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Cross Border Resources, Inc. Announces 2011 Second Quarter Results and Provides Operations Update

August 15, 2011

SAN ANTONIO, Texas, Aug. 15, 2011 /PRNewswire/ — Cross Border Resources, Inc. (OTCQX: XBOR), (“Cross Border” or “the Company”) today announced its financial results for the second quarter ended June 30, 2011, which is the second full quarter of operations for the Company. Cross Border is an oil and gas exploration and production company resulting from the business combination of Doral Energy Corp. and Pure Energy Group, which was effective January 3, 2011. The merger impacts all comparisons to the prior year. Summary financial data is provided below:

Second Quarter 2011 Financial and Operating Highlights

  • Revenues increased by 119% year-over-year to $2.1 million, up from $957,307 in the second quarter of 2010.
  • Production volume totaled 23,015 barrels of oil equivalent (“boe”), an increase of 33% compared to the second quarter of 2010.
  • Adjusted EBITDA totaled $980,417, an increase of 195% compared to adjusted EBITDA of $332,525 in the second quarter of 2010.
  • Leo 3 Fed Com #1H has a 24-hour initial production rate of 1,101 barrels of oil (“BO”), 520 barrels of water (“BW”) and 623 thousand cubic feet (“mcf”).

Six-Month Financial and Operating Highlights

  • Revenues increased by 88% year-over-year to $3.7 million, up from $2.0 million in the six months ended June 30, 2010.
  • Production volume totaled 44,786 boe, an increase of 26% compared to the first half of 2010.
  • Adjusted EBITDA totaled $1.6 million, an increase of 41% compared to adjusted EBITDA of $1.1 million in the first half of 2010.

“Cross Border made excellent progress during the second quarter and first half of 2011,” said Everett “Will” Gray II, CEO and Chairman of Cross Border. “We’re still a new company, and as such, our bottom line was impacted by certain startup and merger-related costs. I expect these expenses to diminish going forward as we continue to grow.”

Mr. Gray continued, “Looking at our operations, our established footprint within the Permian Basin offers our shareholders the opportunity to participate in promising, low-risk plays with the potential for attractive returns. We expect increasing production volumes and important reserve adds as our active drilling program continues. Going forward, the Company should maintain its brisk drilling schedule for the rest of 2011, followed by an approximate 25 or more gross wells to be drilled during 2012. We now project Cross Border will participate in 23 gross wells this year. We continue to focus on the Bone Spring and Wolfberry Trend — two of the most active oil plays within the Permian Basin — as well as conventional plays such as the Abo, Yeso and Delaware.”

Results of Operations for the Three Months Ended June 30, 2011

Revenues

Revenues for the three months ended June 30, 2011 were $2.1 million, as compared to $957,307 for the three months ended June 30, 2010. The increase of $1.1 million, or 119%, was primarily due to increased production from wells added year-over-year, increased production due to the merger, and a year-over-year increase in the average sales prices for oil and natural gas. Oil and gas sales increased 59% year-over-year to $1.5 million as compared to $919,234 for the same period a year ago. The Company also recorded a $599,100 gain on the sale of oil and gas properties during the second quarter of 2011.

Production volumes for the three months ended June 30, 2011 were 23,015 boe, up 33% year-over-year and 6% sequentially. The increase was primarily due to a combination of increased production from wells added period-over-period and increased production brought on through the merger. Average daily production sold during the second quarter of 2011 was 253 barrels of oil equivalent per day (“boed”) compared to 190 boed for the second quarter of 2010. Cross Border’s definition of daily production represents only what volumes were sold in each respective quarter and does not account for stored inventory.

Cross Border’s average realized crude oil sales price for the second quarter of 2011 was $95.00 per barrel, compared to $76.99 in the second quarter of 2010. The Company’s average realized natural gas sales price during the second quarter of 2011 was $6.42 per mcf, compared to $6.16 per mcf in the second quarter of 2010.

Income from Operations

Operating loss for the three months ended June 30, 2011 amounted to $45,804 as compared to operating income of $297,571 for the three months ended June 30, 2010. Operating expenses for the three-month period totaled $2.1 million, an increase of 225% of as compared to $659,736. The increase was primarily due to increased expenses related to expanded production.

