SOURCE: PetroShare Corp.

PetroShare

November 15, 2017 07:00 ET

PetroShare Corp. Issues Third Quarter 2017 Financial Results

ENGLEWOOD, CO--(Marketwired - November 15, 2017) - PetroShare Corp. (OTCQB: PRHR), a Colorado-based oil and gas exploration and production company with operations in the Wattenberg Field of the Denver-Julesburg Basin, today provided its 2017 third quarter financial results.

Third Quarter 2017 Highlights

  • Revenues were $2.8 million for the three months ended September 30, 2017
  • Net loss was $2.0 million and Adjusted EBITDA was $1.3 million for the three months ended September 30, 2017 (see further discussion regarding the presentation of Adjusted EBITDA in "Use of Non-GAAP Financial Measures" below)

Third Quarter 2017 Financial Results

The following tables present a comparison of results of operations for the three and nine months ended:

     
Net Sales Volumes  Three Months Ended
9/30/2017
 Nine Months Ended
9/30/2017
Crude Oil (Bbls)  46,392  158,124
Natural Gas Liquids (Bbls)  15,985  36,562
Natural Gas (Mcf)  175,659  381,735
Sales Volumes: (BOE)  91,653  258,308
Average Daily Sales Volumes      
Daily sales volumes (BOE/day)  996  946
Product Price Received      
Crude Oil ($/Bbl)  $45.14  $45.06
Natural Gas Liquids ($/Bbl)  $16.14  $15.61
Natural Gas ($/Mcf)  $2.77  $2.78
Average Realized Price ($/BOE)  $30.97  $33.90
Per Unit Cost Information ($/BOE)
Lease Operating Exp.  $2.09  $2.40
Production Tax  $2.17  $2.33
DD&A Expense  $12.72  $12.27
Total G&A Expense  $16.52  $16.96
       

Crude oil, natural gas and NGL sales revenue was $2.8 million, for the three months ended September 30, 2017 compared to $0.1 million for the three months ended September 30, 2016. The revenue that we reported in the third quarter of 2017 came from the sale of crude oil, natural gas and NGLs produced primarily from horizontal wells in which we participated as a non-operator and which were placed in service primarily during the first quarter of 2017, and to a much lesser extent, the vertical wells that we acquired during 2016.

The Company's 2017 third quarter net loss totaled $2.0 million, or $(0.09) per diluted share compared to a net loss of $1.2 million or $(0.05) per diluted share in the year ago quarter. Adjusted EBITDA in the third quarter was $1,289,857 as compared to $(637,987) in the year ago quarter.

Important Cautions Regarding Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. The use of words such as "believes", "expects", "anticipates", "intends", "plans", "estimates", "should", "likely", "guidance" or similar expressions indicates a forward-looking statement. Forward-looking statements herein include statements regarding future transactions, plans and midstream issues. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management, and information currently available to management. The actual results could differ materially from a conclusion, forecast or projection in the forward-looking information. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. The identification in this press release of factors that may affect the Company's future performance and the accuracy of forward-looking statements is meant to be illustrative and by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Factors that could cause the Company's actual results to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: the success of the Company's exploration and development efforts; the price of oil and gas; worldwide economic situation; change in interest rates or inflation; willingness and ability of third parties to honor their contractual commitments; the availability of adequate midstream infrastructure, the Company's ability to raise additional capital, as it may be affected by current conditions in the stock market and competition in the oil and gas industry for risk capital; the Company's capital costs, which may be affected by delays or cost overruns; costs of production; environmental and other regulations, as the same presently exist or may later be amended; the Company's ability to identify, finance and integrate any future acquisitions; the volatility of the Company's stock price; and the other factors described in the "Risk Factors" sections of the Company's filings with the Securities and Exchange Commission, all of which are incorporated by reference in this release.

Reconciliation of Non-GAAP Financial Measures

We define adjusted EBITDA, a non-GAAP financial measure, as net (loss) adjusted to exclude the impact of the items set forth in the table below. We exclude those items because they can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures, and the method by which the assets were acquired. We believe that adjusted EBITDA is widely used in our industry as a measure of operating performance and may also be used by investors to measure our ability to meet debt covenant requirements. The following table presents a reconciliation of adjusted EBITDA to net (loss), its nearest GAAP measures.

 
PETROSHARE CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(unaudited)
         
    Three Months Ended September 30,
    2017   2016
Adjusted EBITDA:            
  Net (loss)   $ (2,031,072 )   $ (1,152,045 )
  Depletion, depreciation, and accretion     1,191,890       39,064  
  Stock-based compensation     397,205       378,870  
  Interest expense, net of interest income     1,731,834       96,124  
      Adjusted EBITDA   $ 1,289,857     $ (637,987 )
                 

Condensed Consolidated Financial Statements

Condensed consolidated financial statements are included below. Additional financial information, including footnotes that are considered an integral part of the condensed consolidated financial statements, can be found in PetroShare's Quarterly Report on Form 10-Q for the period ended September 30, 2017, which is available at www.sec.gov.

