SOURCE: Yuma Energy, Inc.

Yuma Energy, Inc.

August 14, 2015 17:00 ET

Yuma Energy, Inc. Announces Second Quarter 2015 Financial Results and Provides an Operational Overview

HOUSTON, TX--(Marketwired - Aug 14, 2015) - Yuma Energy, Inc. (NYSE MKT: YUMA) (the "Company" or "Yuma") today announced its financial results for the quarter ended June 30, 2015 and provided an operational overview relating to its properties.

Financial Results

Sales and Other Operating Revenues

The following table presents the net quantities of oil, natural gas and natural gas liquids produced and sold by us for the three and six months ended June 30, 2015 and 2014, and the average sales price per unit sold.

         
    Three Months Ended June 30,   Six Months Ended June 30,
    2015   2014   2015   2014
Production volumes:                        
  Crude oil and condensate (Bbl)     60,956     60,603     124,592     123,490
  Natural gas (Mcf)     500,404     860,515     990,540     1,716,404
  Natural gas liquids (Bbl)     17,767     29,607     33,939     60,932
    Total (Boe) (1)     162,124     233,629     323,621     470,490
                         
Average prices realized:                        
  Excluding commodity derivatives (both realized and unrealized)                        
    Crude oil and condensate (per Bbl)   $ 59.22   $ 103.20   $ 52.72   $ 102.28
    Natural gas (per Mcf)   $ 2.85   $ 4.86   $ 2.80   $ 4.97
    Natural gas liquids (per Bbl)   $ 22.71   $ 37.86   $ 19.57   $ 41.39
                             

(1) Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equal to one barrel of oil equivalent (Boe).

The following table presents our revenues for the three and six months ended June 30, 2015 and 2014.

             
    Three Months Ended June 30,     Six Months Ended June 30,  
    2015     2014     2015     2014  
Sales of natural gas and crude oil:                                
  Crude oil and condensate   $ 3,609,719     $ 6,254,072     $ 6,567,989     $ 12,631,160  
  Natural gas     1,429,114       4,186,260       2,771,188       8,531,860  
  Natural gas liquids     403,544       1,120,936       664,110       2,522,182  
  Realized gain (loss) on commodity derivatives     (255,049 )     (1,020,979 )     4,681,785       (1,994,173 )
  Unrealized loss on commodity derivatives     (1,441,930 )     (708,547 )     (5,308,196 )     (1,686,933 )
  Gas marketing sales     92,517       147,783       104,286       330,868  
                                 
Other revenue     316,746       302,143       586,764       543,636  
Total revenues   $ 4,154,661     $ 10,281,668     $ 10,067,926     $ 20,878,600  
                                 

NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA

The following table reconciles reported net income to Adjusted EBITDA for the periods indicated:

           
  Three Months Ended June 30,     Six Months Ended June 30,  
  2015   2014     2015     2014  
Net Income $ (8,191,464 ) $ (7,550,697 )   $ (12,210,038 )   $ (7,845,675 )
  Depreciation, depletion & amortization of property and equipment   3,755,446     6,012,525       7,896,466       11,738,608  
  Interest expense, net of interest income and amounts capitalized   109,305     66,402       188,447       204,772  
  Income tax benefit   (3,421,600 )   (285,000 )     (5,380,600 )     (1,134,000 )
  Costs to obtain a public listing   -     295,835       -       1,884,965  
  Increase in value of preferred stock derivative liability   -     5,975,944       -       4,503,914  
  Stock-based compensation net of capitalized cost   133,921     28,926       1,872,331       76,840  
  Accretion of asset retirement obligation   166,773     145,945       329,557       288,089  
  Goodwill impairment   5,349,988     -       5,349,988       -  
  Amortization of benefit from commodity derivatives sold   -     (23,437 )     -       (46,875 )
  Net commodity derivatives mark-to-market loss   1,441,930     708,547       5,308,196       1,686,933  
Adjusted EBITDA $ (655,701 ) $ 5,374,990     $ 3,354,347     $ 11,357,571  
                             

Adjusted EBITDA is provided as an additional metric that is used by our board of directors and management to measure operating performance and trends. Adjusted EBITDA for the three and six months ended June 30, 2015 decreased from the same periods in 2014 by $6,030,691 (112%) and $8,003,224 (70%), respectively.