Net Income

Net loss for the three months ended June 30, 2011 was $66,597 as compared to a net loss of $1,143 for the three months ended June 30, 2010. Net income per diluted share was essentially break-even on a per-share basis.

Adjusted EBITDA

Adjusted EBITDA totaled $980,417, or $0.07 per fully diluted share, an increase of 195% compared to adjusted EBITDA of $332,525 in the year-ago period.

EBITDA is defined as net earnings before interest, income taxes, depreciation, depletion, and amortization (adjusted EBITDA), which is a non-GAAP performance measure. Adjusted EBITDA does not represent, and should not be considered an alternative to GAAP measurements, and Cross Border’s calculations thereof may not be comparable to similarly titled measures reported by other companies. Cross Border’s management does not view adjusted EBITDA in isolation and also uses other measurements, such as net earnings (loss) and revenues to measure operating performance. A complete reconciliation of EBITDA to GAAP accounting standards can be found in this press release under the financial table “Reconciliation to GAAP.”

Results of Operations for the Six Months Ended June 30, 2011

Revenues

Revenues for the six months ended June 30, 2011 were $3.7 million as compared to $2.0 million for the six months ended June 30, 2010. The increase of $1.7 million, or 88%, was primarily due to increased production from wells added year-over-year, increased production due to the merger, and a year-over-year increase in the average sales prices for oil and natural gas. Oil and gas sales increased 57% year-over-year to $3.0 million as compared to $2.0 million for the same period in 2010. The Company also recorded a $599,100 gain on the sale of oil and gas properties during the first half of 2011.

Production volume totaled 44,786 boe, an increase of 26% compared to 35,449 boe for the first half of 2010. The increase was due primarily to a combination of increased production from wells added period-over-period and increased production brought on through the merger. Average daily production for the six months ended June 30, 2011 was 247 boed compared to 196 boed for the first six months of 2010. Cross Border’s definition of daily production represent only what volumes were sold in each respective quarter and does not account for stored inventory.

Cross Border’s average realized crude oil sales price for the first six months of 2011 was $89.60 per barrel, compared to $74.86 in the first six months of 2010. The Company’s average realized natural gas sales price during the first half of 2011 was $6.19 per mcf, compared to $5.99 per mcf for the first half of 2010.

Income from Operations

Operating loss for the six months ended June 30, 2011 amounted to $188,883 as compared to operating income of $480,196 for the six months ended June 30, 2010. Operating expenses for the six months ended June 30, 2011 totaled $3.9 million, up 161% from $1.5 million in the same period a year ago. The increase was primarily due to expanded production.

Net Income

Net loss for the six months ended June 30, 2011 was $221,513 as compared to net income of $237,308 for the six months ended June 30, 2010. Net loss per diluted share was $0.02 for the first six months of 2011.

Adjusted EBITDA

Adjusted EBITDA totaled $1.6 million, an increase of 41% compared to adjusted EBITDA of $1.1 million in the year-ago period.

Liquidity and Capital Resources

As of June 30, 2011, the Company’s current assets were $2.6 million and current liabilities were $1.4 million. Cash and cash equivalents totaled $1.5 million as of June 30, 2011. The Company’s shareholders’ equity at June 30, 2011 was $18.3 million. The Company used $1.2 million for operating activities for the six months ended June 30, 2011, compared to a provision of $1.5 million for the same period in 2010. The Company used $1.1 million for investing activities for the six months ended June 30, 2011, compared to $1.0 million for the first half of 2010. The Company generated $2.9 million from financing activities for the six months ended June 30, 2011, compared to $477,895 used in financing activities during the first half of 2010.

