CALGARY, ALBERTA–(Marketwired – Aug. 29, 2016) – ROOSTER ENERGY LTD. (the “Company”) (www.roosterenergyltd.com) (TSX VENTURE:COQ) is pleased to announce it has filed on SEDAR (www.sedar.com) its interim financial statements and management discussion and analysis (MD&A) for the second quarter ended June 30, 2016 (“Q2 2016”).
- Q2 2016 EBITDAX $3.7 million
- Q2 2016 Production Averaged 1,893 BOEPD
- Decommissioning Activity Sees Seasonal Increase in Q2 2016 compared to Q1 2016
In the Oil & Gas segment, production averaged 1,893 boepd in Q2 2016, down 39% from year-ago levels as the Company shut-in and began to abandon three fields. The decline in sales volumes, combined with significantly lower commodity prices, resulted in a 54% drop in oil and gas revenues in Q2 2016 to $3.1 million. The Oil & Gas segment reported EBITDAX of $0.2 million in Q2 2016 compared to $2.7 million in Q2 2015.
Well Services segment utilization averaged 25% in Q2 2016 compared to 42% last year. Utilization continued to be hindered by lower spending on plugging & abandonment projects by external clients. Segment revenues fell 22% in Q2 2016 to $4.9 million compared to $6.3 million in Q2 2015. Well Services was able to offset low external utilization by increased activity related to its internal decommissioning contracts. The segment reported EBITDAX of $4.6 million in Q2 2016, in line with Q2 2015. On a consolidated basis, the Company generated EBITDAX of $3.7 million in Q2 2016 compared to $5.8 million in Q2 2015.
Robert P. Murphy, Chief Executive Officer, commented that “while the improvement in commodity prices over the last few months has offered some relief, the operating environment remains challenging. Despite lower oil & gas production and lower Well Services utilization, the Company’s efforts to right-size its cost structure has resulted in a 42% drop in operating expenses over the first half of the year. These efforts, combined with our team’s ongoing execution of decommissioning contracts, have enabled the Company to withstand the operating environment while generating positive cash flow ($10 million of EBITDAX over the first half of the year) and continue servicing our Senior Secured Notes.
In June, 2016, the Company entered into a $21.8 million turnkey decommissioning contract in the Gulf of Mexico. The work, which commenced in August, 2016, is expected to be completed by the end of the year. The Company also continues to evaluate acquisition opportunities from both the production and decommissioning arenas where we believe our hybrid strategy offers a competitive advantage.”
SUMMARY OF OPERATING AND FINANCIAL RESULTS FOR Q2 2016
|For the three months ended||For the six months ended|
|June 30,||June 30,|
|Oil & Gas Sale Volumes|
|Crude oil (Bbls)||27,614||75,873||60,706||138,115|
|Natural gas (Mcf)||746,064||1,180,441||1,484,356||2,413,729|
|Total (BOE) (a)||172,231||284,111||354,304||565,568|
|Daily (BOE per day) (a)||1,893||3,122||1,947||3,125|
|Operating income (loss)||(242,073||)||(4,118,289||)||(1,761,266||)||(3,448,672||)|
|Gain on asset retirement obligation||1,807,484||2,308,657||1,746,401||3,359,099|
|Unrealized gain on financing warrants||–||–||–||1,000|
|Finance expenses (b)||(3,267,741||)||(3,114,069||)||(6,795,243||)||(6,148,382||)|
|Income before income taxes||(1,702,330||)||(4,923,701||)||(6,810,107||)||(6,236,955||)|
|Deferred income tax expense (recovery)||(577,599||)||(1,396,000||)||(2,356,000||)||(1,791,000||)|
|Net income (loss)||$||(1,124,731||)||$||(3,527,701||)||$||(4,454,107||)||$||(4,445,955||)|
|Net income (loss) per share|
|Weighted average shares outstanding|
|Oil & Gas||$||159,472||$||2,626,773||$||6,911,414||$||7,256,848|
|Corporate allocation & eliminations||(1,154,458||)||(1,455,890||)||(1,491,986||)||(2,319,001||)|
|(a) Gas volumes are converted to BOE on the basis of 6 Mcf per 1 barrel.|
|(b) Finance expenses include accretion for asset retirement obligations.|
|(c) EBITDAX is a non-IFRS measure commonly used in the oil and gas industry; see MD&A.|
As previously disclosed, effective June 30 2016, the Company entered into the Second Amendment and Waiver to the Amended and Restated Note Purchase Agreement, which extended the waiver for the financial and performance covenants associated with the Senior Secured Notes for the third and fourth fiscal quarters of 2016. Absent a prior default, if the Company is unable to restructure the covenants or extend the term of the waiver on or before December 31, 2016, then the Company will be in default of one or more of the loan covenants and the outstanding balance will become current; in that event the holders of the senior secured indebtedness may exercise their remedies against the Company. No assurances can be given that the Company will be able to reach agreement with the holders of the indebtedness on the consequences of any possible default at that time, and in that event the Company may not be able to continue as a going concern.
ABOUT ROOSTER ENERGY LTD.
Rooster Energy Ltd. is a Houston, Texas, based vertically integrated oil and gas exploration production company combined with a well service intervention/plugging and abandonment subsidiary focused in the shallow waters of the US Gulf of Mexico. Our primary oil and gas assets consist of producing oil and gas wells located on US federal and state oil and gas leases and the well service assets consists primarily of rigless well plugging and abandonment/intervention units.
Investors are welcome to visit our website at www.roosterenergyltd.com.