DENVER, Aug. 7, 2013 /PRNewswire/ -- Double Eagle
Petroleum Co. (NASDAQ: DBLE) today reported its financial and
operating results for the second quarter ended June 30, 2013. The Company had a net loss
attributable to common stock of $570,000, or $0.05
per share for the second quarter of 2013 as compared to a net loss
of $4,951,000, or $0.44 per share for the second quarter of
2012. Clean earnings, a non GAAP measure, totaled
$2,959,000, or $0.26 per share, for the second quarter of 2013,
as compared to $3,733,000 or
$0.33 per share for the same
prior-year period. Clean earnings excludes the effects on net
income (loss) of non-cash charges, consisting of depreciation,
depletion and amortization expense, unrealized gains and losses
related to the Company's economic hedges, impairment charges and
stock-based compensation expense. Clean earnings also
excludes the impact of income taxes, as the Company does not expect
to pay income tax in the foreseeable future due to its net
operating loss carryforwards. Please see the table at the end
of this release for the reconciliation of clean earnings to GAAP
income (loss). The following items impacted our second
quarter 2013 results:
Pricing.
The Company benefited from an 18% increase in its average
realized natural gas price, increasing to $3.98 per Mcfe in the second quarter of 2013 from
$3.36 per Mcfe in the comparable 2012
period.
Production.
Production totaled 2.3 Bcfe for the quarter ended June 30, 2013, representing a 12% decrease from
the comparable 2012 period. The Company experienced a 21%
decrease in its average daily net production at the Catalina Unit,
which resulted from a series of equipment challenges that occurred
over the past year, including a compressor failure and unscheduled
maintenance on several injection pumps. Coalbed methane gas
wells are susceptible to water saturation when they are offline,
and it often takes time for production to recover. Management
remains focused on production recovery at this field and will begin
a 13 well workover program in mid-August
2013 when wildlife restrictions are lifted. The
decrease in total production volumes was partially offset by
increased ownership in the Catalina and Spy Glass Hill units, as a
result of the Company's purchase of additional working interests in
the fourth quarter of 2012.
Non-cash gain/loss on derivative instruments.
The Company had an unrealized non-cash gain from its derivatives
of $2,684,000 in the second quarter
of 2013, resulting from the change in the fair value of its
commodity contracts and interest rate swap at June 30, 2013. This compared to an
unrealized non-cash loss of $5,436,000 in the second quarter of
2012.
Hedging Activity
The Company continues to benefit from its hedging program, and
it realized prices above the prevailing market prices in both the
second quarter of 2013 and 2012. Excluding the impact of its
commodity hedges which settled during the quarter, the Company's
per Mcf realized natural gas price was $3.52 and $1.83 for
the quarters ended June 30, 2013 and
2012, respectively. The Company has historically entered into
forward sales contracts, collars and fixed price swaps to manage
the price risk associated with its natural gas production.
All of the contracts the Company enters into are at no up-front
cost to the Company. The table below summarizes the Company's
current open derivative contracts as of June
30, 2013.
|
|
Remaining
|
|
|
|
|
|
|
Contractual
|
|
|
|
|
Type of
Contract
|
|
Volume
(Mcf)
|
|
Term
|
|
Price1
|
|
|
|
|
|
|
|
Fixed Price
Swap
|
|
1,104,000
|
|
01/13-12/13
|
$5.16
|
Costless
Collar
|
|
1,104,000
|
|
01/13-12/13
|
$5.00 floor
$5.35 ceiling
|
Costless
Collar
|
|
1,080,000
|
|
01/13-12/13
|
$3.25 floor
$4.00 ceiling
|
Fixed Price
Swap
|
|
1,825,000
|
|
01/14-12/14
|
$4.27
|
Fixed Price
Swap
|
|
1,800,000
|
|
01/14-12/14
|
$4.20
|
Costless
Collar
|
|
1,800,000
|
|
01/14-12/14
|
$4.00 floor
$4.50 ceiling
|
Fixed Price
Swap
|
|
3,000,000
|
|
01/15-12/15
|
$4.28
|
Total
|
|
11,713,000
|
|
|
|
|
|
|
|
|
|
|
|
(1) All contracts are indexed to the New York Mercantile
Exchange
Credit Facility and Capital Investment
The Company had $47,450,000
outstanding on its credit facility as of June 30, 2013, with an average interest rate of
3.5%. The Company has developed its 2013 capital spending
program to stay within its estimated cash flow from operations for
2013, as not to draw-down further on its credit facility in
2013. It currently expects to invest approximately
$11,000,000 for capital projects in
the Atlantic Rim and Pinedale Anticline in 2013. At the
Catalina Unit, the Company plans to commence the aforementioned
well workover program in mid-August that will focus on opening up
previously unfractured formations in existing wells.
Additionally, the Company plans to participate in non-operated
drilling programs at the Spy Glass Hill Unit, where the operator
will drill 25 new wells in the second half of 2013, and at the Mesa
"B" Unit of the Pinedale Anticline, where the operator is
completing the final 13 well locations.