Adjusted EBITDA is presented based on management's belief that it will enable a user of the financial information to understand the impact of these items on reported results. Additionally, this presentation provides a helpful comparison to similarly adjusted measurements of prior periods. Adjusted EBITDA is not a measure of financial performance under GAAP and should not be considered as an alternative to net income, earnings per share and cash flow from operations, as defined by GAAP. Adjusted EBITDA may not be comparable to similarly named non-GAAP financial measures that other companies may use and may not be useful in comparing the performance of those companies to our performance.

Operational Overview

Amazon 3-D Project - Calcasieu and Jefferson Parishes, Louisiana. During the second quarter of 2015, we completed our Anaconda prospect, the Talbot 23-1 well, where we hold approximately a 45.0% working interest after casing point. The well was perforated in a lower portion of the main Hackberry sand from 11,744 feet to 11,748 feet (MD) and tested at an initial gross production ("IP") rate of approximately 7.0 MMcf/d and 180 Bbl/d of 55 degree API condensate on a 13/64th choke with flowing tubing pressures of approximately 9,000 pounds. Subsequent production from the well was held at approximately the same producing rates until July 23rd when the well stopped flowing. Workover operations are underway and we anticipate having the well back on production in August 2015. The Talbot 23-1 has additional up-hole Hackberry sands in the main Hackberry section as well as four additional Marg-Tex sands with calculated pay behind pipe.

La Posada, Bayou Hebert Field - Vermilion Parish, Louisiana. The field is currently producing approximately 53.4 MMcf/d of natural gas and 1,063 Bbl/d of oil gross (4.8 MMcf/d and 95 Bbl/d net). During the second quarter of 2015, the field averaged approximately 55.2 MMcf/d of natural gas and 1,044 Bbl/d of oil gross (5.0 MMcf/d and 94 Bbl/d net). We have an average net working interest in the project of approximately 12.5%.

Livingston Prospects - Livingston Parish, Louisiana.  In January of 2015, we drilled the Blackwell 39-1 (35% working interest) to a total depth of 10,100 feet measured depth (10,042 feet TVD) and completed the well in the first Wilcox sand from 9,466 feet to 9,476 feet. During the third week in June of 2015, we installed artificial lift on the well using an electrical submersible pump ("ESP") and tested the well at an initial gross production rate of 191 Bbl/d (50 Bbl/d net) of 42 degree API crude oil. The Blackwell 39-1 averaged approximately 146 Bbl/d (38 Bbl/d net) over the first 30 days of production with the ESP. Also during the second quarter of 2015, we converted the Roberts 57-1 (33% working interest) to ESP lift which resulted in a significant increase in production. Gross production from the Roberts 57-1 is currently averaging 110 Bbl/d (26 Bbl/d net) of 40 degree API crude oil. 

We are currently in the process of evaluating further artificial lift enhancements in the remaining wells on the Livingston project. We currently have four wells producing from the lower Tuscaloosa sands, one of which is the Roberts 57-1, and three wells producing from the Wilcox sands, one of which is the Blackwell 39-1. During the second quarter of 2015, the field averaged approximately 515 Bbl/d gross (124 Bbl/d net). We have an average net working interest in the project of approximately 33%. 

Lake Fortuna Field (Raccoon Island) - St. Bernard Parish, Louisiana.  We are continuing to evaluate additional production enhancements and facility upgrades and plan to perform additional operations during the third quarter of 2015 to improve production from the field. During the second quarter of 2015, the field averaged approximately 132 Bbl/d gross (86 Bbl/d net). We have an average net working interest in the project of approximately 91%.