    Operations Update
       Well     County    Operator     Formation
      New
       Mexico
     Leo 3
      Fed
      Com.               Concho
      #1H       Chaves    Resources   Abo
     Grave
      Digger             Concho
      #2H       Eddy      Resources   Yeso
      Texas
      Shortes            Big
      6 #1      Borden    Star         Wolfberry/
                                      Tres
                                       Amigos
      Shortes            Big
      43 #1     Dawson    Star         Wolfberry/
                                      Tres
                                       Amigos
      Coleman            Big
      9 #1      Borden    Star         Wolfberry/
                                      Tres
                                       Amigos
      Simmons            Big
      27 #2     Dawson    Star        Wolfberry


                                 Working
       Well        Status        Interest
      New
       Mexico
     Leo 3      24-hour IP
      Fed        Rate of 1,101
      Com.       BO, 520 BW &
      #1H        623 mcf             6.25%
                Averaging 125
                 bopd and
     Grave       106.7 mcfd of
      Digger     gas, awaiting
      #2H        pay status.         5.64%
      Texas
                Recovered all
                 frac fluid,
                 monitoring
                 excess fluid
                 level in
                 well,
      Shortes    averaging 12
      6 #1       bopd.(1)           10.00%
                Flowing back
                 frac load,
                 averaging 27
                 bopd with 303
                 barrels of
                 load with
                 4,452 barrels
      Shortes    of load left
      43 #1      to recover.        10.00%
                Flowing back
                 frac load,
                 averaging 5
                 bopd with 325
                 barrels of
                 load with
                 4,202 barrels
      Coleman    of load left
      9 #1       to recover.        10.00%
                Drilling
                 completed,
                 preparing
                 2-stage Lower
      Simmons    Mississippian
      27 #2      frac.              10.00%

2011 Business Outlook

Cross Border anticipates accelerated drilling activity in the second half of 2011 with a primary focus on its 2nd Bone Spring acreage located in both Eddy and Lea counties, New Mexico. Approximately $5.5 million has been allocated toward the 2nd Bone Spring development, representing approximately 51% of Cross Border’s 2011 CAPEX budget. Cross Border is witnessing increased permitting activity within its current footprint due to the success of emerging drilling and completion technologies that have provided significant rates of return for Permian Basin operators, further demonstrated by the number of active rigs currently drilling in the Permian Basin.

Cross Border expects to spud approximately 23 gross wells, or 3.6 net wells, in 2011, with drilling capital expenditures increasing to approximately $10.6 million for the year versus only $8.5 million as previously stated. The drilling schedule that was published in the Cross Border presentation dated August 2011 has been revised. Management has pushed back four wells that were expected to spud in 2011, which are now anticipated to spud in 2012, and has replaced them with the Cimarex SE Lusk 33 #2H and the Cimarex SE Lusk 33 #3H, both targeting the 2nd Bone Spring and both with a 37.5% working interest. This revision has increased capital expenditure for the second half of 2011 from $7.4 million to $9.6 million. Historically, Cross Border has been invoiced by its various operators over a three-month time frame with a net 30-day payment for each stage of the drilling and completions costs. If this remains the case, for the remainder of 2011, Cross Border would expect to fund approximately $5.7 million for its proportionate ownership costs with the remaining balance spilling over into Q1 of 2012. All wells listed in the revised drilling schedule are classified as developmental wells.

Cross Border expects to fund all remaining 2011 drilling commitments using cash-on-hand, cash flow and its existing credit facility. Current availability under the existing credit facility is approximately $4 million. The updated drilling schedule for the remainder of 2011 is provided in the chart below:


        WELL
         NAME       COUNTY     OPERATOR    FORMATION

    KSI 22                                  2nd Bone
     Fed #1H     Lea, NM      Devon         Spring
    Zircon 2                                2nd Bone
     #1H         Eddy, NM     Mewbourne     Spring
    Leo 3
     Fed
     Com.
     #2H         Chaves, NM   Cimarex      Abo
    Wasp 2
     St #3H      Chaves, NM   Cimarex      Abo
    Santa
     Elena
     19 Fed
     #1H         Eddy, NM     Apache       Abo
    Buck
     Baker
     15 #1       Martin, TX   Big Star     Wolfberry
     Providence
     A #1        Dawson, TX   Big Star     Wolfberry
    Grave
     Digger
     #3H         Eddy, NM     Concho       Yeso
                              Resources
    Brown
     Bear 14
     St Com
     #1          Lea, NM      Devon        Delaware
    Fecta 33
     Fed Com                                2nd Bone
     #1H         Lea, NM       Occidental   Spring
    Ocelot
     34 Fed                                 2nd Bone
     Com #1H     Lea, NM      Mewbourne     Spring
    Wasp 2
     St #4H      Chaves, NM   Cimarex      Abo
    Staley
     St 30
     "K" #01     Eddy, NM     Apache       Yeso
    Tres
     Amigos
     PH          Borden, TX   Big Star     Wolfberry
    Hefley
     24 #1       Martin, TX   Big Star     Wolfberry
    Stearns                    Cross
     PH          Chaves, NM    Border      San Andres
    SE Lusk                                 2nd Bone
     33 #2H      Lea, NM      Cimarex       Spring
    SE Lusk                                 2nd Bone
     33 #3H      Lea, NM      Cimarex       Spring
    High
     Lonesome
     26 Com
     #2H         Eddy, NM     Concho       Abo
                              Resources


