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Dune Energy Reports Fourth Quarter And Full Year 2012 Results -Updates Operations And Year-End Reserves

March 8, 2013

HOUSTON, March 8, 2013 /PRNewswire/ — Dune Energy, Inc. (OCTBB:DUNR) today announced results for the fourth quarter and calendar year 2012 and provided an operational update.

Revenue and Production

Revenue for the fourth quarter totaled $12.0 million and $52.0 million for the full year 2012. This compares with $14.5 million and $62.9 million for the fourth quarter and full year 2011, respectively. Production volumes in the fourth quarter were 1.1 Bcfe and 5.3 Bcfe for the full year 2012. This compares with 1.3 Bcfe for the fourth quarter of 2011, and 5.8 Bcfe for the full year 2011. In 2012, the average sales price of oil was $105.54 per barrel, and $3.20 per Mcf for natural gas, as compared with $102.64 per barrel and $4.58 per Mcf, respectively for 2011. Production declined almost 10% in 2012 as compared to 2011. Oil prices increased 3% and gas prices decreased 30% from 2011 levels. During 2012 oil accounted for 47% of the total production volumes on an Mcfe equivalent basis, however oil revenue accounted for 83% of the total revenue.

Costs and Expenses

Total operating expenses were $26.0 million for 2012 as compared to $26.1 million for 2011 or $4.93 and $4.48 per Mcfe produced respectively. This increase on a per Mcfe basis was reflective of lower production volumes in 2012 in our older fields with high fixed cost expenses. DD&A expense was $3.9 million for the fourth quarter and $14.1 million for 2012 or $2.67 per Mcfe. G&A expense totaled $2.8 million for the fourth quarter and $10.4 million for 2012. G&A for 2011 was $9.6 million. Included in G&A was $1.7 million of stock based compensation in 2012 and $0.5 million in 2011. Cash G&A was $8.7 million in 2012 and $9.1 million in 2011. Interest and financing expense was $2.6 million for the fourth quarter and $9.8 million for 2012. As part of the restructuring on December 22, 2011 the term loan was repaid and replaced with a $200 million revolving credit facility under which $28 million was borrowed at year-end 2012 and $2 million in letters of credit were outstanding. Also as part of the restructuring, the $300 million of Senior Secured notes were reduced to $3.0 million at year-end 2011 and new notes of $49.5 million with a maturity of 2016 were added. This amount has increased to $55.4 million as of December 31, 2012 due to the notes payment-in-kind feature.

Earnings

Net loss available to common shareholders totaled $3.7 million for the fourth quarter of 2012 and $7.9 million for the full year 2012. This compares with an $80.6 million loss in 2011. Preferred stock dividends were $20.2 million in 2011. The preferred stock was eliminated as part of the December 22, 2011 restructuring so there were no preferred stock dividends in 2012.

Liquidity

At the end of the year we had $22.8 million in cash and $22 million available under our Credit Facility based on $50 million of availability. Such availability is subject to an EBITDAX to Total Debt Covenant of 4.0 to 1.0 beginning at the end of the first quarter of 2013. Such covenants may limit our availability under the revolver. The availability is also subject to a semiannual redetermination based on the Company’s reserve report.

Year-End 2012 Reserves

Year-end 2012 proved reserves were 6,585 MBO and 50.6 Bcf or 90.1 Bcfe. PV @ 10% value of these reserves in accordance with applicable financial and reporting standards of the SEC are $260.6 million. Year-end 2011 proved reserve were 5,654 MBO and 45.5 Bcf or 79.5 Bcfe. PV @ 10% value of these reserves at year-end 2011 using the same methodology as above was $249.9 million. On a Bcfe basis reserves increased 13.3%. The majority of the increase occurred in our Leeville field where approximately 20 Proved undeveloped locations were identified using new 3-D seismic data. As described below the Company has initiated a multi well program to develop these PUD reserves.

2013 Operations Summary YTD and Capital Program

Operations Update

At our Garden Island Bay field we completed the following four capital projects designed to increase production: recompletion of the SL 214 #915 into the G-1 A and G-2 sands; cased hole evaluation of the SL 214 #916 well; pipeline installation at the SL 214 #145 well; and, tubing replacement and recompletion of the SL 214 #551 well. Although the SL 214 #916 well was unproductive, the other projects were all successful and are currently yielding new production of 300-400 BOPD net to the Company. Since initiating a drilling program in the Leeville filed late in 2012, we have, to date, run casing for future production on the following new wells: the Heirs of Abraham, the LeFort #1, the LL&E #344 ST #1 and the LL&E #342. Completion operations and facilities construction are underway in all these projects with production anticipated to commence late in the first quarter or early in the second quarter. The Heirs of Abraham well is planned as a single completion in the NF 96 sand at 11,212 feet; the LeFort #1 is anticipated to be a dual completion in the 95E and NF 96 sands at 10,500 and 10,700 feet respectively. The LL&E # 342 is anticipated to be a dual completion in the 192 sand and the 163 sand at 5,400 feet and 5,700 feet respectively, and the LL&E #344 ST #1 is anticipated to be a single completion in the NF 96 sand at 10,250 feet. These six completions from the four well bores are all anticipated to be oil producing with rates net to the Company’s 40% interest expected to flow in the range of 50-100 Boe/day each. The original hole of the #344 found noncommercial pay and was instead sidetracked to become the successful LL&E 344 ST #1. Currently drilling are the LL&E #340 ST #1, which is targeting the 95 sand at 8,500 feet, and the SL 20783 # 1 exploratory which expects to reach the Cib. Carst. sands at approximately 20,000 feet.

