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").
HIGHLIGHTS:
- 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 $21.8 million turnkey decommissioning contract in the Gulf of Mexico. The
work, which commenced in August, 2016, is expected to be completed by the end of the year. The Company also continues to evaluate
acquisition opportunities from both the production and decommissioning arenas where we believe our hybrid strategy offers a
competitive advantage."
SUMMARY OF OPERATING AND FINANCIAL RESULTS FOR Q2 2016
| |
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| |
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For the three months ended |
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For the six months ended |
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| |
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June 30, |
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June 30, |
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2016 |
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|
2015 |
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2016 |
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2015 |
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| Oil & Gas Sale Volumes |
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|
| Crude oil (Bbls) |
|
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27,614 |
|
|
|
75,873 |
|
|
|
60,706 |
|
|
|
138,115 |
|
| NGLs (Bbls) |
|
|
20,272 |
|
|
|
11,498 |
|
|
|
46,205 |
|
|
|
25,165 |
|
| Natural gas (Mcf) |
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|
746,064 |
|
|
|
1,180,441 |
|
|
|
1,484,356 |
|
|
|
2,413,729 |
|
| Total (BOE) (a) |
|
|
172,231 |
|
|
|
284,111 |
|
|
|
354,304 |
|
|
|
565,568 |
|
| Daily (BOE per day) (a) |
|
|
1,893 |
|
|
|
3,122 |
|
|
|
1,947 |
|
|
|
3,125 |
|
| |
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| Financials |
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| Revenues |
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$ |
8,208,483 |
|
|
$ |
10,625,832 |
|
|
$ |
14,758,202 |
|
|
$ |
25,099,352 |
|
| Operating Expenses |
|
|
(8,450,556 |
) |
|
|
(14,744,121 |
) |
|
|
(16,519,468 |
) |
|
|
(28,548,024 |
) |
| 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 |
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| 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 |
) |
| |
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| Net income (loss) per share |
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|
|
|
|
|
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|
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|
|
|
|
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Basic |
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|
0.00 |
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
| |
Diluted |
|
|
0.00 |
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
| Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Basic |
|
|
324,099,502 |
|
|
|
324,099,502 |
|
|
|
324,099,502 |
|
|
|
324,099,502 |
|
| |
Diluted |
|
|
324,099,502 |
|
|
|
324,099,502 |
|
|
|
324,099,502 |
|
|
|
324,099,502 |
|
| EBITDAX (c) |
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|
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|
|
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|
|
|
|
|
|
|
| |
Oil & Gas |
|
$ |
159,472 |
|
|
$ |
2,626,773 |
|
|
$ |
6,911,414 |
|
|
$ |
7,256,848 |
|
| |
Well Services |
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|
4,647,074 |
|
|
|
4,607,962 |
|
|
|
4,791,542 |
|
|
|
4,674,205 |
|
| |
Corporate allocation & eliminations |
|
|
(1,154,458 |
) |
|
|
(1,455,890 |
) |
|
|
(1,491,986 |
) |
|
|
(2,319,001 |
) |
| |
Total EBITDAX |
|
$ |
3,652,089 |
|
|
$ |
5,778,845 |
|
|
$ |
10,210,971 |
|
|
$ |
9,612,052 |
|
| |
|
| (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.
Forward Looking Information and Statements
Certain statements and information in this press release may constitute "forward-looking information" or
statements as such terms are used in applicable Canadian securities laws. Any statement that expresses, involves or includes
expectations of the anticipated benefits of the refinancing or modification of existing debt or future operations (including
drill rig commitments and use of proceeds), commerciality of any hydrocarbon discovered, production rates, operating costs,
commodity prices, administrative costs, commodity price risk and other components of cash flow and earnings, management activity,
acquisitions and dispositions, capital spending, access to credit facilities taxes, regulatory changes, projections, objective,
assumptions or future events that are not statements of historical fact should be viewed as "forward-looking statements". Events
or circumstances may cause actual results to differ materially from those predicted, a result of numerous known and unknown
risks, uncertainties, and other factors, many of which are beyond the control of the Company. These risks include, but are not
limited to, the risks associated with the oil and gas industry, commodity prices, and interest and exchange rate changes.
Industry related risks could include, but are not limited to, operational risks in exploration, development and production,
delays or changes in plans, risks associated with the uncertainty of reserve estimates, or reservoir performance, health and
safety risks and the uncertainty of estimates and projections of production, costs and expenses. The reader is cautioned not to
place undue reliance on any forward-looking statement in this press release. The Company disclaims any intention or obligation to
update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as
required by applicable law.
Financial outlook information contained in this press release about the Company's prospective cash flows and/or
financial position is based on assumptions about future events, including economic conditions and proposed courses of action,
based on management's assessment of the relevant information currently available. Readers are cautioned that any such financial
outlook information contained herein should not be used for purposes other than for which it is disclosed herein.
Note Regarding Boe
The term barrel of oil equivalent ("boe") may be misleading, particularly if used in isolation. A conversion
ratio for gas of 6 mcf//1 boe is based on an energy equivalency conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared
to natural gas is significantly equivalency conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is misleading as an
indication of value.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICE PROVIDER (AS THAT TERM IS DEFINED IN THE
POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THE RELEASE.