceeds from the conveyance of working interests   -       3,789,989  
  Additions to oil and gas properties   (80,431,828 )     (18,814,668 )
  Additions to equipment and leasehold improvements   (14,849 )     (227,706 )
  Increase (decrease) in amounts due to Carry Agreement partner   (4,956,817 )     7,665,725  
  Purchase of certificates of deposit   -       (50,000 )
  Purchase of marketable securities   -       (51,301 )
Net cash used for investing activities   (85,403,494 )     (7,209,396 )
Cash flows provided by financing activities:              
  Proceeds from issuance of stock   13,877,367       110,000  
  Proceeds from exercise of stock options   -       34,625  
  Proceeds from issuance of long-term debt   67,349,190       -  
  Repayment of debt   (21,131,197 )     -  
Net cash provided by financing activities   60,095,360       144,625  
               
               
               
               
               
               
    For the Nine-Month Periods  
    Ended September 30,  
    2013       2012  
               
               
Effect of exchange rate changes on cash   37,581       -  
Net change in cash   (19,635 )     7,273,561  
Cash beginning of period   19,057,727       12,151,309  
Cash end of period $ 19,038,092     $ 19,424,870  
               
               

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