Rooster Energy Ltd.

Rooster Energy Ltd.

August 29, 2014 22:00 ET

Rooster Energy Ltd. Announces Second Quarter 2014 Financial and Operating Results and Provides Update on Debt Financing

CALGARY, ALBERTA--(Marketwired - Aug. 29, 2014) - ROOSTER ENERGY LTD. (the "Company") ( (TSX VENTURE:COQ) is pleased to announce that it has filed on SEDAR its unaudited interim financial statements, and related management discussion and analysis ("MD&A") for the three months ended June 30, 2014 ("Q2 2014"). Selected financial and operational information for Q1 2014 and subsequent thereto is contained in the below summary and should be read in conjunction with the financial statements and related MD&A.

Robert P. Murphy, President & Chief Executive Officer, comments that "production volumes in Q2 2014 averaged 1,310 barrels of oil equivalent per day ('BOEPD'), compared to 1,208 BOEPD in Q1 2014. During the second quarter, the Company resumed production of our wells at High Island 141 and installed compression at Grand Isle 70, which led to the sequential increase in production. The Company generated EBITDAX of $3.3 million in Q2 2014, compared to $3.8 million in Q1 2014.

"In July, 2014, the Company announced its intention to commence a private offering of US$100 million of senior secured notes. We have received considerable interest in the offering and anticipate finalizing terms of a financing in the next 30 days. Proceeds from a financing, combined with the proposed new revolving credit facility, will enable Rooster to execute on its 2014-2015 drilling and recompletion program. Concurrent with the closing of the proposed financing and revolving credit facility, we intend to consummate the acquisitions of Cochon Properties, LLC ('Cochon') and Morrison Well Services, LLC ('Well Services') previously approved by shareholders. The acquisition of Cochon and Well Services will create a vertically- integrated 'cradle to grave' oil and gas operator that enables us to continue our strategy of near infrastructure exploration and development with the added ability to dismantle the infrastructure in a safe, timely and cost efficient manner."


For the three months ended For the six months ended
June 30, June 30,
2014 2013 2014 2013
Oil (Bbl) 61,640 76,498 119,952 151,063
NGL (Bbl) 5,263 8,816 10,564 18,691
Natural gas (Mcf) 313,772 752,227 584,318 1,698,390
Total (BOE/day) (a) 1,310 2,315 1,259 2,502
Revenue $ 7,877,628 $ 10,731,229 $ 15,571,769 $ 22,289,783
Total costs and expenses 6,377,426 7,103,388 11,408,336 19,008,695
Operating income (loss) 1,500,202 3,627,841 4,163,433 3,281,088
Unrealized gain (loss) on financing warrants (1,038,000 ) (1,515,000 ) (287,000 ) (1,464,000 )
Finance expenses (b) (3,518,414 ) (1,295,045 ) (5,230,963 ) (2,564,765 )
Income (loss) before tax expense (3,056,212 ) 817,796 (1,354,530 ) (747,677 )
Deferred tax expense (recovery) (312,000 ) 759,000 304,000 (85,000 )
Income (loss) (2,744,212 ) 58,796 (1,658,530 ) (662,677 )
Income (loss) per share
Basic (0.03 ) 0.00 (0.02 ) (0.01 )
Diluted (0.03 ) 0.00 (0.02 ) (0.01 )
Capital expenditures $ 573,844 $ 9,677,716 $ 2,562,337 $ 9,920,031
EBITDAX (c) $ 3,319,191 $ 6,186,928 $ 7,083,126 $ 13,171,150
(a) Gas volumes are converted to BOE on the basis of 6 Mcfe per 1 barrel.
(b) Finance expense includes accretion for asset retirement obligations.
(c) EBITDAX is a non-IFRS measure commonly used in the oil and gas industry. Such measures do not conform to IFRS and may not be comparable to those reported by other companies nor should they be viewed as an alternative to other measures of financial performance calculated in accordance with IFRS. The company defines EBITDAX as net income before finance expense, taxes, depreciation, amortization, accretion, exploration and evaluation, bad debt, impairments, stock-based compensation, and the non-cash portion of plug and abandonment expense.