        WELL               WORKING                       V=Vertical
         NAME      SPUD    INTEREST        D&C           H=Horizontal
                   DATE               proportionate
                                        to XBOR's
                                           NRI

    KSI 22
     Fed #1H     Q3 2011       3.00%       $144,000          H
    Zircon 2
     #1H         Q4 2011      12.50%       $399,000          H
    Leo 3
     Fed
     Com.
     #2H         Q4 2011       6.25%       $318,000          H
    Wasp 2
     St #3H      Q3 2011       6.25%       $236,000          H
    Santa
     Elena
     19 Fed
     #1H         Q4 2011      12.50%       $560,000          H
    Buck
     Baker
     15 #1       Q3 2011      20.00%       $525,000          V
     Providence
     A #1        Q4 2011      10.00%       $263,000          V
    Grave
     Digger
     #3H         Q3 2011       5.64%       $139,000          H
    Brown
     Bear 14
     St Com
     #1          Q4 2011       3.00%       $120,000          H
    Fecta 33
     Fed Com
     #1H         Q3 2011      12.50%       $578,000          H
    Ocelot
     34 Fed
     Com #1H     Q4 2011      14.90%       $623,000          H
    Wasp 2
     St #4H      Q4 2011       6.25%       $236,000          H
    Staley
     St 30
     "K" #01     Q4 2011      12.50%       $225,000          V
    Tres
     Amigos
     PH          Q4 2011      10.00%       $183,000          V
    Hefley
     24 #1       Q4 2011      20.00%       $525,000          V
    Stearns
     PH          Q4 2011     100.00%       $650,000          V
    SE Lusk
     33 #2H      Q3 2011      37.50%     $1,883,000          H
    SE Lusk
     33 #3H      Q4 2011      37.50%     $1,883,000          H
    High
     Lonesome
     26 Com
     #2H         Q3 2011       3.13%       $164,000          H

Please note that Cross Border reserves the right to adjust the drilling schedule on a quarterly basis. Management has derived this tentative drilling schedule based upon communication with current operators, identifying and mapping all approved drilling permits on Cross Border acreage, and approved AFEs (authorization for expenditure).

Conference Call and Webcast

Management will host a conference call to discuss these financial results Tuesday, August 16, at 11:00 a.m. Eastern time (8:00 a.m. Pacific).

To participate in the call please dial (877) 941-4778, or (480) 629-9715 for international calls, approximately 10 minutes prior to the scheduled start time. Interested parties can also listen via a live Internet webcast, which can be found via the Company’s website at http://www.xbres.com, or alternately at http://ViaVid.net.

A replay of the call will be available for two weeks from 2:00 p.m. EDT on August 17, 2011, until 11:59 p.m. EDT on August 31, 2011. The number for the replay is (877) 870-5176, or (858) 384-5517 for international calls; the passcode for the replay is 4465173. In addition, a recording of the call will be available via the company’s website at http://www.xbres.com for one year.

About Cross Border Resources

Cross Border Resources is an oil and gas exploration company, headquartered in San Antonio, Texas, focusing on non-operated opportunities with proven operators within the Permian Basin. Cross Border consists of over 800,000 gross (approximately 300,000 net) mineral and lease acres within the state of New Mexico targeting various emerging plays including the 1st & 2nd Bone Spring, and more conventional plays such as the Abo, Yeso, San Andres as well as our Wolfberry acreage located in West Texas. Cross Border Resources currently owns approximately 31,000 net acres within the Permian Basin.