2013 Capital Budget

The Board of Directors approved a capital budget of $64 million for 2013. This budget will accommodate the drilling program in our Leeville, Garden Island Bay and Chocolate Bayou fields in the first half of the year, as well as projects in other fields within our portfolio during the latter part of the year. The budget assumes we will receive the additional $20 million of new equity from our major shareholders under the $50 million equity financing announced in December of 2012. Further, it assumes increased availability under our $200 million revolving credit facility at the mid-year redetermination. The current availability is $50 million.

James A. Watt, President and CEO of the Company, stated, “Initial work at our Garden Island Bay field has successfully increased production and drilling results to date are very encouraging in our Leeville field with production to commence soon. This increased production and resultant cash flow will fund our planned drilling operations for the remainder of the year.”

Click here for more information: http://www.duneenergy.com/news.html?b=1683&1=1

FORWARD-LOOKING STATEMENTS: This document includes forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning estimates of expected drilling and development wells and associated costs, statements relating to estimates of, and increases in, production, cash flows and values, statements relating to the continued advancement of Dune Energy, Inc.’s projects and other statements which are not historical facts. When used in this document, the words such as “could,” “plan,” “estimate,” “expect,” “intend,” “may,” “potential,” “should,” and similar expressions are forward-looking statements. Although Dune Energy, Inc. believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include the potential that the Company’s projects will experience technological and mechanical problems, geological conditions in the reservoir may not result in commercial levels of oil and gas production, changes in product prices and other risks disclosed in Dune’s Annual report on Form 10-K filed with the U.S. Securities and Exchange Commission.

CONTACT: Investors, Steven J. Craig, Sr. Vice President Investor Relations and Administration, Dune Energy, Inc., +1-713-229-6300

                            Dune Energy, Inc.

                       Consolidated Balance Sheets

                                Successor
                                ---------

                               December 31,
                               ------------

                                                      2012          2011
                                                      ----          ----

     ASSETS

     Current
      assets:

        Cash                                   $22,793,916   $20,393,672

        Restricted
         cash                                            -        17,184

        Accounts
         receivable                              6,723,233     8,107,009

        Current
         derivative
         asset                                     765,992             -

        Prepayments
         and other
         current
         assets                                  5,160,533     2,556,373

     Total
      current
      assets                                    35,443,674    31,074,238
                                                ----------    ----------

     Oil and gas
      properties,
      using
      successful
      efforts
      accounting
      -proved                                  239,233,653   210,199,348

     Less
      accumulated
      depreciation,
      depletion
      and
      amortization                             (13,806,672)            -

     Net oil and
      gas
      properties                               225,426,981   210,199,348
                                               -----------   -----------

     Property and
      equipment,
      net of
      accumulated
      depreciation
      of $256,380
      and $ -                                       71,080       230,074

     Deferred
      financing
      costs, net
      of
      accumulated
      amortization
      of $771,061
      and $19,449                                2,428,453     2,915,229

     Noncurrent
      derivative
      asset                                        397,886             -

     Other assets                                2,692,797     3,006,564

                                                 5,590,216     6,151,867
                                                 ---------     ---------

     TOTAL ASSETS                             $266,460,871  $247,425,453
                                              ============  ============

     LIABILITIES
      AND
      STOCKHOLDERS'
      EQUITY

     Current
      liabilities:

        Accounts
         payable                                $6,987,857    $6,759,073

        Accrued
         liabilities                            12,529,899    10,042,683

        Current
         maturities
         of long-
         term debt                               1,623,541     4,557,857

     Total
      current
      liabilities                               21,141,297    21,359,613

     Long-term
      debt                                      83,429,862    88,503,991

     Other long-
      term
      liabilities                               13,860,597    12,630,676

     Total
      liabilities                              118,431,756   122,494,280
                                               -----------   -----------

     Commitments
      and
      contingencies                                      -             -

      STOCKHOLDERS'
      EQUITY

     Preferred
      stock,
      $.001 par
      value,
      1,000,000
      shares
      authorized,

