NEW YORK, NY–(Marketwired – Dec 16, 2015) – Petro River Oil Corp. (OTCBB: PTRC) (OTCBB: PTRCD) (“Petro River” or the “Company”), today reported its second quarter 2015 highlights and selected financial results for the three and six months ended October 31, 2015, as well as an overview of recent developments focusing on the Company’s restructuring and corporate strategy.
Highlights for Quarter ending October 31, 2015.
- Recorded second quarter net income of $6,293,845 ($0.74 per share), compared to a net loss of $(1,103,025) (-$0.27 per share) for quarter ending October 31, 2014.
- Current assets of $24,995,165, compared to current assets of $1,231,002 as of April 30, 2015.
- Total liabilities (excluding long term asset retirement obligations) of $1,593,521, compared to liabilities of $794,186 as of April 30, 2015. The Company does not have any bank debt or other secured financing obligations.
- Working capital of approximately $23.4 million as of October 31, 2015.
The second quarter results include the income generated from the transaction between the Company and its wholly owned subsidiary, Megawest Kansas Energy Corporation (“Megawest”), and Fortis Property Group, LLC (“Fortis”), pursuant to the contribution agreement, dated as of October 30, 2015 and effective as of October 15, 2015 (the “Megawest Transaction”). As a result of the Megawest Transaction, the Company recorded approximately $18.3 million in amounts due from a related party; this amount was collected by Megawest subsequent to the quarter ended October 31, 2015.
The Company, led by its newly appointed President, Stephen Brunner, is involved in capitalizing on the current oil market by identifying and acquiring highly attractive oil and gas assets. When asked about the Company’s positioning and strategy, Mr. Brunner stated the following:
“While other companies are struggling with high debt and low oil prices, management believes this period presents an opportunity to secure assets not previously available to small oil and gas exploration and development companies. Securing financing under the Megawest Transaction and the Horizon Transaction (described below) puts Petro River in an unprecedented position for growth going forward.”
Acquisition of Horizon Investments:
On December 1, 2015, the Company entered into a purchase agreement to acquire Horizon I Investments, LLC in an all-stock deal (the “Horizon Transaction”). Upon closing, the acquisition will provide Petro River with approximately $5.0 million in cash plus a 20% membership interest in Horizon Energy Partners, LLC (“Horizon Energy Partners”).
Horizon Energy Partners is an oil and gas exploration and development company owned and managed by former senior oil and gas executives. It has a portfolio of domestic and international assets, including two assets located in the United Kingdom, adjacent to the giant Wytch Farm oil field, the largest onshore oil field in Western Europe. Other projects include the proposed redevelopment of a large oil field in Kern County, California and the development of an additional recent discovery in Kern County. The Company will provide more details on each project on or prior to the closing of the Horizon Transaction.
On October 30, 2015, the Company entered into a contribution agreement with Megawest and Fortis, pursuant to which the Company and Fortis each agreed to assign certain assets to Megawest in exchange for shares of MegaWest common stock.
The Company transferred its 50% membership interest in Bandolier Energy, LLC, together with Megawest’s existing assets, and Fortis transferred certain indirect interests held in certain real estate assets and the rights to any profits and proceeds therefrom, to Megawest. As consideration for the assignment of the Bandolier Interest, Megawest issued 58,510 (58.51%) of its common stock to the Company; as consideration for the assets assigned to Megawest by Fortis, Megawest issued 41,490 (41.49%) of its common stock to Fortis. The joint venture plans to invest in oil and gas assets, including the Company’s assets in Osage County, Oklahoma.
Steve Brunner commented “We are happy to work with Fortis on finding attractive opportunities in oil and gas assets, including the possible investment in a vertical drilling program for our Pearsonia West Concession, consisting of 106,500 contiguous acres in Osage County, Oklahoma.”
Reverse Stock Split:
On December 7, 2015, the Company effected a one (1) for two hundred (200) reverse split of its issued and outstanding common stock as a step toward the Company’s intention to have its common stock listed on the NYSE MKT. The Company’s common stock will begin trading under a new CUSIP number (71647K303). The Company’s ticker symbol, “PTRC”, will remain unchanged; however, the ticker symbol will be represented as “PTRCD” for 20 trading days commencing on the Effective Date to designate the Reverse Split.
Executive Chairman Statement.
Scot Cohen commented “While other oil companies are playing defense, turning off production, shutting down exploration activity and divesting assets, we are now playing offense. We have taken advantage of this low priced oil environment to execute key strategic initiatives. We have acquired access to potentially lucrative domestic and international assets, recapitalized our balance sheet and established new leadership. I’m thrilled to have Stephen Brunner on board, his track record speaks for itself.”