Forward-Looking Statements

This news release contains forward-looking statements that are not historical facts and are subject to risks and uncertainties. Forward-looking statements are based on current facts and analyses and other information that are based on forecasts of future results, estimates of amounts not yet determined, and assumptions of management. Forward-looking statements are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “aims”, “potential”, “goal”, “objective”, “prospective”, and similar expressions or that events or conditions “will”, “would”, “may”, “can”, “could” or “should” occur. Information concerning oil or natural gas reserve estimates may also be deemed to be forward-looking statements, as it constitutes a prediction of what might be found to be present when and if a project is actually developed.

Actual results may differ materially from those currently anticipated due to a number of factors beyond the reasonable control of the Company. It is important to note that actual outcomes and the Company’s actual results could differ materially from those in such forward-looking statements. Factors that could cause actual results to differ materially include misinterpretation of data, inaccurate estimates of oil and natural gas reserves, the uncertainty of the requirements demanded by environmental agencies, the Company’s ability to raise financing for operations, breach by parties with whom the Company has contracted, inability to maintain qualified employees or consultants because of compensation or other issues, competition for equipment, inability to obtain drilling permits, potential delays or obstacles in drilling operations and interpreting data, the likelihood that no commercial quantities of oil or gas are found or recoverable, and our ability to participate in the exploration of, and successful completion of development programs on all aforementioned prospects and leases. Additional information risks for the Company can be found in the Company’s filings with the U.S. Securities and Exchange Commission.

                                  Cross Border Resources, Inc.
                                    Condensed Balance Sheets
                                                       Predecessor
                                                                    Entity
                                          June 30,    December 31,
                                                2011        2010
                                                ----        ----
                                         (Unaudited)  (As Restated)
    ASSETS

    Current Assets
      Cash                                $1,537,152    $975,123
      Accounts Receivable - Production       497,430     512,624
      Accounts Receivable -Related Party           -     250,000
      Prepaid Expenses                       446,606           -
      Derivative Asset                       106,850
      Current Tax Asset                       49,737           -
                                              ------         ---
      Total Current Assets                 2,637,775   1,737,747

    Oil and Gas Properties                31,971,832  19,421,621
      Less: Accumulated Depletion        (8,768,498) (7,328,326)
                                          ----------  ----------
      Net Oil and Gas Properties          23,203,334  12,093,295

    Other Assets
    Other Property and Equipment, net of
     Accumulated Depreciation of
     $112,763 and $94,759 in 2011 and
     2010, respectively                      108,194     124,776
    Deferred Bond Costs, net of
     Accumulated Amortization of
     $303,243 and $293,915 in 2011 and
     2010, respectively                      200,611     209,939
    Deferred Bond Discount, net of
     Accumulated Amortization of
     $134,019 and $108,827 in 2011 and
     2010, respectively                       52,541      77,733
    Other Assets                             173,056     112,532
                                             -------     -------
    Total Other Assets                       534,402     524,980
                                             -------     -------

      TOTAL ASSETS                       $26,375,511 $14,356,022


                                                      Predecessor
                                                                   Entity
                                       June 30,      December 31,
                                               2011          2010
                                               ----          ----
                                      (Unaudited)    (As Restated)
    LIABILITIES AND PARTNERS'
     CAPITAL

    Current Liabilities
      Accounts Payable - Trade             $253,910      $875,881
      Accounts Payable -Revenue
       Distribution                          76,000        49,880
      Interest Payable                       83,532       107,875
      Accrued Expenses                       19,968        28,460
      Deferred Revenues                      97,436       162,394
      Bonds Payable -Current Portion        720,000       660,000
      Creditors Payable -Current
       Portion                              180,000       150,000
                                            -------       -------
      Total Current Liabilities           1,430,846     2,034,490

    Non-Current Liabilities
      Asset Retirement Obligations        1,191,919       508,588
      Deferred Income Tax Liability          19,487             -
      Line of Credit                          1,000     1,582,426
      Notes Payable                         764,278             -
      Bonds Payable, net of Current
       Portion                            3,305,000     3,555,000
      Creditors Payable, net of
       Current Portion                    1,359,545     1,656,305
                                          ---------     ---------
      Total Non-Current Liabilities       6,641,229     7,302,319
                                          ---------     ---------
      Total Liabilities                   8,072,075     9,336,809