Gardner Island and Branville Bay - St. Bernard Parish, Louisiana. During the second quarter of 2015, we completed repair work on the salt water disposal well servicing the two fields and performed upgrades to the production facilities. Production from the two fields was restored in April 2015 and averaged approximately 359 Bbl/d gross (84 Bbl/d net) during the second quarter of 2015 inclusive of the downtime in April.

Cat Canyon Field - Santa Barbara County, California. We plan to drill our first operated well on this property in 2015. We are currently in the process of permitting the well.

Liquidity and Capital Resources (1)

Liquidity is calculated by adding the net funds available under our credit facility to our cash and cash equivalents. We use liquidity as an indicator, along with our ongoing cash flow, of our ability to satisfy our future capital expenditures. 

At June 30, 2015, we had a $33.0 million conforming borrowing base, with an additional $3.0 million non-conforming piece, and an undrawn amount of $6.1 million under our credit facility.

In addition, we had a cash and cash equivalents balance of $8.3 million at June 30, 2015. This resulted in Liquidity (1) of approximately $14.4 million as of June 30, 2015.

 On July 27, 2015 the Company entered into its Eighth Amendment to the credit agreement, which changed the Company's borrowing base to $33.5 million, with an additional $1.5 million non-conforming borrowing base that expires on October 1, 2015. The effects of this amendment would have reduced the Company's liquidity position to approximately $13.4 million at June 30, 2015. 

(1) Liquidity can vary from period to period for Yuma and can vary among companies as to what is or is not included in liquidity. This measurement should not be considered as an alternative to net income (as an indicator of operating performance) or as an alternative to cash flow (as a measure of liquidity or ability to service debt obligations) and is not in accordance with, nor superior to, generally accepted accounting principles, but provides additional information for evaluation of our operating performance.

Management Comments

Sam L. Banks, Chairman, President and CEO of Yuma Energy, Inc., commented, "While the second quarter was challenging, we continue to maintain our focus on increasing our production and reducing our operating costs. Yuma has an attractive inventory of conventional and unconventional projects that have strong economics, even in this low price environment. During the second quarter, we improved production in our Livingston project by converting wells from rod pump to electronic submersible pumps. We believe the work that we are performing in our Livingston project as well as the work we have accomplished on our legacy properties will lead to both production and cash flow growth in the third quarter. On our Amazon project in the second quarter of 2015, we successfully completed our Anaconda prospect, the Talbot 23-1, where we hold approximately a 45% working interest after casing point. This well tested at an initial gross production rate of approximately 7.0 MMcf/d and 180 Bbl/d of 55 degree API condensate on a 13/64th choke with flowing tubing pressures of approximately 9,000 pounds. While the well is temporarily down, we anticipate having the well back on production in August and expect for it to be a meaningful cash flow driver for the Company. Lastly, acquisition and M&A opportunities are increasing, and we believe that we will be able to add accretive properties to our existing inventory of projects. As we look ahead, we believe we can successfully grow the Company and develop our significant inventory of diversified oil and gas assets."

   
Yuma Energy, Inc.  
   
CONSOLIDATED BALANCE SHEETS  
(Unaudited)  
    June 30,      
    2015   December 31,  
    (Unaudited)   2014  
ASSETS              
               
CURRENT ASSETS:              
Cash and cash equivalents   $ 8,283,003   $ 11,558,322  
Short-term investments     -     1,170,868  
Accounts receivable, net of allowance for doubtful accounts:              
  Trade     6,325,634     9,739,737  
  Officers and employees     47,565     316,077  
  Other     234,745     697,991  
Commodity derivative instruments     110,027     3,338,537  
Prepayments     843,838     782,234  
Deferred taxes     245,922     245,922  
Other deferred charges     281,409     342,798  
               
Total current assets     16,372,143     28,192,486  
               
OIL AND GAS PROPERTIES (full cost method):              
Not subject to amortization     24,202,942     25,707,052  
Subject to amortization     195,212,666     186,530,863  
               