Niobrara Update
In the second half of 2013, the Company plans to continue to
refine the previous well completions in an effort to isolate excess
water production and maximize production. The excess water
production has resulted in only minimal production to date.
The Company is currently awaiting regulatory approval to begin
producing gas from the Dakota and Frontier formations.
New Relationship with Petrie Partners, LLC
The Company is pleased to announce that it has retained Petrie
Partners, LLC ("Petrie Partners"), a boutique investment banking
firm offering financial advisory services to the oil and gas
industry. Petrie Partners has been engaged to assist the
Company in identifying potential merger candidates, asset
partnerships and sale opportunities. A member of the Board of
Directors (the "Board"), Scott
Baxter recently joined Petrie Partners, and as a result has
informed the Board that he will resign as a Company director
effective September 30,
2013.
Form 10-Q and Earnings Conference Call
Please refer to the Company's Form 10-Q, which will be filed
with the Securities and Exchange Commission on August 8, 2013, for a more detailed discussion of
the Company's results.
Double Eagle will host a conference call to discuss results on
Thursday, August 8, 2013 at
11:00 a.m. Eastern Daylight Time
(9 a.m. Mountain Daylight).
Those wanting to listen and participate in the Q&A portion can
call (800) 434-1335 and use conference code 319727#.
A replay of this conference call will be available for one week
by calling (800) 704-9804 and using pass code * then
319727#.
SUMMARY STATEMENT
OF OPERATIONS
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
June 30,
|
|
June 30,
|
|
June 30,
|
|
June 30,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
Oil and gas
sales
|
|
$
8,502
|
|
$
5,214
|
|
$
16,035
|
|
$
11,245
|
Transportation
revenue
|
|
858
|
|
1,249
|
|
1,837
|
|
2,487
|
Price risk management
activities, net
|
|
3,438
|
|
(1,239)
|
|
634
|
|
4,533
|
Other income,
net
|
|
503
|
|
19
|
|
508
|
|
23
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
13,301
|
|
5,243
|
|
19,014
|
|
18,288
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
Lease operating
expenses
|
|
3,288
|
|
2,758
|
|
6,196
|
|
5,916
|
Production
taxes
|
|
1,023
|
|
389
|
|
1,965
|
|
1,138
|
Pipeline operating
expenses
|
|
1,198
|
|
1,188
|
|
2,712
|
|
2,449
|
Exploration expenses
including dry holes
|
|
46
|
|
66
|
|
70
|
|
576
|
Impairment and abandonment of equipment and
properties
|
|
472
|
|
4
|
|
1,536
|
|
309
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
6,027
|
|
4,405
|
|
12,479
|
|
10,388
|
|
|
|
|
|
|
|
|
|
Gross Margin
Percentage
|
|
54.7%
|
|
16.0%
|
|
34.4%
|
|
43.2%
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
1,347
|
|
1,519
|
|
2,963
|
|
3,222
|
Depreciation,
depletion and
|
|
|
|
|
|
|
|
|
amortization
expense
|
|
5,231
|
|
4,803
|
|
10,453
|
|
9,407
|
Interest expense,
net
|
|
(123)
|
|
(571)
|
|
(455)
|
|
(851)
|
|
|
|
|
|
|
|
|
|
Pre-tax income
(loss)
|
|
573
|
|
(6,055)
|
|
(7,336)
|
|
(5,580)
|
|
|
|
|
|
|
|
|
|
Benefit (Provision)
for deferred taxes
|
|
(212)
|
|
2,035
|
|
2,521
|
|
1,888
|
|
|
|
|
|
|
|
|
|
NET INCOME
(LOSS)
|
|
361
|
|
(4,020)
|
|
(4,815)
|
|
(3,692)
|
|
|
|
|
|
|
|
|
|
Preferred stock
requirements
|
|
931
|
|
931
|
|
1,862
|
|
1,862
|
|
|
|
|
|
|
|
|
|
NET LOSS
attributable
|
|
|
|
|
|
|
|
|
to common
stock
|
|
$
(570)
|
|
$
(4,951)
|
|
$
(6,677)
|
|
$
(5,554)
|
|
|
|
|
|
|
|
|
|
Net loss per
common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(0.05)
|
|
$
(0.44)
|
|
$
(0.59)
|
|
$
(0.49)
|
Diluted
|
|
$
(0.05)
|
|
$
(0.44)
|
|
$
(0.59)
|
|
$
(0.49)
|
|
|
|
|
|
|
|
|
|
Weighted
average
|
|
|
|
|
|
|
|
|
shares
outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
11,326,415
|
|
11,238,697
|
|
11,316,205
|
|
11,233,725
|
Diluted
|
|
11,326,415
|
|
11,238,697
|
|
11,316,205
|
|
11,233,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED BALANCE
SHEET DATA
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
|
|
2013
|
|
2012
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
146,527
|
|
$
158,810
|
|
-8%
|
|
|
|
|
|
|
|
|
Balance outstanding
on credit facility
|
47,450
|
|
47,450
|
|
0%
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
37,288
|
|
43,470
|
|
-14%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED CASH FLOW
DATA
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30,
|
|
|
|
|
2013
|
|
2012
|
|
%
Change
|
|
|
|
|
|
|
|
Net cash provided
by
|
|
|
|
|
|
|
operating
activities
|
$
6,755
|
|
$
7,987
|
|
-15%
|
|
|
|
|
|
|
|
|
Net cash used
in
|
|
|
|
|
|
|
investing
activities