    Stockholders' Equity (Deficit)
      Retained Earnings (Accumulated
       Deficit) (1)                     (14,371,458)    5,019,213
      Common Stock ($0.001 par value;
       36,363,637 authorized and
       16,151,946 shares issued and
       outstanding at June 30, 2011)         16,152             -
      Additional Paid in Capital         32,658,742             -
                                         ----------           ---
      Total Stockholders' Equity         18,303,436     5,019,213
                                         ----------     ---------

      TOTAL LIABILITIES AND
       STOCKHOLDERS' EQUITY             $26,375,511   $14,356,022
    (1)   Retained Earnings as of December 31, 2010 (As Restated)
    includes all equity accounts, including all Predecessor Entity
    Partners' Capital accounts.

                       Cross Border Resources, Inc.
                    Condensed Statements of Operations
                               (Unaudited)
                                      Three months ended June 30,
                                      ---------------------------
                                         2011                    2010
                                         ----                    ----
                                                            Predecessor
                                                                        Entity
                                                           ------------
     Revenues and Gains
      Oil and gas sales            $1,465,050                $919,234
      Gain on sale of oil and gas
       properties                     599,100                      --
      Other                            32,479                  38,073
                                       ------                  ------
    Total revenues and gains       $2,096,629                $957,307

    Expenses:
    Operating costs                   362,161                  87,375
    Production taxes                  165,108                 100,440
    Depreciation, depletion, and
     amortization                     488,601                 222,538
    Accretion expense                  26,416                  14,818
    General and administrative      1,100,147                 234,565
                                    ---------                 -------
    Total expense                   2,142,433                 659,736
                                    ---------                 -------

    Gain (loss) from operations       (45,804)                297,571
                                      -------                 -------

    Other income (expense):
    Bond issuance amortization         (4,664)                 (4,664)
    Gain (loss) on derivatives         75,857                       -
    Interest expense                 (142,438)                (91,648)
    Miscellaneous other income
     (expense)                         10,609                (202,402)
                                       ------                --------
    Total other income (expense)      (60,636)               (298,714)
                                      -------                --------

    Loss before income taxes         (106,440)                 (1,143)

    Current tax benefit (expense)      54,160                  (7,862)
    Deferred tax benefit (expense)    (14,317)                  7,862
                                      -------                   -----
    Income tax benefit (expense)       39,843                       -
                                       ------                     ---
    Net income (loss)                $(66,597)                $(1,143)

    Net loss per share:
      Basic and diluted                $(0.00)        $             -
    Weighted average shares
     outstanding:
      Basic and diluted            14,948,649                       -

                         Cross Border Resources, Inc.
                      Condensed Statements of Operations
                                 (Unaudited)
                                       Six months ended June 30,
                                       -------------------------
                                         2011                    2010
                                         ----                    ----
                                                            Predecessor
                                                                        Entity
                                                           ------------
     Revenues and Gains
      Oil and gas sales            $3,031,863              $1,926,964
      Gain on sale of oil and gas
       properties                     599,100                      --
      Other                            64,958                  41,076
                                       ------                  ------
    Total revenues and gains       $3,695,921              $1,968,040

    Expenses:
    Operating costs                   515,225                 183,624
    Production taxes                  270,564                 186,286
    Depreciation, depletion, and
     amortization                   1,072,891                 624,835
    Accretion expense                  52,833                  29,635
    General and administrative      1,973,291                 463,464
                                    ---------                 -------
    Total expense                   3,884,804               1,487,844
                                    ---------               ---------

    Gain (loss) from operations      (188,883)                480,196
                                     --------                 -------

    Other income (expense):
    Bond issuance amortization         (9,328)                 (9,328)
    Gain (loss) on derivatives        106,123                       -
    Interest expense                 (247,594)               (202,321)
    Miscellaneous other income
     (expense)                         52,628                 (31,239)
                                       ------                 -------
    Total other income (expense)      (98,171)               (242,888)
                                      -------                --------

    Loss before income taxes         (287,054)                237,308

    Current tax benefit (expense)      85,028                 (21,358)
    Deferred tax benefit (expense)    (19,487)                 21,358
                                      -------                  ------
    Income tax benefit (expense)       65,541                       -
                                       ------                     ---
    Net income (loss)               $(221,513)               $237,308