      219,415,608     212,237,915  
Less: accumulated depreciation, depletion and amortization     (111,684,897 )   (103,929,493 )
               
Net oil and gas properties     107,730,711     108,308,422  
               
OTHER PROPERTY AND EQUIPMENT:              
Land, buildings and improvements     2,795,000     2,795,000  
Other property and equipment     3,471,408     3,439,688  
      6,266,408     6,234,688  
Less: accumulated depreciation and amortization     (2,050,414 )   (1,909,352 )
               
Net other property and equipment     4,215,994     4,325,336  
               
OTHER ASSETS AND DEFERRED CHARGES:              
Commodity derivative instruments     6,579     1,403,109  
Deposits     264,064     264,064  
Goodwill     -     5,349,988  
Other noncurrent assets     269,634     262,200  
               
Total other assets and deferred charges     540,277     7,279,361  
               
TOTAL ASSETS   $ 128,859,125   $ 148,105,605  
               
   
   
   
Yuma Energy, Inc.  
   
CONSOLIDATED BALANCE SHEETS - CONTINUED  
(Unaudited)  
    June 30,      
    2015   December 31,  
    (Unaudited)   2014  
LIABILITIES AND EQUITY              
               
CURRENT LIABILITIES:              
Current maturities of debt   $ 431,546   $ 282,843  
Accounts payable, principally trade     10,645,356     25,004,364  
Commodity derivative instruments     720,299     -  
Asset retirement obligations     673,336     -  
Deferred taxes     471,995     471,995  
Other accrued liabilities     2,144,437     1,419,565  
               
Total current liabilities     15,086,969     27,178,767  
               
LONG-TERM DEBT:              
Bank debt     29,900,000     22,900,000  
               
OTHER NONCURRENT LIABILITIES:              
Asset retirement obligations     12,077,632     12,487,770  
Commodity derivative instruments     51,219     -  
Deferred taxes     8,971,643     14,388,662  
Restricted stock units     -     71,569  
Other liabilities     58,223     22,451  
               
Total other noncurrent liabilities     21,158,717     26,970,452  
               
EQUITY:              
Common stock, no par value              
(300 million shares authorized, 71,579,952 and 69,139,869 issued)     141,140,509     137,469,772  
Preferred stock     10,828,603     9,958,217  
Accumulated other comprehensive income (loss)     (15,542 )   38,801  
Accumulated earnings (deficit)     (89,240,131 )   (76,410,404 )
               
Total equity     62,713,439     71,056,386  
               
TOTAL LIABILITIES AND EQUITY   $ 128,859,125   $ 148,105,605  
   
   
   
Yuma Energy, Inc.  
   
CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited)  
   
    Three Months Ended June 30,     Six Months Ended June 30,  
    2015     2014     2015     2014  
REVENUES:                                
Sales of natural gas and crude oil   $ 5,534,894     $ 11,709,051     $ 10,107,573     $ 24,016,069  
Realized and unrealized net losses from commodity derivatives     (1,696,979 )     (1,729,526 )     (626,411 )     (3,681,105 )
Other revenue     316,746       302,143       586,764       543,636  
  Total revenues     4,154,661       10,281,668       10,067,926       20,878,600  
                                 
EXPENSES:                                
Marketing cost of sales     97,994       282,701       199,682       604,018  
Lease operating     3,226,225       3,264,643       6,449,341       6,923,148  
Re-engineering and workovers     60,063       550,401       554,492       551,911  
General and administrative - stock-based compensation     133,921       28,926       1,872,331       76,840  
General and administrative - other     2,160,909       1,789,050       4,103,139       4,939,121  
Depreciation, depletion and amortization     3,755,446       6,012,525       7,896,466       11,738,608  
Asset retirement obligation accretion expense     166,773       145,945       329,557       288,089  
Goodwill impairment     5,349,988       -       5,349,988       -  
Bad debt expense     726,225       2,871       737,536       29,999  
Recovery of bad debts     (18,887 )     (1,984 )     (18,887 )     (1,984 )
  Total expenses     15,658,657       12,075,078       27,473,645       25,149,750  
                                 