The following tables set forth selected financial information for the three and six months ended October 31, 2015 and October 31, 2014. The information is derived from the Company’s financial statements included in its Quarterly Report on Form 10-Q for the three and six months ended October 31, 2015 and October 31, 2014. All of this information should be read in conjunction with the Form 10-Q and the financial statements contained therein, including the notes to the financial statements.
|Petro River Oil Corp. and Subsidiaries|
|Consolidated Balance Sheets|
|Cash and cash equivalents||$||526,135||$||1,010,543|
|Certificate of deposit – restricted||125,000||125,000|
|Accounts receivable – oil and gas||1,806||42,688|
|Accounts receivable – related party||18,271,716||–|
|Real estate – held for sale||6,021,779||–|
|Prepaid expenses and other current assets||48,729||52,771|
|Total Current Assets||24,995,165||1,231,002|
|Oil and gas assets, net||15,403,605||15,757,011|
|Property, plant and equipment, net of accumulated depreciation of $304,090 and $313,508, respectively||2,720||60,953|
|Intangible assets, net of accumulated amortization of $80,519 and $20,293, respectively||2,143,167||2,203,393|
|Total Other Assets||17,577,625||18,049,279|
|Liabilities and Equity|
|Accounts payable and accrued expenses||$||163,187||$||252,227|
|Deposit on real estate sales||888,375||–|
|Asset retirement obligations, current portion||541,959||541,959|
|Total Current Liabilities||1,593,521||794,186|
|Asset retirement obligations, net of current portion||396,798||376,471|
|Total Long-term Liabilities||396,798||376,471|
|Commitments and contingencies|
|Preferred shares – 5,000,000 authorized; par value $0.00001; 0 shares issued and outstanding||–||–|
|Preferred B shares – 29,500 authorized; par value $0.00001; 0 shares issued and outstanding||–||–|
|Common shares – 112,500,000 authorized; par value $0.00001; 4,259,505 issued and outstanding||43||43|
|Additional paid-in capital||38,659,215||31,115,291|
|Total Petro River Oil Corp. Equity||24,492,197||14,464,848|
|Total Liabilities and Equity||$||42,572,790||$||19,280,281|
|Petro River Oil Corp. and Subsidiaries|
|Consolidated Statements of Operations|
Three Months Ended
Six Months Ended
|Oil and natural gas sales||$||–||$||757,485||$||62,841||$||1,423,761|
|Sales of real estate||18,347,111||–||18,347,111||–|
|Cost of revenues – sales of real estate||10,486,373||–||10,486,373||–|
|Lease operating expenses||84,035||446,829||259,988||787,497|
|Depreciation, depletion and accretion||39,777||218,681||105,750||400,833|
|Amortization of intangibles||30,113||–||60,226||–|
|Gain on sale of equipment||(5,519||)||–||(5,519||)||–|
|General and administrative||1,418,386||1,195,000||1,978,361||3,052,032|
|Operating income (loss)||6,293,946||(1,103,025||)||5,524,773||(2,816,601||)|
|Other income (expense)||(101||)||–||782||33|
|Net income (loss)||6,293,845||(1,103,025||)||5,525,555||(2,816,568||)|
|Net income (loss) attributable to non-controlling interest||3,125,489||55,680||3,042,130||(347,031||)|
|Net income (loss) attributable to Petro River Oil Corp. and Subsidiaries||$||3,168,356||$||(1,158,705||)||$||2,483,425||$||(2,469,537||)|
|Basic and diluted net income (loss) per common share||$||0.74||$||(0.28||)||$||0.58||$||(0.60||)|
|Weighted average number of common shares outstanding – Basic and diluted||4,259,505||4,092,839||4,259,505||4,092,839|
|Petro River Oil Corp. and Subsidiaries|
|Consolidated Statements of Cash Flows|
|For the Six
|For the Six
|October 31,||October 31,|
|Cash Flows From Operating Activities:|
|Net income (loss)||$||5,525,555||$||(2,816,568||)|
|Adjustments to reconcile net income (loss) to net cash used in operating activities|
|Depreciation, depletion and accretion||105,750||400,834|
|Amortization of intangibles||60,226||–|
|Non-cash cost of real estate properties sold||9,522,603||–|
|Gain on sale of equipment||(5,519||)||–|
|Changes in operating assets and liabilities:|
|Accounts receivable – oil and gas||40,882||(225,805||)|
|Accounts receivable – related party||(17,383,341||)||–|
|Prepaid expenses and other current assets||4,042||(45,564||)|
|Accounts payable and accrued expenses||(89,036||)||(78,981||)|
|Net Cash Used in Operating Activities||(815,928||)||(2,091,830||)|
|Cash Flows From Investing Activities:|
|Purchase of certificate of deposit – restricted||–||(125,000||)|
|Capitalized expenditures on oil and gas assets||(7,283||)||(8,333,510||)|
|Cash received upon disposal of oil and gas assets||279,013||–|
|Purchase of equipment||–||(39,756||)|
|Proceeds from sale of equipment||60,000||–|
|Payments on deposits||(210||)||(10,999||)|
|Net Cash Provided by (Used in) Investing Activities||331,520||(8,509,265||)|
|Cash Flows From Financing Activities:|
|Cash payments of note payable||–||(1,926||)|
|Cash received from non-controlling interest contribution||–||5,000,000|
|Net Cash Provided by Financing Activities||–||4,998,074|
|Decrease in cash and cash equivalents||(484,408||)||(5,603,021||)|
|Cash and cash equivalents, beginning of period||1,010,543||8,352,949|
|Cash and cash equivalents, end of period||$||526,135||$||2,749,928|
|Supplementary Cash Flow Information:|
|Cash paid during the period for:|
|Non-cash Investing and Financing Activities:|
|Real estate contributed by non-controlling interest||$||15,544,382||$||–|
|Accounts receivable for deposit received on real estate sales in escrow||$||888,375||$||–|
|Acquisition of oil and gas assets||$||–||$||48,763|
|Issuance of note payable for purchase of fixed assets||$||–||$||27,280|