|
(5,319)
|
|
(12,760)
|
|
-58%
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in)
|
|
|
|
|
|
|
financing
activities
|
(1,883)
|
|
(1,888)
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED
OPERATIONAL DATA
|
|
|
|
|
|
|
|
|
|
Three months
ended,
|
|
|
|
|
June
30,
|
|
June
30,
|
|
|
|
|
2013
|
|
2012
|
|
%
Change
|
|
|
|
|
|
|
|
Total production
(Mcfe)
|
2,267,799
|
|
2,581,876
|
|
-12%
|
|
|
|
|
|
|
|
|
Average price
realized per Mcfe
|
$
4.21
|
|
$
3.52
|
|
20%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Use of Non-GAAP Financial Measures
The Company believes that the presentation of "clean earnings"
below provides a meaningful non-GAAP financial measure to help
management and investors understand and compare operating results
and business trends among different reporting periods on a
consistent basis, independent of regularly reported non-cash
charges. The measure also excludes the impact of income taxes
because the Company does not expect to pay taxes in the near future
due to its net operating loss carryforwards. The Company's
management also uses clean earnings in its planning and development
of target operating models and to enhance its understanding of
ongoing operations. Readers should not view clean earnings as
superior to or an alternative to GAAP results or as being
comparable to results reported or forecasted by other companies.
Readers should refer to the reconciliation of GAAP net income with
clean earnings for the three and six months ended June 30, 2013 and 2012, respectively, contained
below.
Reconciliation of
GAAP Results to Pro Forma Results
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June 30,
|
|
Six Months
Ended June 30,
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
Net Income (loss)
attributable to common stock to as
reported under US GAAP
|
$
(570)
|
|
$
(4,951)
|
|
$
(6,677)
|
|
$
(5,554)
|
Add back non-cash
items:
|
|
|
|
|
|
|
|
Provision
for
income
taxes
|
212
|
|
(2,035)
|
|
(2,521)
|
|
(1,888)
|
Depreciation,
depletion, amortization and accretion expense
|
5,295
|
|
4,848
|
|
10,578
|
|
9,499
|
Non-cash loss (gain)
on derivatives (1)
|
(2,684)
|
|
5,436
|
|
1,952
|
|
2,862
|
Stock-based
compensation expense
|
234
|
|
406
|
|
516
|
|
820
|
Impairments,
abandonments and dry hole costs
|
472
|
|
23
|
|
1,536
|
|
766
|
Other non-cash
items
|
-
|
|
6
|
|
10
|
|
9
|
Clean
Earnings
|
$
2,959
|
|
$
3,733
|
|
$
5,394
|
|
$
6,514
|
|
|
|
|
|
|
|
|
Clean Earnings per
Share
|
$
0.26
|
|
$
0.33
|
|
$
0.48
|
|
$
0.58
|
Clean Earnings per Share - less non-recurring proceeds from
contract termination penalty
(2)
|
$
0.22
|
|
$
0.33
|
|
$
0.43
|
|
$
0.58
|
|
|
|
|
|
|
|
|
(1)
|
Non-cash gain on
derivatives is comprised of an unrealized loss (gain) from the
Company's mark-to-market derivative instruments (both commodity
contracts and interest rate swaps), resulting from recording the
instruments at fair value at each period end.
|
(2)
|
During the second
quarter of 2013, the Company received cash proceeds of $500 from a
third party as a penalty for opting-out of farm-out agreement at
the Main Fork Unit.
|
About Double Eagle
Double Eagle Petroleum Co., which is headquartered in
Denver, Colorado, explores,
develops, and sells natural gas and crude oil, with natural gas in
the Rocky Mountain region. The Company currently has development
activities and opportunities in its Atlantic Rim coalbed methane
and in the Pinedale Anticline in Wyoming. Also, exploration
potential exists in its Niobrara
acreage in Wyoming and
Nebraska, which totals over 70,000
net acres.
This release may contain forward-looking statements regarding
Double Eagle Petroleum Co.'s future and expected performance based
on assumptions that the Company believes are reasonable. No
assurances can be given that these statements will prove to be
accurate. A number of risks and uncertainties could cause
actual results to differ materially from these statements,
including, without limitation, decreases in prices for natural gas
and crude oil, unexpected decreases in gas and oil production, the
timeliness, costs and results of development and exploration
activities, unanticipated delays and costs resulting from
regulatory compliance, and other risk factors described from time
to time in the Company's Forms 10-K and 10-Q and other reports
filed with the Securities and Exchange Commission. Double
Eagle undertakes no obligation to publicly update these
forward-looking statements, whether as a result of new information,
future events or otherwise.
Company Contact:
John Campbell, IR
(303) 794-8445
www.dble.com
SOURCE Double Eagle Petroleum Co.