INCOME (LOSS) FROM OPERATIONS     (11,503,996 )     (1,793,410 )     (17,405,719 )     (4,271,150 )
                                 
OTHER INCOME (EXPENSE):                                
Change in fair value of preferred stock derivative liability - Series A and Series B     -       (5,975,944 )     -       (4,503,914 )
Interest expense     (114,378 )     (67,856 )     (206,385 )     (207,275 )
Other, net     5,310       1,513       21,466       2,664  
  Total other income (expense)     (109,068 )     (6,042,287 )     (184,919 )     (4,708,525 )
                                 
NET INCOME (LOSS) BEFORE INCOME TAXES     (11,613,064 )     (7,835,697 )     (17,590,638 )     (8,979,675 )
                                 
Income tax expense (benefit)     (3,421,600 )     (285,000 )     (5,380,600 )     (1,134,000 )
                                 
NET INCOME (LOSS)     (8,191,464 )     (7,550,697 )     (12,210,038 )     (7,845,675 )
                                 
PREFERRED STOCK, SERIES A AND SERIES B:                                
Dividends paid in cash, perpetual preferred Series A     318,874       -       619,689       -  
Accretion, Series A and Series B     -       284,580       -       566,529  
Dividends paid in cash, Series A and Series B     -       98,960       -       98,960  
Dividends paid in kind, Series A and Series B     -       4,133,380       -       4,133,380  
                                 
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS   $ (8,510,338 )   $ (12,067,617 )   $ (12,829,727 )   $ (12,644,544 )
                                 
EARNINGS (LOSS) PER COMMON SHARE:                                
Basic   $ (0.12 )   $ (0.29 )   $ (0.18 )   $ (0.31 )
Diluted   $ (0.12 )   $ (0.29 )   $ (0.18 )   $ (0.31 )
                                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:                                
Basic     71,502,546       41,074,953       70,384,326       41,074,953  
Diluted     71,502,546       41,074,953       70,384,326       41,074,953  
   
   
   
Yuma Energy, Inc.  
   
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(Unaudited)  
   
  Six Months Ended June 30,  
  2015     2014  
               
CASH FLOWS FROM OPERATING ACTIVITIES:              
Reconciliation of net loss to net cash provided by (used in) operating activities              
Net loss $ (12,210,038 )   $ (7,845,675 )
Goodwill impairment   5,349,988       -  
Increase in fair value of preferred stock derivative liability   -       4,503,914  
Depreciation, depletion and amortization of property and equipment   7,896,466       11,738,608  
Accretion of asset retirement obligation   329,557       288,089  
Stock-based compensation net of capitalized cost   1,872,331       76,840  
Amortization of other assets and liabilities   136,758       93,240  
Deferred tax expense (benefit)   (5,383,000 )     (1,134,000 )
Bad debt expense   737,536       29,999  
Write off deferred offering costs   -       1,257,160  
Commodity derivatives sold previously recognized in other comprehensive income   (119,917 )     -  
Amortization of benefit from commodity derivatives sold   -       (46,875 )
Net commodity derivatives mark-to-market loss   5,428,113       1,686,933  
Other   (18,887 )     (4,668 )
               
Changes in current operating assets and liabilities:              
Accounts receivable   3,427,212       (663,557 )
Other current assets   (61,604 )     (116,261 )
Accounts payable   (11,663,279 )     4,439,867  
Other current liabilities   877,533       747,969  
               
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES   (3,401,231 )     15,051,583  
               
CASH FLOWS FROM INVESTING ACTIVITIES:              
Capital expenditures on property and equipment   (9,301,034 )     (7,162,819 )
Proceeds from sale of property   30,442       307,600  
Decrease in short-term investments   1,170,868       -  
Decrease in noncurrent receivable from affiliate   -       95,634  
               
NET CASH USED IN INVESTING ACTIVITIES   (8,099,724 )     (6,759,585 )
   
   
   
Yuma Energy, Inc.  
   