        250,000
         shares
         undesignated,
         no shares
         issued and
         outstanding                                     -             -

     Common
      stock,
      $.001 par
      value,
      4,200,000,000
      shares
      authorized,

        59,022,445
         and
         38,579,630
         shares
         issued                                     59,022        38,580

     Treasury
      stock, at
      cost (1,056
      and 235
      shares)                                       (1,914)         (552)

     Additional
      paid-in
      capital                                  155,824,868   124,893,145

     Accumulated
      deficit                                   (7,852,861)            -

     Total
      stockholders'
      equity                                   148,029,115   124,931,173
                                               -----------   -----------

     TOTAL
      LIABILITIES
      AND
      STOCKHOLDERS'
      EQUITY                                  $266,460,871  $247,425,453
                                              ============  ============

                                               Dune Energy, Inc.

                                     Consolidated Statements of Operations

                                          Successor                        Predecessor

                                           Company                           Company
                                          -------                            -------

                              For the Year ended December 31,

                                                              2012                             2011
                                                              ----                             ----

     Oil and gas revenues                              $51,968,654                      $62,891,627

     Other revenues                                        173,250                                -

     Total revenues                                     52,141,904                       62,891,627
                                                        ----------                       ----------

     Operating expenses:

        Lease operating
         expense and
         production taxes                               25,960,588                       26,084,239

        Accretion of asset
         retirement
         obligation                                      1,461,756                        1,317,516

        Depletion,
         depreciation and
         amortization                                   14,063,052                       22,076,347

        General and
         administrative
         expense                                        10,390,043                        9,602,222

        Impairment of oil and
         gas properties                                          -                       18,087,128

        Exploration expense                                      -                        6,119,943

        Loss on settlement of
         asset retirement
         obligation liability                            1,657,999                          497,647

     Total operating
      expense                                           53,533,438                       83,785,042
                                                        ----------                       ----------

     Operating loss                                     (1,391,534)                     (20,893,415)
                                                        ----------                      -----------

     Other income
      (expense):

        Other income                                       828,151                           45,156

        Interest expense                                (9,765,239)                     (39,566,366)

        Gain on derivative
         instruments                                     2,475,761                                -

     Total other income
      (expense)                                         (6,461,327)                     (39,521,210)
                                                        ----------                      -----------

     Net loss                                           (7,852,861)                     (60,414,625)

     Preferred stock
      dividend                                                   -                      (20,212,916)
                                                               ---                      -----------

     Net loss available to
      common shareholders                              $(7,852,861)                    $(80,627,541)
                                                       ===========                     ============

     Net loss per share:

        Basic and diluted                                   $(0.20)                        $(166.79)

     Weighted average
      shares outstanding:

        Basic and diluted                               40,027,622                          483,413

                                                     Dune Energy, Inc.

                                           Consolidated Statements of Cash Flows

                                                     Successor                   Predecessor

                                                      Company                      Company
                                                     -------                       -------

                                         For the Year ended December 31,

                                                                         2012                        2011
                                                                         ----                        ----

     CASH FLOWS FROM OPERATING
      ACTIVITIES

     Net loss                                                     $(7,852,861)               $(60,414,625)

     Adjustments to reconcile net
      loss to net cash used in

        operating activities:

        Depletion, depreciation and
         amortization                                              14,063,052                  22,076,347

        Amortization of deferred
         financing costs and debt
         discount                                                     751,612                   3,833,870

        Stock-based compensation                                    1,721,531                     506,210

        Accretion of asset retirement
         obligation                                                 1,461,756                   1,317,516

        Loss on settlement of asset
         retirement obligation
         liability                                                  1,657,999                     497,647

        Unrealized gain on derivative
         instruments                                               (1,163,878)                          -

        Impairment of oil and gas
         properties                                                         -                  18,087,128

        Changes in:

           Accounts receivable                                      1,382,414                   1,743,725

           Prepayments and other assets                            (2,604,160)                    (13,425)

           Payments made to settle asset
            retirement obligations                                 (3,590,824)                   (743,611)

           Accounts payable and accrued
            liabilities                                             3,099,902                  14,412,362

     NET CASH PROVIDED BY
      OPERATING ACTIVITIES                                          8,926,543                   1,303,144
                                                                    ---------                   ---------

     CASH FLOWS FROM INVESTING
      ACTIVITIES

     Investment in proved and
      unproved properties                                         (21,791,346)                (18,302,410)

     Decrease in restricted cash                                       17,184                  15,736,258

     Purchase of furniture and
      fixtures                                                        (97,386)                    (85,004)

     Decrease in other assets                                         313,767                     705,682

     NET CASH USED IN INVESTING
      ACTIVITIES                                                  (21,557,781)                 (1,945,474)

