CALGARY, ALBERTA–(Marketwired – May 16, 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 first quarter ended March 31, 2016 (“Q1 2016”).
HIGHLIGHTS:
In the Oil & Gas segment, production averaged 2,001 Boepd in Q1 2016, down 36% from year-ago levels as the Company shut-in and began to abandon three fields that have been rendered uneconomic due to the decline in commodity prices. The decline in sales volumes, combined with significantly lower commodity prices, resulted in a 54% drop in oil and gas revenues in Q1 2016 to $2.7 million; this was partially offset by a 45% drop in lease operating expenses. However, the Company terminated its derivative commodity contracts, which contributed to a $7.8 million realized gain in Q1 2016. The Oil & Gas segment reported EBITDAX of $6.8 million in Q1 2016 (including $5.6 million related to terminating the derivative commodity contracts) compared to $2.1 million in Q1 2015.
The Well Services segment, utilization averaged 5% in Q1 2016 compared to 27% in Q1 2015, a decline of 22%, as lower commodity prices continued to weigh on activity levels. As a result, Well Services revenues declined 62% in Q1 2016 to $1.4 million. Lower revenues were offset by a 64% drop in operating expenses. Decommissioning revenues fell 49% to $1.6 million from the prior year period; the only work completed in Q1 2016 related to the removal of a platform at the West Delta 44/45 field. The Well Services segment reported EBITDAX of $0.1 million in Q1 2016 compared to $2.6 million in Q1 2015. The Company’s consolidated EBITDAX totaled $6.6 million in Q1 2016 compared to $3.8 million in Q1 2015.
Robert P. Murphy, Chief Executive Officer, commented that “the drop in commodity prices over the last 18 months has led the Company to review the profitability of its oil and gas fields. As such, the Company has shut-in production from three offshore fields. Though this resulted in lower production, we would note that the year-over-year decline in Oil & Gas segment revenues was nearly offset by a similar decline in lease operating expenses.
“Well Services utilization in Q1 2016 was also hindered due to low commodity prices and low activity levels due to seasonality during the winter months. Utilization levels are scheduled to increase in Q2 2016 as weather patterns are more conducive to performing offshore decommissioning during the late spring and summer months. In addition to work performed for our valued external clients, the Company’s backlog of contracted decommissioning business is expected to provide substantial revenues during the upcoming months as we ramp up our 2016 program. The Company also continues to evaluate decommissioning opportunities in the Gulf of Mexico and certain international offshore basins.”
SUMMARY OF OPERATING AND FINANCIAL RESULTS FOR Q1 2016
| For the three months ended | |||||||
| March 31, | |||||||
| 2016 | 2015 | ||||||
| Oil & Gas Sale Volumes | |||||||
| Crude oil (Bbls) | 33,092 | 62,242 | |||||
| NGLs (Bbls) | 25,933 | 13,667 | |||||
| Natural gas (Mcf) | 738,292 | 1,233,287 | |||||
| Total (BOE) (a) | 182,073 | 281,457 | |||||
| Daily (BOE per day) (a) | 2,001 | 3,127 | |||||
| Financials | |||||||
| Revenues | $ | 6,549,719 | $ | 14,473,520 | |||
| Operating Expenses | (8,068,911 | ) | (13,803,903 | ) | |||
| Operating income (loss) | (1,519,192 | ) | 669,617 | ||||
| Gain on asset retirement obligation | (61,083 | ) | 1,050,442 | ||||
| Unrealized gain (loss) on financing warrants | – | 1,000 | |||||
| Finance expenses (b) | (3,527,502 | ) | (3,034,313 | ) | |||
| Income before income taxes | (5,107,778 | ) | (1,313,254 | ) | |||
| Deferred income tax expense (recovery) | (1,778,401 | ) | (395,000 | ) | |||
| Net income (loss) | $ | (3,329,377 | ) | $ | (918,254 | ) | |
| Net income (loss) per share | |||||||
| Basic | (0.01 | ) | 0.00 | ||||
| Diluted | (0.01 | ) | 0.00 | ||||
| Weighted average shares outstanding | |||||||
| Basic | 324,099,502 | 324,099,502 | |||||
| Diluted | 324,099,502 | 324,099,502 | |||||
| EBITDAX (c) | |||||||
| Oil & Gas | $ | 6,751,942 | $ | 2,136,653 | |||
| Well Services | 144,467 | 2,577,874 | |||||
| Corporate allocation & eliminations | (337,528 | ) | (881,320 | ) | |||
| Total EBITDAX | $ | 6,558,881 | $ | 3,833,207 | |||
| (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, on March 14, 2016, the Company and the holders of its senior secured indebtedness entered into the First Amendment and Waiver to the Amended and Restated Note Purchase Agreement effective December 31, 2015. Pursuant to the First Amendment, all of the financial and performance covenants of the senior secured credit facility and scheduled loan amortization are waived for the fiscal quarters ending March 31, 2016 and June 30, 2016. If the Company is unable to restructure the financial and performance covenants of the loan or extend the term of the waiver on or before the end of the fiscal quarter ending June 30, 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.
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