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED  
(Unaudited)  
    Six Months Ended June 30,  
    2015     2014  
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Change in borrowing on line of credit   $ 7,000,000     $ (6,440,000 )
Proceeds from insurance note     536,762       624,457  
Payments on insurance note     (388,059 )     (294,830 )
Line of credit financing costs     (210,194 )     (45,249 )
Net proceeds from sale of common stock     1,363,160       -  
Net proceeds from sale of perpetual preferred stock     870,386       -  
Cash dividends to preferred shareholders     (619,689 )     (98,960 )
Common stock purchased from employees     (300,732 )     -  
Other     (25,998 )     -  
                 
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES     8,225,636       (6,254,582 )
                 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     (3,275,319 )     2,037,416  
                 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD     11,558,322       4,194,511  
                 
CASH AND CASH EQUIVALENTS AT END OF PERIOD   $ 8,283,003     $ 6,231,927  
                 
Supplemental disclosure of cash flow information:                
Interest payments (net of interest capitalized)   $ 20,479     $ 125,023  
Interest capitalized   $ 483,158     $ 501,408  
Supplemental disclosure of significant non-cash activity:                
Change in capital expenditures financed by accounts payable   $ (2,695,729 )   $ 2,580,503  
Preferred dividends paid in kind   $ -     $ 4,133,380  
                 

About Yuma Energy, Inc.

Yuma Energy, Inc. is a U.S.-based oil and gas company focused on the exploration for, and development of, conventional and unconventional oil and gas properties, primarily through the use of 3-D seismic surveys, in the U.S. Gulf Coast and California. The Company has employed a 3-D seismic-based strategy to build a multi-year inventory of development and exploration prospects. The Company's current operations are focused on onshore central Louisiana, where the Company is targeting the Austin Chalk, Tuscaloosa, Wilcox, Frio, Marg Tex and Hackberry formations. In addition, the Company has a non-operated position in the Bakken Shale in North Dakota and operated positions in Kern and Santa Barbara Counties in California. Our common stock is traded on the NYSE MKT under the trading symbol "YUMA." For more information about Yuma Energy, Inc., please visit our website at www.yumaenergyinc.com.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Statements that are not strictly historical statements constitute forward-looking statements and may often, but not always, be identified by the use of such words such as "expects," "believes," "intends," "anticipates," "plans," "estimates," "potential," "possible," or "probable" or statements that certain actions, events or results "may," "will," "should," or "could" be taken occur or be achieved. The forward-looking statements include statements about future operations, estimates of reserve and production volumes. Forward-looking statements are based on current expectations and assumptions and analyses made by the Company in light of experience and perception of historical trends, current conditions and expected future developments, as well as other factors appropriate under the circumstances. However, whether actual results and developments will conform with expectations is subject to a number of risks and uncertainties, including but not limited to: fluctuations in oil and gas prices; the risks of the oil and gas industry (for example, operational risks in drilling and exploring for, developing and producing crude oil and natural gas); risks and uncertainties involving geology of oil and gas deposits; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to future production, costs and expenses; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; health, safety and environmental risks and risks related to weather; inability of management to execute its plans to meet its goals, shortages of drilling equipment, oil field personnel and services, unavailability of gathering systems, pipelines and processing facilities and the possibility that government policies may change. The Company's annual report on Form 10-K for the year ended December 31, 2014, quarterly reports on Form 10-Q, recent current reports on Form 8-K, and other Securities and Exchange Commission filings discuss some of the important risk factors identified that may affect its business, results of operations, and financial condition. The Company undertakes no obligation to revise or update publicly any forward-looking statements except as required by law.

Contact Information

  • For more information, please contact:

    James J. Jacobs
    Vice President - Corporate and Business Development
    Yuma Energy, Inc.
    1177 West Loop South, Suite 1825
    Houston, TX 77027
    Telephone: (713) 968-7000