     CASH FLOWS FROM FINANCING
      ACTIVITIES

     Proceeds from short-term
      debt                                                          2,087,410                   2,018,387

     Proceeds from long-term debt                                  12,000,000                           -

     Proceeds from sale of common
      stock                                                        30,000,000                           -

     Increase in long-term debt
      issuance costs                                                 (198,924)                 (3,098,232)

     Increase in common stock
      issuance costs                                                 (835,278)                          -

     Payments on short-term debt                                   (5,021,726)                 (1,869,448)

     Payments on long-term debt                                   (23,000,000)                          -

     NET CASH PROVIDED BY (USED
      IN) FINANCING ACTIVITIES                                     15,031,482                  (2,949,293)
                                                                   ----------                  ----------

     NET CHANGE IN CASH BALANCE                                     2,400,244                  (3,591,623)

        Cash balance at beginning of
         period                                                    20,393,672                  23,670,192

        Cash balance at end of period                             $22,793,916                 $20,078,569
                                                                  ===========                 ===========

     SUPPLEMENTAL DISCLOSURES

     Interest paid                                                 $2,923,566                 $20,734,335

     Income taxes paid                                                      -                           -

     NON-CASH INVESTING AND
      FINANCIAL DISCLOSURES

     Accrued interest converted to
      long-term debt                                               $5,925,871     $                     -

     Non-cash investment in
      proved and unproved
      properties in accounts
      payable                                                       5,541,969                           -

     Revisions to asset retirement
      obligations                                                   1,700,990                           -

     Redeemable convertible
      preferred stock dividends                                             -                  17,852,000

     Accretion of discount on
      preferred stock                                                       -                   2,360,916

     Common stock issued for
      conversion of preferred
      stock                                                                 -                  62,288,000

                                                                                                          Dune Energy, Inc.

                                                                                Consolidated Statements of Changes in Stockholders' Equity (Deficit)

                                                                                               Years ended December 31, 2012 and 2011

                                                                                                                                                     Additional                                                         Total

                                  Common Stock           Treasury Stock             Paid-In                                            Accumulated                            Stockholders'
                                  ------------           --------------

                                     Shares                  Amount            Shares                              Amount                              Capital                              Deficit                Equity (Deficit)
                                     ------                  ------            ------                              ------                              -------                              -------                ---------------

    Balance at December 31, 2010                419,127                  $419          (1,284)                             $(62,920)                             $81,082,184                        $(358,270,640)               $(277,250,957)

    Conversion of preferred stock                71,186                    71                                                                                     62,287,929                                                        62,288,000

    Purchase of treasury stock                                                         (1,146)                              (12,115)                                                                                                   (12,115)

    Restricted stock issued                                                                                                                                                                                                                  -

    Restricted stock cancelled                   (1,124)                   (1)                                                                                             1                                                                 -

    Stock-based compensation                                                                                                                                         506,210                                                           506,210

    Preferred stock dividends                                                                                                                                    (17,852,000)                                                      (17,852,000)

    Accretion of discount on
     preferred stock                                                                                                                                              (2,360,916)                                                       (2,360,916)

    Net loss                                                                                                                                                                                          (60,414,625)                 (60,414,625)

    Equity adjustment due to debt
     restructure                               (489,189)                 (489)          2,430                                75,035                             (123,663,408)                         418,685,265                  295,096,403

                                                      -         $           -               -                        $            -                    $                   -                $                   -      $                     -

    Successor Company:

    Purchase of treasury stock                                                           (235)                                 (552)                                                                                                      (552)

    Equity adjustment due to debt
     restructure                             38,579,630                38,580                                                                                    124,893,145                                                       124,931,725

    Balance at December 31, 2011             38,579,630               $38,580            (235)                                $(552)                            $124,893,145                $                   -                 $124,931,173

    Issuance of common stock                 18,749,997                18,750                                                                                     29,981,250                                                        30,000,000

    Purchase of treasury stock                                                           (821)                               (1,362)                                                                                                    (1,362)

    Restricted stock issued                   1,716,433                 1,716                                                                                         (1,716)                                                                -

    Restricted stock cancelled                  (23,615)                  (24)                                                                                            24                                                                 -

    Stock-based compensation                                                                                                                                       1,721,531                                                         1,721,531

    Common stock issuance costs                                                                                                                                     (835,278)                                                         (835,278)

    Long-term debt issuance costs                                                                                                                                     65,912                                                            65,912

    Net loss                                                                                                                                                                                           (7,852,861)                  (7,852,861)

    Balance at December 31, 2012             59,022,445               $59,022          (1,056)                              $(1,914)                            $155,824,868                          $(7,852,861)                $148,029,115
                                             ==========               =======          ======                               =======                             ============                          ===========                 ============

SOURCE Dune Energy, Inc.


Source: PR Newswire