    Net loss per share:
      Basic and diluted                $(0.02)        $             -
    Weighted average shares
     outstanding:
      Basic and diluted            13,719,626                       -

                                  Cross Border Resources, Inc.
                               Condensed Statements of Cash Flows
                         For the six months ended June 30, 2011 and 2010
                                           (Unaudited)
                                    Six Months Ended June 30,
                                    -------------------------
                                             2011             2010
                                             ----             ----
                                                         Predecessor
                                                                     Entity
                                                        ------------
    CASH FLOWS FROM OPERATING
     ACTIVITIES
    Net income (loss)                   $(221,513)        $237,308
    Adjustments to reconcile net
     income (loss) to cash used by
     operating activities:
    Depreciation, depletion,
     amortization                       1,047,697          624,835
    Accretion                              52,833           29,635
    Gain on Disposition of Assets        (583,766)               -
    Share-based Compensation              455,230                -
    Amortization of debt discount
     and deferred financing costs          34,520           34,521
    Changes in operating assets and
     liabilities:
      Accounts receivable                  15,194          265,168
      Prepaid expenses and other
       current assets                    (551,986)           6,714
      Accounts payable - trade        (1,064,664)           52,095
      Accrued expenses                   (190,602)         (27,801)
      Deferred income tax                 (30,250)               -
      Deferred revenue                    (64,958)         227,352
      Other current liabilities          (105,074)          21,835
                                         --------           ------
    NET CASH PROVIDED BY (USED IN)
     OPERATING ACTIVITIES             (1,207,339)        1,471,662
                                       ----------        ---------

    CASH FLOWS FROM INVESTING
     ACTIVITIES
    Capital expenditures -oil and
     gas properties                   (1,856,805)         (996,363)
    Disposal of oil and gas
     properties                           799,100                -
    Capital expenditures -other
     assets                               (35,239)               -
                                          -------              ---
    NET CASH USED IN INVESTING
     ACTIVITIES                       (1,092,944)         (996,363)
                                       ----------         --------

    CASH FLOWS FROM FINANCING
     ACTIVITIES
    Proceeds from issuance of
     common stock, net of expenses      5,143,220                -
    Net borrowings (payments) on
     line of credit                   (1,581,426)         (355,000)
    Proceeds from renewing notes          139,359                -
    Repayments of notes payable          (382,081)
    Repayments of bonds                  (190,000)               -
    Repayments to creditors              (266,760)        (122,895)
                                         --------         --------
    NET CASH PROVIDED BY (USED IN)
     FINANCING ACTIVITIES               2,862,312         (477,895)
                                        ---------         --------

    NET INCREASE (DECREASE) IN CASH
     AND CASH EQUIVALENTS                 562,029           (2,596)
    Cash and cash equivalents,
     beginning of period                  975,123          757,119
                                          -------          -------
    Cash and cash equivalents, end
     of period                         $1,537,152         $754,523

    Supplemental disclosures of
     cash flow information:
      Interest paid                      $195,795         $185,493
      Income taxes paid             $           -   $            -

The above changes in current assets and current liabilities differ from changes between amounts reflected in the June 30, 2011 balance sheet due to current assets and current liabilities acquired in connection with the Company’s reverse acquisition with Pure Energy Group, Inc. and Pure Gas Partners II, LP, as more fully described in Note 1 to the unaudited financial statements.

                             Cross Border Resources, Inc.
                             Summary Operating Statistics
                                      (Unaudited)
                                     Three Months Ended
                                          June 30,
                                          --------
                                                    2010
                                               (Predecessor
                                        2011       Entity)
                                    ----       -------------

    Revenues & Sales
    Oil & Gas Sales               $1,465,050         919,234
    Gain on Sale of Oil &
     Gas Properties                  599,100               -
    Total revenue                  2,096,629         957,307
    Net Income (Loss)                (66,597)         (1,143)

    Net Income Per Share
    Basic & Diluted                     0.00             n/a
    Average Number of
     Shares Outstanding
    Basic & Diluted               14,948,649               -