 
PETROSHARE CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
         
ASSETS   September 30,
2017
  December 31,
2016
Current assets:            
  Cash and cash equivalents   $ 719,091     $ 2,449,412  
  Other current assets     3,226,992       1,911,869  
    Total current assets     3,946,083       4,361,281  
             
Oil and gas properties and other equipment, net     28,698,193       13,610,203  
Property, plant and equipment, net     170,703       39,542  
Other assets     103,707       15,758  
             
    Total assets   $ 32,918,686     $ 18,026,784  
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Current liabilities     22,044,954       10,476,782  
             
Notes payable, net of issuance costs     3,288,251       5,005,308  
Asset retirement obligations     1,114,874       945,419  
Other liabilities     127,527       23,128  
    Total liabilities     26,575,606       16,450,637  
             
Shareholders' equity:            
  Common stock and paid-in capital     21,097,802       11,427,189  
  Accumulated deficit     (14,754,722 )     (9,851,042 )
Total shareholders' equity     6,343,080       1,576,147  
             
Total liabilities and shareholders' equity   $ 32,918,686     $ 18,026,784  
                 
     
PETROSHARE CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
     
    Nine Months Ended September 30,
    2017   2016
Cash flows from operating activities:            
  Net (loss)   $ (4,903,680 )   $ (2,793,052 )
  Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities:            
    Depletion, depreciation, and accretion     6,770,357       43,425  
    Stock-based compensation     1,127,950       1,093,854  
    Other, non-cash items     34,716       26,880  
    Changes in operating assets and liabilities     1,067,260       1,225,324  
    Net cash provided by (used in) operating activities     4,096,603       (403,569 )
             
Cash flows from investing activities:            
  Additions of property, plant and equipment     (79,886 )     (16,417 )
  Development of crude oil and natural gas properties     (8,082,911 )     (2,127,869 )
  Acquisitions of crude oil and natural gas properties - business combinations     -       (2,260,890 )
  Acquisitions of crude oil and natural gas properties     (3,003,339 )     (1,138,893 )
    Net cash used in investing activities     (11,166,136 )     (5,544,069 )
             
Cash flows from financing activities:            
  Equity financing activities     8,891,712       95,000  
  Debt financing activities     (3,552,500 )     3,937,815  
    Net cash provided by financing activities     5,339,212       4,032,815  
             
Net (decrease) in cash and equivalents     (1,730,321 )     (1,914,823 )
Cash and equivalents at beginning of period     2,449,412       3,011,291  
Cash and equivalents at end of period   $ 719,091     $ 1,096,468  
                 
 
PETROSHARE CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
         
    Three Months Ended September 30,   Nine Months Ended September 30,
    2017   2016   2017   2016
Crude oil, natural gas, and NGL revenues   $ 2,838,192     $ 87,157     $ 8,757,079     $ 87,157  
                         
Costs and expenses:                        
  Lease operating expenses     191,204       34,923       619,884       34,844  
  Production taxes, gathering and marketing     268,550       29,793       753,190       35,465  
  Exploration costs     708       14,740       67,382       17,440  
  Depletion, depreciation, and accretion     1,191,890       39,064       3,241,569       43,425  
  Plugging expense     -       33,847       23,123       33,847  
  Impairment of proved crude oil and natural gas properties     -       9,841       -       26,880  
  General and administrative     1,514,007       980,870       4,380,676       2,535,789  
    Total costs and expenses     3,166,359       1,143,078       9,085,824       2,727,690  
                         
Operating (loss)     (328,167 )     (1,055,921 )     (328,745 )     (2,640,533 )
                         
Other income (expense):                        
  Other income     28,948       33       29,194       534  
  Interest expense     (1,731,853 )     (96,157 )     (4,604,129 )     (153,053 )
    Total other (expense)     (1,702,905 )     (96,124 )     (4,574,935 )     (152,519 )
                         
Net (loss)   $ (2,031,072 )   $ (1,152,045 )   $ (4,903,680 )   $ (2,793,052 )
                         
Net (loss) per common share:                        
  Basic and diluted   $ (0.09 )   $ (0.05 )   $ (0.22 )   $ (0.13 )
                         
Weighted-average shares outstanding:                        
  Basic and diluted     22,577,417       21,878,553       22,270,291       21,798,185  

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