Extension of Membership Interest Contribution Agreements

On March 7, 2014, the Company announced that it entered into two separate Membership Interest Contribution Agreements to acquire all of the ownership of Morrison Well Services, LLC ("Well Services") and Cochon Properties, LLC ("Cochon") which acquisitions were subsequently approved by the shareholders on May 16, 2014. The Company previously entered into agreements with the members of Cochon and Well Services to extend the time to close its acquisitions of Well Services and Cochon from July 7, 2014 until August 15, 2014. The Company is pleased to announce that it has entered into subsequent agreements to extend the time to close its acquisitions of Well Services and Cochon until September 30, 2014. It is expected that the acquisitions will close on or about the same time as the financing but the acquisitions are not conditioned upon the financing.

Extension of Limited Consent

In order to enter into the membership interest contribution agreements for Well Services and Cochon, the Company obtained the consent of the holders of its current first priority secured notes in the amount of US$22.5 million pursuant to a limited consent and forbearance agreement dated March 7, 2014 (the "Limited Consent"). Therein, the holders of the notes and the Company acknowledged that at the end of fourth quarter of 2013, the Company was in existing and continuing default of the collateral coverage ratio covenant of the notes (the "Specified Default") and in order to allow for the acquisition of Cochon and Well Services, the Limited Consent provided that, the holders of the notes will forbear from exercising certain rights and remedies under its loan agreements in respect of the Specified Default until, among other things, payment in full of the obligations owed by the Company to the holders or July 7, 2014. The Company entered into a first amended Limited Consent agreement with the holders extending from July 7, 2014 to August 31, 2014 the date of the Limited Consent. On August 29, 2014, the Company entered into a second amended Limited Consent agreement with the holders of the notes extending the termination date of the Limited Consent to September 30, 2014.


Rooster Energy Ltd. is a Houston, Texas, USA, based independent oil and natural gas exploration and production company focused on the development of resources in the shallow waters of the Gulf of Mexico. At June 30, 2014, our primary assets consist of interests in 22 producing oil and/or natural gas wells and 15 federal leases or blocks. The Company is the operator of the majority of its properties and daily oil and gas production.

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Forward-Looking Information and Statements

Certain statements and information in this press release may constitute "forward-looking information" or statements as such terms are used in applicable Canadian securities laws. Any statement that expresses, involves or includes expectations of future operations (including drill rig commitments and use of proceeds), commerciality of any hydrocarbon discovered, production rates, operating costs, commodity prices, administrative costs, commodity price risk and other components of cash flow and earnings, management activity, acquisitions and dispositions, capital spending, access to credit facilities taxes, regulatory changes, projections, objective, assumptions or future events that are not statements of historical fact should be viewed as "forward-looking statements". Events or circumstances may cause actual results to differ materially from those predicted, a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. These risks include, but are not limited to, the risks associated with the oil and gas industry, commodity prices, and exchange rate changes. Industry related risks could include, but are not limited to, operational risks in exploration, development and production, delays or changes in plans, risks associated with the uncertainty of reserve estimates, or reservoir performance, health and safety risks and the uncertainty of estimates and projections of production, costs and expenses. The reader is cautioned not to place undue reliance on any forward-looking statement in this press release. The Company disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

Financial outlook information contained in this press release about the Company's prospective cash flows and financial position is based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available. Readers are cautioned that any such financial outlook information contained herein should not be used for purposes other than for which it is disclosed herein.

Note Regarding BOEs

The term barrel of oil equivalent ("boe") may be misleading, particularly if used in isolation. A conversion ratio for gas of 6 mcf:1 boe is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly equivalency conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is misleading as an indication of value.


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