    Production Volumes
    Oil (Bbls)                        12,569           6,737
    Gas (mcf)                         62,672          63,474
      Total Barrels of Oil
       Equivalent (boe)*              23,015          17,316

    Average Barrels of
     Oil Equivalent per
     day (boed)                          253             190

    Oil (Bbls)                          54.6%           38.9%
    Gas (mcf)                           45.4%           61.1%
                                        ----            ----
      Total Barrels of Oil
       Equivalent (boe)*               100.0%          100.0%
                                       =====           =====

    Average sales price:
      Gas ($ per mcf)                   6.42           $6.16
      Oil ($ per bbl)                  95.00           76.99
    Average cost of
     production:
      Average production
       cost ($/boe)                    14.90            5.15
      Average production
       taxes ($/boe)                    7.28            5.78

    Depletion Expense                577,249      292,356.25
    Depletion Expense
     ($/boe)                           25.08           16.88

    Non-GAAP Adjusted
     EBITDA                          980,417         332,525
    Non GAAP Adjusted
     EBITDA Per Share
    Basic & Diluted                     0.07             n/a


                                       Six Months Ended
                                           June 30,
                                           --------
                                                      2010
                                                 (Predecessor
                                          2011       Entity)
                                      ----       -------------

    Revenues & Sales
    Oil & Gas Sales                 $3,031,863       1,926,964
    Gain on Sale of Oil &
     Gas Properties                    599,100
    Total revenue                    3,695,921       1,968,040
    Net Income (Loss)                 (221,513)        237,308

    Net Income Per Share
    Basic & Diluted                      (0.02)            n/a
    Average Number of
     Shares Outstanding
    Basic & Diluted                 13,719,626               -

    Production Volumes
    Oil (Bbls)                          25,856          14,553
    Gas (mcf)                          113,583         125,376
      Total Barrels of Oil
       Equivalent (boe)*                44,786          35,449

    Average Barrels of
     Oil Equivalent per
     day (boed)                            247             196

    Oil (Bbls)                            57.7%           41.1%
    Gas (mcf)                             42.3%           58.9%
                                          ----            ----
      Total Barrels of Oil
       Equivalent (boe)*                 100.0%          100.0%
                                         =====           =====

    Average sales price:
      Gas ($ per mcf)                     6.19           $5.99
      Oil ($ per bbl)                    89.60           74.86
    Average cost of
     production:
      Average production
       cost ($/boe)                      10.78            5.27
      Average production
       taxes ($/boe)                      6.09            5.24

    Depletion Expense             1,122,990.00         584,713
    Depletion Expense
     ($/boe)                             25.07           16.49

    Non-GAAP Adjusted
     EBITDA                          1,550,822       1,103,427
    Non GAAP Adjusted
     EBITDA Per Share
    Basic & Diluted                       0.11             n/a


                                  Cross Border Resources, Inc.
                                     Reconciliation to GAAP
                                           Three Months Ended
                                                June 30,
                                                --------
                                            2011                    2010
                                            ----                    ----
                                                            Predecessor
                                                                        Entity
        Net income (loss)               $(66,597)                $(1,143)
        Interest expense and
         other                           147,102                  96,312
        Income tax expense
         (benefit)                       (39,843)                     --
        Accretion of asset
         retirement
         obligations                      26,416                  14,818
        Depreciation,
         depletion, and
         amortization                    488,601                 222,538
        Stock-based
         compensation                    424,738                      --
                                         -------                     ---
           Adjusted EBITDA              $980,417                $332,525
                                        ========                ========


                    Six Months Ended
                        June 30,
                        --------
                                 2011             2010
                                 ----             ----
                                                        Predecessor
                                                         Entity
                                                       ------------
     Net income
      (loss)                           $(221,513)                     $237,308
     Interest
      expense
      and other                          256,922                       211,649
     Income tax
      expense
      (benefit)                          (65,541)                           --
     Accretion
      of asset
      retirement
      obligations                         52,833                        29,635
      Depreciation,
      depletion,
      and
      amortization                     1,072,891                       624,835
     Stock-
      based
      compensation                       455,230                            --
                                         -------                           ---
        Adjusted
         EBITDA                       $1,550,822                    $1,103,427
                                      ==========                    ==========

SOURCE Cross Border Resources, Inc.


Source: newswire



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